MW Momentum investors have amplified the bond-market rally, says JPMorgan. Here's how far they can take things.

By Steve Goldstein

One of the reasons that government bonds have surged in value lately is that momentum investors have amplified the move.

The yield on the 10-year Treasury BX:TMUBMUSD10Y has dropped for six straight sessions, a period where it's lost nearly 30 basis points. Yields move in the opposite direction to prices. That's occurred during a period of weaker-than-expected economic reports, notably in surveys of consumers and purchasing managers.

Analysts at JPMorgan led by Nikolaos Panigirtzoglou say commodity trading advisors, or CTAs, flipped from being short to being long the asset class between Feb. 12 and Feb. 25. They can still push down yields by another 30 basis points before hitting levels where profit taking may begin, the strategists say.

So-called real money investors - like pension funds and insurers - also have jumped in, boosting long positions since early February to a decade high.

Multi-asset investors such as balanced mutual funds, however, have not piled on as aggressively, the strategists say.

-Steve Goldstein

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February 27, 2025 05:38 ET (10:38 GMT)

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