Debt Options Traders Capitulate on Hedges for Lower U.S. Rates
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Options traders are making an about face on whether long-term government debt yields can go lower.
The difference between volatility, a gauge of price and demand, on three-month options that allow investors to lock-in paying fixed rates on 10-year interest-rate swaps and those that grant the right to receive them turned positive Thursday for the first time since November. The so-called swaption skew shows a bias for hedges against 10-year rates rising.