Latest news with #hedgefunds
Bloomberg
18 hours ago
- Business
- Bloomberg
Arb Trades Are Back in Vogue in Latest Ether Push
David Pan takes a deeper look at the how traders are trying to shake Ether from its doldrums. Bitcoin's record-breaking rally has hedge funds dusting off a tried-and-true arbitrage strategy for the market's second-largest digital asset, Ether.
Yahoo
20 hours ago
- Business
- Yahoo
Ether Sees Record Short Build up as Hedge Funds Pile on Basis Trade
Hedge funds have been aggressively shorting ether (ETH) during the recent uptick to $3,000 as they attempt to harvest a yield by carrying out a basis trade. Hedge funds are shorting ether to the tune of $1.73 billion on the CME, a venue favored by institutional traders, according to data from the Block, which cites the CFTC. CME data also shows that ether leveraged net totals have skewed heavily to the short side, according to X account zerohedge. A basis trade involves shorting an asset on one venue whilst simultaneously buying on another, remaining delta neutral in terms of price action. In this case, traders can secure around 9.5% per year by shorting ETH on the CME while buying spot ETFs, of which there is around $12 billion in assets under management. Data from Coinglass shows that on Thursday alone there was a record $421 million worth of inflows to ether ETFs, a trend that has been ongoing since early May. Those shorting ETH could secure an additional yield if they buy spot ETH and stake it for a further 3.5% per year. It's worth noting that this option isn't possible for spot ETF purchasers as custody is handled by the ETF provider. Bitcoin (BTC) was a popular asset for traders carrying out the basis trade in 2024 but that yield collapsed in March, which temporarily stalled inflows and muted price action.
Bloomberg
a day ago
- Business
- Bloomberg
Hedge Funds in Ukraine Are Drawing a Line In State Rail Bond Restructuring
Credit investors have largely supported debt restructurings in Ukraine since Russia's invasion. But some holders of Ukrainian Railways' bonds are reluctant to engage in new debt talks until the government allows it to raise freight charges. Welcome to The Brink. I'm Edward Clark, a reporter in London, where I looked at a brewing standoff between Ukraine's government and hedge funds holding bonds in the state rail operator. We also have news on LifeScan, which is getting close to handing control to second-lien creditors, and a look at a shift in strategy for special situation funds. Follow this link to subscribe. Send us feedback and tips at debtnews@ Hedge funds that hold bonds in Ukrainian Railways are drawing a line in debt talks that would mark a second restructuring since Russia's invasion. Credit investors have given the green light to Ukraine's $20 billion debt revamp — and those of government-owned companies like Naftogaz and road operator Ukravtodor — since the February 2022 invasion. Privately-owned firms like DTEK Renewables have also been able to get extensions.
Yahoo
2 days ago
- Business
- Yahoo
Posthaste: This shift in Canada's bond market is raising red flags
There's been a shift in Canada's bond market and it's raising red flags with some observers. As the Government of Canada bond market expands, hedge funds are grabbing a bigger share. In recent auctions, these funds bought nearly half of the bonds available in some maturities, and took a 30 per cent share of secondary trading, said a report by Moody's Analytics. In 2010, hedge funds purchased less than 2 per cent of these bonds at auction. 'Hedge funds are now at the core of the Government of Canada bond market,' said Moody's Analytics economist Charles Houston. 'This shift in market structure has important consequences for financial stability.' One reason for the increase in hedge fund buying is that the Government of Canada has issued more bonds, with the value rising by more than 60 per cent since the start of the pandemic, says Moody's. Bank-owned dealers, who used to be the main buyers, have not been able to absorb the higher issuance because of their capital constraints and risk management policies. 'Hedge funds have stepped in to fill the gap,' he said. Where the vulnerability lies is that hedge funds tend to use a strategy called cash-futures basis trade, which involves buying a bond in the cash market and selling a futures contract tied to that same bond. These transactions are often financed through short-term borrowing in the repurchase (repo) market and their popularity is growing. Volumes linked to this strategy hit $51 billion in April 2024, almost 10 per cent of the government of Canada bond market, according to the Bank of Canada. When the bond market behaves predictably, the strategy works well, especially when trades are scaled up by borrowing. But when it doesn't, things can go very bad, very quickly. If bond volatility spikes, margin calls can increase and banks cut back on funding hedge funds' positions, said Moody's. Funds are then forced to quickly unwind their trades, swamping the market, and yields rise. This vulnerability blew up in March 2020 in the U.S. Treasuries market when foreign central banks and bond funds dumped their Treasuries in a 'dash for cash.' The Federal Reserve was forced to step in, buying more than US$1 trillion in Treasuries in just one month. More recently, it was seen in early April of this year, just days after Donald Trump's Liberation Day roiled the stock market. In a highly unusual situation, bond yields surged as stocks dropped, and the Treasuries basis trade was named as one of the big culprits. The Bank of Canada identified cash-futures basis trade as a potential risk in a 2024 report that calculated that trading volumes in this strategy had more than doubled since 2016. 