Commitment Of Traders: The Speculative Treasury Bubble Pops As Dollar Longs Continue Rising

Tyler Durden's picture

Today's CFTC Commitment of Trader data confirms that the dollar strengthening trend from last week continues: net spec commercial positions in the USD are now well off their lows from three weeks ago and are up to 5,850, after hitting a 2010 low of -1,580. At the same time, both JPY and EUR spec positions declined (by -2,727 and -6,243 positions, respectively) as the rotation into the dollar, as brief as it may end up being, accelerated. Whether this was merely momentum chasing or an expectation of a less efficient QE2 can be answered by looking at select commodity positions. A quick glance at wheat, soybeans, coffee, corn and oats shows that pretty much all 5 representative commodities saw their net long spec positions increase again. So QE2 is definitely going to manifest itself in more inflation, or so at least claim the speculators. Yet not is as it seems: a look at Treasury specs shows a combined drop across the 2, 5 and 10Y space of 123,835 contracts to 186,892, only the second largest drop in 2010, which occurred after the cumulative total hit a 2010 record of 310,727 the week prior! In other words, even as specs were discounting an increase in inflation and a potential increase in the value of the dollar, the bond bubble officially popped.

Treasury Net Specs:

Commodity Net Specs:

FX Net Specs:

And, as usual, a full CFTC COT report, courtesy of Libanman Futures - link

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SMG's picture

This goes against all common sense right now,  but I think we are going to see, for at least a short time, a dollar rally and a stock market/ precious metals nose dive.

Of course I'm a stinky investor so don't listen to me.



Cdad's picture

That is exactly what is about to happen.  The largest profitable trade on the street now is short dollar.   It is way over done.  Gold has huge profits to be booked. 

It is a no brainer.  The only question did it NOT start today?

Hat tip to Tyler...for this week's sweat equity.

flacon's picture

Good question: How did it NOT start today? Perhaps TERRORISM or perhaps enough people are going to HOLD THEIR GOLD/SILVER and NOT SELL into Nov 3rd? My miner stocks have not done as well as the metals themselves. I really want another 500oz of the WOLF series maple leaf silver coins. Should I hold on to stocks and trade out later, or should I cash out now into USD and buy up on "perhaps" drop? Dunno...

Howard_Beale's picture

These are the kinds of questions/comments that rarely occurred a year ago here at ZH without tons of what if's, ridicule, and good jokes.

So here's the answer: get out your fucking Ouigi board or flip a coin. We don't have the answers, my friend.

Dammit, what the fuck is wrong with you? Get some gumption and stop with the stupid questions. Make a decision and live with it and don't expect a fucking decision bailout here. Riddle me this, riddle me that--

Hey, I got one--Why did Bernanke cross the road?

Answer: Who fucking cares unless he was hit by a car and killed.

Talk to a financial therapist or suck it up. 13 weeks here and you think you are going to get advice or an answer to your problems? 


chopper read's picture

i would classify this response to his question as 'the death penalty for jay-walking'.

i reckon gold (and other commodities) and the USD can go up on some days together as stocks and bonds are liquidated and foreign fiat is printed alongside the USD (specifically Japanese Yen and perhaps Euros).  

just my two cents. 

Howard_Beale's picture

I got 3 cents that say you could be right and could be wrong.

waterdog's picture

Whoever flagged this as junk can suck my chicken as soon as your mommy and daddy finish paying for your braces. Please remove your retainer.

Thanks Howard, I was beginning to think I was not able to laugh anymore.


Howard_Beale's picture

You are very welcome dog. It's time for the one year club to beat some sense into these late to the partiers and take the blog back to some sense of reason. We got Banzai finally to contrib status and I highly recommend Money McBags contributions. He is a riot.

