Bets against US Treasury bills left bond bears in a cold sweat

Investors betting against Treasury bonds of the United States—or even just hiding out in cash waiting for lower prices—just suffered a rough week, even after a robust slate of economic figures showed that America’s rebound from the pandemic is gaining steam. Treasury yields could extend their decline, potentially taking the 10-year yield as low as 1.2%—a level not seen since February, says Tom Essaye, a former Merrill Lynch trader who started The Sevens Report newsletter. Longer-term, I still think yields are headed higher—but we are in this weird position now where the Fed has essentially said they aren’t changing their opinion of things no matter what the data is.” Federal Reserve Chair Jerome Powell has said that while the economy appears to have turned a corner, central bankers are not in a hurry to remove monetary support. Mark Cabana, head of US interest rates strategy at Bank of America Corp, said on Bloomberg TV on Friday that he’s been encouraging clients to use the “little rate rally” to reset short positions. On 21 April, expect data on MBA mortgage applications, and the next day, expect the Chicago Fed national activity index, jobless claims, Langer consumer comfort, existing home sales and Kansas City Fed manufacturing activity.