Traders' Short Positions in U.S. Treasuries Shrink Notably Ahead of Refunding
nashnova research
Traders are unwinding short bets and piling into longs ahead of the Treasury's quarterly refunding statement, midterm elections, and the jobs report — net longs in 10-year futures hit a record 3 million contracts, a clear shift from selling to buying.
Where did all the shorts go?
CME data show open interest in Treasury futures rose alongside prices over the past two weeks, shifting from extreme short positioning in early October toward balance.
Brendan Murphy, head of North American fixed income at Insight Investment, said: "The market is no longer looking for reasons to sell — it's looking for reasons to buy."
This means → the move is less about fresh bullishness and more about forced short-covering — traders who bet on higher rates are admitting defeat.
How crowded is the long side now?
As of the week ending October 27, asset managers held a net long of 3 million contracts in 10-year futures — an all-time record.
Open interest in 10-year futures rose by roughly 200,000 contracts last week, equivalent to about $16 billion in cash bonds.
Citi strategist David Bieber noted that tactical positioning has "flipped to overweight long."
In plain terms = the money betting on higher bond prices has never been this large in recorded history.
What is the options market betting on?
On Monday, a single trade carried an $11 million premium, wagering on further bond gains and lower yields.
Separately, a buyer paid roughly $8 million in premium for January 107.00 calls on 5-year futures.
This means → large options bets are pointing one way: yields keep falling. These are not exploratory positions — they are heavy, directional wagers.
But has a consensus actually formed?
Bank of America strategists including Eleanor Xiao wrote: "Positioning and flows suggest two-way rate risk persists."
JPMorgan's latest client survey showed investors cut longs by 2 percentage points to neutral in the week ending November 2, while shorts held steady.
This reflects a split: futures positioning is record-long, yet real-money flows have not gone all-in — the disagreement remains; the shorts simply stepped back first.
What do this week's three catalysts mean for positioning?
The Treasury's quarterly refunding statement, midterm election results, and the nonfarm payrolls report all land this week.
The 10-year yield has already pulled back from a 20-year-plus high in early October to below 5%, driven largely by haven demand after AI-trading turbulence.
In plain terms = record-long positioning cuts both ways — if any of the three events disappoints, the crowded trade makes a stampede more likely, not less.
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