Skip to content
Subscriber Only

Quants Ditch Treasuries Amid Battle Over How High Yields Can Go

  • U.S. jobs data may be next catalyst for Treasury yields: DWS
  • BMO Capital Markets says Fed expected to remain patient
Updated on

With Democrats poised to take control of Congress and the White House, Treasury yields look set to climb, leaving bond traders trying to figure out just how high they might go.

That’s the key question after the results of the Georgia Senate runoffs on Wednesday triggered a long-awaited breach of the 1% level on the 10-year note. While many expect yields to edge up just a few basis points, more aggressive calls see rates climbing as high as 2% in short order. Quantitative hedge funds are busy liquidating loss-making bets on Treasuries and could begin to establish new short positions if the 10-year yield breaches 1.10%, according to market participants.