For all of the hoopla about data showing speculators’ record net short positions in Treasury futures, the market for repurchase agreements suggests people may be overestimating the potential for a squeeze in U.S. debt.
Repos involving 5-year and 10-year Treasuries are currently trading “only slightly special,” according to Curvature Securities vice president Scott Skyrm. Specific securities are considered on “special” when there is high demand for them and the rate they attract in the repo market is below those on general collateral.
The article is available at https://www.bloomberg.com/news/articles/2018-08-21/what-squeeze-treasury-repo-suggests-shorts-are-not-so-extreme