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FX & Rates · 6 August 2026
Leveraged funds' covering of the 2-year Treasury short in the week to 28 July 2026 reflects…
Leveraged funds' covering of the 2-year Treasury short in the week to 28 July 2026 reflects de-risking ahead of the 7 August payroll print, not a directional bet on Fed cuts, while the 10-year short's continued build and the futures-priced 42.3bp firmer 12-month path both argue the higher-yield thesis is still intact at the long end.
- What would prove it wrong
- If the Non-Farm Employment Change prints at or below 57,000 on 7 August 2026, the 2-year Treasury yield would fall back through 4.0%, confirming the front-end covering anticipated a softer labor read; if it prints at or above 85,000 with the 2-year yield holding above 4.0%, the covering was premature and the firmer path stands unchallenged.
- Stated probability the thesis holds
- 52% · 1d horizon
- Status
- Desk's current note
This is the desk’s own dated record, settled against market data. Descriptive of a research thesis, not investment advice.