German defence announcement hits steepener trades
Rapid euro curve flattening following Merz’s comments last week caught out a number of hedge funds, say dealers
The big moves in the Bund market last week saw a number of macro hedge funds get stopped out of positions that aim to profit from changes in the relative rates of different tenors of euro interest rate swaps, according to dealers.
Hedge funds have been increasingly active in the steepener trades that bet on the spread between the five- or 10-year euro interest rate swaps versus the 30-year point
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