Bond Trader Makes Huge Bet on U.S.-Germany Yield Curve Reversals
- As Treasury curve has flattened, German spreads remained wide
- Wager could hinge on ECB meeting this week, Fed next week
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Someone in the global bond market is betting that the widening rift between yield curves across the Atlantic can’t last much longer.
A flurry of massive trades Wednesday in European and U.S. interest-rate futures caught the market’s attention both for their sheer size and their somewhat unusual cross-country bet. Taken together, they form a “box trade,” that pays off if the Treasury yield curve from five to 10 years stops flattening, while the German one avoids further steepening.