Ahead Of Record Weekly Treasury Issuance, Traders Rush To Cover Record Shorts

Two weeks ago, and one day ahead of the Monday 5 VIXplosion, we warned that the combination of record equity longs...

... and record Treasury shorts in the 2Y maturity and the Ultra-Long buckets...

... was "Recipe For Disaster."

Indeed it was, and what followed next was a dramatic vol and risk-parity puke, which forced both equity and bond investors to drastically reduce their record exposure, and as Reuters' Jamie McGeever writes, speculators have been scrambling to scale back their bets on higher yields... by a record margin.

According to the latest CFTC data, in the weekend ending Feb 13, what was until 2 weeks earlier a record net short position, saw a furious rush to cover (perhaps shorts were worried that the Fed could cut rates it stocks continued to tumble), and as a result net 2Y short positions were slashed by 76,772 contracts to 133,986: that’s less than half the record net short of 329,066 contracts just two weeks ago.

If one extends the frantic move by one week to Feb 6, the reduction in spec net short positions of almost 200,000 contracts in that period is the second largest two-week fall in bearish bets ever.

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