No news isn’t no news. The Primary Dealers are in the same posture they’ve been in. They’re still bullish on bonds and that’s an extremely dangerous situation.
It’s like that warehouse packed with explosives in Beirut. One small fire could ignite a conflagration of biblical proportions.
The dealers continue to maintain historically large fixed income positions. Those positions hit record high prices. They’ve accumulated a good bit of inventory near the highs. They remain highly leveraged. Worse, they’ve reduced their futures hedges significantly. They are positioned for even more or a bullish environment in bonds.
This report gives you the keys to look for.
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