Post the GFC US longer dated 30-year bonds were still nudging 5% hence the fact that they are trading sub 2.5% today, as most commodity prices surge to multi-year highs, is a major warning signal to MM that investors aren’t pricing in enough risk of rising interest rates / bond yields in the bigger picture but we feel that’s something to worry about after Christmas, and beyond. Short-term we still wouldn’t be surprised to see a washout to the downside towards 2% just to hurt the crowded long yield position, a move we would love to buy if it does eventuate.
MM is bullish bond yields / interest rates in the bigger picture
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