The duration split you're describing already shows up in positioning data, not just yield spreads.
Reading across 68 reports, duration just moved from a clear underweight to a near-perfect 38.9/38.9 split, the most contested this call has been in months. Wellington and Federated Hermes are building duration into a Fed-cut cycle while roughly the same number bet the opposite way you do.
If Japan really does become a forced seller, that split becomes the fault line, not just a footnote.
Hi Russell, the case for higher yields in the long term is a relatively easy sell. How do you time your thesis in months and years? Is their a trigger or just death by a thousand cuts (pardon the inappropriate pun). Thanks
Well it could play out over decades... but if you follow my clearinghouse theory, I expect there to be an airpocket in the treasury market at some point, where treasuries rapidly reprice - and then we cover, wait for a rally and short again.
The BoJ is faced with two mutually exclusive options, defend JGBs or defend the currency.
Well the market is clearly saying interest rates should be higher....
The duration split you're describing already shows up in positioning data, not just yield spreads.
Reading across 68 reports, duration just moved from a clear underweight to a near-perfect 38.9/38.9 split, the most contested this call has been in months. Wellington and Federated Hermes are building duration into a Fed-cut cycle while roughly the same number bet the opposite way you do.
If Japan really does become a forced seller, that split becomes the fault line, not just a footnote.
Hi Russell, the case for higher yields in the long term is a relatively easy sell. How do you time your thesis in months and years? Is their a trigger or just death by a thousand cuts (pardon the inappropriate pun). Thanks
Well it could play out over decades... but if you follow my clearinghouse theory, I expect there to be an airpocket in the treasury market at some point, where treasuries rapidly reprice - and then we cover, wait for a rally and short again.
Russell you should look up Dave Dredge’s “hunger games” thesis, very much parallel to this
A modern name for "Crowding Out" theory - no?
For the most part, yes. But when I hear crowding-out I think sovereign vs private. His emphasis is moreso on sovereign vs sovereign.
fair enough