JPMorgan's Bob Michele on Treasury Market Deleveraging and Yields

Treasury Market Deleveraging

• 📉 Treasury prices have experienced downward pressure due to a complete deleveraging of positions across various trades.
• ⚡ This deleveraging includes unwinding swap spread trades, Treasury basis trades, and shifts where investors sold German bonds to buy US Treasuries.

Market Sentiment and Fed Signals

• 💡 A shift in sentiment occurred after Susan Collins indicated the Fed would monitor market conditions and potentially intervene, deviating from a sole focus on inflation.
• 📊 The Fed report revealed that foreign central banks and reserve managers were not selling Treasuries as rumored, and in fact, added slightly to their holdings.
• 💬 Overseas investors are reportedly not being