30-Year Treasury Bond Sentiment

Published May 11th, 2006 in Sentiment, Fixed Income Tags: bond, bonds, COT, fixed income, long bond, sentiment.

The 30-year Treasury bond has been on a very steep downtrend for most of this year. Now, sentiment is getting so negative that I think we are close to an inflection point. Note that the chart below is the yield (not the price) of the 30 year Treasury bond:

Now, take a look at the recent commitments of traders:

As you can see things are getting very lopsided. The (smart money) commercials have taken a huge long position and have been adding to that bias for about 3 months. And the (dumb money) small speculators have been taking the other side with a large short position. The tell that an inflection point is coming soon is that the open position has ballooned to 851,211 contracts.

Sooner or later, the score will have to be settled and the winnings divied up. I think it will be sooner rather than later and the winner will be the commercials.