Bond Trade That Rests on Slower And Smaller Fed Cuts Gets Tested
- Insight Investment buys Treasuries, sells European bonds
- View challenges popular bullish trade on euro-area notes
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A contrarian call that US bonds will start to outshine German peers is gaining traction, putting at risk one of the most popular bond trades of the year.
Insight Investment Management Ltd has been buying Treasuries and selling European paper, saying markets are pricing too few interest-rate cuts from the Federal Reserve. Toronto Dominion Bank is recommending clients do the same, seeing a risk the European Central Bank will disappoint markets by not delivering enough easing.