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What's crowded? Bond longs or shorts?

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What's crowded? Bond longs or shorts?

In a bizarre way, the enormous treasury futures short exposure of hedge funds might actually be the manifestation of an overextended long bond bet in the market.

Fallacy Alarm
Oct 11, 2023
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What's crowded? Bond longs or shorts?

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In recent months you have often heard me claim that the long bonds trade is hopelessly overcrowded which might cause trouble ahead. With a $2tn deficit, the US Treasury is effectively selling fresh bonds into a void. The Fed does not want to buy. Foreign players can’t absorb it because their currencies are under pressure. And private investors are maxed…

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