Core Viewpoint - The potential for a short squeeze in US Treasuries is emerging, driven by various economic factors and market dynamics, which could lead to significant price movements in the bond market. Group 1: Market Dynamics - Shorting US Treasuries is considered risky, akin to historical short plays against sovereign currencies, with the US Treasury bond being a benchmark for fixed income since post-WW II [1][2] - The current short position in US Treasury futures is at 1.97 million contracts, marking one of the most crowded positions in history for long bonds [4] - The total ETF short interest stands at approximately $12.4 billion, indicating substantial bearish sentiment in the market [4] Group 2: Economic Indicators - Long bond yields have risen to around 4.85%, influenced by inflationary pressures and currency debasement, prompting traders to short Treasury bonds [3] - Inflation peaked at 9.0% in June 2022, leading to increased short positions as traders anticipated lower prices and higher yields [3] - China has reduced its holdings of US Treasuries to $682.6 billion as of November 2025, down from a peak of $1.32 trillion in 2013, reflecting a long-term diversification strategy [3] Group 3: Potential Market Movements - Economists predict a potential move of 25-50 basis points in the near term, with the possibility of even larger daily movements if short coverage becomes panicky [5] - The $12.6 trillion Repo market could trigger significant price movements as shorts may need to cover positions before a price surge [8] - Recent Treasury auctions have performed above expectations, indicating strong demand despite the crowded short positions [4]