InvestMacro

COT Bonds Charts: Speculator Bets led by SOFR 1-Month & Ultra 10-Year Bonds

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 January 28th and shows a quick view of how large traders (for-profit speculators and commercial hedgers) were positioned in the futures markets.

Weekly Speculator Bets led by SOFR 1-Month & Ultra 10-Year Bonds

The COT bond market speculator bets were slightly 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 SOFR 1-Month (77,373 contracts) with the Ultra 10-Year Bonds (63,045 contracts), the SOFR 3-Months (28,065 contracts), the 5-Year Bonds (20,136 contracts) and the US Treasury Bonds (4,128 contracts) also having positive weeks.

The bond markets with declines in speculator bets for the week were the 10-Year Bonds (-120,397 contracts), the Fed Funds (-41,201 contracts), the 2-Year Bonds (-27,182 contracts) and with the Ultra Treasury Bonds (-11,604 contracts) also seeing lower bets on the week.

Bonds Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by SOFR 1-Month & 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 SOFR 1-Month (96 percent) and the US Treasury Bonds (93 percent) lead the bond markets this week. The Ultra Treasury Bonds (82 percent) come in as the next highest in the weekly strength scores.

On the downside, the Fed Funds (12 percent), the 5-Year Bond (11 percent) and the 2-Year Bonds (19 percent) come in at the lowest strength level currently and are in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
Fed Funds (11.8 percent) vs Fed Funds previous week (19.4 percent)
2-Year Bond (19.3 percent) vs 2-Year Bond previous week (21.2 percent)
5-Year Bond (11.0 percent) vs 5-Year Bond previous week (9.9 percent)
10-Year Bond (41.9 percent) vs 10-Year Bond previous week (53.3 percent)
Ultra 10-Year Bond (52.3 percent) vs Ultra 10-Year Bond previous week (32.8 percent)
US Treasury Bond (93.5 percent) vs US Treasury Bond previous week (92.0 percent)
Ultra US Treasury Bond (82.1 percent) vs Ultra US Treasury Bond previous week (86.5 percent)
SOFR 1-Month (96.3 percent) vs SOFR 1-Month previous week (77.3 percent)
SOFR 3-Months (27.0 percent) vs SOFR 3-Months previous week (25.5 percent)

SOFR 1-Month & US Treasury Bonds 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 1-Month (38 percent) and the US Treasury Bonds (26 percent) lead the past six weeks trends for bonds. The 2-Year Bonds (4 percent) are the next highest positive movers in the latest trends data.

The SOFR 3-Months (-28 percent) and the Ultra Treasury Bonds (-9 percent) lead the downside trend scores currently.

Strength Trend Statistics:
Fed Funds (-36.3 percent) vs Fed Funds previous week (-18.9 percent)
2-Year Bond (3.9 percent) vs 2-Year Bond previous week (5.5 percent)
5-Year Bond (-0.7 percent) vs 5-Year Bond previous week (-0.3 percent)
10-Year Bond (3.1 percent) vs 10-Year Bond previous week (27.9 percent)
Ultra 10-Year Bond (0.9 percent) vs Ultra 10-Year Bond previous week (-20.6 percent)
US Treasury Bond (26.1 percent) vs US Treasury Bond previous week (22.3 percent)
Ultra US Treasury Bond (-8.5 percent) vs Ultra US Treasury Bond previous week (-5.2 percent)
SOFR 1-Month (37.6 percent) vs SOFR 1-Month previous week (25.8 percent)
SOFR 3-Months (-27.7 percent) vs SOFR 3-Months previous week (-17.8 percent)

30-Day Federal Funds Futures:

The 30-Day Federal Funds large speculator standing this week equaled a net position of -231,996 contracts in the data reported through Tuesday. This was a weekly reduction of -41,201 contracts from the previous week which had a total of -190,795 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 11.8 percent. The commercials are Bullish-Extreme with a score of 84.2 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 85.9 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

30-Day Federal Funds Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	7.8	72.3	1.9
– Percent of Open Interest Shorts:	19.2	61.0	1.9
– Net Position:	-231,996	231,578	418
– Gross Longs:	158,888	1,475,432	38,321
– Gross Shorts:	390,884	1,243,854	37,903
– Long to Short Ratio:	0.4 to 1	1.2 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	11.8	84.2	85.9
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-36.3	35.0	7.6

Secured Overnight Financing Rate (3-Month) Futures:

The Secured Overnight Financing Rate (3-Month) large speculator standing this week equaled a net position of -644,264 contracts in the data reported through Tuesday. This was a weekly boost of 28,065 contracts from the previous week which had a total of -672,329 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 27.0 percent. The commercials are Bullish with a score of 72.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 90.6 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

SOFR 3-Months Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	11.8	63.4	0.3
– Percent of Open Interest Shorts:	18.2	57.1	0.3
– Net Position:	-644,264	639,189	5,075
– Gross Longs:	1,190,201	6,390,627	31,310
– Gross Shorts:	1,834,465	5,751,438	26,235
– Long to Short Ratio:	0.6 to 1	1.1 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	27.0	72.7	90.6
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-27.7	27.0	7.4

Individual Bond Markets:

Secured Overnight Financing Rate (1-Month) Futures:

The Secured Overnight Financing Rate (1-Month) large speculator standing this week equaled a net position of 112,967 contracts in the data reported through Tuesday. This was a weekly boost of 77,373 contracts from the previous week which had a total of 35,594 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 96.3 percent. The commercials are Bearish-Extreme with a score of 3.9 percent and the small traders (not shown in chart) are Bullish with a score of 51.9 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

SOFR 1-Month Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	26.1	57.3	0.0
– Percent of Open Interest Shorts:	18.9	64.4	0.0
– Net Position:	112,967	-112,462	-505
– Gross Longs:	411,468	902,583	131
– Gross Shorts:	298,501	1,015,045	636
– Long to Short Ratio:	1.4 to 1	0.9 to 1	0.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	96.3	3.9	51.9
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	37.6	-37.5	-1.3

2-Year Treasury Note Futures:

The 2-Year Treasury Note large speculator standing this week equaled a net position of -1,201,559 contracts in the data reported through Tuesday. This was a weekly fall of -27,182 contracts from the previous week which had a total of -1,174,377 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 19.3 percent. The commercials are Bullish with a score of 78.2 percent and the small traders (not shown in chart) are Bullish with a score of 79.8 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

2-Year Treasury Note Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	14.1	76.1	6.0
– Percent of Open Interest Shorts:	42.6	50.9	2.7
– Net Position:	-1,201,559	1,063,075	138,484
– Gross Longs:	594,596	3,213,069	253,132
– Gross Shorts:	1,796,155	2,149,994	114,648
– Long to Short Ratio:	0.3 to 1	1.5 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	19.3	78.2	79.8
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	3.9	-5.4	2.8

5-Year Treasury Note Futures:

The 5-Year Treasury Note large speculator standing this week equaled a net position of -1,776,055 contracts in the data reported through Tuesday. This was a weekly gain of 20,136 contracts from the previous week which had a total of -1,796,191 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 11.0 percent. The commercials are Bullish-Extreme with a score of 86.9 percent and the small traders (not shown in chart) are Bullish with a score of 74.3 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

