Traders are turning less bearish on US Treasuries ahead of a busy week featuring the Treasury’s quarterly issuance statement, midterm election results, and the crucial US jobs report. Open interest in Treasury futures has risen alongside bond price gains, signaling a shift from extreme short positions seen in early October. Recent volatility around the AI trade has driven investors toward Treasuries as a safe haven, pushing 10-year yields below 5%.
With positioning now more balanced, market participants are watching for catalysts that could influence Federal Reserve policy. Bank of America strategists note continued two-way risk in rates, while CFTC data shows asset managers boosting net longs on 10-year futures to a record 3 million contracts. Citigroup’s David Bieber says tactical positioning has flipped into extended longs, with options flows favoring hedges against further bond rallies.
An $11 million premium trade on December 106.75 calls highlights growing bullish sentiment. As of early November, investor long positions were trimmed slightly, shifting to neutral, but the overall tone suggests growing confidence in lower yields ahead of key economic data.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing