The overcrowded inflation trade

The latest BofA Global Fund Manager Survey gives us a clear indication most institutional investors believe inflation has peaked. In such a scenario, being long 10 or even 30 year Treasuries makes sense and appears to become an overcrowded trade. While we believe the odds are high inflation has indeed reached a high, we would however caution to become too aggressive in the duration trade as: 1/ Inflation also has structural reasons 2/ In the 70’s inflation came in waves 3/ consensus trades can be risky. We remain happy investors in the short end of the inverted US yield curve.