5-Year Treasury Note Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	6.6	84.6	6.6
– Percent of Open Interest Shorts:	34.6	58.5	4.7
– Net Position:	-1,776,055	1,656,392	119,663
– Gross Longs:	417,956	5,363,619	420,005
– Gross Shorts:	2,194,011	3,707,227	300,342
– 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):	11.0	86.9	74.3
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-0.7	-0.9	5.4

10-Year Treasury Note Futures:

The 10-Year Treasury Note large speculator standing this week equaled a net position of -700,642 contracts in the data reported through Tuesday. This was a weekly reduction of -120,397 contracts from the previous week which had a total of -580,245 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 41.9 percent. The commercials are Bullish with a score of 57.2 percent and the small traders (not shown in chart) are Bullish with a score of 77.5 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

10-Year Treasury Note Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	14.0	75.3	8.7
– Percent of Open Interest Shorts:	28.3	62.2	7.5
– Net Position:	-700,642	640,374	60,268
– Gross Longs:	683,437	3,676,042	426,342
– Gross Shorts:	1,384,079	3,035,668	366,074
– Long to Short Ratio:	0.5 to 1	1.2 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	41.9	57.2	77.5
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	3.1	-1.4	-4.7

Ultra 10-Year Notes Futures:

The Ultra 10-Year Notes large speculator standing this week equaled a net position of -109,479 contracts in the data reported through Tuesday. This was a weekly lift of 63,045 contracts from the previous week which had a total of -172,524 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 52.3 percent. The commercials are Bearish with a score of 21.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 86.4 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

Ultra 10-Year Notes Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	14.8	74.3	9.9
– Percent of Open Interest Shorts:	19.6	67.8	11.7
– Net Position:	-109,479	149,059	-39,580
– Gross Longs:	336,739	1,690,796	226,084
– Gross Shorts:	446,218	1,541,737	265,664
– Long to Short Ratio:	0.8 to 1	1.1 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	52.3	21.0	86.4
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	0.9	1.6	-5.1

US Treasury Bonds Futures:

The US Treasury Bonds large speculator standing this week equaled a net position of 28,584 contracts in the data reported through Tuesday. This was a weekly gain of 4,128 contracts from the previous week which had a total of 24,456 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 93.5 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish with a score of 65.9 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

US Treasury Bonds Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	23.8	63.9	11.0
– Percent of Open Interest Shorts:	22.4	68.9	7.5
– Net Position:	28,584	-96,972	68,388
– Gross Longs:	466,674	1,252,662	215,698
– Gross Shorts:	438,090	1,349,634	147,310
– Long to Short Ratio:	1.1 to 1	0.9 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	93.5	0.0	65.9
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	26.1	-20.4	-8.2

Ultra US Treasury Bonds Futures:

The Ultra US Treasury Bonds large speculator standing this week equaled a net position of -241,592 contracts in the data reported through Tuesday. This was a weekly fall of -11,604 contracts from the previous week which had a total of -229,988 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 82.1 percent. The commercials are Bearish-Extreme with a score of 14.9 percent and the small traders (not shown in chart) are Bearish with a score of 37.5 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

Ultra US Treasury Bonds Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	7.8	81.2	10.1
– Percent of Open Interest Shorts:	21.4	68.8	9.0
– Net Position:	-241,592	221,578	20,014
– Gross Longs:	139,167	1,444,856	180,040
– Gross Shorts:	380,759	1,223,278	160,026
– 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):	82.1	14.9	37.5
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-8.5	10.2	-0.9

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.

01 Feb

COT Soft Commodities Charts: Speculator Bets led by Corn & Soybeans

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 January 28th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Bets led by Corn & Soybeans

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

Leading the gains for the softs markets was Corn (50,952 contracts) with Soybeans (12,802 contracts), Soybean Oil (9,666 contracts), Soybean Meal (4,090 contracts), Coffee (2,229 contracts), Sugar (2,033 contracts) and Live Cattle (312 contracts) also showing positive weeks.

The markets with the declines in speculator bets this week were Wheat (-18,102 contracts), Lean Hogs (-3,915 contracts), Cotton (-2,477 contracts) and with Cocoa (-497 contracts) also registering lower bets on the week.

Soft Commodities Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Coffee & 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 Coffee (100 percent) and Live Cattle (96 percent) lead the softs markets this week. Corn (90 percent), Lean Hogs (79 percent) and Soybean Oil (68 percent) come in as the next highest in the weekly strength scores.

On the downside, Sugar (1 percent), Cotton (2 percent), Wheat (5 percent) and Soybean Meal (17 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
Corn (90.4 percent) vs Corn previous week (83.9 percent)
Sugar (0.7 percent) vs Sugar previous week (0.0 percent)
Coffee (100.0 percent) vs Coffee previous week (97.8 percent)
Soybeans (54.0 percent) vs Soybeans previous week (50.9 percent)
Soybean Oil (67.8 percent) vs Soybean Oil previous week (62.5 percent)
Soybean Meal (17.4 percent) vs Soybean Meal previous week (15.7 percent)
Live Cattle (95.9 percent) vs Live Cattle previous week (95.6 percent)
Lean Hogs (78.9 percent) vs Lean Hogs previous week (81.9 percent)
Cotton (2.5 percent) vs Cotton previous week (4.2 percent)
Cocoa (47.7 percent) vs Cocoa previous week (48.2 percent)
Wheat (4.8 percent) vs Wheat previous week (19.2 percent)

Soybeans & Corn top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that Soybeans (33 percent) and Corn (28 percent) lead the past six weeks trends for soft commodities. Coffee (14 percent), Soybean Meal (8 percent) and Soybean Oil (8 percent) are the next highest positive movers in the latest trends data.

Sugar (-31 percent) leads the downside trend scores currently with Lean Hogs (-21 percent), Cotton (-11 percent) and Wheat (-9 percent) following next with lower trend scores.

Strength Trend Statistics:
Corn (28.3 percent) vs Corn previous week (21.5 percent)
Sugar (-31.4 percent) vs Sugar previous week (-41.4 percent)
Coffee (13.9 percent) vs Coffee previous week (11.8 percent)
Soybeans (33.2 percent) vs Soybeans previous week (24.7 percent)
Soybean Oil (8.1 percent) vs Soybean Oil previous week (-2.4 percent)
Soybean Meal (8.3 percent) vs Soybean Meal previous week (0.3 percent)
Live Cattle (8.0 percent) vs Live Cattle previous week (15.5 percent)
Lean Hogs (-21.1 percent) vs Lean Hogs previous week (-16.6 percent)
Cotton (-10.7 percent) vs Cotton previous week (-13.8 percent)
Cocoa (1.7 percent) vs Cocoa previous week (0.5 percent)
Wheat (-9.3 percent) vs Wheat previous week (-10.9 percent)

Individual Soft Commodities Markets:

CORN Futures:

The CORN large speculator standing this week resulted in a net position of 443,875 contracts in the data reported through Tuesday. This was a weekly increase of 50,952 contracts from the previous week which had a total of 392,923 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 90.4 percent. The commercials are Bearish-Extreme with a score of 15.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 0.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

