Short positions still in play for US treasuries

Despite last month's significant price movements in US treasuries, yields are still below the levels seen at the end of last year.

Strategic bond fund managers who have taken high-profile short positions in US government bonds saw some of those moves pay off at the end of June as US treasuries suffered their largest one-week price falls for almost two years. The yield on 10-year US treasuries rose from 2.95% to 3.22% in the week from 27 June to 1 July amid a wider improvement in risk appetite. But while the move was significant, yields remain below the 3.3% level seen at the end of 2010, leaving plenty of room for manoeuvre – and anticipation of a further drop in prices. “If we wriggle towards a diplomatic so...