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Here’s how an obscure bet on bonds almost crashed the $29 trillion Treasury market, Fed official says - MarketWatch

1. 30-year Treasury yields surged due to a failed swap-spread trade. 2. Roberto Perli highlighted the liquidity crunch caused by abrupt investor positions. 3. The yield increased nearly 50 basis points, marking the highest spike since 1987. 4. The Federal Reserve plans to enhance liquidity tools for the Treasury market. 5. Trump's tariffs triggered initial safe-haven buying, followed by sharp yield reversals.

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FAQ

Why Bearish?

The significant spike in long-dated Treasury yields is likely to deter investment interest in TMUBMUSD30Y, especially given historical comparisons to similar volatility which resulted in yields stabilizing or increasing further, leading to decreased demand for long-term bonds.

How important is it?

The article discusses direct factors affecting Treasury yields and consequently TMUBMUSD30Y, with implications highlighted by a Federal Reserve official.

Why Short Term?

The immediate effects of yield spikes generally influence investor sentiment and market behavior quickly, often leading to rapid adjustments in bond valuations.

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