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

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Big one is China but they’d lose a bunch of leverage if they preemptively clipped their entire position

I’m sure there’s some selling happening from foreign govts

Are foreign governments selling as well? Isn't that part of the aim here with the tariffs (to fix trade imbalances via "fixing" currency imbalance inelastic demand for USD)?

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

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

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

You sure they aren't just rotating into equities at peak fear?

The Fed would buy the bonds with printed cash

2021 all over again