Clients Are The Most Net Short Treasuries Since 2006, JPMorgan Warns

Tyler Durden's picture

We have shown the surge in short positioning that CFTC exposes via its Commitment of Traders data that has begun to see some covering; but despite Citi's protestation that the recent rally in bonds 'must' have cleared out the short base and squared positions, the truth is - the Treasury market is dominated by more than just futures and institutional clients have not been this short Treasuries since 2006. As JPMorgan's Client Survey exposes, as of the end of last week, active clients were adding to shorts... which could be a problem as the last time all clients were this net short, bond yields collapsed in the next few months...



So while we know that banks have massive flattener positions on, they continue to push the idea of steepeners and bearish bets to their clients... perhaps it is time to do as they 'do', not as they 'say'.


Chart: Bloomberg

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NoDebt's picture

"active clients were adding to shorts... which could be a problem as the last time all clients were this net short, bond yields collapsed in the next few months..."

Short that stuff at your peril.  If there's a market where the Fed has almost absolute dominion, it's Treasuries, and the last thing they want to see is higher rates.

Againstthelie's picture

Short that stuff at your peril.  If there's a market where the Fed has almost absolute dominion

Wonderful comment. Because it also shows, why stocks are going up and Gold can find no friends: the Central Banks have clearly signalled what they want. And nobody is taking positions against them, as long as CBs have full control. The CBs make the music for now.

The logical conclusion from this thesis is, that gold needs a development that goes against the intentions of the CBs.

NoDebt's picture


So, I guess there's still a chance that Obamacare could be overturned.

JustObserving's picture

Snowden revealed that the NSA spies on everybody including Congress, White House and Supreme Court.  So the NSA can order the Supreme Court to edit its decisions.  And, probably it does:

The most extraordinary passage in the memo requires that the Israeli spooks “destroy upon recognition” any communication provided by the NSA “that is either to or from an official of the US government.” It goes on to spell out that this includes “officials of the Executive Branch (including the White House, Cabinet Departments, and independent agencies); the US House of Representatives and Senate (members and staff); and the US Federal Court System (including, but not limited to, the Supreme Court).”

The stunning implication of this passage is that NSA spying targets not only ordinary American citizens, but also Supreme Court justices, members of Congress and the White House itself. One could hardly ask for a more naked exposure of a police state.


AccreditedEYE's picture

This also means all the weakest companies (aka "most shorted") will be able to continue to have access to really, really cheap credit. Since the 80's, the equity Bull has followed low yields and the bond Bull. Whenever the Bond Bull starts to crack only then will you have a chance at lower equity prices. (Don't hold your breath)

Stoploss's picture

LOL!!!  Does this qualify as a pain trade?

There is definitely going to be some pain..

flyingpigg's picture

Crowded trade Bitchez! They usually cause pain indeed.

youngman's picture

Bonds at all time highs...and people are shorting that...makes sense to me in a normal market.....but I agree with NoDebt...the Fed have control over this market..and interest rates will never get out of control will destroy the US Politicians playground....but if they do..that marks the end and the soon to come crash...when the Fed has lost control....

Dr. Engali's picture

These people are fucking insane. Their problem is that for some strange reason they believe we still have markets, whereas we clearly do not. The bond shorts, like the market shorts, are going to get creamed. How hard is it to understyand that we are Japan 2.0? 

Bay of Pigs's picture
"JPMorgan Warns"

How do we take that headline seriously? Haha....

taketheredpill's picture



Sentiment works reasonably well unless it doesn't.  June 2013.



disabledvet's picture

Are they sure they want to win that bet?

"Dog chases tire, catches car. Driver hears noise but doesn't stop."

Rodders75's picture



So if further yield compression happens it won't be about deflation expectations, but more related to short covering and other technical factors (Fed buying etc) alluded to in the above comments. Therefore the equity / bond yield disconnect isn't that ominous.

Plus: equities and bonds can move in unison.

Joy to the world!

Praise be to Yellen and Berwanke!

BTFATH bitchez!

Flakmeister's picture

Sometimes the smart money ain't.....

fiboman's picture

treasuries are ready for a small correction and then resume the uptrend

ponyboy96's picture

Bonds have further to fall.  If there is a correction, everyone will be headed for the exitis and bonds will be the choice.  I went long bonds earlier this year and have done awesome.  Why?  I'm really not that smart, but I just took the inverse of the action.  it seems bonds got hammered all last year -22% for the ETF i'm in.  So i figured, well it only has room to grow since everything else went to the moon.  Net result YTD 43% gain in my portfolio this year.

antidisestablishmentarianismishness's picture

That chart has zero predictive value but I guess nobody bothered to look at it.

Obamanation's picture

Can this site stop spreading false info?  Latest CFTC data showed speculative position shorts got cut almost down to zero.  And yet all you fools that have no idea about half the sh*t you spew just play along like lap dogs without questioning the sources.  As for JPM, I've been following their survey as well for quite a while now and have noticed it starting to not fully capture true positioning in real time.  Perhaps bc market participants are so quick to turn and flip positions or cover these days.  BTW, I'm one of those "active clients" and neither me nor my colleagues have ever been asked our positions so don't automatically accept it as gospel.  

earnyermoney's picture

I could care less what the paper pushers publish about the "markets" nor the reactions of the paper pushers to the published material.

atoast2toast's picture

who are paper pushers ? - i am intersted from a trading perspective ...

atoast2toast's picture

in your other post you are ridiculling the rumour that there is short covering but in this post the writer is saying there is short covering? how do you explain that - you cant have it both ways 

"We have shown the surge in short positioning that CFTC exposes via its Commitment of Traders data that has begun to see some covering"

I think you guys need to get a grip and maybe make sure you understand what you are talking about before you publish disinformation like this. 

To be fair you have made huge mistakes on both posts, commercials have been short OR flat for the entire year this year - see column D or download the file 

truth serum's picture

The US is not Japan, they had a huge nest of savers to draw from, the US has nothing but consumers and debt, and when inflation hits hard....look out bonds!