...the greatest pain trade out there right now is not the downdraft in equities but it is the rally in Treasuries — the net speculative short position on the U.S. 10-year Treasury note of nearly 200,000 contracts is feeling the pain. The short squeeze is very likely going to lead to even lower bond yield activity ahead too. For all the resistance to this view, look at where Germany and Sweden (2.9%), Denmark (3.0%), Finland (3.1%), France (3.2%), Austria and Norway (3.3%), Switzerland (1.7%) and of course, Japan (1.26% — fresh four-month low) all trade. Canadian and U.S. yields north of 3.5% look like a bargain next to these markets.
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