- De-leveraging in futures can support a steeper Treasury curve
- Trader positioning now less extreme, moving closer to neutral
The unwinding of positions in Treasury futures stands to rekindle a popular bond-market wager that’s been burned as traders pare back expectations for aggressive Federal Reserve interest rate cuts, Bloomberg reported.
The recalibration is pushing firms to unwind leveraged positions, with some closing out bets against short-dated Treasuries and others unwinding bullish trades on longer-dated bonds. That’s expected to keep fueling buying of shorter bonds and sales of longer-maturity ones, widening the gap between the two.