Attempting to ELI5 the bond market situation

- there’s something called the “basis trade” that hedge funds are in on where they are betting on micro differences in the price of bonds and their prices on the futures market
- tariffs crashed the stock market which in turn crashed this trade and the hedge funds need to sell their bonds to make up for losses
- because prices are dropping fast it could cause people to panic sell and cause many billions in losses
- one option is for the federal reserve to stabilize prices by buying lots of bonds
- he doesn’t want to because we’re already in historic debt and this would be taking on even more debt

Barista in the morning, AI engineer by day, and parent (with @shiwen) by night ||
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You sure they aren't just rotating into equities at peak fear?

Data @ Coinbase Institutional :::
casts are my own bad takes

Not if you’re a hedge fund trading bond pairs lol

June futures are down the last three days, if you were unwinding a short basis trade that went wrong you would be buying tbills not selling right

ya if you're a cash buyer, it's a decent spot to dca

I'm actually personally buying here, nice to add at these rates when I would have anyway

Depends if you’re unwinding or getting blown out of your leveraged position. By now it’s about who else is leverage long on bonds and losing a ton from the panic selling