In a nutshell, we are absolutely amazed at the amount of pain endured by speculators who are short long-term treasury bonds. One would have thought that after a 15 month long rally in bond prices (yields lower) that bets on yields rising would have abated significantly as the crowd capitulated on the reality of "lower for longer". One would have been wrong.
As it stands today, the other "most crowded trade" besides being long the USD is still to be short long-term US treasury bonds. Indeed, over the last several weeks as bonds sold off, the net speculator short position (indicated by the red line right axis, inverted) popped back up to more than 300,000 options or futures contracts. We've been making the point for the past year that bond yields have previously not bottomed until the speculator net positing turned from being short to long. If history is a guide, then there is an awful lot of short covering (and likely lower yields) in front of us before we get to that point.