PIMCO Thoughts on Treasury Bond Rally

From II:

"Domestic banks were compelled to increase their footings in Treasuries for two main reasons. First, they entered the year with a fairly aggressive short position in the asset class, inspired by optimistic growth outlooks and concerned that the Fed would have to become more hawkish in response. This became a rather crowded trade. Nearly all strategists were predicting higher rates to prevail throughout 2014. When the buying appeared from overseas, that put pressure on those positions, and dealers scrambled to get back to neutral. It became a self-reinforcing phenomenon as more new buying created more short-covering."

I agree that Treasury shorts got squeezed. But in general, what Pimco and most other investors say about interest moves does not make sense to me.

I think the most important thing that happened in interest rates in 2013-2014 was when the ten year interest rate increased from 1.4% in April to 3% by the end of the year, which coincided with, and possibly caused, the housing market echo-bubble to pop.