The trend isn't their friend
Short bonds has been a steady, profitable trade this year but Barclays says it's time to go long. Strategists there say 10-year yields will fall to 2.70% from 2.90%.
They say the expected rise in Fed funds to 2.50% to 3.00% "already appears too optimistic" and that medium term risks to the economy are rising "given the current late stage of the business cycle."
They also cite a negative term premium at the long end, positioning and convexity will help push yields lower. They also anticipate that European yields will stabilize and that will stop pushing Treasury yields higher.
It's certainly an out-of-consensus call and definitely swimming against the tide.
