10-Year Note COT Data
I believe Treasuries are mispriced. I discussed this in our latest newsletter (https://decarleytrading.substack.com/). Assuming this is a good take, the fact that speculators are holding the largest net short position in history is a recipe for a face-ripping short squeeze should a catalyst arise. If it weren't for Japan selling bonds to raise cash (to support its own currency in market operations), US bonds would be trading higher and yields lower. I infer this from the fact that Sovereign debt issued by other nations garner a lower yield. If the market is going to punish the US for its debt problem, it would have to punish the rest of the world, too. US interest rates are higher than those in most other developed countries, whose balance sheets are just as horrid, if not worse. I’ll remind our readers that Greece is paying less to borrow money from the global market than the US is. In 2011, I visited Greece to support a family member in the Special Olympics World Games. At the time, the Greek people were protesting austerity measures aimed at preventing the country from defaulting on its debt. Upon exiting the subway at Syntagma Square, I was tear-gassed by police attempting to thwart the riots. Despite the chaos, Greece defaulted on its debt, and the people were forced to accept cuts to government programs. Does it make sense for Greek bonds to be trading with a lower yield than US bonds? I have yet to be tear-gassed in my home country over a potential debt default, so my opinion is “no.”