A sizable options trade hit the U.S. Treasury market, betting that continued selling in government bonds will push the 10-year yield above 5%. The move came as rising oil prices were seen as a possible driver of already elevated inflation, adding to hedging demand in the bond market. The report said the sell-off had pushed the 10-year yield back toward its 2023 peak of slightly above 5%.
The 30-year U.S. Treasury yield climbed to 5.35% on Thursday, its highest level since 2007. The options position carried a premium of about $14 million, making it a notable trade in the derivatives market. Traders had earlier said that behind-the-scenes hedging activity was already building and had added to selling pressure.
According to the report, the trade would break even if the 10-year Treasury yield rises to about 5.1%. If the yield reaches 5.2%, the profit would increase to roughly $15 million. The last time the 10-year yield was at that level was in 2007.
A large options trade appeared in the U.S. Treasury market, betting that the ongoing sell-off in government bonds will push the 10-year yield above 5%, according to Odaily.
Rising oil prices may add more pressure to already elevated inflation, and the trade was described as the latest sign that investors are stepping up hedges against risks in the bond market. The selling has pushed the 10-year yield back toward its 2023 peak of slightly above 5%.
The 30-year U.S. Treasury yield rose to 5.35% on Thursday, the highest level since 2007. The premium paid for the options position was about $14 million, a relatively large trade in the derivatives market.
Traders had previously said that a wave of behind-the-scenes hedging had already emerged and was adding to the sell-off. If the decline continues, investors may buy more bearish options to protect portfolios from losses, while also increasing so-called convexity hedging.
If the 10-year U.S. Treasury yield rises to about 5.1%, the trade would reach break-even. If the yield climbs to 5.2%, the profit would increase to about $15 million. The last time the 10-year yield reached that level was in 2007.
This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan. Disclaimer:
The market information, project data, and third-party content displayed on this platform are for industry information sharing only and do not constitute any form of investment advice or return commitment.
Cryptocurrency trading carries high risks. Users should fully assess their risk tolerance and make independent decisions. All profits, losses, and legal responsibilities are borne by the users themselves.
