“Massive” ‘Smart-Money’ Bond Short Completely Unwound

The massive ‘smart money’ bond short has been completely unwound.
In late June, we wrote a post suggesting why perhaps the long-term, and long-doubted, bull market in bonds could be in jeopardy. The thesis admittedly revolved substantially around anecdotal evidence pointing to a new-found bullish consensus toward bonds. But after at least a decade in which most market participants thought the only possible path for interest rates was higher, the widespread resignation to ‘lower for longer’ seemed to be a watershed change of opinion. And that change of consensus opinion was what we believed could pave the way for a long-term reversal in interest rates.
In the shorter-term, it was an objective piece of evidence that pointed to the upside being the path of least resistance for rates. Specifically, from the CFTC’s Committment Of Traders (COT) report on futures positioning, we noted that Commercial Hedgers had just moved to their largest net short position in Treasury Bond futures in 18 years. And as we continued in the post,

This post was published at Zero Hedge on Nov 8, 2016.