COT report (commitment of traders) question

C

cBev

I was going through the Commitments of traders report and couldn't help notice how the hedge funds are all collectively long the 30 year treasuries but the institutions are all collectively short. the exact same could be said for the 5 year but inverted. So the institutions are long 5 year with the hedge funds short.

Now, what am asking is - why is there such a binary positioning on the matter. i mean, the report is almost black and white in terms of quite heavy positioning to either side of the bond market.

curious about this and wondering if anyone knows why this is??

many thanks in advance
 
I can only guess that the hedge fund position is a bet while the "institutions", whoever they are, took the other side of the trade and hedge it. Someone needs to be on the other side.
 
I think you have to look at these things holistically. The futures market is only one part of the jigsaw. So, for example, maybe at the 5yr level leveraged funds are doing a lot of betting on spreads between treasuries and other instruments so the futures leg is the interest rate hedge on that, whereas for the 30yr bond maybe that's more of a pure term premium play and the spreading is less intense there.

Personally wouldn't read it as one set of organisations fighting another set. The bit of interest is to see where leveraged funds+asset managers+others are relative to history and % of open interest; treat the dealer part as a mechanical mirror of that. But the usefulness of the report in general is a function of how important the futures product is to the overall asset class I think. For interest rates I guess the futures market not as predominant as it is in commodities for example so it's hard to use for sentiment.

just mho.
 
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