The Market Remains "Over-Hedged"...Unless There's A "Harris Surprise": Nomura

Bonds are in the midst of a rolling “crucible moment”, according to Nomura MD Charlie McElligott, where in the coming-days and over the next two weeks, we’ll experience a bunch of front-loaded issuance (new 5Y UST at $70B, new 2Y for $69B, new 7Y for $44B), US JOLTS data, the Treasury’s latest refunding announcement, PCE, NFP, US Presidential Election Day and the Nov FOMC meeting

Already, the multi-week term-premium rebuild in US Treasuries has been easily-rationalized at this point, thanks to the structural reality of the US government running massive deficit spending of course then contributing to higher nominal GDP, with persistently above-target inflation being accepted as the lesser evil with the Fed seemingly deprioritized it as mandate versus the Employment–side of their mandate being obviously perceived as the larger Economic risk...