CORN Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	31.2	39.4	6.0
– Percent of Open Interest Shorts:	8.8	57.4	10.4
– Net Position:	443,875	-355,959	-87,916
– Gross Longs:	617,299	780,449	117,958
– Gross Shorts:	173,424	1,136,408	205,874
– Long to Short Ratio:	3.6 to 1	0.7 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	90.4	15.2	0.0
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	28.3	-24.6	-44.7

SUGAR Futures:

The SUGAR large speculator standing this week resulted in a net position of -29,434 contracts in the data reported through Tuesday. This was a weekly rise of 2,033 contracts from the previous week which had a total of -31,467 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 0.7 percent. The commercials are Bullish-Extreme with a score of 97.5 percent and the small traders (not shown in chart) are Bearish with a score of 24.4 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

SUGAR Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	23.0	54.0	6.9
– Percent of Open Interest Shorts:	26.0	51.5	6.6
– Net Position:	-29,434	25,746	3,688
– Gross Longs:	230,941	541,544	69,367
– Gross Shorts:	260,375	515,798	65,679
– 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):	0.7	97.5	24.4
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-31.4	28.5	-10.6

COFFEE Futures:

The COFFEE large speculator standing this week resulted in a net position of 76,520 contracts in the data reported through Tuesday. This was a weekly increase of 2,229 contracts from the previous week which had a total of 74,291 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 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 81.3 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

COFFEE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	44.1	29.3	6.1
– Percent of Open Interest Shorts:	4.8	70.7	4.0
– Net Position:	76,520	-80,705	4,185
– Gross Longs:	85,902	57,117	11,978
– Gross Shorts:	9,382	137,822	7,793
– Long to Short Ratio:	9.2 to 1	0.4 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	100.0	0.0	81.3
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	13.9	-14.3	9.8

SOYBEANS Futures:

The SOYBEANS large speculator standing this week resulted in a net position of 31,351 contracts in the data reported through Tuesday. This was a weekly increase of 12,802 contracts from the previous week which had a total of 18,549 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 54.0 percent. The commercials are Bearish with a score of 49.6 percent and the small traders (not shown in chart) are Bearish with a score of 21.3 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

SOYBEANS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	21.2	55.8	4.9
– Percent of Open Interest Shorts:	17.5	55.4	8.9
– Net Position:	31,351	3,608	-34,959
– Gross Longs:	182,713	482,192	42,015
– Gross Shorts:	151,362	478,584	76,974
– Long to Short Ratio:	1.2 to 1	1.0 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	54.0	49.6	21.3
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	33.2	-30.1	-50.2

SOYBEAN OIL Futures:

The SOYBEAN OIL large speculator standing this week resulted in a net position of 48,167 contracts in the data reported through Tuesday. This was a weekly rise of 9,666 contracts from the previous week which had a total of 38,501 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 67.8 percent. The commercials are Bearish with a score of 36.3 percent and the small traders (not shown in chart) are Bearish with a score of 36.3 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

SOYBEAN OIL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	20.4	54.5	5.5
– Percent of Open Interest Shorts:	11.9	64.1	4.5
– Net Position:	48,167	-53,893	5,726
– Gross Longs:	115,448	308,193	31,027
– Gross Shorts:	67,281	362,086	25,301
– Long to Short Ratio:	1.7 to 1	0.9 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	67.8	36.3	36.3
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.1	-9.5	17.5

SOYBEAN MEAL Futures:

The SOYBEAN MEAL large speculator standing this week resulted in a net position of -24,508 contracts in the data reported through Tuesday. This was a weekly advance of 4,090 contracts from the previous week which had a total of -28,598 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 17.4 percent. The commercials are Bullish-Extreme with a score of 80.5 percent and the small traders (not shown in chart) are Bearish with a score of 34.8 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

SOYBEAN MEAL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	16.5	50.5	8.5
– Percent of Open Interest Shorts:	20.7	49.3	5.5
– Net Position:	-24,508	6,916	17,592
– Gross Longs:	95,385	292,582	49,507
– Gross Shorts:	119,893	285,666	31,915
– Long to Short Ratio:	0.8 to 1	1.0 to 1	1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	17.4	80.5	34.8
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.3	-5.8	-26.1

LIVE CATTLE Futures:

The LIVE CATTLE large speculator standing this week resulted in a net position of 119,044 contracts in the data reported through Tuesday. This was a weekly increase of 312 contracts from the previous week which had a total of 118,732 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 95.9 percent. The commercials are Bearish-Extreme with a score of 9.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 5.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

LIVE CATTLE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	51.7	27.7	7.1
– Percent of Open Interest Shorts:	21.3	51.4	13.9
– Net Position:	119,044	-92,602	-26,442
– Gross Longs:	202,150	108,436	27,836
– Gross Shorts:	83,106	201,038	54,278
– Long to Short Ratio:	2.4 to 1	0.5 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	95.9	9.5	5.0
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.0	-5.6	-12.1

LEAN HOGS Futures:

The LEAN HOGS large speculator standing this week resulted in a net position of 66,061 contracts in the data reported through Tuesday. This was a weekly decrease of -3,915 contracts from the previous week which had a total of 69,976 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 78.9 percent. The commercials are Bearish-Extreme with a score of 18.0 percent and the small traders (not shown in chart) are Bullish with a score of 52.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

LEAN HOGS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	41.4	33.9	7.8
– Percent of Open Interest Shorts:	19.3	54.6	9.2
– Net Position:	66,061	-61,847	-4,214
– Gross Longs:	123,796	101,493	23,441
– Gross Shorts:	57,735	163,340	27,655
– Long to Short Ratio:	2.1 to 1	0.6 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	78.9	18.0	52.2
– Strength Index Reading (3 Year Range):	Bullish	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-21.1	15.9	52.2

COTTON Futures:

The COTTON large speculator standing this week resulted in a net position of -42,428 contracts in the data reported through Tuesday. This was a weekly reduction of -2,477 contracts from the previous week which had a total of -39,951 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 2.5 percent. The commercials are Bullish-Extreme with a score of 94.5 percent and the small traders (not shown in chart) are Bearish with a score of 31.8 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

COTTON Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	23.4	49.8	5.9
– Percent of Open Interest Shorts:	38.8	35.4	5.0
– Net Position:	-42,428	39,929	2,499
– Gross Longs:	64,766	137,714	16,275
– Gross Shorts:	107,194	97,785	13,776
– Long to Short Ratio:	0.6 to 1	1.4 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	2.5	94.5	31.8
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-10.7	7.7	21.0

COCOA Futures:

The COCOA large speculator standing this week resulted in a net position of 36,968 contracts in the data reported through Tuesday. This was a weekly decline of -497 contracts from the previous week which had a total of 37,465 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 47.7 percent. The commercials are Bearish with a score of 49.6 percent and the small traders (not shown in chart) are Bullish with a score of 66.1 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

COCOA Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	40.5	36.0	9.7
– Percent of Open Interest Shorts:	10.5	71.1	4.6
– Net Position:	36,968	-43,297	6,329
– Gross Longs:	49,950	44,471	12,017
– Gross Shorts:	12,982	87,768	5,688
– Long to Short Ratio:	3.8 to 1	0.5 to 1	2.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	47.7	49.6	66.1
– Strength Index Reading (3 Year Range):	Bearish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	1.7	-1.3	-3.9

WHEAT Futures:

The WHEAT large speculator standing this week resulted in a net position of -91,111 contracts in the data reported through Tuesday. This was a weekly fall of -18,102 contracts from the previous week which had a total of -73,009 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 4.8 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 83.3 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

WHEAT Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	27.1	35.5	7.6
– Percent of Open Interest Shorts:	45.5	18.1	6.6
– Net Position:	-91,111	86,289	4,822
– Gross Longs:	133,872	175,754	37,566
– Gross Shorts:	224,983	89,465	32,744
– Long to Short Ratio:	0.6 to 1	2.0 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	4.8	90.1	83.3
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-9.3	4.3	35.7

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Financial News Soft Commodities

01 Feb

COT Stock Market Charts: Speculator Bets led by S&P500 & Nasdaq

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 January 28th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Bets led by S&P500-Mini & Nasdaq-Mini

The COT stock markets speculator bets were slightly lower this week as four out of the seven stock markets we cover had higher positioning while the other three markets had lower speculator contracts.

