Lukas Becker

Markets editor of and FX Markets

[Lukas Becker @LukasBeckerRisk]

The full 2,600 word piece is here for those interested: https://t.co/4yiBCEi3MO

[Lukas Becker @LukasBeckerRisk]

During interviews last month for the initial flurry of stories about Sebi's market manipulation accusations against Jane Street, one source pointed to something interesting. 🧵

[Lukas Becker @LukasBeckerRisk]

The source was not able to go into detail about the other 14 days under investigation by Sebi, however, and did not want to be drawn on other questions around expectations of market impact from the combined strategies.

[Lukas Becker @LukasBeckerRisk]

Investors positioned for a steeper rates vol curve also came undone thanks to long-end dealer hedging flows and a sharp front-end move

https://t.co/q8DLmF3Fte

[Lukas Becker @LukasBeckerRisk]

While the April 2 'Liberation Day' tariffs kicked off a storm in the US Treasury market, it also rocked Japanese yen interest rates and led to an estimated $1 billion of losses across banks and hedge funds.

[Lukas Becker @LukasBeckerRisk]

Firms that had bet on short-end rates rising and the curve flattening were caught out when the market moved sharply in the opposite direction following Trump's tariff reveal.

[Lukas Becker @LukasBeckerRisk]

Link: https://t.co/eg9yJBKNil

[Lukas Becker @LukasBeckerRisk]

Last week I happened to be in New York and had a front-row seat to the Treasuries meltdown. I had meetings scheduled with several senior rates traders at the large US banks, that still went ahead despite the chaos that was unfolding as the market lost its safe haven status.

[Lukas Becker @LukasBeckerRisk]

Here is the result of those conversations - 3,000 words on how a VaR shock triggered mass unwinds of leveraged Treasuries positions, hitting swap spreads trades and crushing market liquidity - and ultimately threatening the much larger basis trade and systemic risk issues

[Lukas Becker @LukasBeckerRisk]

Traders say EU bond liquidity has in-turn improved dramatically, though questions still remain around long-term issuance plans.

https://t.co/ZqTD4pqL6T

[Lukas Becker @LukasBeckerRisk]

With correlations between European government bonds and interest rate swaps declining thanks to QT and year-end bank balance sheet pressures, hedge funds are turning to EU bonds as their preferred EGB hedge