CFTC Weekly Options Update: Specs Get Drop In 10 Year Perfectly Wrong
Once again option speculators confirm they are nothing but macro momentum chasing lemmings who never anticipate an inflection point until it is well in the rear-view mirror. Last week's CFTC data, which was released with a delay today, due to Veterans' Day, shows that after the reflation trade appeared to be peaking in the past two weeks, so has non-commercial spec demand for commodities, all of which were virtually unchanged from the prior week.
In currencies, we saw a resumption of the same old, with the brief renaissance in the USD tapering, and net positions once again declining toward a short bias. CHF sentiment was flat, JPY was down, while the GBP was up: in essence mimicking the actions in the underlying.
And the most important chart which we believe is the UST spec distribution by 2/5/10Y, showed that bets for a decline in the 2 year accelerated, the 5 Year was flat, and speculation that the 10 Y would strengthen increased: precisely the opposite of what has since happened, even as expectations that the UST curve would continue surging near 2010 highs.