Goldman Sees Bond Basis Trades Climbing Beyond 2018-2019 Levels
- Leveraged investors have become dominant buyers of Treasuries
- Popular hedge-fund trade seen getting ‘substantially bigger’
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A popular — and occasionally troublesome — hedge-fund trade involving bonds, corresponding futures and ample leverage is bouncing back, according to strategists at Goldman Sachs Group Inc.
The bond basis trade, which has already rebounded to 2018-2019 levels, can get “substantially bigger” once a US debt limit suspension allows the supply of Treasury securities to resume growing, Goldman analysts led by Praveen Korapaty say in a May 26 note.