Bond funds, facing depressed returns from aggregate bond indices that are 45% government debt, are buying credit instead while hedging duration exposure through treasury futures, and hedge funds are shorting those futures while repo-ing cash treasuries from primary dealers, creating a carousel of leverage that unwinds violently when spreads tighten.

causalpending

Speaker

Simon White

Evidence Quote

bond funds have been trying to enhance their returns by buying more credit...they have to buy a duration hedge...They can just go and use futures...hedge funds short the futures against the bond funds...they repo in the treasuries...from the primary dealers [35:25]

Source

MacroVoices #475 Simon White: The Dawn of A New Financial OrderMacro Voices
Created: 8/11/2026, 7:06:30 AM

My Notes

Loading notes...