Highest-Ever Treasury Short Positioning by Hedge Funds into Last Week Was “Accident Waiting to Happen,” Massive Short-Covering Ensued, Pushed Down Yields. “Basis Trade” at it Again

The fireworks over the past few weeks in the US Treasury market involved, as you’d expect, highly leveraged hedge funds covering their massive short positions. According to an aggregate of Commodity Futures Trading Commission figures going back to 2006...