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Week Ahead: EURUSD braced for explosive risk cocktail

If you thought the last few days were wild for financial markets, then wait until you see what’s in store for the week ahead…

Investors will be served a generous platter of risk investors ranging from pivotal major central bank meetings in the shape of the Reserve Bank of Australia (RBA), Federal Reserve (Fed), and European Central Bank (ECB).

This will be complemented with top-tier data like the US ISM and Friday’s monthly non-farm payrolls report. Another wave of quarterly earnings from the largest economies in the world will top this off, leaving even the hungriest of market players satisfied.

The first trading week of May features these scheduled economic data releases and events:

Monday, May 1

May Day holiday: UK, France & China
USD: ISM manufacturing

Tuesday, May 2

AUD: RBA rate decision
EUR: CPI, Eurozone S&P Global manufacturing PMI
GBP: UK S&P Global manufacturing PMI
USD: US factory orders, revised durable goods

Wednesday, May 3

AUD: Australia retail sales
NZD: RBNZ financial stability report
EUR: Eurozone unemployment
USD: Fed rate decision, US ADP payrolls data

Thursday, May 4

CNH: China Caixin manufacturing PMI
EUR: ECB rate decision
USD: US initial jobless claims
NQ100_m: Apple Inc (after US markets close)

Friday, May 5

CNH: China Caixin services PMI
EUR: Eurozone retail sales
USD: US April nonfarm payrolls (NFP)

Given the crackerjack list of risk events, investors may feel like a kid in a candy store of volatility and opportunity! Our focus will fall on the world’s most popular traded currency pair which could be heavily influenced by central bank meetings and economic data.

Here are 3 reasons why we’re focusing on the EURUSD for the coming week:

Fed + ECB meeting combo

A central bank combo featuring the Fed and ECB could spark explosive levels of volatility on the EURUSD.

Markets widely expect the Federal Reserve to raise interest rates by 25 basis points on Wednesday, taking the upper band of the Fed funds rates to 5.25%. The key question is whether this will be the final hike that marks the end of the Central Bank’s hiking cycle. Given how annual US inflation cooled for a ninth consecutive period in March and economic growth slowed in Q1, this could strengthen the argument for a cut down the road. If the Fed moves along with a dovish hike, dollar weakness could become a dominant theme in the week ahead.

In regards to the ECB, a 25-basis point hike has been penciled for its Thursday meeting. Stabilizing inflationary pressures continue to support expectations around the central bank shifting into lower gear from 50 basis point hikes. It may be wise to keep a close eye on the euro-inflation data for April which could influence May’s policy decision and beyond. If core inflation remains sticky, this could fuel speculation of the ECB hiking into the summer.

Whatever the outcome of both central bank rate decisions, it will certainly impact the EURUSD.

US April nonfarm payrolls

The NFP may provide fresh clues on what actions the Federal Reserve may take beyond May.

Markets expect the US economy to have created 177,000 jobs in April which is less than the prior month while the unemployment rate is seen holding at 3.5%. A stronger-than-expected US jobs report may support expectations around the Fed keeping US interest rates high for longer – boosting the dollar. However, further evidence of weakening US jobs markets may reinforce bets around the Fed pausing rate hikes, before eventually lowering them. Such a scenario is likely to weaken the dollar – pushing the EURUSD higher.

EURUSD ready to breakout?

Euro bulls have struggled to conquer the 1.1075 level on repeated occasions.

Although the trend remains bullish with prices above the 50 and 100-day Simple Moving Average, bears could strike if prices slip below 1.0950. A daily close below this point could signal a decline towards 1.0910 and 1.0845, respectively. Alternatively, a strong breakout above 1.1075 could inspire an incline toward levels not seen since late March 2022 at 1.1150.

Zooming out to the weekly chart, bulls are clearly in the driving seat. A strong weekly close above 1.1075 may signal a move toward the 200-week SMA near 1.1200. If prices dip back under 1.0900, prices may test 1.0754 and 1.0500, respectively.

At the time of writing Bloomberg’s FX model forecasts a 72% chance that EURUSD will trade within the 1.0827 – 1.1153 range over the upcoming week.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Opinions

27 Apr

Cognitive flexibility is essential to navigating a changing world – new research in mice shows how your brain learns new rules

By Vikaas Sohal, University of California, San Francisco and Kathleen Cho, Inserm

Being flexible and learning to adapt when the world changes is something you practice every day. Whether you run into a new construction site and have to reroute your commute or download a new streaming app and have to relearn how to find your favorite show, changing familiar behaviors in response to new situations is an essential skill.

To make these adaptations, your brain changes its activity patterns within a structure called the prefrontal cortex – an area of the brain critical for cognitive functions such as attention, planning and decision-making. But which specific circuits “tell” the prefrontal cortex to update its activity patterns in order to change behavior have been unknown.

The prefrontal cortex of the brain is involved in executive functions like self-control and decision-making.

We are a team of neuroscientists who study how the brain processes information and what happens when this function is impaired. In our newly published research, we discovered a special class of neurons in the prefrontal cortex that may enable flexible behavior and, when they malfunction, may lead to conditions such as schizophrenia and bipolar disorder.

Inhibitory neurons and learning new rules

Inhibitory neurons dampen the activity of other neurons in the brain. Researchers have traditionally assumed they send their electrical and chemical outputs only to nearby neurons. However, we found a particular class of inhibitory neurons in the prefrontal cortex that communicate across long distances to neurons in the opposite hemisphere of the brain.

We wondered whether these long-range inhibitory connections are involved in coordinating changes in activity patterns across the left and right prefrontal cortex. By doing so, they might provide the critical signals that help you change your behavior at the right moment.

Microscopy image of an interneuron — Interneurons connect other neurons together.
NICHD/McBain Laboratory via Flickr, CC BY-NC-ND

To test the function of these long-range inhibitory connections, we observed mice performing a task that required them to learn a rule to receive a reward and then later adapt to a new rule in order to continue receiving the reward. In this task, mice dug in bowls to find hidden food. Initially, the smell of garlic or the presence of sand within a bowl might indicate the location of the hidden food. The specific cue associated with the reward would later change, forcing the mice to learn a new rule.

We found that silencing the long-range inhibitory connections between the left and right prefrontal cortex caused the mice to get stuck, or perseverate, on one rule and prevented them from learning new ones. They were unable to change gears and learn that the old cue was now meaningless and the new cue signaled food.

Brain waves and flexible behavior

We also made surprising discoveries about how these long-range inhibitory connections create behavioral flexibility. Specifically, they synchronize a set of “brain waves” called gamma oscillations across the two hemispheres. Gamma oscillations are rhythmic fluctuations in brain activity that occur roughly 40 times per second. These fluctuations can be detected during many cognitive functions, such as when performing a task that requires holding information in your memory or making different movements based on what you see on a computer screen.

Though scientists have observed the presence of gamma oscillations for many decades, their function has been controversial. Many researchers think that the synchronization of these rhythmic fluctuations across different brain regions doesn’t serve any useful purpose. Others have speculated that synchronization across different brain regions enhances communication between those regions.

Fluctuations in neural activity manifest as brain waves, or neural oscillations.

We found a completely different potential role for gamma synchrony. When long-range inhibitory connections synchronize gamma oscillations across the left and right prefrontal cortex, they seem to also gate communication between them. When mice learn to disregard a previously established rule that no longer leads to a reward, these connections synchronize gamma oscillations and seem to stop one hemisphere from maintaining unneeded activity patterns in the other. In other words, long-range inhibitory connections seem to stop input from one hemisphere from “getting in the way” of the other when it is trying to learn something new.

For example, the left prefrontal cortex can “remind” the right prefrontal cortex about your usual route to work. But when long-range inhibitory connections synchronize these two areas, they also seem to shut off these reminders and enable new patterns of brain activity corresponding to your new commute to take hold.

Finally, these long-range inhibitory connections also trigger long-lasting effects. Shutting off these connections just once caused mice to have trouble learning new rules several days later. Conversely, rhythmically stimulating these connections to artificially synchronize gamma oscillations can reverse these deficits and restore normal learning.

Cognitive flexibility and schizophrenia

Long-range inhibitory connections play an important role in cognitive flexibility. The inability to appropriately update previously learned rules is one hallmark form of cognitive impairment in psychiatric conditions such as schizophrenia and bipolar disorder.

Research has also seen deficiencies in gamma synchronization and abnormalities in a class of prefrontal inhibitory neurons, which includes the ones we studied, in people with schizophrenia. In this context, our study suggests that treatments that target these long-range inhibitory connections may help improve cognition in people with schizophrenia by synchronizing gamma oscillations.

Many details of how these connections affect brain circuits remain unknown. For example, we do not know exactly which cells within the prefrontal cortex receive input from these long-range inhibitory connections and change their activity patterns to learn new rules. We also do not know whether there are specific molecular pathways that produce the long-lasting changes in neural activity. Answering these questions could reveal how the brain flexibly switches between maintaining and updating old information and potentially lead to new treatments for schizophrenia and other psychiatric conditions.

About the Author:

Vikaas Sohal, Professor of Psychiatry, University of California, San Francisco and Kathleen Cho, Principal Investigator in Neuroscience, Inserm

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions

26 Apr

What are stock buybacks, which critics are blaming for hastening Bed Bath & Beyond’s bankruptcy? A finance professor explains

By D. Brian Blank, Mississippi State University

Bed Bath & Beyond filed for bankruptcy on April 23, 2023, and some analysts are blaming the billions of dollars the retailer spent on share buybacks as one of the reasons for its downfall. In total, the company has spent nearly US$12 billion buying back its own stock since 2005, including $1 billion in 2021 alone – cash that could have potentially helped stave off bankruptcy.

Bed Bath & Beyond is hardly alone in snapping up its own stock. Companies have been buying back record amounts of their own shares in recent years, which prompted President Joe Biden to propose quadrupling the tax on buybacks to 4%.

But what are stock buybacks, and why do some people consider them to be a bad thing? The Conversation tapped D. Brian Blank, who studies company financial decision-making at Mississippi State University, to fill us in.

1. What are stock buybacks?

Before we can answer that question, first we need to understand the basics of how stock works.

