Hedge funds' Treasury futures short is $787 billion, a third below its record; the crowding is in ultra-long bonds

With the 30-year Treasury yield ending Tuesday at 5.59% and the 10-year at 5.26%, according to the Treasury's daily yield curve, attention has turned to who is short the bond market and what happens if the selloff reverses. Bloomberg reported on Tuesday that a crowded short in Treasury futures raises the risk of a squeeze.

We went to the regulator's own positioning data to see how big that short actually is. The answer is more specific than "crowded".

The total is smaller than a year ago

The Commodity Futures Trading Commission's Traders in Financial Futures report splits positions by trader type. "Leveraged funds", mostly hedge funds, held a combined net short across the six main Treasury futures contracts equal to about $787 billion of face value as of Tuesday, September 22, the latest week published. That is our calculation from contract counts, at $200,000 face for the 2-year note and $100,000 for the others.

So on the broad measure, the hedge-fund short is about 34% below its record and about 30% smaller than a year ago, and it shrank through September even as yields climbed. On the other side, asset managers held a net long of about $1.09 trillion of face value. Much of the leveraged-fund short is widely understood to be the cash-futures basis trade, where funds own Treasury bonds and short futures against them. That kind of short is hedged and is not a bet on higher yields.

Where the short is actually crowded

Broken out by contract, the picture changes. Ranking each week since January 2018 (456 weeks):

The Ultra Bond short is 88% of the record it set in June, and the Ultra 10-year short is in the top 6% of weeks. Those contracts track the longest bonds, so each one carries far more interest-rate risk than a 2-year or 5-year contract. In risk terms, the long end is where positioning is stretched, which is also where the selloff has been sharpest: from September 22 to Tuesday, the 30-year yield rose 30 basis points, from 5.29% to 5.59%.

What futures traders are watching

A squeeze needs a trigger that pushes long-bond yields down fast enough to force shorts to cover. The two scheduled candidates this week are Wednesday's August PCE inflation report, where revisions could lower July's core reading, and Friday's September jobs report. A soft number on either would test the ultra-long positions first.

Two caveats. The CFTC data are a week old, and the 30-point move since then may already have changed positions. The next report, covering Tuesday, September 29, is due Friday. And positioning shows how much is exposed, not when it moves. Crowded trades can stay crowded for a long time.

For the rate backdrop, see the 30-year's move to its highest since 2002 and the 10-year chart.

Sources: CFTC Traders in Financial Futures (futures only), weekly data through September 22, 2026; U.S. Treasury daily par yield curve; Bloomberg. Face values, percentages and rankings are Chronicle calculations. This is market information, not investment advice.