Hedge Funds Pull Back From the Basis Trade as Bond Gaps Vanish
Hedge funds are reducing their involvement in the US Treasury basis trade, which has reached its smallest size in over two years. Wall Street strategists attribute this decline to fewer market dislocations. The shift reflects a changing environment in the bond market.
A popular trade in US Treasuries has shrunk to its smallest size in over two years, in what Wall Street strategists say reflects fewer dislocations in the bond market for hedge funds to exploit.
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