Weekly Commitment Of Traders Report - What Noncommercials Are Doing

Following futures positions of non-commercials are as of September 22, 2020.

10-year note: Currently net long 82.2k, up 67.4k.

Several Fed officials this week stressed on the need for Congress to get its act together and provide fiscal help. This included Chair Jeremy Powell who spoke at a congressional hearing on Wednesday.

Since March in particular, when the Fed announced open QE and also said it would begin to purchase investment-grade corporate bonds, which in April was expanded to include junk bonds, it has implicitly provided a backstop to stocks.

At the same time, Fed officials’ constant appeal to Congress to act also lays bare the limits of monetary policy. The Fed already holds $7.09 trillion in assets, down slightly from record $7.17 trillion reached in the week to June 10. The fed funds rate is already zero-bound. It already tweaked its inflation language, with Powell stating at this year’s Jackson Hole that it has now adopted an “average inflation target”, under which it will seek to achieve inflation that averages two percent over time.

Increasingly, it feels the Fed’s monetary quiver is running out of arrows – or running thin – hence the repeated attempts to have Congress share the stimulus burden.

30-year bond: Currently net short 157.1k, up 9.4k.

Major economic releases next week are as follows.

The S&P Case-Shiller home price index (July) is scheduled for Tuesday. Nationally, US home prices appreciated 4.3 percent in the 12 months to June. The trend is in deceleration since April’s 4.6 percent rise.

GDP (2Q20, final estimate) and corporate profits (2Q20, revised) are due out Wednesday.

The second estimate showed real GDP collapsed 31.7 percent in 2Q, coming on the heels of a five-percent drop in 1Q.

The preliminary estimate showed 2Q corporate profits with inventory valuation and capital consumption adjustments tumbled 20.1 percent year-over-year to a seasonally adjusted annual rate of $1.81 trillion. The record high $2.31 trillion was reached in 4Q19.

Personal income/spending (August) and the ISM manufacturing index (September) are on tap for Thursday.

In the 12 months to August, core PCE (personal consumption expenditures), which is the Fed’s favorite measure of consumer inflation, rose 1.3 percent. In April, prices were only rising 0.91 percent.

Manufacturing activity rose 1.8 points month-over-month to 56 in August – a 21-month high.

Friday brings nonfarm payrolls (September), durable goods orders (August, revised) and the University of Michigan’s consumer sentiment index (September, final).

Between February and April, the economy lost 22.2 million non-farm jobs. From the April low through August, 10.6 million jobs were gained back, to 140.9 million.

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Disclaimer: This article is not intended to be, nor shall it be construed as, investment advice. Neither the information nor any opinion expressed here constitutes an offer to buy or sell any ...

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