The Last Time Traders Were This Short 2Y Notes, Rates Collapsed

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