It is difficult to predict how the trade scuffles between the US, China and Europe will play out.

But what we do know is that the US Treasury 10Y-2Y slope continues flattening, now down to 26.4 basis points.

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Meanwhile, net shorts in 10-year Treasury futures positions hit record levels. Net short positions on the 10-year future rose to more than half a million contracts in the week ended July 3, according to the latest data from the Commodity Futures Trading Commission. These positions were built as the 10-year Treasury yield fell to around 2.83 percent on July 3, and it’s currently around 2.86 percent.

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Net futures on 10-year Treasury notes continue to rises

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Even though the 10-year Treasury yield rise has lost its mojo with the trade scuffles.

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Janus has the most negative duration fund (net shorts larger than net long positions) while Barclays has positive duration.

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Will The Fed and other Central Banks take a pass on raising rates until the “tariff tussle” subsides? Or will they continue to raise rates? It looks like The Fed has a 78% probability of raising their target rate again at the September 26 FOMC meeting.

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