Hedge Funds bet on Government Debt

Hedge Funds bet on Government Debt
Hedge fund speculators at the Chicago Board of Trade bet a record $35 billion that the prices of government debt will continue to rise, according to research by CBOT.

CBOT Holdings, Inc. operates a marketplace for the trading of interest rate, agricultural, equity index and metals, energy and other futures contracts, as well as options on futures contracts through its exchange subsidiary, the Board of Trade of the City of Chicago, Inc.

According to CBOT, hedge funds have 347,559 futures in contracts, and wagered that the price of 10 year Treasury notes would rise, in order to profit on their investment. The contracts would not profit from a decline. Hedge funds wager for or against their stock, meaning they can make money whether the market goes up or down.

The Commodities Futures Trading Commission reported 675,003 bets that prices will rise on 10 year notes. In its Commitments of Traders report from Washington it also said that traders believe two years of interest-rate increases by the U.S. Federal Reserve are slowing growth enough to curb inflation.

In contrast, the total of wagers on a decline were 327,444.