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Gold Shorts Explode; Specs Sell Vol, Bonds As "Winter In The Markets" Looms
07-29-2018, 06:46 AM,
Gold Shorts Explode; Specs Sell Vol, Bonds As "Winter In The Markets" Looms
Gold Shorts Explode; Specs Sell Vol, Bonds As "Winter In The Markets" Looms

<p>Before the shit really hit the fan this week as Techs wrecked and Yuan crashed, CFTC data (reported as of Tuesday close) showed <strong>speculators piling increasingly into the most-crowded trades as if nothing will ever change</strong>.</p>

<p>The two most extreme positioning situations are in Gold and US Treasuries as there has <strong>never been more hedge fund shorts in the precious metal</strong> - and it is accelerating dramatically...</p>

<p><a data-image-external-href="" data-image-href="/sites/default/files/inline-images/2018-07-28_8-37-45.jpg?itok=5fSKEa_q" data-link-option="0" href=""><img data-entity-type="file" data-entity-uuid="6cb6c21b-d0a8-4862-b170-cc07a908601b" data-responsive-image-style="inline_images" height="252" width="500" srcset=" 1x" src="" alt="" typeof="foaf:Image" /></a></p>

<p>And <strong>never been more aggregate speculative short positions across the Treasury complex</strong> in history...</p>

<p><a data-image-external-href="" data-image-href="/sites/default/files/inline-images/2018-07-28_8-40-46.jpg?itok=LM4h2bZL" data-link-option="0" href=""><img data-entity-type="file" data-entity-uuid="4195d4d6-1754-480a-800f-7a9bbb23c8ff" data-responsive-image-style="inline_images" height="260" width="500" srcset=" 1x" src="" alt="" typeof="foaf:Image" /></a></p>

<p>Specifically, 10Y Treasury shorts are exploding higher...</p>

<p><a data-image-external-href="" data-image-href="/sites/default/files/inline-images/2018-07-28_8-35-06.jpg?itok=ELoqYiHi" data-link-option="0" href=""><img data-entity-type="file" data-entity-uuid="16bc4f89-94a0-4435-a6bb-30f11f9c6227" data-responsive-image-style="inline_images" height="265" width="500" srcset=" 1x" src="" alt="" typeof="foaf:Image" /></a></p>

<p>Additionally, as China's offshore Yuan collapses,<strong> traders are adding to their net long USDollar positions</strong> - but for now, the dollar refuses to follow their positioning...</p>

<p><a data-image-external-href="" data-image-href="/sites/default/files/inline-images/2018-07-28_8-22-41.jpg?itok=aI24sBAD" data-link-option="0" href=""><img data-entity-type="file" data-entity-uuid="d7e23475-ff74-4d03-8e3e-611ff4c93734" data-responsive-image-style="inline_images" height="262" width="500" srcset=" 1x" src="" alt="" typeof="foaf:Image" /></a></p>

<p>And finally, <strong>specs added further to their renewed belief in the old 'sell vol' trade</strong> being back...</p>

<p><a data-image-external-href="" data-image-href="/sites/default/files/inline-images/2018-07-28_8-27-04.jpg?itok=OsfHa89j" data-link-option="0" href=""><img data-entity-type="file" data-entity-uuid="efefeb02-4711-41b0-88a6-cb5a683d0edd" data-responsive-image-style="inline_images" height="259" width="500" srcset=" 1x" src="" alt="" typeof="foaf:Image" /></a></p>

<p>As if February never happened.</p>

<p>Despite the fact that we are heading into the market's most seasonally volatile time of year...</p>

<p><a data-image-external-href="" data-image-href="/sites/default/files/inline-images/2018-07-28_6-57-38.jpg?itok=lnFQLvH2" data-link-option="0" href=""><img data-entity-type="file" data-entity-uuid="b204ced0-0474-4532-a67a-e17115835b27" data-responsive-image-style="inline_images" height="251" width="500" srcset=" 1x" src="" alt="" typeof="foaf:Image" /></a></p>

<p>All of this positioning occurred before things went a little pear-shaped in global markets towards the latter end of the week, and <a href="">as Bloomberg notes,</a> this year even more so as<strong> for many, unpredictable markets could mar dreams of a lazy summer at the beach. </strong>Event risk could derail plans as trade tensions linger and China’s sliding currency recalls August 2015’s <a href="">devaluation</a>. And lest you forget: President Donald Trump has a <a href="">Twitter account</a>.</p>

<p><strong><em>“It’s the winter in the markets -- not the summer,” </em></strong>Louis Gargour, the chief investment officer of London-based LNG Capital, an alternative investment-management firm, said in an interview. He’s been reducing exposure to risk and increasing shorts in credit.<strong> </strong></p>

<p><strong>“China’s a big story, the second-order effects of trade wars are a much bigger factor that could pressure global markets.”</strong></p>

<p>Additionally, <strong>Goldman has warned that <a href="">depleted liquidity</a> makes the market prone to crises</strong>.</p>

<p><strong>“You have a lot of geopolitical events that could happen this summer,”</strong> said Barbara Reinhard, head of asset allocation at the $227 billion AUM Voya Asset Management.</p>

<p><strong>“August ones are particularly alarming -- that’s when volumes are thin and people are on vacation.”</strong></p>

<p>Risk-off sentiment could rapidly snowball alongside the specter of higher borrowing costs. Investors may struggle to offload positions, from corporate bonds to emerging-market assets, in the second-lowest equity volume month of the year, as Reinhard concluded:</p>

<p><em><strong>“Let’s put it this way, everyone taking a vacation: they can’t be without their devices.”</strong></em></p>
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