Our focus on the commercial trader population within the Commodity Futures Trading Commissions’ (CFTC) weekly Commitments of Traders (COT) report is based upon the premise that these people are some of the most well connected members of today’s financial world. Much of the weight we give them is based on years of watching their positions build and decline in conjunction with the economic news of a given market. Their timing is uncannily accurate. Therefore, when their actions forecast a given scenario ahead of an important news event, we take note. When the news, like this morning’s unemployment report, moves the market further against their position, we REALLY take note.
The interest rate sector has been spooked back and forth between the Federal Open Market Committee’s (FOMC) desire to raise domestic interest rates and the global economy’s seeming inability to gain any significant traction. This has led to the conundrum we face as the FOMC raised interest rates for the first time in nearly a decade while, simultaneously, more of the First World’s economic powers slip deeper into negative interest rates. This begs the question, “How can an individual determine the path of interest rates even as the world’s most connected bankers and governments argue vehemently among themselves regarding the same topic?” Our answer in times like these has always been the effective implementation of commercial traders’ consensus combined with good old-fashioned technical analysis.