Bullish US Treasury bets face reversal risk ahead of Fed policy meeting

Bullish positions in US Treasuries are vulnerable to a sharp reversal if Federal Reserve Chairman Kevin Warsh delivers hawkish messaging during the upcoming monetary policy meeting.

Traders have built up net long positions to their highest level since early September, driving benchmark 10-year yields down to around 5% from a peak of 5.36% earlier in the month.

Options market hedging costs rose to their highest level since March as traders rushed to protect portfolios against a further decline in yields.