Leading the gains for the stock markets was the S&P500-Mini (19,561 contracts) with the Nasdaq-Mini (12,202 contracts) and the MSCI EAFE-Mini (2,676 contracts) also experiencing positive weeks.

The markets with the declines in speculator bets this week were the VIX (-21,385 contracts), the Russell-Mini (-1,008 contracts), the DowJones-Mini (-593 contracts) and with the Nikkei 225 (-305 contracts) also seeing lower bets on the week.

Stock Market Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Nasdaq-Mini & Russell-Mini

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 Nasdaq-Mini (87 percent) and the Russell-Mini (67 percent) lead the stock markets this week. The DowJones-Mini (63 percent) comes in as the next highest in the weekly strength scores.

On the downside, the MSCI EAFE-Mini (46 percent) comes in at the lowest strength level currently.

Strength Statistics:
VIX (51.6 percent) vs VIX previous week (70.9 percent)
S&P500-Mini (56.4 percent) vs S&P500-Mini previous week (53.5 percent)
DowJones-Mini (63.1 percent) vs DowJones-Mini previous week (64.1 percent)
Nasdaq-Mini (86.7 percent) vs Nasdaq-Mini previous week (67.8 percent)
Russell2000-Mini (66.9 percent) vs Russell2000-Mini previous week (67.6 percent)
Nikkei USD (54.1 percent) vs Nikkei USD previous week (56.7 percent)
EAFE-Mini (46.2 percent) vs EAFE-Mini previous week (42.7 percent)

MSCI EAFE-Mini tops the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the MSCI EAFE-Mini (4 percent) leads the past six weeks trends for the stock markets and is the only positive mover in the latest trends data.

The Russell-Mini (-15 percent) leads the downside trend scores currently with the DowJones-Mini (-9 percent) coming in as the next market with lower trend scores.

Strength Trend Statistics:
VIX (-0.4 percent) vs VIX previous week (15.5 percent)
S&P500-Mini (-2.4 percent) vs S&P500-Mini previous week (1.1 percent)
DowJones-Mini (-9.4 percent) vs DowJones-Mini previous week (-14.2 percent)
Nasdaq-Mini (-8.4 percent) vs Nasdaq-Mini previous week (-26.5 percent)
Russell2000-Mini (-14.8 percent) vs Russell2000-Mini previous week (-12.9 percent)
Nikkei USD (-5.1 percent) vs Nikkei USD previous week (-6.8 percent)
EAFE-Mini (4.1 percent) vs EAFE-Mini previous week (-17.1 percent)

Individual Stock Market Charts:

VIX Volatility Futures:

The VIX Volatility large speculator standing this week was a net position of -49,445 contracts in the data reported through Tuesday. This was a weekly fall of -21,385 contracts from the previous week which had a total of -28,060 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 51.6 percent. The commercials are Bullish with a score of 51.3 percent and the small traders (not shown in chart) are Bullish with a score of 71.7 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

VIX Volatility Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	19.3	49.6	7.6
– Percent of Open Interest Shorts:	34.2	34.2	8.1
– Net Position:	-49,445	50,961	-1,516
– Gross Longs:	63,710	164,190	25,270
– Gross Shorts:	113,155	113,229	26,786
– Long to Short Ratio:	0.6 to 1	1.5 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	51.6	51.3	71.7
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-0.4	2.3	-9.3

S&P500 Mini Futures:

The S&P500 Mini large speculator standing this week was a net position of -56,154 contracts in the data reported through Tuesday. This was a weekly boost of 19,561 contracts from the previous week which had a total of -75,715 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 56.4 percent. The commercials are Bearish with a score of 23.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 90.9 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

S&P500 Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	12.4	71.0	13.7
– Percent of Open Interest Shorts:	15.2	74.9	7.1
– Net Position:	-56,154	-79,303	135,457
– Gross Longs:	252,595	1,444,016	279,072
– Gross Shorts:	308,749	1,523,319	143,615
– Long to Short Ratio:	0.8 to 1	0.9 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	56.4	23.7	90.9
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-2.4	5.8	-9.1

Dow Jones Mini Futures:

The Dow Jones Mini large speculator standing this week was a net position of 1,734 contracts in the data reported through Tuesday. This was a weekly fall of -593 contracts from the previous week which had a total of 2,327 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 63.1 percent. The commercials are Bearish with a score of 32.8 percent and the small traders (not shown in chart) are Bullish with a score of 66.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

Dow Jones Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	17.5	64.7	16.7
– Percent of Open Interest Shorts:	15.4	69.2	14.3
– Net Position:	1,734	-3,769	2,035
– Gross Longs:	14,703	54,455	14,096
– Gross Shorts:	12,969	58,224	12,061
– Long to Short Ratio:	1.1 to 1	0.9 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	63.1	32.8	66.0
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-9.4	13.6	-21.5

Nasdaq Mini Futures:

The Nasdaq Mini large speculator standing this week was a net position of 30,691 contracts in the data reported through Tuesday. This was a weekly increase of 12,202 contracts from the previous week which had a total of 18,489 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 86.7 percent. The commercials are Bearish-Extreme with a score of 7.6 percent and the small traders (not shown in chart) are Bullish with a score of 77.6 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

Nasdaq Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.0	50.9	15.4
– Percent of Open Interest Shorts:	20.5	66.8	10.9
– Net Position:	30,691	-42,758	12,067
– Gross Longs:	85,687	136,285	41,209
– Gross Shorts:	54,996	179,043	29,142
– Long to Short Ratio:	1.6 to 1	0.8 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	86.7	7.6	77.6
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-8.4	4.7	1.9

Russell 2000 Mini Futures:

The Russell 2000 Mini large speculator standing this week was a net position of -22,035 contracts in the data reported through Tuesday. This was a weekly reduction of -1,008 contracts from the previous week which had a total of -21,027 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 66.9 percent. The commercials are Bearish with a score of 27.9 percent and the small traders (not shown in chart) are Bullish with a score of 68.6 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

Russell 2000 Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	11.6	77.3	8.1
– Percent of Open Interest Shorts:	16.8	75.8	4.4
– Net Position:	-22,035	6,387	15,648
– Gross Longs:	49,368	328,989	34,288
– Gross Shorts:	71,403	322,602	18,640
– Long to Short Ratio:	0.7 to 1	1.0 to 1	1.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	66.9	27.9	68.6
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-14.8	17.6	-19.9

