Some time ago I mentioned the carry trade being put on in spades.

Here is a picture of the carry trade. The picture shows the net positions of large speculators - mostly the hedge funds - in the 10-year Treasury futures. Clearly they are all on the same side of the boat - the commercials, the bond dealers, are on the other side and are correspondingly short. Should be interesting if and when this gets unwound. I mention it today because the 10-year Treasury yield is up strongly. If the hedgies are forced to cover their shorts in a hurry, there could be more than a little pain.

As one can see from the chart, this is about six standard deviations. A very unusual situation, by definition. Although it is interesting to observe that the positions have been growing very quickly in recent years, probably a reflection of the growth in both the number of hedge funds and their assets.