J.P.Morgan Flag Potential Short-Covering

J.P.Morgan note that "all three of this week's mid-month Treasury auctions cleared through pre-auction levels amid significantly above-average end-user demand. The ECB's dovish tone pushed rates lower on Thursday and allowed Treasuries to ignore the lowest weekly claims since the pandemic started. Strong primary demand has not been exclusive to Treasuries. Our HG credit colleagues point to how their market has easily absorbed a recent period of heavy supply. Such strong demand following our survey results showing increased bearish positioning could be a sign that short-covering is taking place here, especially given that our Treasury Client Survey indicates bearish duration positioning has increased in recent weeks."