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WHY WE WORRY ABOUT TREASURY MARKET LIQUIDITY "Bond traders are taking on a record amount of risk as they bet on a Treasury market rally fueled by expectations the Federal Reserve will embark on its first interest-rate cut in more than four years. The number of leveraged positions… https://t.co/hsnhA8mpdL
Bond traders have been taking on a record amount of risk as they bet on a Treasury market rally tied to the Fed’s rate cuts. The number of leveraged positions in US government bond futures has risen to an all-time high ahead Jackson Hole https://t.co/O757XNz872
Bond Traders Amassing Historic Level of Risk on Rate-Cut Bets https://t.co/GHz0ZYakI5 Hopefully, we live to regret switching from LIBOR to SOFR. SOFR relies indirectly on Treasury yields, so there is the possibility of a feedback loop, particularly w/derivatives during a crisis
Bond traders are currently assuming a historic level of risk as they position themselves for a potential rally in the Treasury market. This surge in risk-taking is largely attributed to expectations that the Federal Reserve will implement its first interest-rate cut in over four years. The number of leveraged positions in U.S. government bond futures has reached an all-time high, particularly as the market anticipates the upcoming Jackson Hole Economic Policy Symposium. Analysts are expressing concerns about the implications of such concentrated risk, suggesting that if many traders are on one side of the market, it could lead to significant volatility.