The Commitments of Traders (COT) is a weekly market report issued by the Commodity Futures Trading Commission (CFTC) listing the positions held by commercial traders and the “Smart Money”, the hedge funds and bank institutions in various futures markets in the United States. Since the COT measures the net long and short positions held by speculative traders and commercial traders, it is a great resource to gauge sentiment in the Markets.
On Tuesday, the 10-year bond yield fell to a 19-month low of 2.264% due to the growing concern that the U.S.-China trade war will last longer than anticipated with prolong adverse affects on the global economy.
Because treasury yields and bond prices are inversely correlated, the Smart Money has been going long the futures as indicated by the open interest increasing along with the price of the 10-year bond.
However, according to the 10-year bond smart month sentiment, with sentiment only at 35% bullish, relative to the past five years, there is more room for the Smart Money to be bullish.
Despite the 10 yr bond smart money net positions declining over the last several months, net positions did break the long term down trend, so I’m looking for a net position of around -400k contracts as support to take the next leg higher.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.