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Special repo rates for 10-year Treasury widen as yields rise bets grow

The overnight cash rate to borrow the on-the-run 10-year note traded as low as 2.7% before closing at 3.7%, versus about 3.9% for general collateral Treasuries.

Reported · Written up by our desk · Government Bonds

LiveMint, citing Bloomberg data, said US funding markets may face disruption as traders increasingly position for higher Treasury yields using repo trades. One common strategy involves borrowing a Treasury security and delivering an overnight cash loan, with the repo rate changing based on demand for specific issues.

The outlet said the repo rate for the current 10-year Treasury note traded as low as 2.7% before closing at 3.75%, while general collateral Treasuries closed higher, with the non-specific rate at 3.92% after trading around 3.86% earlier.

Curvature Securities data highlighted how the gap signals traders are paying up to borrow particular notes. The story also noted the current 10-year note is slated for a second reopening next week, even though supply was already ample near $92 billion.

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