Treasury bets vulnerable to Fed hawkish reversal ahead of policy meeting
· Business · LiveMint, Bloomberg
Bullish Treasury positions face sharp reversal risk if the Federal Reserve adopts a more aggressive stance at its upcoming monetary policy meeting. While investors price only a slim chance of a rate lift on Wednesday, hawkish messaging from Chairman Kevin Warsh on inflation could prompt reassessment of borrowing costs. CME Group data show traders reducing short positions in Treasuries over the past week amid bets that gains from AI trade concerns and French bond stress will continue. JPMorgan’s weekly survey confirms net long positions at their highest since early September, with the 10-year yield currently around 5%. Traders have protected portfolios against further yield declines, driving option hedge costs to their highest level.
Why it matters
Investors and traders holding long Treasury positions face potential losses if the Fed signals a rate hike, which could trigger a painful unwind of record bullish bets built during recent haven flows.
Read the original report — LiveMint
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