Leveraged funds indicate bearish view on Treasuries

Leveraged funds, which the Commodities Futures Trading Commission defines as hedge funds and investment entities such as commodity trading advisers, had a net short position in 10-year Treasury notes at the end of May, according to the CFTC's Commitments of Traders report.

For the week ended May 31, leveraged funds had 353,883 long contracts and 396,679 short contracts, equating to a net short of 42,796 contracts. This was the first time leveraged funds have sold more contracts than they bought since January 2021.

Amid persistently high inflation, the Federal Reserve has adapted a hawkish stance, including reducing Treasury holdings by $30 billion a month starting in June, increasing the amount to $60 billion in three months. The 10-year yield has crossed 3% several times this year, closing Tuesday at 2.98%