Geoff Yu, BNY's senior macro strategist for Europe, the Middle East and Africa, said the use of short positions in duration bonds across European markets, including the eurozone and the U.K., has risen sharply. According to Sina Finance, the measure remains above the level seen at the end of July, even though recent pressure has eased.
Yu wrote in a research note that Europe still faces fundamental challenges in energy resilience, which makes bond risk premia more volatile. He also said actual hedging activity is more common in European markets than in the U.S., where debt burdens and active intervention in the Treasury market have drawn attention.
Earlier on Wednesday, Brent crude broke above $100 a barrel for the first time since July amid the conflict between the U.S. and Iran, while highly sensitive European natural gas prices also surged. Yu said direct buying remains active because real interest rates are high, and BNY expects U.S. short usage to stay low unless inflation expectations in the U.S. become severely unanchored.