Failed Trades in 10-Year Treasury Soar as Note Stays `Special'
- Slide in repo rates lifts costs and unsettled trades
- Short wagers against the notes spur demand to borrow
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The shortage of benchmark 10-year Treasury notes in the market for borrowing and lending U.S. government debt has become so pronounced that uncompleted trades are soaring.
Such trades, known as fails, surged into the billions of dollars in recent days for the newest 10-year note, and may have been in the range of $6 billion to $12 billion, according to Treasury market participants familiar with the matter who requested anonymity because the figures aren’t public. While uncompleted trades occur daily, sometimes because of computer glitches, it’s unusual for the level to be so high. There were $132 million in failures for all 10-year Treasuries in the week ended Feb. 24, the latest data from the Federal Reserve Bank of New York show.