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CTAs ‘Are Likely To Amplify’ Oil Price Spike, JPMorgan Says

Chasing the momentum?

10-year yields yo-yoed on Monday, as markets coped with the fallout from one the most consequential geopolitical escalations in recent history. At 1.78%, we're now well off the recent, reflation optimism-inspired highs. The safe-haven bid across markets over the two sessions since the assassination of Iran's most legendary general has put the brakes on the nascent bond selloff that some believed would push benchmark yields stateside beyond 2%. A deluge of supply could help reverse the bullish momentum this week and indeed, Treasurys moved back to little changed during the US morning, on decent data out of the UK and ahead of issuance from the US, Japan and France. At the same time, crude is obviously surging on the same geopolitical tensions that have, temporarily anyway, capped the rise in DM bond yields. To what extent are trend followers likely to contribute to the next potential leg lower for yields or higher for crude? Well, if you ask JPMorgan, "CTAs are likely to amplify bullish momentum [for crude] in the coming weeks now that longer-term and shorter-term signals are now all bullish". (JPMorgan) "We noted in early December that the switch in the longer-term signa
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