Fed PolicyInvestments

10-year Treasury yields remain tentatively calm

According to Bloomberg, U.S. government debt is becoming increasingly dangerous to options traders who are pushing up the cost to protect against sudden losses.

The publication explains:

While the prospect the Fed will keep its $85 billion of monthly bond purchases into 2014 caused swings in 10-year Treasury yields to diminish and encouraged bullish options traders to bet on lower rates, the relative calm is obscuring the danger that investors may get blindsided by a pullback. Some speculators are hedging their bets that yields are poised to eclipse 3 percent. Reports on jobs, services and manufacturing last week all showed U.S. companies persevered through the partial government shutdown.


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