Frank Flight shifts bullish on long-term Treasuries after warning of a "cruel summer"

Frank Flight, head of macro strategy at Citadel Securities, has shifted from warning of a difficult summer for US bond investors to seeing the balance of risks favor a rally in long-dated Treasuries. He cited crowded bearish positioning, particularly among trend-following commodity trading advisers, and improving inflation data. Citadel's cross-asset model found that yields fell over the following 120 days in 71% of 64 historical periods since 2003 with similar growth and monetary-policy signals, with an average decline of 0.25 percentage point. The outlook follows a recent rise in the 30-year Treasury yield to its highest level in about two decades, driven by inflation and fiscal concerns as well as heavy technology-company bond issuance to fund artificial intelligence infrastructure. Treasury Secretary Scott Bessent has said buybacks of Treasuries maturing in 10 to 30 years would be expanded.

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