Frozen Treasury Yields Belie Hedging Bets on Stronger Fed Action
- Barclays sees positions grow for negative rates, curve control
- Short-volatility positions bet that rates remain subdued
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Dwindling volumes in interest-rates markets suggest that the normal summer doldrums are arriving on time, yet underneath the surface there are signs that traders are bracing for more drama ahead.
From trades anticipating yield-curve control measures by the Federal Reserve, to lingering bets on negative interest rates and even positions that would benefit from an eventual rate increase by the Fed, traders are searching for the next edge based on what they expect the central bank will do.