With the stock market falling sharply a few weeks ago and then rallying back just as quickly, most of my attention has been on the sentiment indicators for the equities market.
However, looking at the Commitment of Traders report, I couldn't help but take notice of the data for the 10-year Treasury note.
The large speculator group is net short more than 250,000 contracts, while the commercial hedging group is net long almost 400,000 contracts.
The commercial hedgers had a similar long position last December, but the large speculators haven't had this big of a short position built up since May 2010.
In April 2010, the 10-year Treasury yield had risen to a peak of 4.013 percent before it fell for four consecutive months and dropped below 2.5 percent in August.
The 10-year Treasury note then fell for about seven months, causing the yield to rise back up to 3.75 percent before falling for the better part of the next year and a half, with the yield eventually dipping down below 1.4 percent.
Being short the 10-year Treasury note means that large speculators expect the rates to rise. Given the intentions of the Federal Reserve to raise rates, this makes sense.
What doesn't make sense is how the group was so bearish on the 10-year Treasury in 2010, since the Fed was very accommodating and was pumping money into the economy to keep rates down.
Large speculators bet against the Fed in 2010 and now they are betting with the Fed.
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