Mean reversion traders, I want to understand the conviction on bonds.
Your thesis treats yields as “stretched”. But the mean assumes the regime/underlyjgn trend hasn't changed, and a lot has, right? persistent deficits, heavy treasury issuance, a higher term premium, and foreign buyers who are no longer the price-insensitive bid they used to be…
None of that shows up in a z-scores… So how do you justify ignoring it? Are you assuming these pressures fade, or just that history rhymes?
Also, is it possible that those who think of this as a strong mean reversion trade or also politically aligned with the belief that the situation is going to cool off without consequence?