Bearish sentiments persist in bond markets
Robert Burgess | 08 Jun 2018 00:30
The rebound in the US bond market in recent weeks that pushed yields on 10-year Treasuries back below the psychologically important 3% level has made the bond bears very happy. Yes, the bears. Rather than capitulating, some new data suggests that the bears see the rally as an opportunity to set up new positions betting against bonds at more attractive levels.

A widely followed JPMorgan Chase & Co survey showed that investors went from being neutral on bonds to bearish in the biggest weekly decline in sentiment since the start of October. Its so-called All Client Net Long index slid to negative 19 from zero in the week ended June 4, as 10-year yields dropped to as low as 2.76% from as high as 3.13% on May 18.

If anything, the survey underscores the multitude of headwinds facing the bond market. Signs of faster inflation have traders betting on two to three more interest-rate increases from the US Federal Reserve this year, starting with one this week.

On top of that, the government is poised to double bond sales this year to about US$1 tril (RM3.97 tril) to pay for a growing federal budget deficit.

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