Hedge funds return to JGB flatteners after brutal stop-outs
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Funds bet repatriation of assets by Japan’s pension funds will driver further long-end yield compression
Hedge funds are piling back into curve flattener trades on Japanese interest rates, despite repeated losses on the exposures over the last two years.
A senior rates trader at one US bank in Tokyo says traders revived bets after the front end of the curve sold off aggressively since late August, causing the gap between two- and 30-year Japanese government bond (JGB) yields to narrow by 25 basis
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