Futures Markets News 

Betting on Crisis, Hedge Funds Short Italian Bonds

“The popularity of the futures market in Italian bonds means it is simpler and cheaper than before to place speculative bets about coming price swings” reports nytimes.com. Nordvig said that a robust market for futures contracts tied to Italian government bonds had made it easy to bet against Italy.If Italy flouts European deficit restrictions, for example, investors and large banks likely would sell the government’s bonds, fearing deep losses.It became a self-fulfilling prophecy as pension funds, mutual funds and banks sold these suddenly risky securities.Many large investors, he said, now “have a short bias” toward Italy, believing that a clash between Rome and Brussels over eurozone rules and regulations could lead to a sell-off.
 
Source: nytimes.com



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