The US Bond Market has now been in a drawdown for 39 months, by far the longest bond bear market in history
Source: Charlie Bilello
US Home Prices hit a new all-time high in August while affordability has plummeted to record lows...please explain...
Source: Charlie Bilello
Marketable US Treasury Debt to Explode by $2.85 Trillion in the 10 Months from End of Debt Ceiling to March 31, 2024
In total, over those two quarters marketable debt will have increased by $1.59 trillion! This follows the $1.01 billion increase in Q3, and the surge in June after the debt ceiling ended. At the beginning of Q4, marketable debt outstanding was $26.04 trillion. The government will add $1.59 trillion to it, pushing it to $27.6 trillion by March 31, 2024. Source: Wolfstreet, WallStreetSilver
Beware the short squeeze... CTAs are now short $25 billion of US equities, one of the largest short positions in the 8 years...
Source: Barchart
The US equity market ultra-dominance
Source: Michel A.Arouet, Bloomberg, Goldman Sachs
US To Borrow $1.5 Trillion In Debt This & Next Quarter, After Borrowing A Massive $1 Trillion Last Quarter
During the October – December 2023 quarter, Treasury expects to borrow $776 billion in privately-held net marketable debt, assuming an end-of-December cash balance of $750 billion. The borrowing estimate is $76 billion lower than announced in July 2023, largely due to projections of higher receipts somewhat offset by higher outlays. During the January – March 2024 quarter, Treasury expects to borrow $816 billion in privately-held net marketable debt, assuming an end-of-March cash balance of $750 billion. Source: www.zerohedge.com
The US treasury curve is going in all directions
Interest rate futures are beginning to price-in a potential rate CUT this week, at a 5% chance. Meanwhile, the base case still shows rate cuts beginning in June 2024. However, odds of another HIKE in January 2024 are now up to ~36%... Source: The Kobeissi Letter
With the US 10-year yield close to 5%, long duration bonds start to look attractive
There is one issue though: sentiment on long-dated bonds look too optimistic E.g 1/ not a single sell-side analyst does have a 10-year target yield above 5% for the next 6 months; 2/ Long-dated bonds funds are enjoying record inflows; 3/ Magazine cover pages look upbeat on bonds (source: J-C Parets). The consensus is not always wrong but so much optimism is usually not a good sign from a contrarian perspective.
