“The majority of fund managers expect lower interest rates,” says Jim Bianco.  Therefore, expect higher-for-longer and a “no landing,” as this is still the contrarian play.

Mr. Bianco shows multiple graphs to support this thesis, but the first ones are deceptive.  While showing a surge in the shorting of the Treasury market – which on the surface would indicate a general positioning for lower rates in the future – this is instead due to traders positioning for the classic arbitrage “basis trade” – whereby one borrows in the repurchase agreement (repo) market, purchases a Treasury and then shorts a Treasury in the futures market. He then shows net long positions of asset managers growing substantially, and the BofA FMS also showing them expecting lower long-term rates.  Additionally, the Bloomberg survey of 70 economists shows most expecting lower rates, and fund flows into a long-term bond ETF (TLT) have soared.