The latest BofA Merrill Lynch survey of fixed income fund managers asks a simple question: Why are you long U.S. Treasury bonds?
The answer from the majority of managers is that they aren't.
According to BAML strategists Ralf Preusser and Richard Cochinos, 66 percent of investors are no longer holding
The two write in a note to clients that with such bearish sentiment toward U.S. government debt, "the sell-off in Treasuries may be running out of steam."
BofA Merrill Lynch Global Research
The answers to this question reveal an important dynamic in the market: only four percent of the managers surveyed believe the Federal Reserve has their back.
One thing the reduction in exposure to Treasuries does not appear to be about, according to the survey, is a "Great Rotation" of investment capital out of bond funds and into equity funds.
Preusser and Cochinos note that only 37 percent of managers believe the "Great Rotation" is actually happening:
BofA Merrill Lynch Global Research
One other notable stat from the survey, which compiled the views of 74 fixed income fund managers from around the globe: investors are underweight U.S. dollars for the first time since 2010.
A lot has been made of the over-extended nature of the rally in risk assets. This is the flip-side of the coin – bearishness toward safe-havens like Treasuries and dollars may be equally overextended.
The BAML rates team says this supports their view that the rise in yields is coming to a halt for now. The other big factor driving that call, they say, is concern over "the consumer facing a large drop in disposable income."
Read more about what BAML calls the U.S. economy's coming "moment of truth" here >