{
  "id": 9536263,
  "title": "Analysis-Hedge funds sour on basis trade as Treasury selloff continues",
  "url": "https://urgent.news/2026/09/24/analysis-hedge-funds-sour-on-basis-trade-as-treasury-selloff-continues",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-24T10:25:12.000Z",
  "source": {
    "name": "Investing.com",
    "slug": "investing-com",
    "url": "https://www.investing.com/news/economy-news/analysishedge-funds-sour-on-basis-trade-as-treasury-selloff-continues-4914832"
  },
  "original_language": "en",
  "account": "The Treasury basis trade, a strategy favored by hedge funds, has seen a decline in popularity as Treasury selloffs persist. The trade, which involves borrowing overnight to profit from the slight price difference between Treasury securities and futures, has experienced a 20% decrease in funds, amounting to $1.2 trillion, according to Morgan Stanley estimates. The trade relies on rising US interest-rate expectations and improved trading conditions, both of which limit its profitability. The decline in the treasury basis trade is partly due to reduced demand for both Treasury securities and futures. Additionally, higher Treasury inventories at banks and Treasury buybacks have reduced potential gains. The trade is driven by asset managers' demand for long-term Treasury holdings to boost their duration, which hedge funds match by selling corresponding futures. The trade spans across the entire yield curve, with significant activity in the 2- and 5-year sectors as well as the 10- and long-end futures. The pullback has primarily affected short-term Treasuries, as rising Federal Reserve rate-increase expectations make it harder for hedge funds to enter the trade. Despite the decline, hedge funds still hold a substantial position in the trade. The New York Federal Reserve has raised concerns about potential systemic risks, but the current market stress has not been widespread.",
  "summary": null,
  "key_points": [
    "Hedge funds reduce $1.2T in Treasury basis trade due to selloffs",
    "Trade relies on rising interest-rate expectations, limited by profitability",
    "Reduced demand and higher Treasury inventories affect trade's gains"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 3,
    "also_reported_by": [
      {
        "outlet": "Hedgeweek",
        "title": "Hedge funds scale back Treasury basis trade as arbitrage gaps narrow",
        "url": "https://urgent.news/2026/09/23/hedge-funds-scale-back-treasury-basis-trade-as-arbitrage-gaps-narrow",
        "published": "2026-09-23T08:42:00.000Z"
      },
      {
        "outlet": "Bloomberg",
        "title": "US 30-Year Yield Hits Highest Since 2004 as Bond Selloff Deepens",
        "url": "https://urgent.news/2026/09/24/us-30-year-yield-hits-highest-since-2004-as-bond-selloff-deepens",
        "published": "2026-09-24T08:37:06.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}