Supply also crowded out the bulls and JPM Chase's investor sentiment survey showed a large increase in Treasury short positions. Hedge fund liquidation as well as fresh bearish option structures also weighed.
The technical deterioration became self-fulfilling as the 10-year note yield set a month-high mark of 4.60% -- over 10 basis points higher on the session after clearing out chart points around 4.52% and 4.55%. Similarly, the 2-year note gained about 7 basis points to 2.79% and the 2s-10s spread widened back out 3-4 basis points to +182. Hedge fund liquidation and bearish "put" spread options structures across the maturity spectrum exaggerated the sharp moves, says Action Economics. From Action Economics