Yields on both 20-year and 30-year treasury bonds rose to more than a month’s highs, and the already crowded short positions in Treasury futures appear to have increased further. If the trend starts to turn around, the market will face a great risk of short covering.
the open positions of 15-25-year US Treasury futures increased steadily, while the yield of 30-year treasury bonds broke the 50 day moving average, the open positions of ultra long-term US bond futures also increased sharply.
short positions are already crowded. As of August 4, the net short positions of bond futures speculators reached their highest level since 2006, according to the commodity futures trading commission. Short positions in ultra long term bonds are close to record highs. At the same time, recent options activities have shown the theme of re inflation, betting on higher long-term yields.
However, the thin ice has not yet broken. US Treasury bonds fell for the fourth consecutive day on Wednesday, with German 30-year bond yields and UK 5-year bond yields both rising to positive levels at one time, following global trends.
the rise in yields is ahead of this week’s issuance of 10-year and 30-year treasury bonds. Since then, the focus will begin to shift to the September fed meeting, which could change the slope of the yield curve if there is a policy adjustment.
it is expected that the Fed may increase the scale of treasury bond purchases, adjust its composition, or both at this meeting, and may also issue policy assessment results.