According to the RBS Research Team, “There are widespread signs that investors are now defensively positioned for higher rates.” Indeed, medium-term momentum signals are deeply oversold for US rates, trader sentiment is exceptionally bearish on bonds (just 8% bulls for US bond futures), net longs in the JPM survey had their biggest plunge in 2yrs and Put/Call ratios are also at extremes (puts over calls in FV, TY and US futures) not seen since February 2011 when 10's pressed up toward 3.75% - just before a massive rally. “Given all this, the skew of risk in rates now tilts heavily toward lower rates as we appear to be running out of sellers. A bullish turn in weekly momentum studies will confirm that a bullish correction to lower rates has begun.” the team adds. Treasury rates therefore appear to be in 'overshoot' territory. Cover shorts, be long 2yr notes (stop on a daily close above 0.43% maybe?) and get ready to extend into the belly if a new bull trend is confirmed in the charts.