What We Learned About Treasuries on the Night of April 8

Bullish:

• $VOL - Expect continued volatility in the treasury market due to structural changes

  • “We're going to continue to see these bouts of volatility in the treasury market because of structural changes.”

    Ira·8:32

Bearish:

• $UST - Dealers are heavily long treasuries, suggesting potential selling pressure, and term premium indicates higher yields for longer-dated treasuries

  • “If you look at dealers, dealers were as long treasuries going into this as they've ever been. So they own more treasuries than ever in history.”

    Ira·18:25

  • “Term premium exists. It must exist, but I called it the dark matter before some members of the federal reserve called it the dark matter of the treasury market. Term premium has to exist because you have to be compensated for risks outside of what the federal reserve is going to do.”

    Ira·36:28
• $USD - Historical trends show decreased foreign demand for USD due to improving current account deficit

  • “As the current account deficit got better in the second half of the twenty teens, you saw that there was significant slowing of what foreigners were buying of US dollars, because they just didn't need to.”

    Ira·35:36