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Hedge Funds Pull Back From the Basis Trade as Bond Gaps Vanish

Source: Bloomberg

Interest Rates & YieldsCredit & Bond MarketsDerivatives & VolatilityMarket Technicals & Flows

The popular US Treasury hedge-fund trade has contracted to its smallest size in more than two years. Wall Street strategists attribute the decline to fewer bond-market dislocations available for hedge funds to exploit, indicating more normalized Treasury market conditions rather than a major directional rates signal.

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