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‘Tectonic’ CTA Shift Drove Rates Reversal, Bond Rally
Two months ago, the US long-end couldn't sustain a bid to save its life and a hawkish Fed risked an over-tightening accident.
Now, bonds can't sell off and market pricing suggests high odds of a rate cut as soon as the March FOMC meeting.
A relentless rally in US duration continued on Wednesday, as the Treasury curve bull flattened following a soft read on private sector hiring and amid an ongoing decline for crude.
This is by now one of the more impressive bond rallies I can personally remem
Makes one wonder about information value of market-derived forecasts of rate cuts.
Thanks for the post. Was wondering about this topic.
If I was a bond trader, but I buy & hold to mat., … I’d be taking $ off table tomorrow… velocity and overshoots are the new norm, imho. Money makers for the brave and nimble.
well, if not jobs report, then likely hawkish hold and hawkish leaning “killer” dots may frustrate the current uber longs…definitely seems that this cycle bottom is in for long suffering long bond holders, but a reasonable correction may be in order given recent strength…