Conventional 60/40 Portfolio Sees Year's Strongest Rally👀
After seeing the strongest rally in the conventional 60/40 portfolio in over a year (+4% last week), bond prices eased off yesterday as the weight of $112bln in UST supply and ~15 IG corporate deals pressured yields about 9bp higher on the day. Yesterday saw around $24bln in fresh IG supply as issuers rushed to lock-in the interim lower funding yields, while a full slate of $48bln in 3yr, $40bln in 10yr, and $24bln in 30yr treasury supply are going to be hitting the market from Tuesday to Thursday of this week. Unfortunately for hedge funds, the community appears to be caught in a record short in bond futures just as the Fed might be pivoting, and no doubt contributing to the dramatic squeeze in bonds last week.
#BondRally #USTSupply #YieldRise #HedgeFunds #FedPolicyPivot