Stock represents an ownership interest in a company, such that stockholders have a stake in the business. Companies use stock as one way to raise capital by selling their shares to investors, usually in an initial public offering.

Most stockholders, however, obtain stock by buying it on a secondary market, like the New York Stock Exchange. In this case, one person chooses to sell their ownership in the company, while another person buys it.

As partial owners, shareholders see the value of their stock rise when the company does well.

One way investors can benefit from holding the stock is that some corporations pay dividends, which are payments made directly to shareholders. Another way that stockholders can benefit is by selling the stock for more than they paid for it. Together, this creates a return on investment.

And this brings us to share buybacks – and why investors like them.

2. Why do companies buy back their own stock?

When companies have extra capital, they might go into the secondary market and buy back stock from investors. This is often referred to as a stock repurchase or buyback program. Companies that are older and less focused on rapid growth tend to do them more often.

Companies do this for a variety of reasons, such as because they think their shares are undervalued and want to signal optimism to Wall Street, or because they simply want another way to distribute profits to shareholders – a key goal of any company – other than through dividends.

Shareholders like buybacks because companies often pay a premium over market price. And when companies buy their own stock, this removes those shares from the market, which has the effect of lifting share prices as supply goes down, benefiting existing stockholders.

It’s estimated that American companies bought back a record $1 trillion of their own stock in 2022. And Apple is the biggest user of buybacks, having spent $557 billion over the past decade repurchasing its own shares.

3. Why do Biden and others dislike buybacks?

Critics like Biden contend that share buybacks represent short-term thinking that doesn’t actually create any real value. They argue instead that companies should use more of their profits to invest in more productive activities like business operations, innovation or employees.

Returning money that a company makes to stockholders does mean less capital is available for other investments. In his speech, Biden specifically called out “Big Oil” companies for using the record profits they’ve earned from high energy prices to buy back their stock rather than investing in new wells to increase supply – and help reduce gas prices.

But the decision whether to invest to increase domestic production is a complicated one. For example, the reason companies aren’t investing in new wells right now is not simply because they are buying back stock. The reason has more to do with how oil companies, and their shareholders, don’t think it is profitable to invest in more supply for a whole host of reasons, including the global push for greener energy by both policymakers and consumers, which is bound to reduce demand for fossil fuels in the future.

It’s also worth noting that while share repurchases are becoming increasingly common and controversial, they remain very similar to dividends, which don’t prompt the same concerns among politicians.

4. Would increasing the tax result in fewer buybacks?

The 1% tax on buybacks is actually brand new.

Congress passed the tax in 2022 as part of the Inflation Reduction Act. It took effect at the beginning of 2023 and only affects buyback programs of $1 million or more.

Usually when an activity is taxed, it happens less frequently. So, I expect the tax to nudge companies to spend less on buybacks and more elsewhere. While politicians intend more of the money to be used to invest in their productive capacity, companies may simply spend more on paying shareholders dividends.

Since the tax is new, it’s hard to evaluate its actual impact. Companies reportedly accelerated their repurchase programs in 2022 to avoid paying the tax.

But early data from 2023 suggests the 1% tax isn’t significantly deterring buybacks. Companies announced $132 billion in buybacks in January, three times as much as a year earlier and the most for the month on record.

Biden’s proposal to boost the tax to 4% may alter corporate behavior more. But again, it may just lead to greater dividend payments, not the other types of investments he and others hope for.

In addition, given that Republicans control the House, and Democrats have only a narrow majority in the Senate, this proposal has little chance of becoming law anytime soon.

The reasons why large corporations make the decisions they do about where to allocate capital – whether to build a factory, hire more workers or buy back stock – are complicated and, in my view, never taken lightly. These decisions have many facets and implications, and are not necessarily bad. I believe this is something worth remembering the next time you hear politicians saying “corporations should do the right thing.”

This is an updated version of an article originally published on Feb. 10, 2023.

About the Author:

D. Brian Blank, Assistant Professor of Finance, Mississippi State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Stock Market News

25 Apr

Global shipping is under pressure to stop its heavy fuel oil use fast – that’s not simple, but changes are coming

By Don Maier, University of Tennessee

Most of the clothing and gadgets you buy in stores today were once in shipping containers, sailing across the ocean. Ships carry over 80% of the world’s traded goods. But they have a problem – the majority of them burn heavy sulfur fuel oil, which is a driver of climate change.

While cargo ships’ engines have become more efficient over time, the industry is under growing pressure to eliminate its carbon footprint.

The European Union Parliament this year voted to require an 80% drop in shipping fuels’ greenhouse gas intensity by 2050 and to require shipping lines to pay for the greenhouse gases their ships release. The International Maritime Organization, the United Nations agency that regulates international shipping, also plans to strengthen its climate strategy this summer. The IMO’s current goal is to cut shipping emissions 50% by 2050. President Joe Biden said on April 20, 2023, that the U.S. would push for a new international goal of zero emissions by 2050 instead.

We asked maritime industry researcher Don Maier if the industry can meet those tougher targets.

Why is it so hard for shipping to transition away from fossil fuels?

Economics and the lifespan of ships are two primary reasons.

Most of the big shippers’ fleets are less than 20 years old, but even the newer builds don’t necessarily have the most advanced technology. It takes roughly a year and a half to come out with a new build of a ship, and it will still be based on technology from a few years ago. So, most of the engines still run on fossil fuel oil.

If companies do buy ships that run on alternative fuels, such as hydrogen, methanol and ammonia, they run into another challenge: There are only a few ports so far with the infrastructure to provide those fuels. Without a way to refuel at all the ports that a ship might use, companies will lose their return on investment, so they will keep using the same technology instead.

It isn’t necessarily that the maritime industry doesn’t want to go the direction of cleaner fuels. But their assets – their fleets – were purchased with a long lifespan in mind, and alternative fuels aren’t yet widely available.

Ships are being built that can run on liquefied natural gas (LNG) and methanol, and even hydrogen is coming online. Often these are dual-fuel – ships that can run on either alternative fuels or fossil fuels. But so far, not enough of this type of ship is being ordered for the costs to make financial sense for most builders or buyers.

The costs of alternative fuels, like methanol and hydrogen fuels made with renewable energy (as opposed to being made with natural gas), are also still significantly higher than fuel oil or LNG. But the good news is those costs are starting to decline. As production ramps up, emissions will drop further.

Can tougher regulations and carbon pricing effectively push the industry to change?

A little bit of pressure on the industry can be helpful, but too much, too fast can really make things more disruptive.

Like most industries, shipping lines want standardized rules they can count on not to change next year. Some of these companies have invested millions of dollars in new ships in recent years, and they’re now being told that those ships might not meet the new standards – even though the ships may be almost brand new.

Another concern with the EU’s moves is whether it has a grasp on all the “what if” scenarios. For example, if the EU has stricter rules than other countries, that affects which ships companies can use on European routes. Any vessels that they put on routes to Europe will have to meet those emissions standards. If there’s a greater demand for products in Europe, they may have fewer vessels they could use.

Press the play button or zoom out and use the filters to see where different ship types travel. Created by London-based data visualization studio Kiln and the UCL Energy Institute

I do think the change will be coming soon in the industry, but changes have to make financial sense to the shipping lines and their customers, too.

Economists have estimated that the cost of cutting emissions 50% by 2050 are anywhere from US$1 trillion to, more realistically, over $3 trillion, and full decarbonization would be even higher. Many of those costs will be passed down to charterers, shippers and eventually consumers – meaning you and me.

Are there ways companies can cut emissions now while preparing to upgrade their fleets?

There are a number of options ship companies are using now to lower emissions.

One that has been used for at least 10 years is putting higher quality paint on the hulls, which reduces the friction between the hull and the water. With less friction, the engine isn’t working as hard, which reduces emissions.

Another is slow speed. If ships run at a higher speed, their engines work harder, which means they use more fuel and release more emissions. So shippers will use slow steaming. Most of the time, ships will go slow when they’re close to shore to reduce emissions that cause smog in port cities like Los Angeles. On the open ocean, they will go back to normal speed.

Another option common in the U.S. and Europe is shutting down the ship’s engines while in port and plugging into the port’s electricity. It’s called “cold ironing.” It avoids burning more of the ship’s fuel, which affects air quality. The Ports of Los Angeles and Long Beach, where smog from idling ships has been a health concern, have been a big driver of electrification. It’s also less expensive for shipping companies than burning their fuel while in port.

As simple as those may sound, they have made huge improvements in terms of emissions, but they aren’t enough on their own.

Will a higher goal set by the IMO be enough to pressure the industry to change?

I used to work in shipping, and I know the maritime industry is a very old-school industry from centuries ago. But the industry has invested millions in new ships with the most effective technology available in recent years.

When the IMO began requiring all ships using heavy fuel in global trade to shift to low-sulfur fuel, the industry pivoted to meet the rule, even though retrofits were costly and time consuming. Many shipping lines complied by installing “scrubbers” that essentially filter the ship’s engine, and new ships were built to run on the low-sulfur fuel oil.

Now, the industry is being told the standards are changing again.

All industries want consistency so they can be confident investing in a new technology. The shipping lines will follow what the IMO says. They will push back, but they will still do it. That’s in part because the IMO supports the maritime industry, too.

About the Author:

Don Maier, Associate Professor of Business, University of Tennessee

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions

23 Apr

Currency Speculators trim US Dollar Index bets to lowest level in 93-weeks

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 18th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Canadian Dollar & British Pound

The COT currency market speculator bets were higher this week as eight out of the eleven currency markets we cover had higher positioning while the other three markets had lower speculator contracts.

Leading the gains for the currency markets was the Canadian Dollar (10,346 contracts) with the British Pound (3,700 contracts), the Swiss Franc (2,014 contracts), the EuroFX (1,023 contracts), Brazilian Real (651 contracts), Bitcoin (633 contracts), New Zealand Dollar (577 contracts) and the Japanese Yen (338 contracts) also recording positive weeks.

The currencies seeing declines in speculator bets on the week were the Mexican Peso (-4,306 contracts) with the Australian Dollar (-4,419 contracts) and the US Dollar Index (-2,751 contracts) also seeing lower bets on the week.

