Bonds: Heaviest Short Position in Macro

Don'tsay we didn't warn you. CFTC positioning shows Bonds via the 30yr,10yr,5yr and 2yrwith one of the heaviest short positions in all of macro. We've been pounding our desk that inflation data is likely to slow AFTER tomorrow NFP data. The likelyhood ofa squeeze is growing day after day, week after week.

Tomorrows jobs data is likely to be the last hawkish data point before next weeks inflation numbers (CPI/PPI). Its very typical that wages increase at/towards the end of the profit cycle, as corporations have made their money and decide to pass some of these gains along to employees. But what happens when you give too many wage increases while the corporate profit cycle slows the employees win, but the company loses which is usually followed by lower jobs growth/hiring, followed by layoffs and firings etc. etc. and round and round the business cycle we go.I can say this with 100% certainty I wouldnt be selling bonds here regardless of the chart structure. Chart's always look the best at the end of the cycle. I don't have any skin in the game on the long side in bonds -yet, but I can say with certainty, I'd be covering gains on the shortside and stepping aside as the business cycle begins to slow in the near-term. Good luck.