Bond Traders Are Placing Euro-Breakup Bets Again
- Near-dated German futures volumes jump as a proxy for cash
- Italian high-coupon bonds underperform in bet on downturn
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Hidden under the surface of European bond markets, traders are placing bets that will pay out if the risks in the euro zone severely escalate.
Markets across the continent have started to price in the increased potential for anti-euro candidates to win elections in France and Italy. Recent positioning in German and Italian bonds are hedges against a blow-up in the risk of a breakup in the common currency, said traders in London and New York, who asked not to be identified because they are not authorized to speak publicly.