Here’s How an Obscure Bet on Bonds Almost Crashed the $29 Trillion Treasury Market, Fed Official Says
The abrupt unwinding of a popular 'Trump trade' in the Treasury market likely fueled April tumult, says Fed's securities-portfolio manager. A massive bond bet backfired in April - and a top Federal Reserve official now says it likely sparked the biggest spike in long-dated Treasury yields since 1987.Roberto Perli, who manages the Fed's roughly $6 trillion securities portfolio, said Friday that the abrupt unwinding of a popular trade known as the swap-spread trade likely exacerbated April's liquidity crunch in Treasurys.The turmoil began after President Donald Trump announced sweeping new tariffs on April 2. At first, investors rushed into U.S. government debt in a "classic flight-to-safety" trade. But just days later, yields on long-dated Treasurys reversed sharply; the 30-year yield BX:TMUBMUSD30Y rose nearly 50 basis points in a week, its biggest such jump since 1987."One factor that appears to have contributed to this unusual pattern is the unwinding of the so-called swap-spread tra
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