(Bloomberg) — Traders are beginning to bet on losses in the US Treasury market as they adjust for a more gradual pace of Federal Reserve interest-rate cuts.
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Since a resilient September jobs report late last week, bond traders have been abandoning long positions in the futures market as part of a broad unwind of bullish wagers that hinged on a series of big rate cuts this year and into early 2025.
At the same time, wagers on losses for US bonds are starting to emerge. The move has led to the biggest outright short position in the cash market since February 2023, according to a survey of JPMorgan Chase & Co. Treasury clients. Yields on 10-year benchmark Treasuries were holding above 4% on Wednesday morning in London.
There’s an “appetite for new short risk ahead of this week’s inflation release,” Citigroup Inc. strategist David Bieber wrote in a note on Tuesday.
The fresh short positions are being formed…
