This week we highlight the contrast in positioning between 5-Year Notes and Bonds where Large Speculators are betting short-term rates are going which is less inflationary and Bonds may rally while the 5-Years go down.
Positioning in the 5-Year Notes is extreme for two out of the three traders, Large Speculators and Commercials, while Small Speculators have not skewed to an extreme yet. As open interest goes up, Large Speculators increased their net-short position week over week and are almost at max levels when looking at the last 30 months.
Positioning in Bonds is not at max levels when looking at absolute data and compared to the 5-Year Notes, but we do see Large Speculators turn net-long for the first time since June 2022. Commercials increased their net-short position and is now the largest since January 2022. We also have both Speculators now on the same side long, while the open interest line turns vertical.
Overall, Large Speculators are slowly increasing their short position in Fixed Income as a whole which is more pronounced in the short-term maturities.
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Thanks,
Jason Shapiro & The CMR Team
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