Nikkei Stock Average (USD) Futures:

The Nikkei Stock Average (USD) large speculator standing this week was a net position of -3,063 contracts in the data reported through Tuesday. This was a weekly fall of -305 contracts from the previous week which had a total of -2,758 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 54.1 percent. The commercials are Bearish with a score of 44.5 percent and the small traders (not shown in chart) are Bullish with a score of 52.3 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

Nikkei Stock Average Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	6.4	73.0	20.6
– Percent of Open Interest Shorts:	31.9	51.5	16.6
– Net Position:	-3,063	2,586	477
– Gross Longs:	767	8,765	2,473
– Gross Shorts:	3,830	6,179	1,996
– Long to Short Ratio:	0.2 to 1	1.4 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	54.1	44.5	52.3
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-5.1	7.0	-7.9

MSCI EAFE Mini Futures:

The MSCI EAFE Mini large speculator standing this week was a net position of -28,515 contracts in the data reported through Tuesday. This was a weekly increase of 2,676 contracts from the previous week which had a total of -31,191 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 46.2 percent. The commercials are Bullish with a score of 56.9 percent and the small traders (not shown in chart) are Bearish with a score of 32.1 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

MSCI EAFE Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	9.5	87.6	2.4
– Percent of Open Interest Shorts:	16.0	81.8	1.7
– Net Position:	-28,515	25,494	3,021
– Gross Longs:	41,888	384,815	10,617
– Gross Shorts:	70,403	359,321	7,596
– Long to Short Ratio:	0.6 to 1	1.1 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	46.2	56.9	32.1
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	4.1	6.8	-43.7

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Financial News Stock Market News

31 Jan

Trump confirmed plans to impose 25% tariffs on Canada and Mexico

By JustMarkets

At the end of Thursday, the Dow Jones Index (US30) was up 0.38%. The S&P 500 Index (US500) added 0.53%. The Nasdaq Technology Index (US100) rose by 0.25%. The US stocks closed higher after a choppy Thursday amid mixed earnings results, while Fed policy bets remained unchanged following the release of key economic data. Meta rose by 1.6% after beating earnings expectations and signaling an ambitious investment in open-source AI, while Tesla jumped 2.9% after announcing earnings despite missing expectations. Meanwhile, Oracle and Broadcom rose by 5.2% and 4.5%, respectively. Microsoft, on the other hand, was down more than 6.2% as its revenue estimates fell short, reflecting some pessimism about the company’s big bet on Azure.

According to BEA’s preliminary estimate, the US economy is expected to grow at an annualized rate of 2.3% in Q4 2024, the slowest pace in three quarters, down from 3.1% in Q3 and projections of 2.6%.

On Thursday, Trump confirmed plans to impose 25% tariffs on Canada and Mexico starting February 1, but did not give a firm date on China, though he noted that tariffs on Chinese goods would be imposed soon.

Mexico’s Q4 2024 GDP contracted by 0.6% quarter-on-quarter, canceling out the 1.1% increase in the previous quarter and falling short of market expectations of a softer 0.2% decline. It’s the first cut since Q3 2021, coinciding with Central Bank signals that more rate cuts may be needed this year, especially if the US follows through on its tariff threats.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) rose by 0.41%, France’s CAC 40 (FR 40) closed up 0.88%, Spain’s IBEX 35 (ES35) gained 1.08%, and the UK’s FTSE 100 (UK100) closed positive 1.04%. After the ECB cut its key deposit rate by 25 bps, as expected, and signaled the possibility of further cuts, the DAX Index set a new record. Meanwhile, the Eurozone economy unexpectedly stalled in Q4 2024, posting its weakest performance in a year. The two largest economies saw an unexpected contraction, with Germany’s GDP declining by 0.2% and France’s by 0.1%. Italy stagnated for the second consecutive quarter, Ireland’s GDP fell by 1.3%, and Austria’s economy was flat. On the other hand, strong growth was recorded in Spain (+0.8%), Portugal (+1.5%) and Lithuania (+0.9%).

WTI crude prices climbed to $73 per barrel on Thursday, trying to rebound from four-week lows as weaker-than-expected economic growth in the US put pressure on the dollar and fueled speculation of a Fed rate cut in March. A weaker dollar made oil more attractive to buyers in other currencies. Meanwhile, investors assessed Trump’s new tariff threats against Canada and Mexico, major suppliers of oil to the US. The White House has confirmed plans to impose 25% tariffs if those countries don’t curb the fentanyl trade. Markets are also keeping an eye on the upcoming OPEC+ meeting on February 3 as Trump pressures the group, particularly Saudi Arabia, to lower oil prices.

The US natural gas prices fell nearly 2% to $3.11/MMBtu, the lowest level since early December, as projections point to milder weather and lower demand next week. Meanwhile, the EIA reported massive gas withdrawals due to last week’s extreme cold weather. The US utilities withdrew 321 billion cubic feet (bcf) from storage in the week ended January 24, well above last year’s 234 bcf and the five-year average of 189 bcf.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was up 0.25%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading due to holidays, while Australia’s ASX 200 (AU200) was positive 0.55%.

The benchmark Consumer Price Index in Tokyo, Japan rose 2.5% year-on-year in January 2025, up from 2.4% in the previous month to the highest level since February last year. The January figure was also in line with market expectations, signaling increased price pressures and providing further justification for the latest interest rate hike. At its January meeting, the Bank of Japan raised its discount rate to 0.5% from 0.25% and revised upward its inflation prognoses, signaling the possibility of further rate hikes.

The Australian dollar stabilized near $0.622 on Friday, but was still on track for a sharp weekly decline amid growing expectations that the Reserve Bank of Australia will start cutting interest rates in February. Data released earlier this week showed Australia’s annual inflation slowed to 2.4% in Q4, down from 2.8% in Q3 and slightly below the estimates of 2.5%. Producer inflation also fell to 3.7% in Q4, down from 3.9% in Q3. Markets are pricing in a 95% probability of a 25 basis point cut in the cash rate to 4.35% at the Central Bank’s February 18 meeting.

S&P 500 (US500) 6,071.17 +31.86 (+0.53%)

Dow Jones (US30) 44,882.13 +168.61 (+0.38%)

DAX (DE40) 21,727.20 +89.67 (+0.41%)

FTSE 100 (UK100) 8,646.88 +89.07 (+1.04%)

USD Index 108.13 +0.13 (+0.12%)

News feed for: 2025.01.31

Japan Tokyo Core CPI (m/m) at 01:30 (GMT+2);
Japan Unemployment Rate (m/m) at 01:30 (GMT+2);
Japan Retail Sales (m/m) at 01:50 (GMT+2);
German Retail Sales (m/m) at 09:30 (GMT+2);
Switzerland Retail Sales (m/m) at 09:30 (GMT+2);
German Unemployment Rate (m/m) at 10:55 (GMT+2);
German Consumer Price Index (m/m) at 15:00 (GMT+2);
Canada GDP (m/m) at 15:30 (GMT+2);
US Core PCE Price Index (m/m) at 15:30 (GMT+2);
US Chicago PMI (m/m) at 16:45 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News

31 Jan

Week Ahead: EU50 hits 24-year high ahead of Trump’s tariff showdown

By ForexTime

Trump set to slap tariffs on Mexico, Canada and China

FXTM’s EU50 ↑ 8% YTD, less than 4% away from records

Trade war remains major risk to European equities

Polymarket: 60% chance of tariff on Canada/Mexico by March

Beyond Trump, EU data could impact EU50 via ECB cut bets

President Donald Trump is set to impose 25% tariffs on goods from Mexico and Canada on February 1st. A potential 10% tariff on Chinese imports is also in the mix.

