As rates fell last week, speculators in 2Y Treasury Notes added aggressively to their short positions. Positioning in 2Y Notes is now at its most short since mid-2007 (as 10Y Bond positioning surged to its most long in over a year), and if history is any guide to what happens next, rates are set to tumble.
The last time 2Y Note speculators were this short was mid-2007 and rates utterly collapsed soon after...
and as BofA notes, 10Y positioning is its most long in a year...
BofA is Bullish.
2yr yields are set to stall and correct lower after the test and hold of 58.9bps/61.1bps.
Immediate downside targets seen to the mid-Apr pivot at 47.8bps before renewed stabilization
Charts: Bloomberg and BofA