Levinson’s Graticule Macro Hedge Fund to Shutter After Losses
Bloomberg reports Levinson’s Graticule Macro Hedge Fund to Shutter After Losses
Levinson’s Graticule Asia macro hedge fund has plunged more than 25% this year, mostly during the days after the collapse of Silicon Valley Bank, according to people with knowledge of the matter. His bets tied to front-end rates imploded and erased years of gains, the people said asking not to be identified because the details are private.
Graticule, based in Singapore, becomes the first known high-profile hedge fund felled by wild swings in bond markets, which were triggered by the SVB’s collapse as traders pulled bets on further rate hikes by central banks. Some of the biggest hedge fund winners of last year from computer-driven hedge funds to money pools run by Rokos Capital Management, Graham Capital Management and Brevan Howard Asset Management have also seen losses.
Expect More Blowups
Not a Zero Sum Game
“There will be many more of these kinds of stories in the days/weeks ahead. The chart will help explain why. The second-highest bond market volatility reading in the last 30+ years (only the week of the TARP bailout was higher) means a lot of bond players are in a “very bad place.” And no, this is not zero-sum. The number of winners from the plunge in rate and big volatility will be much smaller than the number of losers,” says Jim Bianco.
Bond Market Volatility Rises the Most Since the Great Recession
Treasury yield volatility is much worse than during the Covid pandemic. One has to go back to the Great Recession to find worse conditions.
On March 15, 2023, I commented Bond Market Volatility Rises the Most Since the Great Recession
Unprecedented Swings
We have seen wild action in US treasuries in the past week. Traders plowed into leveraged bond shorts expecting more hikes.
Then suddenly we have gone from a 50 basis point hike to none at all for the March 22 FOMC.
Never before have we seen such a amazing swings this close to an FOMC announcement.
The Fed finally convinced everyone that it meant higher for longer, then a few days later people are discussing rate cuts. What a hoot.
Expect some hedge funds to blow up over this bond market volatility.
Well, that did not take long.
Here is the chart of rate hike odds that I posted in the above article.
Target Rate Probabilities for March as of March 15
Chart from CME Fedwatch.
Guess what happened as soon as leveraged players were forced out.
Target Rate Probabilities for March as of March 18
Any hedge fund that plowed into the rate cut or no more rate hikes idea is now subject to being carted out.
What a hoot.
Meanwhile, don’t feel sorry for Levinson. I’m sure he cashed out plenty over the years. And now after shutting down this hedge fund, he is free to start another one.
This post originated at MishTalk.Com.
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Mish
If you arrived 4000 years ago you are not an observer – would have been long ago assimilated and become one of us. How often do you get back to visit?
long ago assimilated and become one of us. How often do you get back to
visit?
You humans have so much to learn. Now, on the home planet, we tell jokes at the expense of Uranus, even though we have no anuses. We expel waste by talking, which is why we are so interested in your leaders. Our funniest jokes are about earthlings. We Neptunians love ironic humor, which is why we have left you alone. We consider earth to be a planet-sized comedy club. As for the other details, we have a saying: “Never complain, never explain.” You probably think England’s monarchy invented that. Uh-uh.
Oh, and covid was caused by the Wuhan Raccoon Dog. The media are taking this seriously. Okay? The Wuhan Raccoon Dog.
https://www.zerohedge.com/political/please-stop-raccoon-dogs
Tis but a scratch!