Treasury 10-Year Note Repo Shortage Risks Rise in Failed Trades
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Treasury 10-year notes are in such short supply in the $1.6 trillion-a-day market for borrowing and lending securities that it may lead to a surge in failed trades.
Traders are willing to pay to borrow the notes in the repurchase-agreement market in exchange for loaning cash overnight for the most actively traded 10-year maturity, with rates reaching negative 2.95 percent today, according to data from ICAP Plc tracked by Bloomberg. Many times traders short, or sell securities they’ve borrowed in the repo market, before a Treasury sale to profit if prices of the securities fall after the auction. The U.S. is selling $21 billion of the securities tomorrow.