Basis Trade Slowdown Drives Shift Into Swap Spreads
The slowdown in the US Treasury basis trade has driven hedge funds into alternative strategies like swap-spread arbitrage. Rising financing costs and regulatory changes made the leveraged cash-futures trade less attractive.
Xurve View
Insights:
Xurve View
Hedge funds slashed cash-futures basis positions by billions of dollars in United States Treasury markets, rotating capital into riskier swap-spread arbitrage. The historic shift reflects rising borrowing costs and regulatory changes that have constrained a once-dominant leveraged trade.