Speculators reduce US Dollar Index bets to lowest level in 93-weeks

Highlighting the COT currency’s data this week is the increased bearishness of the speculator’s positioning in the US Dollar Index.

Large speculative US Dollar Index positions fell this week for a second consecutive week and for the third time in the past four weeks. Speculators have now subtracted a total of -3,631 net contracts from the overall position over the last four weeks. This bearishness has pushed the US Dollar Index speculator net position (currently at +10,513 contracts) to the lowest level of the past 93 weeks, dating back to July 6th of 2021.

Overall, the US Dollar speculator position has been in bullish territory dating back to June 29th of 2021 with the most bullish point of the cycle taking place on June 21st of 2022 with a high of +45,010 contracts. Since then, speculator positions have slowly eroded and have now been under the +20,000 net contract level for the past 18 weeks in a row.

The US Dollar Index futures price has been on the defensive as well with this week being the first weekly advance over the past eight weeks. The front-month futures price closed this week around 101.50 and is down around 4 percent since February while also being down over 10 percent since October.

Data Snapshot of Forex Market Traders | Columns Legend

Apr-18-2023	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
USD Index	34,865	34	10,513	42	-11,955	57	1,442	32
EUR	766,374	80	164,361	82	-213,285	18	48,924	57
GBP	224,536	52	1,302	70	-7,995	29	6,693	71
JPY	177,507	33	-56,869	34	61,645	66	-4,776	44
CHF	40,870	38	-4,720	42	3,386	51	1,334	62
CAD	148,638	29	-46,233	11	42,194	85	4,039	32
AUD	159,708	57	-42,356	46	50,557	57	-8,201	32
NZD	33,377	16	-3,904	43	3,717	55	187	54
MXN	267,698	61	56,171	91	-60,884	10	4,713	85
RUB	20,930	4	7,543	31	-7,150	69	-393	24
BRL	51,883	42	13,596	53	-14,778	46	1,182	53
Bitcoin	15,385	76	-489	68	-176	0	665	28

Strength Scores led by Mexican Peso & EuroFX

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Mexican Peso (91 percent) and the EuroFX (82 percent) lead the currency markets this week. The British Pound (70 percent), Bitcoin (68 percent) and the Brazilian Real (53 percent) come in as the next highest in the weekly strength scores.

On the downside, the Canadian Dollar (11 percent) comes in at the lowest strength levels currently and is in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
US Dollar Index (42.5 percent) vs US Dollar Index previous week (47.1 percent)
EuroFX (81.7 percent) vs EuroFX previous week (81.3 percent)
British Pound Sterling (70.1 percent) vs British Pound Sterling previous week (67.0 percent)
Japanese Yen (33.9 percent) vs Japanese Yen previous week (33.6 percent)
Swiss Franc (42.1 percent) vs Swiss Franc previous week (36.8 percent)
Canadian Dollar (11.4 percent) vs Canadian Dollar previous week (1.8 percent)
Australian Dollar (45.6 percent) vs Australian Dollar previous week (49.7 percent)
New Zealand Dollar (43.0 percent) vs New Zealand Dollar previous week (41.4 percent)
Mexican Peso (91.1 percent) vs Mexican Peso previous week (94.4 percent)
Brazilian Real (53.1 percent) vs Brazilian Real previous week (52.3 percent)
Bitcoin (68.4 percent) vs Bitcoin previous week (57.4 percent)

Mexican Peso & British Pound top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Mexican Peso (66 percent) and the British Pound (16 percent) lead the past six weeks trends for the currencies. The Japanese Yen (11 percent), the EuroFX (6 percent) and the Swiss Franc (-2 percent) are the next highest positive movers in the latest trends data.

The New Zealand Dollar (-26 percent) leads the downside trend scores currently with the Brazilian Real (-21 percent), Australian Dollar (-16 percent) and the Canadian Dollar (-16 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (-3.4 percent) vs US Dollar Index previous week (2.3 percent)
EuroFX (6.1 percent) vs EuroFX previous week (0.4 percent)
British Pound Sterling (16.1 percent) vs British Pound Sterling previous week (18.3 percent)
Japanese Yen (11.4 percent) vs Japanese Yen previous week (0.9 percent)
Swiss Franc (-2.0 percent) vs Swiss Franc previous week (-4.8 percent)
Canadian Dollar (-15.9 percent) vs Canadian Dollar previous week (-19.1 percent)
Australian Dollar (-16.3 percent) vs Australian Dollar previous week (-12.8 percent)
New Zealand Dollar (-25.8 percent) vs New Zealand Dollar previous week (-31.4 percent)
Mexican Peso (66.2 percent) vs Mexican Peso previous week (72.5 percent)
Brazilian Real (-21.0 percent) vs Brazilian Real previous week (-24.0 percent)
Bitcoin (-9.2 percent) vs Bitcoin previous week (-9.1 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

The US Dollar Index large speculator standing this week reached a net position of 10,513 contracts in the data reported through Tuesday. This was a weekly decrease of -2,751 contracts from the previous week which had a total of 13,264 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 42.5 percent. The commercials are Bullish with a score of 56.8 percent and the small traders (not shown in chart) are Bearish with a score of 32.3 percent.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	72.3	9.7	14.2
– Percent of Open Interest Shorts:	42.1	44.0	10.0
– Net Position:	10,513	-11,955	1,442
– Gross Longs:	25,192	3,371	4,940
– Gross Shorts:	14,679	15,326	3,498
– Long to Short Ratio:	1.7 to 1	0.2 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	42.5	56.8	32.3
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-3.4	5.8	-17.9

Euro Currency Futures:

The Euro Currency large speculator standing this week reached a net position of 164,361 contracts in the data reported through Tuesday. This was a weekly rise of 1,023 contracts from the previous week which had a total of 163,338 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 81.7 percent. The commercials are Bearish-Extreme with a score of 18.4 percent and the small traders (not shown in chart) are Bullish with a score of 57.0 percent.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	31.6	54.5	11.8
– Percent of Open Interest Shorts:	10.2	82.3	5.4
– Net Position:	164,361	-213,285	48,924
– Gross Longs:	242,369	417,586	90,436
– Gross Shorts:	78,008	630,871	41,512
– Long to Short Ratio:	3.1 to 1	0.7 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	81.7	18.4	57.0
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	6.1	-3.6	-8.4

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week reached a net position of 1,302 contracts in the data reported through Tuesday. This was a weekly rise of 3,700 contracts from the previous week which had a total of -2,398 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 70.1 percent. The commercials are Bearish with a score of 28.7 percent and the small traders (not shown in chart) are Bullish with a score of 71.1 percent.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	24.0	56.9	13.7
– Percent of Open Interest Shorts:	23.4	60.4	10.7
– Net Position:	1,302	-7,995	6,693
– Gross Longs:	53,834	127,731	30,745
– Gross Shorts:	52,532	135,726	24,052
– Long to Short Ratio:	1.0 to 1	0.9 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	70.1	28.7	71.1
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	16.1	-28.5	45.5

Japanese Yen Futures:

The Japanese Yen large speculator standing this week reached a net position of -56,869 contracts in the data reported through Tuesday. This was a weekly lift of 338 contracts from the previous week which had a total of -57,207 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 33.9 percent. The commercials are Bullish with a score of 65.7 percent and the small traders (not shown in chart) are Bearish with a score of 43.7 percent.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	8.8	74.8	15.3
– Percent of Open Interest Shorts:	40.9	40.1	18.0
– Net Position:	-56,869	61,645	-4,776
– Gross Longs:	15,661	132,747	27,108
– Gross Shorts:	72,530	71,102	31,884
– Long to Short Ratio:	0.2 to 1	1.9 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	33.9	65.7	43.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	11.4	-13.6	19.3

Swiss Franc Futures:

The Swiss Franc large speculator standing this week reached a net position of -4,720 contracts in the data reported through Tuesday. This was a weekly advance of 2,014 contracts from the previous week which had a total of -6,734 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 42.1 percent. The commercials are Bullish with a score of 50.6 percent and the small traders (not shown in chart) are Bullish with a score of 62.0 percent.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	13.1	44.4	37.2
– Percent of Open Interest Shorts:	24.6	36.1	33.9
– Net Position:	-4,720	3,386	1,334
– Gross Longs:	5,347	18,138	15,185
– Gross Shorts:	10,067	14,752	13,851
– Long to Short Ratio:	0.5 to 1	1.2 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	42.1	50.6	62.0
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-2.0	-18.9	41.4

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week reached a net position of -46,233 contracts in the data reported through Tuesday. This was a weekly rise of 10,346 contracts from the previous week which had a total of -56,579 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 11.4 percent. The commercials are Bullish-Extreme with a score of 84.9 percent and the small traders (not shown in chart) are Bearish with a score of 31.8 percent.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	12.0	64.9	21.9
– Percent of Open Interest Shorts:	43.1	36.5	19.2
– Net Position:	-46,233	42,194	4,039
– Gross Longs:	17,806	96,421	32,592
– Gross Shorts:	64,039	54,227	28,553
– Long to Short Ratio:	0.3 to 1	1.8 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	11.4	84.9	31.8
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-15.9	1.9	31.8

Australian Dollar Futures:

The Australian Dollar large speculator standing this week reached a net position of -42,356 contracts in the data reported through Tuesday. This was a weekly decline of -4,419 contracts from the previous week which had a total of -37,937 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 45.6 percent. The commercials are Bullish with a score of 56.6 percent and the small traders (not shown in chart) are Bearish with a score of 32.4 percent.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	27.9	55.5	12.8
– Percent of Open Interest Shorts:	54.5	23.8	18.0
– Net Position:	-42,356	50,557	-8,201
– Gross Longs:	44,610	88,628	20,500
– Gross Shorts:	86,966	38,071	28,701
– Long to Short Ratio:	0.5 to 1	2.3 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	45.6	56.6	32.4
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-16.3	10.9	7.3

