Bond Traders Place Biggest Short in Treasuries Since Fed’s ZIRP and QE Began (Zirp The Surveyor)

Jon Economy, Fiscal Policies, Government, Market Commentary

(Bloomberg) – After the worst losses for Treasuries in 10 months, investors are ramping up bets that the world’s largest bond market will decline further.
A JPMorgan Chase & Co. survey for the week through Oct. 2 found that clients as a whole soured on Treasuries, with 44 percent holding a short position relative to their benchmark. That’s the most since 2006 and up from 30 percent in the prior period. Among those who actively place bets, such as speculative accounts, a record 70 percent were short.
The shift shows how a confluence of factors is weighing on the minds of bond traders as the fourth quarter begins. The Federal Reserve will start unwinding its balance sheet this month, and Chair Janet Yellen has signaled that stubbornly low inflation won’t deter policy makers from tightening. Meanwhile, in the betting markets, former Fed Governor Kevin Warsh, seen by some traders as having a more hawkish tilt, has the highest odds to succeed Yellen.

This post was published at Wall Street Examiner on October 3, 2017.