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Mysterious Billion Dollar Bet

On Thursday, an unknown entity placed a one billion dollar trade in the bond futures market that will profit if US interest rates rise. This means that a major proprietary trader almost certainly knows either that the Federal Reserve will shortly raise interest rates or that the US credit rating is going to be dropped from AAA to AA by credit rating agencies, or both. If this trader is correct, the profit realized could approach 10 to 1. If wrong, the entire billion dollars could be lost overnight.

To an extent, the trade may have been intended to frighten the market, and it did cause traders long treasury bonds and futures to begin a frantic wave of selling, which developed into sharp losses for US bonds on Friday. The number of entities that can afford risk on that scale is extremely small. Hedge fund manager John Paulson could afford it. PIMCO (the Pacific Investment Management Company) could afford it, and the United States and Chinese central banks could as well. It is also possible that a consortium has been formed that could afford it. Paulson is famous for having made $6 Billion when he traded against subprime mortgages prior to the 2008 meltdown.

It's clear that while Congress argued over the debt ceiling and the average person tries to get (or keep) a job, background manipulators are (as usual) cashing in. This is the kind of dynamic information and interpretation that you just can't get anywhere else! Make sure we're still here tomorrow: Subscribe today!



I suppose it's possible that some huge hedge fund is actually hedging some other position (instead of just making wild bets), but what sort of position might that be? If it's a 10:1 profit ratio, that suggests covering a USD$10B bet. Follow the money...

If the US central bank (the federal Reserve) is allowed to bet that interest rates will rise when it is they who set interest rates then we have THE solution to America's debt problem. They could bet one trillion, raise the rates, collect 10 trillion and cancel America's debt.

To top it off, we could then incarcerate everyone at the Fed for insider trading, (no good deed goes unpunished) shut the Fed down, and then the government can begin to borrow money from itself (if ever again needed) at zero interest instead of paying interest to the Fed, thus saving 40% of our current debt payments, which we wouldn't have to pay anyway because the debt would have been paid in full.

Sorry, I know everyone makes mistakes. But that was just too juicy to pass up.

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