'While basis trades help to maintain an efficient government bond market, they can also amplify market stress,' said the report. 'Given the potential implications for financial stability, Bank of Canada staff will continue to monitor the size of the trade and the types of investors that participate in it.' to get Posthaste delivered straight to your trade war has unleashed a tsunami of uncertainty on the world, as shown by this chart from National Bank of Canada tracking the volatility measures, VIX and Bloomberg Global Trade Policy Uncertainty Index, against the United States' effective tariff rate. 'To be frank, the future of U.S. trade policy is as clear as mud,' said Avery Shenfeld, chief economist at CIBC Capital Markets. However, 'amidst all the noise, there's been one point of consistency: no country is getting a 'get out of tariffs free' card from the U.S.' U.S. trade issues will be in focus this week after U.S. President Trump threatened to impose a 35 per cent tariff on Canadian goods last week. Canada and the U.S. are working toward a trade agreement by an Aug. 1 deadline. Today's Data: Canada wholesale trade for May Earnings: PrairieSky Royalty Ltd., Fastenal Co. Trump's new tariff threat hikes uncertainty for Canadian businesses Are Canadian home prices about to roll over? Don't bet the house on it Why was Jersey Milk cut from Canada and could other chocolate makers follow? Once the black sheep of personal finance, reverse mortgages are now lower cost than in the old days, and far more mainstream. In fact, a 2023 Deloitte study found that 17 per cent of soon-to-retire homeowners were ready to tap their home equity to bridge a savings shortfall. Find out what you need to know about reverse mortgages and the best rates, updated daily here. Recently, we published a feature on the death of the summer job as student unemployment reaches crisis levels. We want to hear directly from Canadians aged 15-24 about their summer job search. Send us your story, in 50-100 words, and we'll publish the best submissions in an upcoming edition of the Financial Post. You can submit your story by email to fp_economy@ under the subject heading 'Summer job stories.' Please include your name, your age, the city and province where you reside, and a phone number to reach you. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@ with your contact info and the gist of your problem and we'll find some experts to help you out while writing a Family Finance story about it (we'll keep your name out of it, of course). Want to learn more about mortgages? Mortgage strategist Robert McLister's Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won't want to miss. Plus check his mortgage rate page for Canada's lowest national mortgage rates, updated daily. Visit the Financial Post's YouTube channel for interviews with Canada's leading experts in business, economics, housing, the energy sector and more. Today's Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg. Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@ Canada's mortgage renewal wave close to cresting It's summertime and the season is ripe for a market meltdown
Reuters
2 days ago
- Business
- Reuters
HEDGE FLOW Hedge funds dump banks, buy the dip in consumer staples, Goldman Sachs says
LONDON, July 14 (Reuters) - Hedge funds sold bank stocks for the second straight week and piled into consumer staples at the fastest pace in almost two years, a Goldman Sachs note seen by Reuters on Monday showed, just ahead of earnings announcements this week. Wall Street's march to record highs could be put to the test this week as major banks start to report second-quarter earnings and June's consumer price data for the U.S. is published on Tuesday. Hedge funds fled long positions in U.S. banks and global financial services companies for the second week in a row last week, data from Goldman Sachs prime brokerage desk showed. A long position expects an asset price to rise, whereas a short position bets it will fall. The cohort ditched long positions and added short positions on European financial stocks, said Goldman. Banks, financial services firms and insurance companies were all net sold while those in trading and consumer finance were net bought, said the investment bank. Meanwhile, speculators last week piled into the worst performing U.S. stock sector, consumer staples, the data showed. Consumer staples include products like beverages, food and tobacco which are often relatively shielded in economic downturns because they are essential items. The hedge fund buying comes as analysts expect these next set of quarterly reports to reveal the impact of U.S. President Donald Trump's tariffs on corporate balance sheets and the wider economy. "If the tariffs snap back higher on August 1, and we then get an underwhelming jobs report, that would easily resurrect fears around a U.S. recession," said Deutsche Bank analyst Henry Allen. Consumer staples has been the most net-bought stock sector at the Goldman Sachs prime brokerage desk in July, Goldman said. Global hedge funds trading stock markets systematically are down 1.8% for the month but still up just over 10% for the year. Stock pickers, largely flat for the month so far, have posted a 6.6% return this year.