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week reached a net position of -3,904 contracts in the data reported through Tuesday. This was a weekly lift of 577 contracts from the previous week which had a total of -4,481 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 43.0 percent. The commercials are Bullish with a score of 55.3 percent and the small traders (not shown in chart) are Bullish with a score of 53.8 percent.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.6	55.3	11.3
– Percent of Open Interest Shorts:	44.3	44.2	10.7
– Net Position:	-3,904	3,717	187
– Gross Longs:	10,876	18,474	3,757
– Gross Shorts:	14,780	14,757	3,570
– Long to Short Ratio:	0.7 to 1	1.3 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	43.0	55.3	53.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-25.8	17.7	23.3

Mexican Peso Futures:

The Mexican Peso large speculator standing this week reached a net position of 56,171 contracts in the data reported through Tuesday. This was a weekly decline of -4,306 contracts from the previous week which had a total of 60,477 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 91.1 percent. The commercials are Bearish-Extreme with a score of 9.8 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 85.5 percent.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	52.0	45.0	2.7
– Percent of Open Interest Shorts:	31.0	67.7	1.0
– Net Position:	56,171	-60,884	4,713
– Gross Longs:	139,289	120,371	7,352
– Gross Shorts:	83,118	181,255	2,639
– Long to Short Ratio:	1.7 to 1	0.7 to 1	2.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	91.1	9.8	85.5
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	66.2	-61.5	-8.5

Brazilian Real Futures:

The Brazilian Real large speculator standing this week reached a net position of 13,596 contracts in the data reported through Tuesday. This was a weekly gain of 651 contracts from the previous week which had a total of 12,945 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 53.1 percent. The commercials are Bearish with a score of 46.5 percent and the small traders (not shown in chart) are Bullish with a score of 53.4 percent.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	73.2	18.1	8.7
– Percent of Open Interest Shorts:	47.0	46.5	6.4
– Net Position:	13,596	-14,778	1,182
– Gross Longs:	37,991	9,365	4,527
– Gross Shorts:	24,395	24,143	3,345
– Long to Short Ratio:	1.6 to 1	0.4 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	53.1	46.5	53.4
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-21.0	22.7	-15.4

Bitcoin Futures:

The Bitcoin large speculator standing this week reached a net position of -489 contracts in the data reported through Tuesday. This was a weekly lift of 633 contracts from the previous week which had a total of -1,122 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 68.4 percent. The commercials are Bullish with a score of 51.2 percent and the small traders (not shown in chart) are Bearish with a score of 28.1 percent.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	75.6	3.4	8.9
– Percent of Open Interest Shorts:	78.8	4.5	4.6
– Net Position:	-489	-176	665
– Gross Longs:	11,629	517	1,368
– Gross Shorts:	12,118	693	703
– Long to Short Ratio:	1.0 to 1	0.7 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	68.4	51.2	28.1
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-9.2	-1.1	12.6

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions

23 Apr

Bonds Speculators drop their 10-Year Treasury bets to a 237-week low

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) reports data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 18th and shows a quick view of how large traders (for-profit speculators and commercial hedgers) were positioned in the futures markets.

Weekly Speculator Changes led by 5-Year Bonds & Eurodollar

The COT bond market speculator bets were higher this week as five out of the nine bond markets we cover had higher positioning while the other four markets had lower speculator contracts.

Leading the gains for the bond markets was the Eurodollar (598,254 contracts) which, as noted last week, is being phased out and replaced by the Secured Overnight Financing Rate (SOFR 3-Months) contracts. The rise in Eurodollar bets was due to traders closing out their bearish positions while the SOFR 3-Months contracts saw a similar rise in bearish contracts this week.

The other markets with gains this week were the Fed Funds (48,557 contracts), the US Treasury Bonds (15,656 contracts), the 5-Year Bonds (7,479 contracts) and the Ultra Treasury Bonds (277 contracts) also showing positive weeks.

The bond markets with declines in speculator bets for the week were the SOFR 3-Months (-466,948 contracts) with the 2-Year Bonds (-78,073 contracts), the 10-Year Bonds (-41,044 contracts) and the Ultra 10-Year Bonds (-9,612 contracts) also registering lower bets on the week.

10-Year Bond Speculators drop bets to 237-week low

Highlighting the COT bond’s data this week is the weakness in the 10-Year Bonds speculator net contracts. Large speculative 10-Year Bond positions fell this week by over -40,000 net contracts and have declined for three straight weeks as well as in four out of the past five weeks. The 10-Year Bond net position has now seen a total of -172,715 contracts added to the existing bearish standing over this past five week period.

The 10-Year positions have now fallen (currently at -680,081 contracts) to the most bearish level since October 2nd of 2018, a span of 237 weeks from when the net position totaled -740,192 contracts.

Overall, the 10-Year speculator net positions have now been in a continuous bearish level for 80 straight weeks, dating back to October 12th of 2021 when the net position flipped from bullish to bearish. Since that time, the net position has steadily increased in bearishness (save for a couple of short pullbacks) as the sentiment for bonds has been decimated due to the US Federal Reserve raising their benchmark interest rate (to fight inflation). Despite the current outlook (Fed Rate Tool) that the Federal Reserve will likely only raise the interest rate one more time in May, speculators have continued to raise their bearish bets for the 10-Year.

The 10-Year front-month futures price, meanwhile, has not dropped back to the lowest levels of this cycle. The price closed at 114.15 this week and is almost 5 percent higher than the lows of October when prices dropped to the 108 levels.

Data Snapshot of Bond Market Traders | Columns Legend

Apr-18-2023	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
Eurodollar	603,310	0	-51,231	73	47,522	23	3,709	100
FedFunds	1,728,594	66	-118,719	25	130,563	76	-11,844	68
2-Year	2,642,314	78	-574,914	16	520,558	81	54,356	82
Long T-Bond	1,185,802	54	-116,928	47	46,235	27	70,693	100
10-Year	4,393,559	92	-680,081	0	638,740	90	41,341	94
5-Year	4,472,642	99	-754,502	3	716,633	93	37,869	91

Strength Scores led by Eurodollar & US Treasury Bonds

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Eurodollar (73 percent) and the US Treasury Bonds (47 percent) lead the bond markets this week. The SOFR 3-Months (44 percent) comes in as the next highest in the weekly strength scores.

On the downside, the Ultra 10-Year Bonds (0 percent), the 10-Year Bonds (0 percent), the 5-Year Bonds (3 percent) and the 2-Year Bonds (16 percent) come in at the lowest strength level currently and are all in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
Fed Funds (25.0 percent) vs Fed Funds previous week (19.0 percent)
2-Year Bond (15.5 percent) vs 2-Year Bond previous week (25.5 percent)
5-Year Bond (3.0 percent) vs 5-Year Bond previous week (2.2 percent)
10-Year Bond (0.0 percent) vs 10-Year Bond previous week (4.8 percent)
Ultra 10-Year Bond (0.0 percent) vs Ultra 10-Year Bond previous week (2.0 percent)
US Treasury Bond (46.5 percent) vs US Treasury Bond previous week (41.4 percent)
Ultra US Treasury Bond (19.1 percent) vs Ultra US Treasury Bond previous week (19.0 percent)
Eurodollar (72.7 percent) vs Eurodollar previous week (57.4 percent)
SOFR 3-Months (43.8 percent) vs SOFR 3-Months previous week (81.6 percent)

SOFR 3-Months & Eurodollar top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the SOFR 3-Months (44 percent) and the Eurodollar (23 percent) lead the past six weeks trends for bonds. The US Treasury Bonds (18 percent) and are the next highest positive movers in the latest trends data.

The 10-Year Bonds (-14 percent) and the 5-Year Bonds (-11 percent) lead the downside trend scores currently with the Ultra 10-Year Bonds (-3 percent) following next with lower trend scores.

Strength Trend Statistics:
Fed Funds (15.2 percent) vs Fed Funds previous week (0.5 percent)
2-Year Bond (5.5 percent) vs 2-Year Bond previous week (20.4 percent)
5-Year Bond (-11.2 percent) vs 5-Year Bond previous week (-12.4 percent)
10-Year Bond (-14.4 percent) vs 10-Year Bond previous week (-1.3 percent)
Ultra 10-Year Bond (-3.0 percent) vs Ultra 10-Year Bond previous week (1.1 percent)
US Treasury Bond (18.3 percent) vs US Treasury Bond previous week (14.4 percent)
Ultra US Treasury Bond (11.3 percent) vs Ultra US Treasury Bond previous week (9.9 percent)
Eurodollar (23.1 percent) vs Eurodollar previous week (9.0 percent)
SOFR 3-Months (43.8 percent) vs SOFR 3-Months previous week (54.2 percent)

Individual Bond Markets:

3-Month Eurodollars Futures:

The 3-Month Eurodollars large speculator standing this week reached a net position of -51,231 contracts in the data reported through Tuesday. This was a weekly lift of 598,254 contracts from the previous week which had a total of -649,485 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 72.7 percent. The commercials are Bearish with a score of 22.9 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 100.0 percent.

3-Month Eurodollars Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	26.3	60.6	11.1
– Percent of Open Interest Shorts:	34.8	52.7	10.5
– Net Position:	-51,231	47,522	3,709
– Gross Longs:	158,876	365,308	67,086
– Gross Shorts:	210,107	317,786	63,377
– Long to Short Ratio:	0.8 to 1	1.1 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	72.7	22.9	100.0
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	23.1	-27.2	52.0

Secured Overnight Financing Rate (3-Month) Futures:

The Secured Overnight Financing Rate (3-Month) large speculator standing this week reached a net position of -626,388 contracts in the data reported through Tuesday. This was a weekly lowering of -466,948 contracts from the previous week which had a total of -159,440 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 43.8 percent. The commercials are Bullish with a score of 56.3 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 87.0 percent.

SOFR 3-Months Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	13.9	65.0	0.6
– Percent of Open Interest Shorts:	20.5	58.3	0.6
– Net Position:	-626,388	627,991	-1,603
– Gross Longs:	1,301,626	6,103,493	54,601
– Gross Shorts:	1,928,014	5,475,502	56,204
– Long to Short Ratio:	0.7 to 1	1.1 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	43.8	56.3	87.0
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	43.8	-43.7	-0.3

30-Day Federal Funds Futures:

The 30-Day Federal Funds large speculator standing this week reached a net position of -118,719 contracts in the data reported through Tuesday. This was a weekly rise of 48,557 contracts from the previous week which had a total of -167,276 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.0 percent. The commercials are Bullish with a score of 75.7 percent and the small traders (not shown in chart) are Bullish with a score of 67.8 percent.

