"Shorting an asset of a G7 sovereign nation is a risky bet in the eyes of most traders. Perhaps one must go back to George Soros' successful short play against the British Pound Sterling, which devastated the UK and netted Soros a $1 billion profit. The resources that a nation can gather to defend its assets can be formidable, and if another nation decides to lend a hand, such as the US did a few months ago with Argentina on a currency swap,"
"Historically, short squeeze market scenarios most often occur in the equities market. The stocks of Game Stop, Volkswagen, Hertz, AMC and Tesla are just a few from recent years that come to mind. A short squeeze scenario in bonds is rare, and one in US Treasuries is almost unheard of. And yet, that is exactly what the market is seeing as a very possible occurrence in Q1 2026."
"The US Treasury bond has been the benchmark for the entire fixed income market and its interest rates since the post-WW II era. Its stability has long been synonymous with stability and a AAA Moody's and S&P rating. However, it is the US Treasury bond's historic lack of volatility that is often attractive for ETFs and traders. Some circumstances below might be considered short justification, from a trade perspective:"
Shorting G7 sovereign assets is widely considered risky due to the vast resources nations can marshal to defend their assets. George Soros' short of the British pound yielded a $1 billion profit. A recent US currency swap with Argentina reportedly earned a profit for Washington. Short squeezes typically occur in equities; occurrences in bonds are rare and a squeeze in US Treasuries is almost unheard of, yet markets see that as a possible outcome in Q1 2026. US Treasuries remain the fixed-income benchmark with historically low volatility and AAA ratings. Traders cite higher inflation, monetary overprinting, rising gold and silver, and changes in foreign holdings as justification for short positions.
Read at 24/7 Wall St.
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