An exchange traded note that bets against Treasury bonds saw a notable outflow on Monday as two Federal Reserve presidents were out with dovish speeches.
“In the market there was a particularly interesting trade in iPath US Treasury 10 Year Bear ETN (NYSEArca: DTYS), of nearly 50x average daily volume,” WallachBeth Capital said in a note after Monday’s closing bell.
DTYS experienced the largest volume day in the ETN’s history.
“Further, if these trades are outflows, it would represent a nearly 50% reduction in assets under management of the fund. Lastly, it’s worth noting that this appears to be an equally notional size trade to an inflow that occurred on August 19th of this year,” WallachBeth said. “The only difference is the August 19th trade was executed through a cash creation, while [Monday’s] activity traded in the secondary market.”
DTYS rises when Treasury yields rise. In other words, the ETN offers a way for traders to profit from lower Treasury bond prices.