Bond Traders Go All-In on U.S. Treasury Market’s Big Short Bet
- Repos signal rush for 10-year notes as part of short wagers
- Round of Treasury auctions set to test demand at higher yields
Photographer: Sarinya Pinngam/EyeEm/Getty Images
It’s not just in meme stocks that the fate of short sellers is a key theme. Short bets are increasingly in vogue in the $21 trillion Treasuries market, with crucial implications across asset classes.
The benchmark 10-year yield reached 1.62% Friday -- the highest since February 2020 -- before dip buying from foreign investors emerged. Stronger-than-expected job creation and Federal Reserve Chair Jerome Powell’s seeming lack of concern, for now, with leaping long-term borrowing costs have emboldened traders. In one telltale sign of which way they’re leaning, demand to borrow 10-year notes in the repurchase-agreement market is so great that rates have gone negative, likely part of a move to short the maturity.