The Unloved 20-Year Bond Offers Opportunities Galore for Traders
- Tenor that debuted in May 2020 has been cheapening on curve
- Basis trades engulf weakened sector as futures outperform
This article is for subscribers only.
As investors assail the U.S. Treasury market, pushing yields to the highest levels in years, the still-new 20-year sector is a sitting duck for nimble traders.
The sector, which was revived in May 2020 after a hiatus of more than 30 years as the federal borrowing need ballooned, cheapened significantly last week against its closest peers. And that’s been creating potential opportunities -- and risks -- for traders trying to take advantage of dislocations between different parts of the rates market that are in part fueled by illiquidity.