Bond Trader's $2.5 Million Wager Targets 10-Year Yield at 3.6%
- Bet already in the money as yields jump Friday post-payrolls
- Demand grows for hedges against rates run-up through year-end
The U.S. Treasury building in Washington, D.C.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
A mystery Treasuries trader is betting big that this week’s selloff is just the beginning.
The buyer of put options ponied up $2.5 million for a hedge against a rise in 10-year yields to 3.6 percent, with the wager expiring two days after December’s Federal Reserve meeting. The potential windfall is clear to see: The 18,000-lot block trade was bought at 9 ticks, with rates at roughly 3.19 percent. With the yield settling above 3.23 percent Friday in the aftermath of the U.S. payrolls report, the bet was already almost $1 million in the money.