It's time for revolt. Right here at ZH. Enough newbie porchies yakking up their problems. Time to get back to the best laughs around right here. It used to be a great laugh everyday and now it is a junkfest of clusterfucked horseshit with racist survivalist nonsense. Fuck this bullshit and fuck everyone that is offended by the word fuck. Bunch of phucknuts...we could have Cheeky here with brilliant insights and hysterical rants but he left, we could have Deadhead creating brilliant conversations that left you on the floor, we could have all kinds of fun. But the newbies and trolls became the junker assbites and the blog has been captured.

Time to take it back. Get obscene. Get silly. Get real. Nuff said. And fuck any lameass that junks me because you are morons to begin with and it means squat to me and those with a brain here. Phucknut junkers--eat me.

waterdog's picture

I remember the girls and crazy writing boys. Too many of us took the responses personally. I for one was probably the biggist idiot that ever posted here. Junk was my middle name. I miss the girls, also Robo, Cheeky, and all the other lovable idiots. Not so much Junkyard Dog-he was clever though. I am not sure what to do. I cannot get into it. Things are so bad. I need some therapy to write. A hard kick in the ass, or something.


PeterB's picture

There were some wonderful writers who I still believe moonlight these parts under different guises.

bookwurm's picture

If you cant shut down their servers, dumb down the comment content to the point of imbilicity

heres my .50 cents on whats going on here at ZH...


Problem Is's picture

"I got one--Why did Bernanke cross the road?"

Because everyone gets their marching orders from those that own them...

honestann's picture

I own me... lock, stock and barrel.

jeff montanye's picture

imo (!), hold gold, silver, long tsy, equity puts; in three months sell last two, buy first two. reverse in five years.

Howard_Beale's picture

And I'll take that to the bank of HB.

Actually, I agree with you on PM's after a good sell-off but I am in a nasty mood. I would not take off the equity puts, I would take my profits and wait for a bounce and buy more. But what the fuck do I know? None of us knows. We just hope we know that we all won't go down in flames.

jeff montanye's picture

the thing that worries me is if they finally do get inflation won't (nominal) puts be defeated on a nominal (but not real) basis? 

Howard_Beale's picture

There's an Ap for that. Stop worrying and start living. I don't follow my own advice but I am great at giving it out.

SWRichmond's picture

...but I am in a nasty mood

ya think?

jeff montanye's picture

no more edit?  do i overedit? change "equity puts" to "sell equities" (for parallelism with the last sentence).

lawrence1's picture

¨Gold has huge profits to be booked.¨

Makes me think of an Oscar Wilde quote about someone who knew the price of everything and the value of nothing.

As the Titanic was sïnking, I´ll bet there was a businessman entering one of the first lifeboats who sold his seat and booked a huge profit, thinking he was going to get on one of the next lifeboats... and, perhaps he did.

And with what certainity these predictions!  I like Yogi Berra´s quip, something to the effect that ¨Predicting is hard.... especially the future.

So ¨Book the profits¨! Collect the paper!  And sell me your gold, please, Ill pay full price plus premium.


Arius's picture



i suppose some people just dont know when to quit dancing...thats the stuff losers are made of...

loved the titanic lifeboat gamble - good one!

but i suppose thats the way he got to be rich in the first place....just at some point the music stop and you dont want to follow Chuck Prince but Soros...

macholatte's picture


In theory there is no difference between theory and practice. In practice there is.
Yogi Berra

A nickel ain't worth a dime anymore.
Yogi Berra

IQ 145's picture

 The only question next week will be; "how did it not start this week".

IQ 145's picture

 The only question next week will be; "how did it not start this week".

Howard_Beale's picture

I don't care what you smell like. I mean, you could wreak of a catbox, rank cheese, and a port-a-potty combined. My problem is with the word investor. Gotta get that word out of your vocab asap. 

StychoKiller's picture

But, I see lots of people playing them on CNBS (WTF?)

Kali's picture

My best indicator of how the dollar is doing is by my travels.  In the last few weeks, main tourist areas in other countries that used to freely take dollars in lieu of local currency are now refusing to accept US dollars and want local currency.  That tells me more than anything.

