Short-term bond yields soared, leading to a sharp narrowing of the 30-year and 10-year swap rate spreads, and hedge funds experienced large losses. The deal is called a steep transaction, betting that the 30-year swap rate will rise faster than the 10-year interest rate, yet the spread between the two not widened, but narrowed from 19 basis points to about negative 14 basis points. This round of market shocks in September was like being “forced to close positions,” and investors were forced to stop losses and leave the market; steep global trading was previously extremely popular among short-term capital and macro-funds.

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