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Hedge funds up bearish bets on US Treasuries

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Hedge funds are continuing to up their bearish bets on higher US bond yields and signs are emerging that the size and pace of this collective wager is reaching extreme levels according to a report by Reuters.

The report says the latest Commodity Futures Trading Commission report – the first snapshot of investor positioning since Fed chair Jerome Powell’s Jackson Hole commitment to get inflation back on target – shows funds increased bearish bets on Treasuries across the curve.

Net short position in two-year futures are up to 281,600 contracts from 241,143 contracts, the biggest bearish bet on two-year bonds since April last year, with funds now having added to that short position for six consecutive weeks, the most bearish streak in four years. 

Funds’ are now also net short five-year Treasuries futures to the tune of 565,456 contracts, the largest net short since November 2018. This also marks the sixth straight week of funds adding to the short position – the most bearish streak in four years.

In addition, funds upped their net short position in the 10-year space to 440,103 contracts, the largest since April.

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