30-Day Federal Funds Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	4.1	79.7	2.4
– Percent of Open Interest Shorts:	11.0	72.2	3.0
– Net Position:	-118,719	130,563	-11,844
– Gross Longs:	70,694	1,377,903	40,832
– Gross Shorts:	189,413	1,247,340	52,676
– Long to Short Ratio:	0.4 to 1	1.1 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	25.0	75.7	67.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	15.2	-15.2	3.8

2-Year Treasury Note Futures:

The 2-Year Treasury Note large speculator standing this week reached a net position of -574,914 contracts in the data reported through Tuesday. This was a weekly decrease of -78,073 contracts from the previous week which had a total of -496,841 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 15.5 percent. The commercials are Bullish-Extreme with a score of 80.6 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 81.8 percent.

2-Year Treasury Note Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	8.6	82.2	8.4
– Percent of Open Interest Shorts:	30.4	62.5	6.3
– Net Position:	-574,914	520,558	54,356
– Gross Longs:	227,652	2,173,300	221,790
– Gross Shorts:	802,566	1,652,742	167,434
– Long to Short Ratio:	0.3 to 1	1.3 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	15.5	80.6	81.8
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	5.5	-11.5	18.1

5-Year Treasury Note Futures:

The 5-Year Treasury Note large speculator standing this week reached a net position of -754,502 contracts in the data reported through Tuesday. This was a weekly lift of 7,479 contracts from the previous week which had a total of -761,981 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 3.0 percent. The commercials are Bullish-Extreme with a score of 93.3 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 91.4 percent.

5-Year Treasury Note Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	6.0	84.4	8.2
– Percent of Open Interest Shorts:	22.9	68.4	7.4
– Net Position:	-754,502	716,633	37,869
– Gross Longs:	270,063	3,775,123	366,773
– Gross Shorts:	1,024,565	3,058,490	328,904
– Long to Short Ratio:	0.3 to 1	1.2 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	3.0	93.3	91.4
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-11.2	-1.9	31.5

10-Year Treasury Note Futures:

The 10-Year Treasury Note large speculator standing this week reached a net position of -680,081 contracts in the data reported through Tuesday. This was a weekly lowering of -41,044 contracts from the previous week which had a total of -639,037 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 90.1 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 93.5 percent.

10-Year Treasury Note Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	10.8	78.3	9.0
– Percent of Open Interest Shorts:	26.2	63.7	8.1
– Net Position:	-680,081	638,740	41,341
– Gross Longs:	473,072	3,439,022	395,955
– Gross Shorts:	1,153,153	2,800,282	354,614
– Long to Short Ratio:	0.4 to 1	1.2 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	0.0	90.1	93.5
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-14.4	-4.1	39.9

Ultra 10-Year Notes Futures:

The Ultra 10-Year Notes large speculator standing this week reached a net position of -206,583 contracts in the data reported through Tuesday. This was a weekly lowering of -9,612 contracts from the previous week which had a total of -196,971 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 95.6 percent and the small traders (not shown in chart) are Bullish with a score of 66.5 percent.

Ultra 10-Year Notes Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	8.7	79.8	10.3
– Percent of Open Interest Shorts:	21.5	62.0	15.3
– Net Position:	-206,583	286,593	-80,010
– Gross Longs:	140,107	1,286,225	166,166
– Gross Shorts:	346,690	999,632	246,176
– Long to Short Ratio:	0.4 to 1	1.3 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	0.0	95.6	66.5
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-3.0	-4.4	20.7

US Treasury Bonds Futures:

The US Treasury Bonds large speculator standing this week reached a net position of -116,928 contracts in the data reported through Tuesday. This was a weekly boost of 15,656 contracts from the previous week which had a total of -132,584 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 46.5 percent. The commercials are Bearish with a score of 27.1 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 100.0 percent.

US Treasury Bonds Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	5.8	79.0	14.8
– Percent of Open Interest Shorts:	15.7	75.1	8.9
– Net Position:	-116,928	46,235	70,693
– Gross Longs:	69,031	936,757	175,995
– Gross Shorts:	185,959	890,522	105,302
– Long to Short Ratio:	0.4 to 1	1.1 to 1	1.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	46.5	27.1	100.0
– Strength Index Reading (3 Year Range):	Bearish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	18.3	-39.8	40.5

Ultra US Treasury Bonds Futures:

The Ultra US Treasury Bonds large speculator standing this week reached a net position of -399,001 contracts in the data reported through Tuesday. This was a weekly gain of 277 contracts from the previous week which had a total of -399,278 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 19.1 percent. The commercials are Bullish with a score of 76.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 91.3 percent.

Ultra US Treasury Bonds Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	5.5	82.5	11.9
– Percent of Open Interest Shorts:	33.5	58.1	8.3
– Net Position:	-399,001	347,521	51,480
– Gross Longs:	78,030	1,176,217	169,143
– Gross Shorts:	477,031	828,696	117,663
– Long to Short Ratio:	0.2 to 1	1.4 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	19.1	76.7	91.3
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	11.3	-23.3	21.9

Article By InvestMacro – Receive our weekly COT Newsletter

Bonds COT Updates Opinions

22 Apr

Soft Commodities Speculators boost Sugar bullish bets for 4th week to 84-week high

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) reports data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 18th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by Soybean Meal & Coffee

The COT soft commodities markets speculator bets were higher this week as six out of the eleven softs markets we cover had higher positioning while the other five markets had lower speculator contracts.

Leading the gains for the softs markets was Soybean Meal (14,357 contracts) with Coffee (12,124 contracts), Sugar (9,384 contracts), Cotton (7,749 contracts), Live Cattle (7,456 contracts) and Corn (2,327 contracts) also showing positive weeks.

The markets with the declines in speculator bets this week were Soybeans (-1,836 contracts) with Lean Hogs (-3,065 contracts), Soybean Oil (-3,095 contracts), Wheat (-3,854 contracts) and Cocoa (-558 contracts) also registering lower bets on the week.

Sugar Speculators boost bullish bets for 4th week to 84-week high

Highlighting the COT soft commodities data this week is the continued bullish strength in the Sugar speculator’s positioning. The large speculator bets for Sugar rose this week for the fourth straight week and for the seventh time out of the past ten weeks. Speculators have added a total of +58,516 contracts to the net position over the past 4-week period.

The bullish sentiment has now pushed the Sugar net speculator positions to their highest level in the past 84-weeks, dating back to September 9th of 2021.

Sugar’s speculator strength score level (a 3-year range of speculator positions, on a 0-100 percent scale) has also increased with a score of 86.5 percent this week and up from a score of 83.3 percent last week. Its 6-week trend of strength scores has increased by 10 percent.

The Sugar futures price has also been flying high and touched its highest level since April of 2012 this week. The Sugar front-month futures price has risen for five consecutive weeks and closed at approximately $24.83 on Friday. Sugar futures are now up by over 40 percent since October.

Data Snapshot of Commodity Market Traders | Columns Legend

Apr-18-2023	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
WTI Crude	1,913,192	46	244,575	21	-273,247	78	28,672	47
Gold	482,254	28	189,893	61	-216,425	40	26,532	46
Silver	158,371	46	26,595	56	-38,656	47	12,061	33
Copper	206,216	47	8,934	36	-16,280	60	7,346	65
Palladium	11,848	82	-5,637	13	6,151	89	-514	11
Platinum	63,794	53	24,319	72	-28,202	35	3,883	20
Natural Gas	1,330,947	74	-139,986	16	111,893	84	28,093	47
Brent	146,384	10	-43,322	20	39,827	80	3,495	56
Heating Oil	260,459	20	8,865	43	-24,987	65	16,122	54
Soybeans	683,161	24	177,510	59	-149,491	45	-28,019	25
Corn	1,319,551	17	105,636	44	-41,244	66	-64,392	14
Coffee	190,253	5	37,001	65	-38,309	38	1,308	28
Sugar	961,060	62	269,172	86	-326,198	10	57,026	78
Wheat	378,531	54	-70,536	2	65,243	95	5,293	98

Strength Scores led by Cocoa & Live Cattle

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that Cocoa (98 percent) and Live Cattle (93 percent) lead the softs markets this week. Sugar (86 percent), Soybean Meal (76 percent) and Coffee (65 percent) come in as the next highest in the weekly strength scores.

On the downside, Lean Hogs (0 percent), Soybean Oil (0 percent), Wheat (2 percent) and the Cotton (12 percent) come in at the lowest strength levels currently and are all in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
Corn (43.5 percent) vs Corn previous week (43.2 percent)
Sugar (86.5 percent) vs Sugar previous week (83.3 percent)
Coffee (65.4 percent) vs Coffee previous week (52.9 percent)
Soybeans (58.9 percent) vs Soybeans previous week (59.6 percent)
Soybean Oil (0.0 percent) vs Soybean Oil previous week (2.1 percent)
Soybean Meal (75.6 percent) vs Soybean Meal previous week (68.1 percent)
Live Cattle (92.5 percent) vs Live Cattle previous week (84.2 percent)
Lean Hogs (0.0 percent) vs Lean Hogs previous week (2.7 percent)
Cotton (12.1 percent) vs Cotton previous week (6.2 percent)
Cocoa (97.6 percent) vs Cocoa previous week (98.3 percent)
Wheat (2.3 percent) vs Wheat previous week (5.5 percent)

Coffee & Sugar top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that Coffee (22 percent) and Sugar (10 percent) lead the past six weeks trends for soft commodities. Cocoa (6 percent) and Wheat (2 percent) are the next highest positive movers in the latest trends data.

Soybean Meal (-24 percent) leads the downside trend scores currently with Soybean Oil (-21 percent), Lean Hogs (-17 percent) and Live Cattle (-7 percent) following next with lower trend scores.

