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Traders Set Up for Post-CPI Pop, Targeting US 10-Year Yield at 4.3%
Traders in US Treasury options are positioning for a bond rally and sharp drop in yields in the aftermath of crucial inflation data to be released on Wednesday. Heavy buying over the past week has centered on options that would stand to benefit from US 10-year yields dropping to roughly 4.3%, some 15 basis points below where they are now and the lowest in more than a month. One high-risk trade stood out: It would reap a potential $15 million windfall on a wager of just $150,000 should the 10-year benchmark fall even further to 4.25% by May 24. The bet on a rally comes as bonds regained some ground following a brutal ... (full story)