New York (HedgeCo.net) – The latest Commitment of Traders report for 30-day Treasury bills showed that large speculators have lightened up considerably on their bearish sentiment. The large speculator group is made up mostly of hedge funds and other institutional investors and in mid-July the group was net short over 160,000 contracts for 30-day bills. The COT report that was released on Friday with numbers through September 8th showed the group is net short just over 65,000 contracts now.

What this suggests is that the group isn’t as convinced that the Fed will raise rates later this week when the FOMC meeting concludes on Thursday. If the group was certain a rate increase was happening, we would likely see more contracts being sold short.

While this recent development signals a shift in sentiment toward 30-day bills, it also begs the question about what Element Capital Management is doing. We featured a story about Element last week and detailed how the firm has drawn the attention of the Treasury Department due to the amount of purchases it has made at auctions in recent months. The crux of article was from a report from the Wall Street Journal, but the journal article didn’t detail which auctions Element has been most active in. Are they buying short-term bills or are they buying longer term notes and bonds?

Rick Pendergraft
Research Analyst
HedgeCoVest