Commitment of traders report (COT): Bears are aggressively short T-notes

Traders aren’t shying away from shorting bonds, with large speculators having their most bearish view since April 2021.


Commitment of traders – as of Tuesday 13th of September:

  • Traders increased their net-long exposure to US dollar against G10 currencies by $1.2 billion
  • Net-short exposure to GBP and JPY futures rose to a 14-week high
  • Net-long exposure to CAD futures fell to an 8-week low
  • Traders were their most bearish on 2-year treasury notes in 17-months


20220919cotFOREXfx   This content will only appear on Forex websites! Read our guide on how to interpret the weekly COT report  

US 2-year treasury note:

US bond yields have continued to rise in an almost parabolic fashion, with the 1-year note now just shy of 4%, and the 2-year at 3.8% (and above the 10-year yield of 3.45%) with an increasingly inverted yield curve. And large speculators are not shy in capitalising on these lower bond prices – which move inversely to bond yields. Last week they were net-short the 2-year treasury note by -358k contracts, which is their most bearish position since April 2021.

However, if you look back at net-short exposure over time (white line) it could be argued it is approaching a sentiment extreme.

  • Net-short exposure hasn’t ever spent much below -350k.
  • It’s 3-year Z-score is -2.3 standard deviations (SD)
  • Its 1-year SD is 2.9
  • There are 4.6 bears for every bull.


But to try and pick a top in yields (or a low in bond prices) with some banks now forecasting the Fed to raise rates to 5% next year, it would take a brave (or ill informed) trader to try and fight this trend. But what we can at least see is that traders seem confident that yields could rise further, even at a potential sentiment extreme.



Commitment of traders – as of Tuesday 13th of September:

  • Traders reduced net-short exposure to silver at their fastest weekly pace in 6-months
  • Large speculators decreased net-long exposure to gold for a fifth consecutive week
  • Managed funds were net-short for a second consecutive week



Silver futures (SI):

Whilst commodities were broadly under pressure from the US dollar last week, silver posted a 2% gain. And it appears partly down to short-covering alongside an increase of bullish interest. Large speculators closed -6.5k contracts and 1.7k long contracts were opened. This saw net-short exposure rise at its fastest weekly pace in 6-months. Managed funds also added 4.5k long contracts and closed -11.9k short contracts. So we’ll watch silver prices to see if it can break back above $20 before reverting to a bullish bias.




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