Treasury Traders Bet on Renewed Selloff With Inflation Data Due
- Options bet on five-, 10-year yields to lead charge higher
- Yields will be driven by pricing of Fed rate hikes: Jefferies
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Options are signaling rising expectations of another bond selloff ahead of U.S. inflation data, as investors position for the Federal Reserve’s response to price pressures.
Traders are targeting rates on five to 10-year Treasuries to lead a charge higher, rather than the longer-dated notes they bet on in February. One-month risk reversals -- a gauge of demand for bearish put options over bullish calls -- are at their highest since May for benchmark 10-year Treasury futures and their five-year equivalents. Similar premiums for short- and longer-dated contracts are lagging.