- Hedge fund Alphadyne reportedly lost $1.5 billion in a bond market short-squeeze, Bloomberg repported.
- The hedge fund slipped 4.3% in June and another 2.5% in July, according to the report.
- Its flagship fund, the Alphadyne International Fund, also lost around 10%.
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Alphadyne Asset Management, a New York-based hedge fund, reportedly lost $1.5 billion in a bond market short-squeeze as bets on rising rates turned sour, Bloomberg reported.
The losses, which are some of the biggest publicly revealed among macro-focused hedge funds, are indicative of the unusual economic environment that has characterized 2021 – with inflation readings at their highest in a decade and benchmark interest rates near zero – and how managers have struggled with such historical anomalies.
Bloomberg points to the flattening of the five- to 30-year yield curves in just three days in June, which caught many by surprise, including Alphadyne. The hedge fund slipped 4.3% to its worst month in history in June when its managers positioned for a steeper US yield curve and higher interest rates broadly, according to the report.
By July, the hedge fund – whose investors include pensions, insurance companies, and sovereign wealth funds – lost another 2.5%, Bloomberg reported.
Hedge funds have mostly scaled back betting against Treasury futures as rates continue to hover near historic lows despite rising inflation.