Option Traders Bet on Deep Treasury-Market Selloff Within Weeks

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A bearish tone is taking hold in the market for interest-rate options, suggesting that bond traders are bracing for Treasury yields to surge anew in the coming weeks.

There has been steady demand for bearish hedges using Treasury-option put structures in January contractsBloomberg Terminal on 10-year notes, which expire Dec. 27. Positioning has also been building over the past couple of days in the February options, which expire Jan. 24, the week of President-elect Donald Trump’s inauguration.

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