Hedge funds have sharply increased their use of leveraged US interest-rate swap trades as the traditional cash-futures basis trade loses momentum, the Bank for International Settlements has warned, according to a report by Bloomberg.
The report cites a BIS paper released Monday as highlighting that the value of the so-called swap trade – funded via repo to buy Treasuries while shorting corresponding interest-rate swaps – surged to $631bn in Q2 2025, more than doubling from early 2024. The strate...
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