Markets continue to aggressively reprice interest rates lower. There have been massive capital flows into bond funds, the US long bond has hit a record low yield and the sum of negative yield bonds continues to rise.
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Long bonds is the most crowded trade in the world. It’s been a hugely profitable trade the last 9 months but the rally may be over. Bonds have been the epicenter of the interest rate repricing trade and if bonds start to fall then the “positioning risk” in those markets will create “mean reversion” trading opportunities everywhere.
The market had a lot to digest this past week and thinner-than-normal mid-summer conditions may have exaggerated the moves...but it still feels like there’s a “sea-change” happening here that may be foreshadowing bigger moves to come.
Polar Futures Group
Polar Futures Group is the team of Victor Adair and Drew Zimmerman who have worked together for over 5 years. Together they offer over 50 years of experience trading in financial markets. They specialize in trading currencies, interest rates, precious metals, base metals, financial indices, energies and agricultural exchange listed futures and options contracts .