Bonds are an extremely overcrowded play right now, but for good...

Bonds are an extremely overcrowded play right now, but for good reason

Seventeen months ago, the yield curve inverted, marking one of the lengthiest periods without a recession. As inversion continues, algorithms/speculators will increasingly short futures and buy US treasuries in anticipation of rate cuts to unwind the inversion.

The trade levers up over time.

The dam is poised to rupture in the coming months. With 5.73 trillion in Money Market Funds (MMF), the vanishing of 5% coupons is being closely observed, and it won't be long before the 4% coupons surpass the 2-year mark.



Subsequently, the 5% UMBS with a 30-year maturity will achieve par value, initiating a cascading effect on the yield curve and pushing bond yields progressively lower.

here's the returns you can expect