HALISTER1: UST MORNING CALL: Long Positioning, Global Forces Dominate

UST MORNING CALL: Long Positioning, Global Forces Dominate

(Bloomberg) -- Analysts highlight the long positioning in the market, focus on recent curve moves driven by external forces.
  • JPMorgan strategists comment on the extent of long positioning in client note; client survey shows highest percentage of net longs since 2010, CFTC spec positioning, CTA beta show increase in long duration positions over past month
    • Unwinds of longs could pressure yields higher, but unlikely to be driver of yields until geopolitical outlook stabilizes: JPM
  • Expect underlying bid to persist, buying on dips down to support is the preferred strategy as geopolitical risks persist, Fed unable to move, writes independent strategist Marty Mitchell in a client note
  • Better real money buying in long end Treasuries, continued real money receiving in long end swaps, see yesterday, though much less than Monday and Friday, writes Morgan Stanley in a client note
  • Global forces continue to dominate Fed outlook, U.S. bond market; ~85% of JGB curve now negative, current flattening of the European core curves, has dragged U.S. long yields are dragged ever lower, writes RBS in a client note
  • Month-end flows may begin to drive price action in coming sessions; Barclays U.S. Aggregate to extend by 0.08 years
  • Technicals:
    • Resistance: 133-18 (June 28 high), 134-07 (June 24 high);
    • Support: 132-22+ (June 27 low), 132-14+ (50% of June 24 range)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Marty Mitchell (The Mitchell Market Report LLC)

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