How US shutdown set off long-awaited basis bet
Hedge funds dust off a years-in-the-making relative value trade to profit from fallback mismatch
As the US government hurtled towards a shutdown late last year, most market participants were focused on the political and macroeconomic implications. But a handful of hedge fund inflation derivatives traders were preparing finally to put in place a trade they had been wargaming for years.
The relative value trade saw the funds buy Treasury Inflation-Protected Securities (Tips) and sell a US
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