Bond yields are concerning those watching the financial markets atm and if you're unaware as I was about why then QTR finance has published a pretty thorough (and accurate?) explanation.
Here’s how it works: funds buy long-term Treasury bonds (say, 10-year notes yielding 4%) while shorting Treasury futures contracts tied to the same maturity.
The futures price typically trades at a slight discount to the cash bond price due to financing costs and market mechanics, creating a spread—often just 10-20 basis points (0.1%-0.2%).
[...] But the real juice comes from leverage.
[...] But what if prices move the wrong way?
It seems like we'll finding out the answer to that last question sooner rather than later.