BOND TRADERS ARE NOW BETTING ON A 5% 10-YEAR YIELD
The US Treasury market has just seen an options trade with a notional size of about $14M, betting that the 10Y yield could break above 5% as the bond sell-off continues.
Meanwhile, the 30Y yield has risen to 5.35%, the highest level since 2007. Rising oil prices are fueling inflation worries, forcing investors to step up interest-rate hedging.
According to the trade structure mentioned, if the 10Y yield rises to around 5.1%, the position would be at breakeven; at 5.2%, profits could reach roughly $15M.
My take: 5% on the Treasury 10Y is no longer a far-fetched target if inflation and oil continue to exert pressure. And if the long-term yield truly breaks out, this won’t be just a story for bond traders pricing equities—USD and even crypto will have to respond.
5% Treasury yield. That’s when risk assets start sweating.
Do you think 10Y will truly break above 5% this time, or is the bond market hedging a bit too aggressively?
#Treasury #bondmarket #bitcoin
The US Treasury market has just seen an options trade with a notional size of about $14M, betting that the 10Y yield could break above 5% as the bond sell-off continues.
Meanwhile, the 30Y yield has risen to 5.35%, the highest level since 2007. Rising oil prices are fueling inflation worries, forcing investors to step up interest-rate hedging.
According to the trade structure mentioned, if the 10Y yield rises to around 5.1%, the position would be at breakeven; at 5.2%, profits could reach roughly $15M.
My take: 5% on the Treasury 10Y is no longer a far-fetched target if inflation and oil continue to exert pressure. And if the long-term yield truly breaks out, this won’t be just a story for bond traders pricing equities—USD and even crypto will have to respond.
5% Treasury yield. That’s when risk assets start sweating.
Do you think 10Y will truly break above 5% this time, or is the bond market hedging a bit too aggressively?
#Treasury #bondmarket #bitcoin
