Morgan Stanley Investment Management's Vishal Khanduja, a top-performing fixed-income manager, has scaled back short positions in long-term US Treasuries, citing Treasury Secretary Bessent's willingness to deploy buybacks to cap long-end yields. The move reflects growing conviction that Treasury will actively manage the yield curve through buyback programs, reducing the risk-reward of fading long bonds.
For Armada's traditional repo desk, Treasury buybacks compress yields on long-duration collateral, which can temporarily inflate collateral valuations and alter margin dynamics on repos backed by 10-to-30-year Treasuries. Primary dealer positioning shifts driven by buyback flows also affect repo market liquidity and the availability of long-bond collateral for FICC-cleared transactions.