Hedge fund surge in momentum EGB trading stirs unease
Dealers voice concerns that crowded positions could lead to liquidity squeezes following mass unwinds
The sharp rise of momentum-based trading in European government bonds (EGBs) by hedge funds is raising fears that a sudden unwind could lead to a liquidity squeeze and heighten market volatility, dealers say.
Hedge fund activity in electronic EGB trading has risen to 56% of volumes in 2023, up from 26% in 2018, according to data from Tradeweb. Changes in interest rates over the past two years, as
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