<\/p>\n<\/a>Financial<\/u> –
\nEquities have seen a lot of attention since the election, and for good reason.\u00a0 They\u2019ve matched to new all time highs on strong volume and we\u2019ve also seen massive sector rotation in the process.\u00a0 However I want to take a look at the bond market today quickly ahead of the FOMC statement.\u00a0 Bonds have sold off aggressively as the market prices in both higher inflation and a tightening Fed.\u00a0 With the market fully priced in on a 25 bps hike today, the focus will be mainly on the outlook for rates in 2017 (largely via the dot plot).\u00a0 With that in mind, I just thought it\u2019d be worth a quick look at a few charts surrounding the bond market today.<\/p>\n
First up we should note the results of yesterday\u2019s 30-year bond auction by the Treasury.\u00a0 The sale drew a yield of 3.152% which is the highest yield for such an auction since Sep \u201814.\u00a0 The higher yields might be encouraging a bit more participation.\u00a0 The bid-to-cover ratio was up to 2.39 from 2.11 in Nov.\u00a0 The Nov BTC was a well-below average level and among the lowest we\u2019ve seen in the past 10 years.\u00a0 Additionally, yesterday\u2019s auction drew more indirect bidders than we\u2019ve seen lately.\u00a0 Primary dealers took \u201conly\u201d 26.8% which is the lowest since July.<\/p>\n
Another interesting bit of news that caught my attention yesterday comes from a JPM survey of clients.\u00a0 The survey showed clients had the most short positions in Treasuries since Sep 14.\u00a0 You\u2019ll note that is also the last time when 30-year auction yields were this high as mentioned above.\u00a0 This sort of bearish sentiment is displayed in the recent COT data as well.\u00a0 Attached I have a chart showing the combined non-commercial net position (futures & options) of 2s, 5s, 10s, and 30s.\u00a0 As you can see, the market is basically record short USTs.<\/p>\n
<\/p>\n
While I certainly don\u2019t want to imply I\u2019m friendly to Treasury futures here, this sort of \u201cextreme\u201d in positioning is surely worthy of noting in front of a potentially major market-moving event such as the FOMC statement today.<\/p>\n
DISCLAIMER<\/u><\/strong>:<\/strong> Financial – Equities have seen a lot of attention since the election, and for good reason.\u00a0 They\u2019ve matched to new all time highs on strong volume and we\u2019ve also seen massive sector rotation in the process.\u00a0 However I want to take a look at the bond market today quickly ahead of the FOMC statement.\u00a0 Bonds […]<\/p>\n","protected":false},"author":4,"featured_media":1570,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[],"yoast_head":"\n
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