Column-Leveraged funds' record short Treasuries bets surge again: McGeever

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Column-Leveraged funds' record short Treasuries bets surge again: McGeever
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Cooking Culinary Adventure: inspired by Halifax's Seaport Market | SaltWire #cooking #cookingshortsORLANDO, Florida - Leveraged funds trading U.S. Treasuries futures have increased their record net short position across the curve, which will do little to soothe growing concerns among regulators about the potential financial stability risks these bets pose.

The price difference between cash bonds and futures is tiny, but funds make their money from high levels of leverage in the repo market and sheer volume of trade. The move was particularly strong at the shorter end of the curve. Leveraged accounts increased net short position in two-year futures by 133,000 contracts to 1.554 million contracts and by 92,000 contracts in the five-year space to 1.753 million.

But funds play Treasuries futures for other reasons, like relative value trades, and this year, the basis trade.

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