Basis trade fuels hedge funds’ US bond exposure

Basis trade fuels hedge funds’ US bond exposure

The Star Online - Business·2026-06-26 08:01

WASHINGTON: Hedge funds’ growing exposure to Treasuries is primarily due to the revival of the cash-futures basis trade, according to a Federal Reserve economist.

The highly leveraged trade now accounts for US$830bil of hedge funds’ Treasury long positioning as of September, about double its previous peak in early 2020, according to a report authored by principal economist Phillip Monin.

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