What Is The Basis Trade (This Is A Systemic Risk To The Financial System)

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Regulators are almost feuding with hedge fund "speculators" over something called a basis trade. The former alleges it is a huge systemic risk, and they are right though for the wrong reasons. In the latter group, supporters point out funds have become necessary balance sheet warehouses for Treasuries because of a key gap. Here we'll examine what that gap really is and why it actually matters to find out who is right (spoiler: both).

Eurodollar University's Money & Macro Analysis

Bloomberg: Griffin Says Scrutiny of SEC Basis Trade ‘Utterly Beyond Me’
https://www.bloomberg.com/news/articl...

OFR WP 2021-01: Hedge Funds and the Treasury Cash-Futures
Disconnect
https://www.financialresearch.gov/wor...


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