Morning Interest Rate and Treasuries Report

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July 16th, 2012

The Treasury market starts the trading week with a pattern of higher lows and generally of higher highs. Residual slowing concerns remain in place and there also appears to be residual fears from the Euro zone debt crisis. Weaker equities, a firmer dollar and expectations for slack US data seem to give the bull camp a slight edge to start off the week. In fact, some traders think that Bernanke testimony on Tuesday will initially be seen as a supportive element for Bond and Note, as hope springs eternal for hints of additional easing from the US Fed. A slight contraction in Euro zone June CPI readings would seem to contribute to the bull’s case, especially since estimates for today’s US scheduled data call for minimally soft readings. It is possible that some early Fed commentary from the KC Fed President George will serve to limit Treasury prices today. That Fed member is scheduled to speak to an Ag symposium and it is likely that she will be forced to address food price inflation threats in the face of the ongoing US drought conditions. On the other hand, Treasuries might have some resistance hanging over prices from a series of stronger than expected US data points at the end of last week. That news could be quickly forgotten if this morning’s data flow comes in soft. However, general macro economic slowing expectations are widespread globally and that in turn probably leaves the bull camp with an edge that could be difficult to erase until the Fed testimony has been digested on Tuesday. The Commitments of Traders Futures and Options report as of July 10th for U.S. Treasury Bonds showed Non-Commercial traders were net long 37,655 contracts, an increase of 1,034 contracts. The Commercial traders were net short 78,723 contracts, an increase of 5,928 contracts. The Non-reportable traders were net long 41,068 contracts, an increase of 4,894 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 78,723 contracts. This represents an increase of 5,928 contracts in the net long position held by these traders. The Commitments of Traders Futures and Options report as of July 10th for US Treasury 10 Year Notes showed Non-Commercial traders were net long 11,621 contracts, an increase of 36,804 contracts which represents a change from a net short to net long position. The Commercial traders were net short 1,923 contracts, an increase of 30,805 contracts which represents a change from a net long to net short position. The Non-reportable traders were net short 9,697 contracts, an increase of 5,998 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 1,924 contracts. These traders have gone from a net short to a net long position.
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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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