‘Overshoots’, ‘Devastation’ And The Always Enthralling Term Premium Debate

‘Overshoots’, ‘Devastation’ And The Always Enthralling Term Premium Debate

Right, so on Tuesday, in the course of explaining why stretched positioning might not be a contrarian indicator for Treasurys (i.e., why the crowded spec short might not necessarily presage an imminent squeeze that ends up capping the rise in 10Y yields), Goldman reiterated their argument that the term premium has room to be rebuilt. Specifically, the bank said this: While the market has priced in more term premium in the successive sell-offs, we think that the path to normalization is still t
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