Strength Trend Statistics:
Corn (0.3 percent) vs Corn previous week (-5.1 percent)
Sugar (9.8 percent) vs Sugar previous week (12.4 percent)
Coffee (22.5 percent) vs Coffee previous week (8.7 percent)
Soybeans (-1.1 percent) vs Soybeans previous week (8.2 percent)
Soybean Oil (-20.6 percent) vs Soybean Oil previous week (-22.5 percent)
Soybean Meal (-24.4 percent) vs Soybean Meal previous week (-22.7 percent)
Live Cattle (-7.5 percent) vs Live Cattle previous week (-14.2 percent)
Lean Hogs (-17.5 percent) vs Lean Hogs previous week (-17.9 percent)
Cotton (-1.1 percent) vs Cotton previous week (-3.8 percent)
Cocoa (5.9 percent) vs Cocoa previous week (5.7 percent)
Wheat (2.3 percent) vs Wheat previous week (0.1 percent)

Individual Soft Commodities Markets:

CORN Futures:

The CORN large speculator standing this week was a net position of 105,636 contracts in the data reported through Tuesday. This was a weekly lift of 2,327 contracts from the previous week which had a total of 103,309 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 43.5 percent. The commercials are Bullish with a score of 66.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 13.7 percent.

CORN Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	25.8	48.1	8.3
– Percent of Open Interest Shorts:	17.8	51.3	13.2
– Net Position:	105,636	-41,244	-64,392
– Gross Longs:	340,625	635,232	109,200
– Gross Shorts:	234,989	676,476	173,592
– Long to Short Ratio:	1.4 to 1	0.9 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	43.5	66.0	13.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	0.3	0.4	-4.3

SUGAR Futures:

The SUGAR large speculator standing this week was a net position of 269,172 contracts in the data reported through Tuesday. This was a weekly boost of 9,384 contracts from the previous week which had a total of 259,788 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 86.5 percent. The commercials are Bearish-Extreme with a score of 9.6 percent and the small traders (not shown in chart) are Bullish with a score of 78.4 percent.

SUGAR Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	35.5	40.1	11.0
– Percent of Open Interest Shorts:	7.4	74.1	5.1
– Net Position:	269,172	-326,198	57,026
– Gross Longs:	340,696	385,588	105,872
– Gross Shorts:	71,524	711,786	48,846
– Long to Short Ratio:	4.8 to 1	0.5 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	86.5	9.6	78.4
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	9.8	-10.5	10.1

COFFEE Futures:

The COFFEE large speculator standing this week was a net position of 37,001 contracts in the data reported through Tuesday. This was a weekly increase of 12,124 contracts from the previous week which had a total of 24,877 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 65.4 percent. The commercials are Bearish with a score of 37.8 percent and the small traders (not shown in chart) are Bearish with a score of 28.5 percent.

COFFEE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	29.2	44.1	4.5
– Percent of Open Interest Shorts:	9.7	64.3	3.8
– Net Position:	37,001	-38,309	1,308
– Gross Longs:	55,542	83,982	8,620
– Gross Shorts:	18,541	122,291	7,312
– Long to Short Ratio:	3.0 to 1	0.7 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	65.4	37.8	28.5
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	22.5	-22.3	6.3

SOYBEANS Futures:

The SOYBEANS large speculator standing this week was a net position of 177,510 contracts in the data reported through Tuesday. This was a weekly lowering of -1,836 contracts from the previous week which had a total of 179,346 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 58.9 percent. The commercials are Bearish with a score of 45.1 percent and the small traders (not shown in chart) are Bearish with a score of 25.1 percent.

SOYBEANS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.1	43.3	6.9
– Percent of Open Interest Shorts:	6.1	65.2	11.0
– Net Position:	177,510	-149,491	-28,019
– Gross Longs:	219,301	296,149	47,114
– Gross Shorts:	41,791	445,640	75,133
– Long to Short Ratio:	5.2 to 1	0.7 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	58.9	45.1	25.1
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-1.1	-2.8	18.0

SOYBEAN OIL Futures:

The SOYBEAN OIL large speculator standing this week was a net position of -9,451 contracts in the data reported through Tuesday. This was a weekly lowering of -3,095 contracts from the previous week which had a total of -6,356 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 97.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 18.2 percent.

SOYBEAN OIL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	15.0	58.8	6.6
– Percent of Open Interest Shorts:	17.0	57.3	6.1
– Net Position:	-9,451	6,944	2,507
– Gross Longs:	72,093	282,065	31,891
– Gross Shorts:	81,544	275,121	29,384
– Long to Short Ratio:	0.9 to 1	1.0 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	0.0	97.4	18.2
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-20.6	17.2	6.3

SOYBEAN MEAL Futures:

The SOYBEAN MEAL large speculator standing this week was a net position of 130,269 contracts in the data reported through Tuesday. This was a weekly rise of 14,357 contracts from the previous week which had a total of 115,912 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 75.6 percent. The commercials are Bearish with a score of 25.9 percent and the small traders (not shown in chart) are Bearish with a score of 21.7 percent.

SOYBEAN MEAL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	33.5	36.4	10.8
– Percent of Open Interest Shorts:	4.8	68.7	7.1
– Net Position:	130,269	-146,880	16,611
– Gross Longs:	152,035	165,430	48,978
– Gross Shorts:	21,766	312,310	32,367
– Long to Short Ratio:	7.0 to 1	0.5 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	75.6	25.9	21.7
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-24.4	25.9	-12.8

LIVE CATTLE Futures:

The LIVE CATTLE large speculator standing this week was a net position of 102,072 contracts in the data reported through Tuesday. This was a weekly gain of 7,456 contracts from the previous week which had a total of 94,616 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 92.5 percent. The commercials are Bearish-Extreme with a score of 8.7 percent and the small traders (not shown in chart) are Bearish with a score of 37.7 percent.

LIVE CATTLE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	45.4	25.6	9.9
– Percent of Open Interest Shorts:	15.7	52.6	12.6
– Net Position:	102,072	-92,780	-9,292
– Gross Longs:	155,956	88,017	33,970
– Gross Shorts:	53,884	180,797	43,262
– Long to Short Ratio:	2.9 to 1	0.5 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	92.5	8.7	37.7
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-7.5	8.7	-3.0

LEAN HOGS Futures:

The LEAN HOGS large speculator standing this week was a net position of -27,157 contracts in the data reported through Tuesday. This was a weekly reduction of -3,065 contracts from the previous week which had a total of -24,092 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 100.0 percent.

LEAN HOGS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	28.1	36.1	12.6
– Percent of Open Interest Shorts:	39.8	26.1	11.0
– Net Position:	-27,157	23,443	3,714
– Gross Longs:	65,671	84,339	29,502
– Gross Shorts:	92,828	60,896	25,788
– Long to Short Ratio:	0.7 to 1	1.4 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	0.0	100.0	100.0
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-17.5	15.0	19.3

COTTON Futures:

The COTTON large speculator standing this week was a net position of 4,470 contracts in the data reported through Tuesday. This was a weekly gain of 7,749 contracts from the previous week which had a total of -3,279 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 12.1 percent. The commercials are Bullish-Extreme with a score of 85.5 percent and the small traders (not shown in chart) are Bearish with a score of 32.8 percent.

COTTON Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.8	45.8	7.9
– Percent of Open Interest Shorts:	30.1	50.1	6.3
– Net Position:	4,470	-7,229	2,759
– Gross Longs:	55,156	77,142	13,335
– Gross Shorts:	50,686	84,371	10,576
– Long to Short Ratio:	1.1 to 1	0.9 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	12.1	85.5	32.8
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-1.1	-0.7	15.1

COCOA Futures:

The COCOA large speculator standing this week was a net position of 59,355 contracts in the data reported through Tuesday. This was a weekly fall of -558 contracts from the previous week which had a total of 59,913 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 97.6 percent. The commercials are Bearish-Extreme with a score of 1.6 percent and the small traders (not shown in chart) are Bearish with a score of 44.5 percent.

COCOA Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	39.8	33.3	4.7
– Percent of Open Interest Shorts:	21.8	52.7	3.3
– Net Position:	59,355	-64,143	4,788
– Gross Longs:	131,355	110,050	15,617
– Gross Shorts:	72,000	174,193	10,829
– Long to Short Ratio:	1.8 to 1	0.6 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	97.6	1.6	44.5
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	5.9	-6.6	4.8

WHEAT Futures:

The WHEAT large speculator standing this week was a net position of -70,536 contracts in the data reported through Tuesday. This was a weekly decline of -3,854 contracts from the previous week which had a total of -66,682 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 2.3 percent. The commercials are Bullish-Extreme with a score of 94.6 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 97.6 percent.

WHEAT Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	28.0	37.9	11.1
– Percent of Open Interest Shorts:	46.6	20.7	9.7
– Net Position:	-70,536	65,243	5,293
– Gross Longs:	105,806	143,559	42,074
– Gross Shorts:	176,342	78,316	36,781
– Long to Short Ratio:	0.6 to 1	1.8 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	2.3	94.6	97.6
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	2.3	-5.4	11.4

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Opinions Soft Commodities

22 Apr

Copper Speculator bets go bullish for first time since February

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 18th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by Steel & Silver

The COT metals markets speculator bets were higher this week as five out of the six metals markets we cover had higher positioning while the other one market had lower speculator contracts.

Leading the gains for the metals was Copper (13,237 contracts) with Platinum (10,986 contracts), Silver (2,877 contracts), Palladium (1,436 contracts) and Steel (329 contracts) also having positive weeks.

The market with a decline in speculator bets for the week was Gold with a drop of -2,852 contracts on the week.

Copper bets go bullish for first time since February

Highlighting the COT metals data this week is the renewed bullishness for the Copper speculative positions. The large speculator position in Copper futures rose by over +13,000 contracts this week and are higher for the third time in the past five weeks.

Copper speculative bets have now gained by a total of +23,090 contracts over the past five weeks, going from a bearish net position of -14,156 contracts on March 14th to this week’s net position of +8,934 contracts. This week was the first time that net positions crossed over into bullish territory since February and Copper’s sentiment has been helped out by China’s economic reopening which uses the metal for many types of manufacturing and industry.

