CHART OF THE DAY: Rising Interest Rate Risk (Really?)

US interest rate risk isn’t new either. The last of the classic late-cycle “inflation” readings (wages) got US Treasury Yields to pop to lower-highs on Friday too: 

1. UST 2yr Yield was +8 basis points on the week to 2.70% and remains Bullish TREND @Hedgeye
2. UST 10yr Yield was +8 basis points on the week to 2.94% and is barely back to Neutral TREND @Hedgeye 

But that consensus “hawkishness” is very much in line with consensus macro positioning. Looking at last week’s CFTC non-commercial futures and options positioning, here are the net SHORT positions in US Treasuries across the curve: 

1. UST 2yr net SHORT position got more bearish at -158,001 net short contracts last week
2. UST 5yr net SHORT position got more bearish at -864,516 net short contracts last week
3. UST 10yr net SHORT position got more bearish at -656,136 net short contracts last week 

And that doesn’t surprise us as protecting against a late-cycle “breakout in interest rates”, is really the last of the big 3 consensus positions we think will eventually come unglued by the end of 2018