MBS Day Ahead: In a Position to Improve?


Posted To: MBS Commentary

While they're extremely important to institutional investors and analysts, the role of trading positions in the bond market is one of the most easily overlooked factors in rate movement over shorter time horizons. "Positions" is just a fancy way to refer to how many dollars are betting for or against bonds. This is particularly relevant at the moment because the only traders doing much betting in favor of Treasuries are those that are using Treasuries to hedge positions elsewhere in the market. We can glean this from the CFTC's weekly position report, which breaks Treasury positions into commercial and non-commercial categories. In other words, non-commercial positions tell us the most about how speculators are betting on Treasuries. To say that they're short would be…(read more)

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