The Copper front-month futures price dipped this week but has been higher in the three of the past five weeks, continuing an uptrend since bottoming in July of 2022. Copper futures have gained by approximately 25 percent since that recent bottom in July and closed this week just below the $4.00 per pound major price level.

Data Snapshot of Commodity Market Traders | Columns Legend

Apr-18-2023	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
Gold	482,254	28	189,893	61	-216,425	40	26,532	46
Silver	158,371	46	26,595	56	-38,656	47	12,061	33
Copper	206,216	47	8,934	36	-16,280	60	7,346	65
Palladium	11,848	82	-5,637	13	6,151	89	-514	11
Platinum	63,794	53	24,319	72	-28,202	35	3,883	20

Strength Scores led by Platinum & Gold

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that Platinum (72 percent) and Gold (61 percent) lead the metals markets this week. Steel (59 percent) comes in as the next highest in the weekly strength scores.

On the downside, Palladium (13 percent) comes in at the lowest strength level currently and is in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
Gold (60.6 percent) vs Gold previous week (61.9 percent)
Silver (56.2 percent) vs Silver previous week (52.1 percent)
Copper (36.4 percent) vs Copper previous week (24.6 percent)
Platinum (71.7 percent) vs Platinum previous week (46.4 percent)
Palladium (13.5 percent) vs Palladium previous week (0.2 percent)
Steel (59.3 percent) vs Palladium previous week (58.4 percent)

Silver & Platinum top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that Silver (49 percent) and Platinum (44 percent) lead the past six weeks trends for metals. Gold (40 percent) is the next highest positive mover in the latest trends data.

Steel (-1 percent) leads the downside trend scores currently.

Move Statistics:
Gold (40.2 percent) vs Gold previous week (37.0 percent)
Silver (49.1 percent) vs Silver previous week (33.9 percent)
Copper (14.9 percent) vs Copper previous week (1.6 percent)
Platinum (44.3 percent) vs Platinum previous week (18.5 percent)
Palladium (13.5 percent) vs Palladium previous week (-9.7 percent)
Steel (-1.2 percent) vs Steel previous week (-4.1 percent)

Individual Markets:

Gold Comex Futures:

The Gold Comex Futures large speculator standing this week was a net position of 189,893 contracts in the data reported through Tuesday. This was a weekly decline of -2,852 contracts from the previous week which had a total of 192,745 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 60.6 percent. The commercials are Bearish with a score of 40.4 percent and the small traders (not shown in chart) are Bearish with a score of 46.5 percent.

Gold Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	53.9	25.6	10.5
– Percent of Open Interest Shorts:	14.6	70.5	5.0
– Net Position:	189,893	-216,425	26,532
– Gross Longs:	260,061	123,496	50,647
– Gross Shorts:	70,168	339,921	24,115
– Long to Short Ratio:	3.7 to 1	0.4 to 1	2.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	60.6	40.4	46.5
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	40.2	-37.7	15.3

Silver Comex Futures:

The Silver Comex Futures large speculator standing this week was a net position of 26,595 contracts in the data reported through Tuesday. This was a weekly lift of 2,877 contracts from the previous week which had a total of 23,718 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.2 percent. The commercials are Bearish with a score of 47.1 percent and the small traders (not shown in chart) are Bearish with a score of 33.4 percent.

Silver Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	39.8	32.8	16.1
– Percent of Open Interest Shorts:	23.0	57.2	8.4
– Net Position:	26,595	-38,656	12,061
– Gross Longs:	62,968	51,891	25,438
– Gross Shorts:	36,373	90,547	13,377
– Long to Short Ratio:	1.7 to 1	0.6 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	56.2	47.1	33.4
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	49.1	-40.0	-7.5

Copper Grade #1 Futures:

The Copper Grade #1 Futures large speculator standing this week was a net position of 8,934 contracts in the data reported through Tuesday. This was a weekly lift of 13,237 contracts from the previous week which had a total of -4,303 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 36.4 percent. The commercials are Bullish with a score of 59.6 percent and the small traders (not shown in chart) are Bullish with a score of 64.8 percent.

Copper Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.6	43.2	9.1
– Percent of Open Interest Shorts:	28.3	51.1	5.6
– Net Position:	8,934	-16,280	7,346
– Gross Longs:	67,262	89,131	18,851
– Gross Shorts:	58,328	105,411	11,505
– Long to Short Ratio:	1.2 to 1	0.8 to 1	1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	36.4	59.6	64.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	14.9	-13.0	-8.1

Platinum Futures:

The Platinum Futures large speculator standing this week was a net position of 24,319 contracts in the data reported through Tuesday. This was a weekly boost of 10,986 contracts from the previous week which had a total of 13,333 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 71.7 percent. The commercials are Bearish with a score of 35.2 percent and the small traders (not shown in chart) are Bearish with a score of 20.2 percent.

Platinum Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	54.9	28.4	11.1
– Percent of Open Interest Shorts:	16.8	72.7	5.0
– Net Position:	24,319	-28,202	3,883
– Gross Longs:	35,028	18,147	7,076
– Gross Shorts:	10,709	46,349	3,193
– Long to Short Ratio:	3.3 to 1	0.4 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	71.7	35.2	20.2
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	44.3	-40.0	2.3

Palladium Futures:

The Palladium Futures large speculator standing this week was a net position of -5,637 contracts in the data reported through Tuesday. This was a weekly rise of 1,436 contracts from the previous week which had a total of -7,073 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 13.5 percent. The commercials are Bullish-Extreme with a score of 88.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 10.8 percent.

Palladium Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	16.1	67.4	9.1
– Percent of Open Interest Shorts:	63.7	15.5	13.5
– Net Position:	-5,637	6,151	-514
– Gross Longs:	1,912	7,988	1,084
– Gross Shorts:	7,549	1,837	1,598
– Long to Short Ratio:	0.3 to 1	4.3 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	13.5	88.8	10.8
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	13.5	-10.6	-11.5

Steel Futures Futures:

The Steel Futures large speculator standing this week was a net position of -4,779 contracts in the data reported through Tuesday. This was a weekly boost of 329 contracts from the previous week which had a total of -5,108 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.3 percent. The commercials are Bearish with a score of 40.5 percent and the small traders (not shown in chart) are Bearish with a score of 38.5 percent.

Steel Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	12.4	76.0	1.0
– Percent of Open Interest Shorts:	28.6	60.3	0.5
– Net Position:	-4,779	4,632	147
– Gross Longs:	3,671	22,409	303
– Gross Shorts:	8,450	17,777	156
– Long to Short Ratio:	0.4 to 1	1.3 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	59.3	40.5	38.5
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-1.2	1.8	-25.1

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Metals Opinions

21 Apr

Week Ahead: “Big M.A.M.A.” to weigh on NQ100_m

By ForexTime

Four Big Tech companies, with a combined market cap of over US$ 5 trillion (that’s $5,000,000,000,000), are set to release their respective quarterly earnings in the coming week.

The final week of April also features these scheduled economic data releases and events:

Monday, April 24

EUR: Germany April IFO business climate
Walt Disney may cut thousands of jobs this week
Q1 earnings from embattled banks: Credit Suisse, First Republic Bank

Tuesday, April 25

USD: US April consumer confidence
NQ100_m: Microsoft, Alphabet Q1 earnings (after US markets close)

Wednesday, April 26

NZD: New Zealand March external trade
AUD: Australia March CPI
CAD: Bank of Canada releases April meeting minutes
NQ100_m: Meta Q1 earnings (after US markets close)

Thursday, April 27

EUR: Eurozone April economic confidence
USD: US 1Q GDP; weekly initial jobless claims
NQ100_m: Amazon Q1 earnings (after US markets close)

Friday, April 28

JPY: Bank of Japan rate decision; April Tokyo CPI; Japan March industrial production, retail sales, and unemployment
EUR: Eurozone 1Q GDP; Germany April CPI
USD: US March PCE Deflator, personal income and spending

How big is “Big M.A.M.A.”?

First, a quick reminder about the sheer size of these tech giants that are due to report their Q1 earnings.

Here’s their respective market cap as of US market’s close on Thursday, April 20:

(Market capitalization = how much each company is valued by the markets)

Microsoft: US$ 2.130 trillion
Alphabet: US$ 1.352 trillion
Amazon: US$ 1.064 trillion
Meta: US$ 0.5466 trillion

What to look out for from these Big Tech announcements?

Economic headwinds dampening earnings?

Fears of a looming global recession are set to weigh negatively on the core businesses of these Big Tech companies:

Microsoft is already facing a structural slowdown in the PC industry
Alphabet’s ad business may see a pullback from customers in the financial sector from last month’s banking turmoil
Meta’s Facebook is experiencing weakening engagement
Amazon’s core business of selling goods across the US has lost money for the last 5 consecutive quarters

The challenging economic backdrop is also expected to be a drag on demand for cloud computing services out of Microsoft (Azure), Amazon (AWS), and Alphabet (Google Cloud) – which have been key earnings drivers for these respective companies.

Job cuts: boost to the bottom line?

Here are the headline figures for the intended number of jobs to be slashed according to announcements made in Q1 2023:

Microsoft: 10,000 jobs (5% of its workforce)
Amazon: 18,000 jobs (1% of total employees)
Meta: 10,000 jobs (accumulated 25% of workforce, including the 11k jobs, or 13% of its workforce, already removed back in November 2022)
Alphabet: 12,000 jobs (6% of global workforce)

Ultimately, fundamentally-driven investors want to know whether such cost-cutting measures are having the desired effect of propping up the company’s financials amidst these challenging times.

ChatGPT: the AI race is on

The buzz surrounding ChatGPT/AI technologies have certainly contributed to the double-digit gains for Big Tech stocks so far in 2023.

Markets will be eager to find out how soon before the hype can turn into a profits boost, and whether each of these tech companies have enough of an edge in this red-hot AI race.

How much could these stocks move post-earnings?

Here are the forecasted moves for each stock, either upwards or downwards, on the trading day after their respective financial announcements:

Microsoft: 3.7% move on Wednesday, April 25th
Alphabet: 5.45% move on Wednesday, April 25th
Meta: 9% move on Thursday, April 27th
Amazon: 6.54% move on Friday, April 28th

(% figures as of Friday, April 21st before US markets open)

Why would NQ100_m react to these Big Tech earnings?

