Dizzied Bond Traders Brace for More Pain as Fed Speakers Line Up
- Momentum traders are most short since 2013 tantrum: Jefferies
- Volatility spike, bets on 2022 rate hike raise stakes for Fed
The past week’s tumult in the $21 trillion Treasuries market has left shell-shocked traders positioned for even more losses ahead -- raising pressure on Federal Reserve officials to respond to the startling run-up in yields.
Momentum traders were, as of Thursday’s close, the most short on Treasuries since the 2013 taper tantrum episode, according to Jefferies International. Meanwhile, expected volatility is surging, a warning flag across asset classes, and the market is moving toward pricing in a Fed liftoff from near zero in late 2022, at least a full year earlier than the central bank has signaled. That’s the backdrop in which Fed Chairman Jerome Powell will deliver what are likely his final public comments before a mid-month policy meeting. A bevy of other officials are set to speak before he takes center stage later next week.