Before Fed acted, leverage burned hedge funds in Treasury market
“Investors seeking safety rushed into Treasury futures on March 12, and hedge funds got hammered. A difficulty in completing trades ensued, and was a contributing factor to the Federal Reserve’s decision to pledge $5 trillion to keep markets running smoothly.”
USAGOLD note: That figure – $5 trillion – portends problems much deeper in the financial system than what surfaces as a temporary overnight repo problem. Over the past few days, a considerable amount of conjecture has surfaced that, as reported above, several hedge funds might be in trouble.
Related, please see: Confirmed – Fed balied out hedge funds facing basis trade disaster/ZeroHedge/3-21-2020 (Multiple LTCM’s?)
Repost from 3-22-2020