Hedge Funds Build Treasury Bets to ’07 High in Bear Rebuke – Bloomberg 03-18-13

Salient to Investors:

Hedge funds are the most bullish on 10-yr Treasuries since 2007.

Jason Evans at NineAlpha Capital said it is expensive to fight the Fed – whether yields have begun a structural rise is the multibillion dollar question. Evans says the cost of being under-invested in Treasuries eats you alive every day.

The median economist expects economic growth to rise to 2.7 percent and the 10-year Treasury to yield 2.25 percent by year-end 2013. The median estimate of G-10 growth is 1.15 percent.

Yields on 10-yr notes are 0.79 percent higher than the personal consumption expenditure price index.

David Gerstenhaber at Argonaut Mgmt sees no reason for yields to rise a lot in the near term a,d says they will likely trade in a range.

John Stopford at Investec Asset Mgmt expects growth to be at or above trend through the balance of 2013.

James Conklin at QFS Asset Mgmt says we are not at a pivot point for rates so an aggressive short in Treasuries is too early.

Suhail Shaikh at Fulcrum Asset Mgmt said it is very difficult to have a bond market crisis when ultimately the Fed can print money.

James Lee at RBS said the bullish tilt does not signal that yields are poised to spiral higher as there are other measures of overall speculative positions that are not stretched, indicating room for yields to fall.

ICI said investors have placed $44 billion with bond managers in 2013 more than double the amount that went into US stock funds.

David Keeble at Credit Agricole said leveraged accounts are very suspect on the recovery.

Read the full article at http://www.bloomberg.com/news/2013-03-18/hedge-funds-build-treasury-bets-to-07-high-in-bear-rebuke-2-.html

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