RE:Private Equity BubbleMy Comment: There's another big bubble in the basis trade. Read more at
Credit Bubble Bulletin : Weekly Commentary: Something of a Victory Lap Bloomberg Intelligence’s Brian Meehan was out Friday with timely research:
“Can Historic $1.1 Trillion Net Short Basis Trade Hold or Crack? Leveraged net shorts of Treasury futures have surged to a historic $1.1 trillion in notional value, accelerating 38% in the past four months. While the record short position alone doesn’t suggest the basis trade will blow up, it’s more than double when massive leveraged funding trades cracked in 2019 and 2020 -- and could require the Fed to bail out traders again if the repo market gets overly stressed… The net short position in US Treasury futures held by leveraged accounts per the CFTC Commitment of Traders has increased by $300 billion in notional the past four months… The size of the position alone doesn’t mean a blowup is pending, as funding markets have been quiet ahead of expected Fed easing. But given that the trade has blown out several times in the past 20 years, it's likely more a question of when, not if.”