Note that every single one of these behemoths (Microsoft, Alphabet, Amazon, and Meta) are members of the tech-heavy index, the Nasdaq 100, which is the underlying asset tracked by the NQ100_m.

Their combined market cap of US$5.09 trillion accounts for one-third of the Nasdaq 100’s market cap of US$15.03 trillion.

Hence, the market’s collective reaction to these upcoming Big Tech earnings is set to have an outsized impact on how the NQ100_m performs in the final week of April.

How might NQ100_m react to Big Tech earnings?

Should markets react positively to these Big Tech earnings, that could send the NQ100_m above its month-to-date high at 13,242, and to a fresh 8-month peak.
However, disappointing earnings out of these tech giants may drag the NQ100_m to a lower low beneath the key 12850 support region.
This price area also contains the 38.2% Fibonacci retracement level from NQ100_m’s November 2021 peak down to the October 2022 trough.

To be clear, the Nasdaq 100’s year-to-date advance still stands at an impressive 18.7% so far in 2023, despite the rally having stalled so far in April.

These tech giants could do with a fundamental boost by way of better-than-expected earnings to extend that advance in share prices before April is over.

Otherwise, tech stock bulls might have to wait until the Federal Reserve’s next policy meeting in early May.

A more dovish note out of the US central bank, perhaps indicating a pause on its rate hikes after its May FOMC meeting with perhaps an eye on lowering interest rates later in 2023, may just send stock market bulls racing once more and charging US stock indices higher.

On the other hand, a disappointing earnings season out of Big Tech next week, followed by still-hawkish signals out of the Fed in early May, would likely undo some of the NQ100_m’s year-to-date gains.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Stock Market News

19 Apr

Generative AI: 5 essential reads about the new era of creativity, job anxiety, misinformation, bias and plagiarism

By Eric Smalley, The Conversation

The light and dark sides of AI have been in the public spotlight for many years. Think facial recognition, algorithms making loan and sentencing recommendations, and medical image analysis. But the impressive – and sometimes scary – capabilities of ChatGPT, DALL-E 2 and other conversational and image-conjuring artificial intelligence programs feel like a turning point.

The key change has been the emergence within the last year of powerful generative AI, software that not only learns from vast amounts of data but also produces things – convincingly written documents, engaging conversation, photorealistic images and clones of celebrity voices.

Generative AI has been around for nearly a decade, as long-standing worries about deepfake videos can attest. Now, though, the AI models have become so large and have digested such vast swaths of the internet that people have become unsure of what AI means for the future of knowledge work, the nature of creativity and the origins and truthfulness of content on the internet.

Here are five articles from our archives the take the measure of this new generation of artificial intelligence.

1. Generative AI and work

A panel of five AI experts discussed the implications of generative AI for artists and knowledge workers. It’s not simply a matter of whether the technology will replace you or make you more productive.

University of Tennessee computer scientist Lynne Parker wrote that while there are significant benefits to generative AI, like making creativity and knowledge work more accessible, the new tools also have downsides. Specifically, they could lead to an erosion of skills like writing, and they raise issues of intellectual property protections given that the models are trained on human creations.

University of Colorado Boulder computer scientist Daniel Acuña has found the tools to be useful in his own creative endeavors but is concerned about inaccuracy, bias and plagiarism.

University of Michigan computer scientist Kentaro Toyama wrote that human skill is likely to become costly and extraneous in some fields. “If history is any guide, it’s almost certain that advances in AI will cause more jobs to vanish, that creative-class people with human-only skills will become richer but fewer in number, and that those who own creative technology will become the new mega-rich.”

Florida International University computer scientist Mark Finlayson wrote that some jobs are likely to disappear, but that new skills in working with these AI tools are likely to become valued. By analogy, he noted that the rise of word processing software largely eliminated the need for typists but allowed nearly anyone with access to a computer to produce typeset documents and led to a new class of skills to list on a resume.

University of Colorado Anschutz biomedical informatics researcher Casey Greene wrote that just as Google led people to develop skills in finding information on the internet, AI language models will lead people to develop skills to get the best output from the tools. “As with many technological advances, how people interact with the world will change in the era of widely accessible AI models. The question is whether society will use this moment to advance equity or exacerbate disparities.”

2. Conjuring images from words

Generative AI can seem like magic. It’s hard to imagine how image-generating AIs can take a few words of text and produce an image that matches the words.

Hany Farid, a University of California, Berkeley computer scientist who specializes in image forensics, explained the process. The software is trained on a massive set of images, each of which includes a short text description.

“The model progressively corrupts each image until only visual noise remains, and then trains a neural network to reverse this corruption. Repeating this process hundreds of millions of times, the model learns how to convert pure noise into a coherent image from any caption,” he wrote.

3. Marking the machine

Many of the images produced by generative AI are difficult to distinguish from photographs, and AI-generated video is rapidly improving. This raises the stakes for combating fraud and misinformation. Fake videos of corporate executives could be used to manipulate stock prices, and fake videos of political leaders could be used to spread dangerous misinformation.

Farid explained how it’s possible to produce AI-generated photos and video that contain watermarks verifying that they are synthetic. The trick is to produce digital watermarks that can’t be altered or removed. “These watermarks can be baked into the generative AI systems by watermarking all the training data, after which the generated content will contain the same watermark,” he wrote.

4. Flood of ideas

For all the legitimate concern about the downsides of generative AI, the tools are proving to be useful for some artists, designers and writers. People in creative fields can use the image generators to quickly sketch out ideas, including unexpected off-the-wall material.

AI as an idea generator for designers.

Rochester Institute of Technology industrial designer and professor Juan Noguera and his students use tools like DALL-E or Midjourney to produce thousands of images from abstract ideas – a sort of sketchbook on steroids.

“Enter any sentence – no matter how crazy – and you’ll receive a set of unique images generated just for you. Want to design a teapot? Here, have 1,000 of them,” he wrote. “While only a small subset of them may be usable as a teapot, they provide a seed of inspiration that the designer can nurture and refine into a finished product.”

5. Shortchanging the creative process

However, using AI to produce finished artworks is another matter, according to Nir Eisikovits and Alec Stubbs, philosophers at the Applied Ethics Center at University of Massachusetts Boston. They note that the process of making art is more than just coming up with ideas.

The hands-on process of producing something, iterating the process and making refinements – often in the moment in response to audience reactions – are indispensable aspects of creating art, they wrote.

“It is the work of making something real and working through its details that carries value, not simply that moment of imagining it,” they wrote. “Artistic works are lauded not merely for the finished product, but for the struggle, the playful interaction and the skillful engagement with the artistic task, all of which carry the artist from the moment of inception to the end result.”

Editor’s note: This story is a roundup of articles from The Conversation’s archives.

About the Author:

Eric Smalley, Science + Technology Editor, The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Programming

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Archive for Opinions – Page 91

Inhibitory neurons and learning new rules

Brain waves and flexible behavior

Cognitive flexibility and schizophrenia

1. What are stock buybacks?

2. Why do companies buy back their own stock?

3. Why do Biden and others dislike buybacks?

4. Would increasing the tax result in fewer buybacks?

Why is it so hard for shipping to transition away from fossil fuels?

Can tougher regulations and carbon pricing effectively push the industry to change?

Are there ways companies can cut emissions now while preparing to upgrade their fleets?

Will a higher goal set by the IMO be enough to pressure the industry to change?

Weekly Speculator Changes led by Canadian Dollar & British Pound

Speculators reduce US Dollar Index bets to lowest level in 93-weeks

Strength Scores led by Mexican Peso & EuroFX

Mexican Peso & British Pound top the 6-Week Strength Trends

Individual COT Forex Markets:

US Dollar Index Futures:

Euro Currency Futures:

British Pound Sterling Futures:

Japanese Yen Futures:

Swiss Franc Futures:

Canadian Dollar Futures:

Australian Dollar Futures:

New Zealand Dollar Futures:

Mexican Peso Futures:

Brazilian Real Futures:

Bitcoin Futures:

Weekly Speculator Changes led by 5-Year Bonds & Eurodollar

10-Year Bond Speculators drop bets to 237-week low

Strength Scores led by Eurodollar & US Treasury Bonds

SOFR 3-Months & Eurodollar top the 6-Week Strength Trends

Individual Bond Markets:

3-Month Eurodollars Futures:

Secured Overnight Financing Rate (3-Month) Futures:

30-Day Federal Funds Futures:

2-Year Treasury Note Futures:

5-Year Treasury Note Futures:

10-Year Treasury Note Futures:

Ultra 10-Year Notes Futures:

US Treasury Bonds Futures:

Ultra US Treasury Bonds Futures:

Weekly Speculator Changes led by Soybean Meal & Coffee

Sugar Speculators boost bullish bets for 4th week to 84-week high

Strength Scores led by Cocoa & Live Cattle

Coffee & Sugar top the 6-Week Strength Trends

Individual Soft Commodities Markets:

CORN Futures:

SUGAR Futures:

COFFEE Futures:

SOYBEANS Futures:

SOYBEAN OIL Futures:

SOYBEAN MEAL Futures:

LIVE CATTLE Futures:

LEAN HOGS Futures:

COTTON Futures:

COCOA Futures:

WHEAT Futures:

Weekly Speculator Changes led by Steel & Silver

Copper bets go bullish for first time since February

Strength Scores led by Platinum & Gold

Silver & Platinum top the 6-Week Strength Trends

Individual Markets:

Gold Comex Futures:

Silver Comex Futures:

Copper Grade #1 Futures:

Platinum Futures:

Palladium Futures:

Steel Futures Futures:

How big is “Big M.A.M.A.”?

What to look out for from these Big Tech announcements?

Economic headwinds dampening earnings?

Job cuts: boost to the bottom line?

ChatGPT: the AI race is on

How much could these stocks move post-earnings?

Why would NQ100_m react to these Big Tech earnings?

How might NQ100_m react to Big Tech earnings?

1. Generative AI and work

2. Conjuring images from words

3. Marking the machine