JPMorgan Sees a $1.2 Trillion Reason to Nix a U.S. Yield Rebound
- Short duration positions from banks could increase bond demand
- Strategists say purchases could limit any increase in yields
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Banks likely hold the equivalent of $1.2 trillion worth of short positions in 10-year Treasuries, suggesting any rebound in yields could be capped if they cover their bets, according to JPMorgan Chase & Co.
Expectations in 2018 for interest-rate rises from the Federal Reserve led banks to position themselves short duration, wrote strategists including Matthew Jozoff in a note Feb. 28. The recent “vicious” rate rally has exacerbated this already painful positioning and the financial institutions will find themselves under pressure to buy duration, they said.