For once the shorts were right.
With the latest CFTC Commitment of Traders report showing that positions on 30Y Treasury (Ultra) futures just hitting a record short between both leveraged and speculator net positions...
... yields in both 10Y and 30Y Treasurys are surging this morning, amid a Treasury selloff that has pushed 30-year yields to the highest since August 28 and within 4bp of 200-day moving average, last exceeded in March 2019.
While corporate bond supply - and thus rate locks - is a factor, thanks to another jump in IG credit offerings including various 10- and 30-year tranches, a key driver for today's yield jump and repricing of inflation expectations appears to have come from a shift in trader attention in how markets will respond to a Biden win.
With Bloomberg writing this morning that "A Clear-Cut Biden Win Is Emerging as a Bull Case for Stocks" (which is interesting considering the immediate increase in corproate taxes, and a likely second shutdown of the US economy to contain covid as "respected scientists" advise Biden to do), it is largely referring to a note by JPM's chief equity strategist Mislav Matejka, who writes overnight that a a "potential Biden victory would in our view end up a positive for the market, with likely better trading thereafter", and would trigger the start of a rotation toward value stocks and away from growth.
The JPM strategist, eager to make both a Trump and Biden victory as bullish as possible for stocks, writes that "A potential Biden victory is unlikely to deliver significant tax increases, with these likely to be watered...