The consequences of whether Trump delivers on his threats are huge for global markets.

If Trump’s tariffs lead to a trade war, this could crush risk assets and boost safe-haven demand.

While the week ahead is packed with top-tier data releases and corporate earnings, the tariff showdown could set the tone:

Saturday, 1st February

Trump tariff deadline – Mexico, Canada, China

Monday, 3rd February

AU200: Australia retail sales, building approvals
CN50: China Caixin manufacturing PMI
GER40: Germany HCOB Manufacturing PMI
UK100: UK S&P Global Manufacturing PMI
US500: US construction spending, ISM Manufacturing, Fed speak

Tuesday, 4th February

NZD: New Zealand building permits
US30: US factory orders, US durable goods
NAS100: Alphabet earnings, Fed speak

Wednesday, 5th February

CN50: China Caixin services PMI
EU50: Eurozone HCOB Services PMI, PPI
NZD: New Zealand unemployment
SG20: Singapore retail sales
USDInd: Fed speak

Thursday, 6th February

AU200: Australia trade balance
EUR: Eurozone retail sales
GER40: Germany factory orders
GBP: BoE rate decision
US500: Amazon earnings, US initial jobless claims, Fed speak

Friday, 7th February

CAD: Canada unemployment
GER40: Germany industrial production
JP225: Japan household spending
TWN: Taiwan trade, CPI
USDInd: US nonfarm payrolls, unemployment, University of Michigan consumer sentiment

Our spotlight shines on FXTM’s EU50 which recently has touched its highest level since the year 2000.

The Index has gained over 8% year-to-date, boosted by a sharp rally in technology stocks and the European Central Bank’s 25bp rate cut on Thursday.

eu50 weekly

Note: FXTM’s EU50 tracks the underlying Euro Stoxx 50 index – which represents the performance of the 50 largest blue-chip companies operating within eurozone nations.

In our 2025 market outlook, we highlighted how Trump’s trade war could be a major risk to European equities.

Although Europe has been spared so far, repeated threats have been made and possible tariffs on China could trickle back down to Europe.

With all the above discussed, here are 3 forces that may jolt the EU50 next week:

1) Trump’s tariff deadline – Feb 1st

President Donald Trump’s deadline for slapping tariffs on Mexico, Canada and China is roughly 24 hours away.

If Trump moves ahead with his threats, this could spark risk aversion as trade war fears fuel concern over the global economy.

One thing to keep in mind is that Canada, Mexico and China have a window to negotiate with Trump before the tariffs take effect.

According to Polymarket, there is a 60% chance of 25% tariffs on Canada and Mexico being imposed by March 2025.

FXTM’s EU50 could see a selloff if Trump slaps tariffs with the downside intensified by fading hopes around negotiations.

Should Trump push the deadline, this could trigger a relief rally across markets – boosting FXTM’s EU50.

2) Key EU data

Top-tier data from the largest economy in Europe could shape expectations around ECB rate cuts.

On Thursday 30th January, the ECB cut interest rates by 25 basis points and warned of headwinds to the Eurozone economy.

Traders are currently pricing in another 25 bp ECB cut by March with the odds of another move by April at 87%.

Should incoming data from Germany and across Europe support the case for deeper cuts in 2025, this could support FXTM’s EU50.

3) Technical forces

Prices remain firmly bullish on the daily charts. The candlesticks are trading firmly above the 50, 100 and 200-day SMA but the RSI is deep within overbought territory.

Note: FXTM’s EU50’s all-time high is at 5522 – created in March 2000.

A solid daily close above 5300 may send prices toward the next psychological level at 5400.

Should 5300 prove reliable resistance, prices may slip back toward 5150.

EU50 2

Article by ForexTime

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

Economics & Fundamentals Financial News

31 Jan

Gold Hits Record High as Demand for Safe-Haven Assets Surges

By RoboForex Analytical Department

Gold soared towards 2,800 USD per ounce on Friday, setting a new all-time high. The surge comes as investors seek refuge in safe-haven assets amid renewed trade war threats from US President Donald Trump. His latest statements have heightened concerns over economic slowdowns and potential disruptions to global trade.

Key drivers of Gold’s record rally

Global monetary easing is reinforcing Gold’s rally. Several major central banks have adopted a softer stance, increasing liquidity and keeping interest rates low, further supporting the appeal of non-yielding assets like Gold.

The European Central Bank (ECB) cut rates as expected, leaving room for further easing
The Bank of Canada (BoC) halted quantitative tightening
Sweden’s Riksbank also cut rates earlier in the week
The People’s Bank of China (PBoC) and the Reserve Bank of India (RBI) signalled their willingness to ease policy further and inject liquidity

Meanwhile, the US Federal Reserve kept rates unchanged this week, maintaining expectations for at least two rate cuts later this year.

With all these factors, Gold is on track for its biggest monthly gain since March 2024.

Technical analysis of XAU/USD

On the H4 chart, Gold found support at 2,731 USD and extended its rally to 2,797 USD. A consolidation range is forming around this level.

If the range breaks downward, a correction to 2,772 USD is possible
If the range breaks upward, a growth wave towards 2,818 USD may develop, potentially extending further to 2,839 USD

This scenario is supported by the MACD indicator, which has its signal line above zero and points upwards, confirming bullish momentum.

On the H1 chart, Gold initially formed a consolidation range near 2,772 USD before breaking upwards, reaching 2,797 USD.

A continuation of the rally towards 2,808 USD is likely.
After reaching 2,808 USD, a pullback to 2,777 USD (testing support) is possible
Following the correction, further growth towards 2,818 USD and potentially 2,839 USD is expected

The Stochastic oscillator supports this XAU/USD outlook, with its signal line above 50 and preparing for an upward move towards 80, indicating more upside potential.

Conclusion

Gold’s record-high surge reflects heightened risk aversion and global monetary easing. With central banks cutting rates and Trump’s trade threats unsettling markets, demand for Gold remains strong. Technical indicators suggest further upside, with key resistance levels at 2,818 USD and 2,839 USD. However, short-term corrections towards 2,772 USD or 2,777 USD could provide buying opportunities before the uptrend resumes.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Metals

30 Jan

The Bank of Canada and the Riksbank cut rates expectantly. The US Fed took a pause on interest rate cuts.

By JustMarkets

At the end of Wednesday, the Dow Jones Index (US30) decreased by 0.31%. The S&P 500 Index (US500) was down 0.47%. The Nasdaq Technology Index (US100) fell by 0.51%.

