5-Year Bond Speculators strongly cut back on their bearish bets last week

October 2, 2019

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5-Year Bond Non-Commercial Speculator Positions:

Large bond speculators reduced their bearish net positions in the 5-Year Bond futures markets last week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of 5-Year Bond futures, traded by large speculators and hedge funds, totaled a net position of -72,968 contracts in the data reported through Tuesday September 24th. This was a weekly change of 92,409 net contracts from the previous week which had a total of -165,377 net contracts.

The week’s net position was the result of the gross bullish position (longs) ascending by 36,497 contracts (to a weekly total of 727,916 contracts) while the gross bearish position (shorts) fell by -55,912 contracts for the week (to a total of 800,884 contracts).

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Five-year speculators sharply reduced their existing bearish positions last week for the second time in three weeks. The decline represented the largest one-week drop in fifteen weeks and brought the net position to the least bearish level of the past thirteen weeks.

Overall, the current bearish position is just a fraction of the speculator’s bearishness in 2018 which saw bearish bets get as high as -850,000 contracts.

5-Year Bond Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of 79,093 contracts on the week. This was a weekly decrease of -110,919 contracts from the total net of 190,012 contracts reported the previous week.

5-Year Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the 5-Year Futures (Front Month) closed at approximately $119.28 which was a boost of $0.76 from the previous close of $118.51, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

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