This Week's Commitment Of Traders - What Funds Are Indicating

Following futures positions of non-commercials are as of December 17, 2019.

10-year note: Currently net short 245.3k, up 66.4k.

 

Bond bears (on price) keep hammering on a potentially crucial level.  The 10-year Treasury yield (1.92 percent) dropped to 1.43 percent early September – just about matching the July 2012 low of 1.39 percent and the low four years after that of 1.34 percent.  The rally since the September low ended November 7 at just under two percent – 1.97 percent, to be exact.  A convincing takeout of this level will have established a pattern of higher highs.  Since September, there has already been a pattern of higher lows.  The 200-day moving average lies at 2.02 percent.

Non-commercials obviously are betting that this in due course gets resolved with the 10-year yield breaking this logjam and heading higher.  This week, they took their holdings of net shorts to a 14-week high.  At least for now, momentum is on their side.

30-year bondCurrently net short 100.1k, down 6.9k.

 

Major economic releases next week are as follows.  It is a holiday-shortened week.  Merry Christmas!

New home sales (November) are due out Monday.  October sales were down 0.7 percent month-over-month to a seasonally adjusted annual rate of 733,000 units.  September’s 738,000 units were the highest since July 2007.

Tuesday brings durable goods orders (November).  In the 12 months to October, orders for non-defense capital goods ex-aircraft – proxy for business capex plans – fell 0.9 percent to $69.3 billion (SAAR).  The all-time high of $70 billion was hit in July last year.  October’s drop was the fourth monthly contraction in a row.  The last time this metric dropped y/y was in November 2016.  Back then, the drop was much more severe – both in terms of magnitude and duration.

WTI crude oilCurrently net long 716.3k, up 28k.

 

The cash ($60.44/barrel) broke out of a falling trend line from October last year when it peaked at $76.90.  WTI then bottomed last December at $42.36.  A rising trend line drawn from that low has been persistently defended, resulting in higher lows.  Given this, bulls must find this week’s breakout encouraging, although Friday’s trading resulted in a weekly candle with a long upper shadow.  They now need a higher high for an uptrend to establish, which will occur once the mid-September high of $63.38 gets taken out.  For now, the daily is itching to head back down.

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