Hedge funds and institutional investors are ramping up bearish positioning across the US Treasury curve, as long-dated bonds continue to face relentless selling pressure amid mounting concerns over fiscal imbalances and global supply dynamics, according to a report by Bloomberg.
The report cites a recent JPMorgan Treasury client survey showing that outright short positions across all investor types – including central banks, real money, and hedge funds – rose to the highest levels since February, underscoring a growing consensus that yields could remain elevated or grind higher. Net long positioning fell to its lowest since early Q1.
The move reflects a broader global steepening in yield curves, driven by a potent mix of surging sovereign issuance, softening demand for duration, and geopolitical overhangs. US 30-year yields remain near the psychologically critical 5% threshold, after briefly hitting 5.15% last week — levels not seen since October 2023.
“The message is clear: the long end is under structural pressure,” said Leah Traub, Portfolio Manager at Lord Abbett. “It’s not just about inflation expectations — it’s about the market grappling with both a glut of issuance and diminishing demand across global curves.”
While short-dated paper continues to see robust demand — as evidenced by record indirect bidding in a recent five-year note auction – the bid for duration has collapsed, with positioning and option skew data suggesting further downside risk in long bonds.
