Phantom trader places 1 billion dollar short on bonds

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schockergd

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Investors: The $1 Billion Armageddon Trade Placed Against The United States (NYSE:SLV, NYSE:GLD, NYSE:TBT, NYSE:TLT, NYSE:SPY) | ETF DAILY NEWS


Someone dropped a bomb on the bond market Thursday – a $1 billion Armageddon trade betting the United States will lose its AAA credit rating.

In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world.

The massive trade wasn’t placed in bonds themselves; it was placed in the futures market.

The trade was for block trades of 5,370 10-year Treasury futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01.

The value of the trade was about $850 million dollars. In simple terms, if that was a direct bond buy, no one would be talking about it.

However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.
 


From a bio of George Soros:

With Stanley Druckenmiller shorted England's currency, "broke" British pound 1992; said to have made $1 billion in one day when Bank of England stopped fixing exchange rate.
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schockergd said:

However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.
Click to expand...

Wrong.

The trader would have to have initial margin plus a bankroll of about 2 to 3x initial margin to allow for adverse market conditions.

10 year T-Notes (traded on the CME) have an initial margin of $1,755 per contract.

The trader needs to make a capital commitment of nowhere near $1 billion to make the trade.
 
True, he doesn't need a full capital commitment, but he does need the reserves to back that bet up, and the size of the bet makes it seem unlikely that he was able to leverage it with outside borrowed money.

Ya, this does sound like a Soros move.
 
When I read shit like this, I realize how little I understand about investing. Any recommendations on some decent books?
 
The only reason to make a move that big all at once is to try and get the market all scared and selling with you (ie. Muddy Waters). Soros' move on the GBP was partially because he could personally contribute to the breaking of the currency agreement messing up the prices. I'd argue that he would maybe prefer to have a bit more of an 'edge' on the trade than what he would have on this one, which is why he likes currencies...that and he's too damn old for shenanigans like this.

Regardless of who this is, I look forward to watching the gong-show short-squeeze that comes after the crash when this person tries to unwind their position.
 
I know this guy. NOT SOROS... It just isn't him.

It has to be


































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