The US Federal Reserve kept the federal funds rate at 4.25%-4.5% at its January 2025 meeting, in line with expectations. The Central Bank halted its rate-cutting cycle after three consecutive rate cuts in 2024 totaling a full percentage point. Chairman Powell said the Fed was in no hurry to cut interest rates and that it paused rate cuts to see further progress on inflation. Policymakers noted that recent indicators show that economic activity continues to grow at a solid pace. The unemployment rate has stabilized at low levels in recent months and labor market conditions remain stable.

The Bank of Canada (BoC) cut its key interest rate by 25 bps to 3% in its January 2025 decision, as markets had expected, marking a 200 bps rate cut since the start of the June 2024 rate cut cycle. Meanwhile, the Central Bank also announced the end of quantitative tightening and will resume asset purchases in early March to shore up liquidity and boost economic activity. The Governing Council noted that CPI inflation has moved closer to the 2% mark in recent months and is expected to remain close to the target over the next two years.

Mexico’s unemployment rate fell to 2.4% in December, the lowest since March and a 22-year low, exceeding estimates and signaling the strength of the labor market. This eased pressure on Banxico to maintain its dovish stance, bolstering confidence in the economy. Nevertheless, Banxico’s 2025 monetary program has softer conditions and potential rate cuts beyond 2024, and a 25bp rate cut in February remains the consensus.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) rose by 0.97%, France’s CAC 40 (FR40) closed down 0.32%, Spain’s IBEX 35 (ES35) gained 1.09%, and the UK’s FTSE 100 (UK100) closed positive 0.28%. The DAX Index gained nearly 1% to hit a new record high of 21637.5 on Wednesday, continuing to rise for the second consecutive day. Investors were assessing fresh corporate results and preparing for key ECB monetary policy decisions today, where a 0.25% rate cut is expected.

Sweden’s Riksbank cut its discount rate by 25 bps to 2.25% at its January 2025 meeting in line with market expectations, citing inflation near the 2% target but continued economic weakness. This is the fifth consecutive rate cut and the sixth since May, totaling 175 bps. Previous rate cuts have benefited households and businesses, although their full impact on demand remains to be seen.

WTI crude oil prices fell below $73 a barrel on Wednesday as traders assessed the impact of potential US tariffs on Canada and other oil suppliers, as well as concerns about rising inventories. President Trump’s plan to impose 25% tariffs on Canada and Mexico, which would begin on February 1, added to the pressure as Canada is a major supplier of oil to the US. The threat weakened Canadian crude prices and US inventories rose by 3.463 million barrels, the first increase after nine straight weeks of declines.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was up 1.02%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading due to holidays, while Australia’s ASX 200 (AU200) was positive 0.57%.

The Hong Kong Monetary Policy Authority (HKMA) kept the benchmark rate unchanged at 4.75% on January 30, hours after the US Federal Reserve kept borrowing costs unchanged. Monetary policy in the Asian financial center is conducted in line with the US as the local currency is pegged to the US dollar. The HKMA last cut interest rates in the city by 25 bps in December.

The New Zealand dollar remains under pressure amid growing expectations that the Reserve Bank of New Zealand (RBNZ) will cut its 4.25% monetary rate by 50 bps at its February meeting. Markets also expect further rate easing to 3.0% by the end of the year. In economic news, New Zealand business confidence fell to a five-month low in January (54.4 vs. 62.3 in December).

In Australia, major banks such as Westpac and NAB have brought forward their projections for the first RBA rate cut, now predicting it could come in February rather than May. Markets rate the probability of a 25 basis point cut in the money rate to 4.35% at the Central Bank’s February 18 meeting at 95%.

S&P 500 (US500) 6,039.31 −28.39 (−0.47%)

Dow Jones (US30) 44,713.52 −136.83 (−0.31%)

DAX (DE40) 21,637.53 +206.95 (+0.97%)

FTSE 100 (UK100) 8,557.81 +23.94 (+0.28%)

USD index 107.94 +0.08 (+0.07%)

News feed for: 2025.01.30

Switzerland Trade Balance (m/m) at 09:00 (GMT+2);
Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+2);
Eurozone GDP (m/m) at 12:00 (GMT+2);
Eurozone Unemployment Rate (m/m) at 12:00 (GMT+2);
Eurozone ECB Interest Rate Decision at 15:15 (GMT+2);
Eurozone ECB Monetary Policy Statement at 15:15 (GMT+2);
US GDP (m/m) at 15:30 (GMT+2);
US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
Eurozone ECB Press Conference at 15:45 (GMT+2);
US Pending Home Sales (m/m) at 17:00 (GMT+2);
US Natural Gas Storage (w/w) at 17:30 (GMT+2).

By JustMarkets

Economics & Fundamentals Financial News

30 Jan

Market round-up: Big tech mixed, Fed holds, ECB next

By ForexTime

Magnificent 3 post mixed earnings; DeepSeek elephant in room

Fed in no rush to act, rate cut not expected until June.

ECB seen slashing rates by 25bp in January

Big tech earnings season has kicked off with mixed results from Microsoft, Meta and Tesla.

1) Microsoft shares fell over 6% pre-market despite reporting strong quarterly earnings.

Its cloud business missed revenue estimates, disappointing investors – especially after recent events surrounding DeepSeek.

Still, Microsoft CEO assured investors that DeepSeek was good for business – triggering a rebound that recouped all pre-market losses.

2) Meta also published a mixed bag of results, sending its shares whipsawing pre-market.

The tech giant posted quarterly results that beat expectations, but first-quarter revenue projections were slightly weak. However, positive comments by CEO Mark Zuckerberg pushed meta stocks higher.

3) Tesla’s revenue and profit not only missed expectations, but the EV titan also softened projections for 2025 vehicle sales growth.

Despite slipping as much as 6% pre-market prices later rebounded rising over 5%.

Note: Apple reports its fiscal first-quarter earnings on Thursday 30th after US markets close.

DeepSeek remains the elephant in the room and will likely to dominate big tech earnings. If investors remain fearful over DeepSeek threatening US exceptionalism in AI, this could drag tech stocks lower.

Fed in no rush to cut rates

The Federal Reserve left interest rates unchanged as widely expected on Wednesday.

But the biggest takeaway was that officials were not in a rush to cut rates thanks to a strong economy and more time needed to monitor inflation.

Indeed, inflationary pressures could make a return due to possible tariffs and immigration policies implemented by Trump.

Traders are currently pricing in a 53% probability of a 25 bp Fed cut by May with a move fully priced in by June.

FXTM’s USDInd offered a muted reaction to the Fed meeting, with prices trading around 108.00 as of writing.

The outlook for the dollar may be shaped by what actions Trump take on February 1st when 25% tariffs on Canada, and Mexico and 10% tariffs on China. Trump has also threatened to hit the European Union with tariffs, but no date has been confirmed.

ECB expected to cut rates by 25bp

The ECB is expected to cut interest rates by 25 basis points when it meets this afternoon.

Should the central bank signal faster and deeper rate cuts in 2025 due to Trump’s potential tariffs, this could weaken the euro further.

Looking at the charts, the EURUSD is trading below the 50-day SMA as of writing.

Over the past year, the ECB meeting has triggered upside moves of as much as 0.2% or declines of 0.15% in a 6-hour window post-release.

