The Sirius Report
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The Sirius Report
Through 20 years of diligent research I have gained a unique insight and understanding of the ongoing geopolitical shift towards a multipolar world. I have extensive knowledge of Eurasia, South America, Africa and the U.S.. I am able to assess geopolitical events and provide a very clear understanding of what those developments mean in the context of the vast global changes now unfolding.
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Joined on 23rd October 2025
THE TREASURY BASIS TRADE AND WHY IT IS NOW A HUGE PROBLEM:
The Treasury basis trade is a huge, highly leveraged hedge-fund trade built around exploiting tiny differences between the price of US Treasury bonds and Treasury futures. In simplified terms, a hedge fund buys a Treasury bond while selling a futures contract on essentially the same exposure. Because the price difference between the two is normally extremely small, the trade is only attractive if it is done at enormous scale. Hedge funds therefore finance the Treasury purchases largely by borrowing in the repo market, allowing them to use substantial leverage.
The important point is that this is no longer an obscure corner of finance. Basis-trading hedge funds have become major participants in the Treasury market, partly because banks have become less willing or able to warehouse the enormous quantities of government debt being issued. The trade therefore performs a useful function: hedge funds absorb Treasuries and help connect