Halister News

(Bloomberg) -- UST 10Y futures have shown “characteristics of a bull market, with open interest increasing with rising prices,” BNP Paribas strategists Timothy High and Daniel Totouom-Tangho say in Feb. 4 note.

• “Similar to the Bund market, Treasuries may be vulnerable to a pullback,” and “a turn in prices may lead to a potentially painful liquidating selloff”
• Also, most of the yield declines this year have been on “narrowing inflation breakevens, leaving real yields lower by only half the move in nominal yields,” which may indicate some market participants find the rally “a little dubious”
• If risk assets continue to stabilize, breakevens may widen further and push nominal yields higher
• However, “continued deterioration” could lead to a fresh fall in nominal yields if real yields drop, while “breakevens would not need to fall”
• BNP was stopped out of UST 2Y short recommended Dec. 3