Caught Between Inflation and Fed, Bond Traders Cut Futures Risk

Mounting anxieties about inflation risks and the central bank’s likely policy response are taking a toll on the use of U.S. Treasury futures.

With uncertainty swirling about which way Treasury yields might ultimately go, some traders are apparently taking their chips off the table and the size of outstanding positions in futures is shrinking. That shift has taken place even as yields get tossed up and down within their range, spurred higher by stronger-than-expected inflation figures and a soft auction one day, and weighed down by soothing words from the Federal Reserve boss the next.