Sustained weakness below this point could open a path toward the 21-day SMA at 1.0350 and 1.0276 – the lower bound of Bloomberg’s FX model.

A move back above 1.0434 could see an incline back toward 1.0500.

Article by ForexTime

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

Economics & Fundamentals Financial News

30 Jan

EUR/USD Stable as the Market Absorbs Fed Decision and Awaits ECB Meeting

By RoboForex Analytical Department

The EUR/USD pair is consolidating around 1.0426 on Thursday as investors digest the Federal Reserve’s latest policy decision and shift their focus to the upcoming European Central Bank (ECB) meeting.

Key market influences

As widely expected, the Federal Reserve held its interest rate steady at 4.5% per annum. In its commentary, the central bank reaffirmed its commitment to reducing its balance sheet at a pace of 25 billion USD per month. Fed Chair Jerome Powell stated that inflation does not necessarily need to fall to 2% before considering rate cuts. He also supported banks’ provision of crypto services, a move that signals openness to financial innovation.

Notably, Powell indicated that the Fed is in no rush to lower interest rates. The central bank monitors stock market valuations closely, expressing concerns that some assets may be significantly overvalued. Interestingly, Powell avoided commenting on US President Donald Trump’s repeated calls for immediate rate cuts.

Earlier reports suggested that Trump may push for a policy allowing US presidents to have a say in setting interest rates. While the Fed remains independent for now, the issue could resurface in political discussions.

Technical analysis of EUR/USD

On the H4 chart, EUR/USD moved downward to 1.0382, forming a corrective wave towards 1.0437. After completing this correction, the pair is likely to resume its decline, with an initial target at 1.0345. A brief correction to 1.0437 may follow before the downtrend extends towards 1.0050. The MACD indicator supports this outlook, with its signal line positioned above zero but trending downwards, indicating bearish momentum.

On the H1 chart, the pair consolidated around 1.0437 before breaking lower to reach a local target at 1.0382. A corrective move towards 1.0437 is now likely before the pair resumes its decline towards 1.0345, with a potential continuation to 1.0160. The Stochastic oscillator confirms this scenario, with its signal line above 80 but pointing downward towards 20, signalling the likelihood of further losses.

Conclusion

The EUR/USD pair remains stable following the Fed’s policy announcement, with attention shifting to the ECB’s upcoming meeting. The Fed’s cautious stance on rate cuts supports the USD, while uncertainty surrounding Trump’s potential influence over monetary policy adds another layer of complexity. Technical indicators point to further downside potential for EUR/USD, with key targets at 1.0345 and 1.0160. The next major moves depend on the ECB’s policy outlook and broader market sentiment.

Disclaimer

Financial News Forex and Currency News

29 Jan

Why building big AIs costs billions – and how Chinese startup DeepSeek dramatically changed the calculus

By Ambuj Tewari, University of Michigan

State-of-the-art artificial intelligence systems like OpenAI’s ChatGPT, Google’s Gemini and Anthropic’s Claude have captured the public imagination by producing fluent text in multiple languages in response to user prompts. Those companies have also captured headlines with the huge sums they’ve invested to build ever more powerful models.

An AI startup from China, DeepSeek, has upset expectations about how much money is needed to build the latest and greatest AIs. In the process, they’ve cast doubt on the billions of dollars of investment by the big AI players.

I study machine learning. DeepSeek’s disruptive debut comes down not to any stunning technological breakthrough but to a time-honored practice: finding efficiencies. In a field that consumes vast computing resources, that has proved to be significant.

Where the costs are

Developing such powerful AI systems begins with building a large language model. A large language model predicts the next word given previous words. For example, if the beginning of a sentence is “The theory of relativity was discovered by Albert,” a large language model might predict that the next word is “Einstein.” Large language models are trained to become good at such predictions in a process called pretraining.

Pretraining requires a lot of data and computing power. The companies collect data by crawling the web and scanning books. Computing is usually powered by graphics processing units, or GPUs. Why graphics? It turns out that both computer graphics and the artificial neural networks that underlie large language models rely on the same area of mathematics known as linear algebra. Large language models internally store hundreds of billions of numbers called parameters or weights. It is these weights that are modified during pretraining.

Large language models consume huge amounts of computing resources, which in turn means lots of energy.

Pretraining is, however, not enough to yield a consumer product like ChatGPT. A pretrained large language model is usually not good at following human instructions. It might also not be aligned with human preferences. For example, it might output harmful or abusive language, both of which are present in text on the web.

The pretrained model therefore usually goes through additional stages of training. One such stage is instruction tuning where the model is shown examples of human instructions and expected responses. After instruction tuning comes a stage called reinforcement learning from human feedback. In this stage, human annotators are shown multiple large language model responses to the same prompt. The annotators are then asked to point out which response they prefer.

It is easy to see how costs add up when building an AI model: hiring top-quality AI talent, building a data center with thousands of GPUs, collecting data for pretraining, and running pretraining on GPUs. Additionally, there are costs involved in data collection and computation in the instruction tuning and reinforcement learning from human feedback stages.

All included, costs for building a cutting edge AI model can soar up to US$100 million. GPU training is a significant component of the total cost.

The expenditure does not stop when the model is ready. When the model is deployed and responds to user prompts, it uses more computation known as test time or inference time compute. Test time compute also needs GPUs. In December 2024, OpenAI announced a new phenomenon they saw with their latest model o1: as test time compute increased, the model got better at logical reasoning tasks such as math olympiad and competitive coding problems.

Slimming down resource consumption

Thus it seemed that the path to building the best AI models in the world was to invest in more computation during both training and inference. But then DeepSeek entered the fray and bucked this trend.

DeepSeek sent shockwaves through the tech financial ecosystem.

Their V-series models, culminating in the V3 model, used a series of optimizations to make training cutting edge AI models significantly more economical. Their technical report states that it took them less than $6 million dollars to train V3. They admit that this cost does not include costs of hiring the team, doing the research, trying out various ideas and data collection. But $6 million is still an impressively small figure for training a model that rivals leading AI models developed with much higher costs.

The reduction in costs was not due to a single magic bullet. It was a combination of many smart engineering choices including using fewer bits to represent model weights, innovation in the neural network architecture, and reducing communication overhead as data is passed around between GPUs.

It is interesting to note that due to U.S. export restrictions on China, the DeepSeek team did not have access to high performance GPUs like the Nvidia H100. Instead they used Nvidia H800 GPUs, which Nvidia designed to be lower performance so that they comply with U.S. export restrictions. Working with this limitation seems to have unleashed even more ingenuity from the DeepSeek team.

DeepSeek also innovated to make inference cheaper, reducing the cost of running the model. Moreover, they released a model called R1 that is comparable to OpenAI’s o1 model on reasoning tasks.

They released all the model weights for V3 and R1 publicly. Anyone can download and further improve or customize their models. Furthermore, DeepSeek released their models under the permissive MIT license, which allows others to use the models for personal, academic or commercial purposes with minimal restrictions.

Resetting expectations

DeepSeek has fundamentally altered the landscape of large AI models. An open weights model trained economically is now on par with more expensive and closed models that require paid subscription plans.

The research community and the stock market will need some time to adjust to this new reality.

About the Author:

Ambuj Tewari, Professor of Statistics, University of Michigan

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

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