HALISTER1: UST MORNING CALL: ‘Market Likely Vulnerable to Further Squeezes’

UST MORNING CALL: ‘Market Likely Vulnerable to Further Squeezes’

(Bloomberg) -- “Aside from new shorts in FV and TY, TU shorts were only barely trimmed,” which “leaves the market likely vulnerable to further squeezes with the biggest change in the TY,” BMO strategist Aaron Kohli says in note.
  • “Part of the positions move is a likely effect of investors’ renewed confidence after quarter-end and stability in risk markets. Still, the new shorts present a risk to a further rally in rates especially if risk markets start to look weak”
  • Other observations from strategist morning notes:
  • FTN (Jim Vogel): “Cash that was on hold for a signal from the Fed seeps into the bond market almost every day now”
  • Marty Mitchell (independent): “Momentum is overbought in equities and in the bond market and that should act as a governor on further upside in both sectors until those studies can correct from those overbought extremes”
    • “If we don’t get an upside correction in yields into the auctions, then the chances grow that we will get that correction after the auctions (due to weak demand)”
  • Seaport Global (Tom di Galoma): “Yield curve steepening and the start of Japanese new fiscal year in April should provide the necessary bid for the auctions to go well this week”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Aaron Kohli (Bank of Montreal)
Jim Vogel (Ftn Financial)
Marty Mitchell (The Mitchell Market Report LLC)
Tom Di Galoma (Seaport Group LLC/The)

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