Bill Baruch, President of Blue Line Futures, breaks down the weak ahead.

This week will be about the data. We look to a heavy dose of economic indicators and central bank speak from around the globe culminating with Friday’s jobs report. Yields from the U.S., German and Japanese interest rates all rose last week and now find themselves at an inflection point sparring against recessionary concerns.

Last week, we learned that U.S Q4 GDP was not as bad as feared though it did drop precipitously through 2018, and sentiment data from Europe is trying to turn a corner after an abysmal year. U.S. central bankers are oozing patience while they judge the effects of last year’s quarterly hikes and plan to wrap up their balance sheet unwind later this year while those from Europe and Japan have all but called for fresh easing policies. This is exactly why we find this week to be an inflection point as we stare down the barrel of the Fed’s next quarterly meeting in two weeks.

The yield of the U.S 10-year Treasury note gained 4% last week (meaning prices lower). On Wednesday’s session, the price of the 10-year reversed from the highest level since Feb. 8 and lost significant ground into Friday’s close. The bears were quick to defend what has been a highly over-crowded trade since the second half of 2017. In fact, as of the latest Commodity Futures Trading Commission’s Commitments of Traders Report for the week ending Feb. 19, the leveraged net-short position was only 2,419 contracts shy of the 1,011,166-record set for the week ending Sept. 17, 2018 and two weeks before the market capitulated.

Additionally, the number of leveraged longs is hovering at the lowest level since the week ending Oct. 2, 2018, just ahead of that capitulation. If everyone has already sold, who is left to sell. We will be watching this trade most closely as the week unfolds and expect it to tell a story describing the data and central bank speak.

Monday, March 4

  • U.K Construction PMI, Eurozone Sentix Investor Confidence, ISM -NY Business Conditions, U.S Construction Spending, China Caixin Services PMI, RBA Policy Meeting, 10-year JGB Auction.

Tuesday, March 5

  • U.K, regional and Eurozone Services and Composite PMI, Eurozone Retail Sales, U.S ISM Non-Manufacturing, Boston Fed President Rosengren, Minneapolis Fed President Kashkari, Canadian Ivey PMI, Richmond Fed President Barkin, Aussie GDP.

Wednesday, March 6

  • U.S ADP Payrolls, Bank of Canada Policy Meeting, Cleveland Fed President Mester, NY Fed President Williams, Fed Beige Book, Aussie Retail Sales, 30-year JGB Auction.

Thursday, March 7

  • Eurozone GDP, ECB Policy Meeting, U.S weekly Initial Jobless Claims, Nonfarm Productivity, Fed Governor Brainard, Japan Household Spending, Japan GDP.

Friday, March 8

  • U.S. Employment Situation Report for February: Nonfarm Payrolls, Hourly Earnings, Unemployment rate; Canadian Employment, U.S Wholesale Inventories, China Trade Balance, ECB Mersch, China CPI/PPI and Fed Chair Powell. German Factory Orders, French and Spanish Industrial Production