USD Index COT Data from the commitments of traders report

US bond yields have continued to rise in an almost parabolic fashion, with 1 year note now just shy of 4%, and the 2-year at 3.8% with an increasingly inverted yield curve. And large speculators are not shy in capitalizing 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.

The net-short exposure over time 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.
It’s 1-year SD is 2.9
There are 4.6 bears for every bull.

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

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

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 fastes 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 bullish bias.