Taula Capital’s $1.5bn rate bet hit by September bond rout

Taula Capital's $1.5 billion investment in the TSO fund, launched in March, has encountered significant losses following a September bond market decline. The fund had anticipated a decrease in European interest rates but instead faced a surge in borrowing costs, as persistent inflation and market reassessments of monetary policy took hold.

The concentrated strategy, which focused on declining interest rates, plummeted by 12.8% since its inception, with September being the most severe month, marking a 12.2% loss. The majority of TSO's decline transpired during September, according to Business Insider's report citing anonymous sources familiar with the fund's performance.

Taula raised the capital for TSO through a lock-up period ending next spring. The firm chose not to comment on the matter. The bond sell-off intensified due to geopolitical tensions surrounding Iran, heightened borrowing by AI companies, and an overall surge in fixed-income securities supply. This intensified a quarterly performance slump for global government bonds, with the Bloomberg index falling more than 2%, marking the worst quarterly decline since 2024.

French government debt fared particularly poorly, experiencing its worst quarterly performance in decades due to concerns over the nation's fiscal health and political instability.