-1Delta's picture



i take ur dollars  right now.



GoinFawr's picture

I'll trade you mine for your gold, if you have any. And seeing as you appear to be so confident in FRN's coming strength you will gladly exchange your gold well below spot for my fiat, right?

Howard_Beale's picture

Yeah...exactly where were you?

chopper read's picture

...he was in Zimbabwe.  

Howard_Beale's picture

Nice road trip. LOL...I think he was in magic mushroom land.

GoinFawr's picture


"Don't tell him anything!"



Juggernaut Nihilism's picture

Agreed.  I hold plenty of physical, but am short in my trading account.

Cdad's picture


Check the AH flash crash on GLD.  Nice...more than a 70% markdown. 

I'm sure Shapiro is on the case....

flacon's picture

Provide a link please. What is "AH"?

lo574's picture

AH = after hours.  BMO = before market open.  AMC = after market close.  Much to learn, you have, young padawan

Howard_Beale's picture

Thank you for asking. AH is short for asshole. In the financial markets it is an acronym for after hours. What you do with your asshole after hours is no concern of mine. And yes, we old timers have gotten sick of questions that could easily be answered with the evil GOOG.

Type in AH trading and bingo you get this! You see, this is how you can be a Zh'er and fake it.

dkny's picture

Internet Explorer 7 can be bad for your health.

Samsonov's picture

Hey HB, who appointed you comments-fuhrer?  From your rants I can deduce: 1) you are angry, 2) you like to rant, and 3) you don't know anything and assume no one else does either.  One comment should be enough to cover it for you.

lo574's picture

Uh, Cdad you might want to Google intermarket sweeps and learn more about the market b4 you trade it.

Lux Fiat's picture

Always learn, or hear, about something new.  In looking up info on ISOs, ran across this lovely bit:  Reg NMS "...represents one of the most significant changes in the structure of equity markets in recent memory."  Also interesting was that final implementation of Reg NMS was on Oct. 8, 2007, one day before the highest nominal closing value on the SP-500 since its inception.  Hmmm...may be nothing, but it does make me wonder., page 3.

tmosley's picture

I'd take a nice dip in gold to bulk up my positions.  I'm looking to buy some more in November.  I was afraid that QE2 was going to put it out of reach, but maybe not.  We'll see.

flacon's picture

Jack be Nimble, Jack be QUICK! 

wake the roach's picture

So QE2 is definitely going to manifest itself in more inflation, or so at least claim the speculators.


We have no MONETARY inflation through the real economy, only the inflationary ghosts of the great credit boom. The PRICE inflation we are witnessing in commodities (and thus manufactured goods) is completely speculative/momentum driven owing to the expectation of future monetary inflation (within the real economy) which will not happen. It is a self fulfilling positive feedback. Unless worker/consumer incomes are rising (is not and will not happen), speculative commodity bubbles are ultimately deflationary as the cost of non-discretionary spending lead to increased debt defaults, slowed discretionary product manufacture, higher unemployment, yada yada yada. 

We are living in the final days of the biggest CREDIT driven bubble that the world has ever seen (and ever will see). Yet somehow intelligent people continue to believe that uncle Ben is going to airdrop cash to the masses to begin the bidding wars. The TBTF are hoarding cash thats purchasing power is going to increase, just like it did after the last great depression. Problem is that when the nominal prices of just about everything do fall, no one will have the cash to buy anything, the bankers checkmate. Anyone holding cash will buy up assets for cents on the dollar. 

Again, unless worker/consumer incomes rise, commodity price inflation is ultimately deflationary. Until that happens, we will continue on our merry journey to the dark abyss of the greatest credit driven deflationary collapse the world will ever know and no one is going to trade you a moldy loaf of bread for an ounce of gold. There is simply not enough in existence/circulation to ever become a valued monetary medium. On the short to mid term of collapse, cash will still be king.