(Bloomberg) -- Traders in the $27 trillion Treasury market are betting on higher long-term bond yields as Wall Street starts to adjust for Donald Trump’s...
-- Traders in the $27 trillion Treasury market are betting on higher long-term bond yields as Wall Street starts to adjust for Donald Trump ’s potential return to the White House.Investors have been buying shorter-maturity notes and selling longer-term ones after Trump came out ahead of President Joe Biden in the first presidential debate. It’s a wager — known as a steepener trade — that’s been gaining momentum ever since.
The trade has been touted by a chorus of Wall Street strategists in recent days, with Morgan Stanley and Barclays urging clients to prepare for sticky inflation and higher long-term bond yields in another Trump term. Trading in many of these notes is anonymous, making it difficult to identify the firms behind those bets. Still, the data showed a large futures block steepener on Friday that appears in line with bets on a steeper yield curve.The cash market is seeing similar momentum, according to JPMorgan Chase & Co. data. The bank’s latest survey of clients showed a 5-percentage-point drop in the number of bets for a bond rally, taking the net long position to the smallest since June 10.
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