, Columnist
Hedge Funds Are Guarding Against a Bond Tantrum
While the reflation debate rages, traders are acting. They’re running their biggest short positions against junk bonds for more than a decade.
There, there.
Photographer: Tomohiro Ohsumi/Getty Images
This article is for subscribers only.
As the debate rages about whether surging commodity prices, rebounding economies and fiscal stimulus will spark a sustained acceleration in inflation, government bond yields have been slowly but surely heading higher.
In the riskier corners of the debt market, hedge funds are taking some chips off the table to defend themselves in case of a full-blown bond market tantrum. It’s a smart move given the unusually febrile economic and market environments.