AI
Monday, March 14, 2005 5:58:47 PM
COTS Data Part 3 - Go to cash.
Here is where it gets more interesting. I look a look at some of the other COTS charts and noticed some more corroborating data.
The 2y Treasury seems almost unchanged. Commercials seems to be unwinding both long and short positions.
The 5y Treasury seems to be the most bullish by everyone. Small and Large specs are winding down shorts and going long on the 5y while Commercials keep loading up.
The 10y Treasury Note seems to be getting some active interest by the Commercials to the long side.
If we all know one thing about treasury yields is that an Inverse Yield Curve is bad. Very bad. When the 10y treasury yield breaks over the 30 year it usually means that we are going into a recession. Without knowing what the COTS data for the 30y Yield is I cannot be sure that will happen. What I do know is that the proverbial they are ramping up on the longer term bonds. Focusing primarily on 5 and 10y Notes with little speculative interest in what is going on in the shorter term. It's almost foreboding that they are expecting such heavy interest in Intermediate and Longer Term bonds. IMO its speculation that the USD may gain strength here. How that is possible when the US is running the printing presses day and night? By running up the Fed Rate. IMO we won't see the Fed Rate stop climbing when we get to 3%. IMO we might see 4 or even 5 within the year. And to be se speculative of Treasuries yielding 4 to 5 percent means that that is going to be the only action in town. Better to have 4-5% returns than to loose 5 or more.
Here is where it gets more interesting. I look a look at some of the other COTS charts and noticed some more corroborating data.
The 2y Treasury seems almost unchanged. Commercials seems to be unwinding both long and short positions.
The 5y Treasury seems to be the most bullish by everyone. Small and Large specs are winding down shorts and going long on the 5y while Commercials keep loading up.
The 10y Treasury Note seems to be getting some active interest by the Commercials to the long side.
If we all know one thing about treasury yields is that an Inverse Yield Curve is bad. Very bad. When the 10y treasury yield breaks over the 30 year it usually means that we are going into a recession. Without knowing what the COTS data for the 30y Yield is I cannot be sure that will happen. What I do know is that the proverbial they are ramping up on the longer term bonds. Focusing primarily on 5 and 10y Notes with little speculative interest in what is going on in the shorter term. It's almost foreboding that they are expecting such heavy interest in Intermediate and Longer Term bonds. IMO its speculation that the USD may gain strength here. How that is possible when the US is running the printing presses day and night? By running up the Fed Rate. IMO we won't see the Fed Rate stop climbing when we get to 3%. IMO we might see 4 or even 5 within the year. And to be se speculative of Treasuries yielding 4 to 5 percent means that that is going to be the only action in town. Better to have 4-5% returns than to loose 5 or more.
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