'Crowded' Treasuries see yields spike after poll reveals scramble

LONDON: "If everyone owns it, there's no one left to buy" has long been a financial market truism and that may be partly reflected in the move in U.S. Treasury yields on Wednesday as they hit their highest levels in two weeks.

While a dash for "safety" amid the coronavirus-related economic shock and renewed Federal Reserve bond buying explains the recent scramble for T-bonds, Wednesday's sudden reversal came after a closely watched investor survey by Bank of America indicated demand for Treasuries was the "most crowded trade".

The same trade had previously spent five months - June to October 2019 - as the survey's "most crowded trade" amid the U.S.-China trade standoff.


The publication of the survey came on the back of a blistering rally in global bonds driven by fears of the coronavirus pandemic, one which took U.S. Treasury yields to record lows below 1%.

Yields have quickly snapped back higher as the prospect of "helicopter money" grows, with governments proposing unprecedented stimulus programmes to protect against the economic shock.

Assets occupying the "most-crowded" trade question on the BAML survey have previously unravelled - notably, Bitcoin in late 2017 and short volatility bets in early 2018.