CTAs are maintaining their large short positioning in UST futures, according to the latest tracker from UBS Securities and Treasury (UBS S&T). While there have been some unwinds of shorts in the 10y and 20y buckets, the majority of CTA positions remain focused on the short side. The desk’s current positioning shows a slight shift towards longs, with LONG positions accounting for 83% of total positions in the 10y, 83% in the 20y, and 92% in the 30y bucket.

Despite the recent unwinds of shorts, CTA specialist Nico Le Roux has cautioned that models don’t exactly stop and reposition quickly, but rather over a prolonged period of time. This means that even if the conflict in Iran were to come to an end, it may take some time for CTA’s to begin repositioning their portfolios. However, with hopes of peace through continued negotiations, there is potential for CTA’s to begin this process.

In the last CTA model report, Nico also warned on the larger shorts, stating that “one of the consequences is that CTA’s in effect can only buy from here.” This suggests that CTA’s may be limited in their ability to increase their long positions, and may instead focus on maintaining their current positions.

The current positioning of CTA’s in UST futures highlights the ongoing cautious stance towards risk taken by these investment managers. Despite the recent unwinds of shorts, the majority of CTA positions remain focused on the short side, reflecting their continued bearish outlook on US Treasury yields.