Hedge Funds Unravel Big Short in Long-Dated Treasuries
- Bets on higher yields cut at fastest pace since 1Q: CFTC data
- Gap from 10- to 30-year yields touched narrowest since August
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Hedge funds have chopped short positions in long-dated Treasury bonds that were at record levels just weeks ago, in a move that drove the yield curve to the flattest levels since August.
Fast-money traders pulled bets in futures on higher long-end yields at the fastest pace since the first quarter in the week to Nov. 24, according to the latest data from the Commodity Futures Trading Commission. That helped narrow the gap between the 10- and 30-year Treasury yields to as little as 69 basis points, from 82 a month earlier. To be sure, curve-steepening bets haven’t been abandoned entirely; the spread has since recovered to about 73 basis points, including about 1 basis point of steepening on Tuesday.