The often mentioned reason behind the sell-off of U.S. Treasuries is the closing of “basis trades”

PANews reported on April 14 that Felipe Villarroel, portfolio management partner at TwentyFour Asset Management, said in a report that after talking to government bond trading departments, TwentyFour did not find a clear answer to what caused the sell-off in U.S. Treasuries. "The most common reason is the unwinding of 'basis trades'," he explained, which involves traders having to sell U.S. Treasuries to meet margin calls on leveraged positions. The purpose of leveraged positions is to arbitrage the tiny price differences between U.S. Treasuries and U.S. Treasury futures or interest rate swaps. The huge volume involved triggered a chain reaction, and suddenly many bonds needed a new home, and buyers were too nervous to catch the falling knife in the most turbulent week in recent times.

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Author: PA一线

This content is for informational purposes only and does not constitute investment advice.

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