This is a repost of the previous post, with corrected headline and link. I apologize for the redundancy.
Primary dealers have offset their losses of last August through February in the recent rally, and they have reduced their net long exposure somewhat since their highest levels of a year ago.
But that doesn’t mean that they’re not still at significant risk if the bond market begins to selloff. They are still positioned for stable or higher prices, and stable or lower yields. If yields rise and Treasury prices fall, as I have concluded they will, then it won’t be long before the dealers are in trouble again. And if they’re in trouble, all asset markets will be in trouble.
This report looks at the particulars of their positions, along with a quick update on the 10 year Treasury yield. That includes a few keys that should signal when the next decline in bond prices is starting.
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