(Bloomberg) — A bearish tone is taking hold in Treasury options as traders bet that a crucial stretch ahead — with the US presidential election just days away — will deepen losses in bonds and spark bouts of increased volatility.
Yields have already surged this month, in part on speculation that the winner of the Nov. 5 vote will boost fiscal stimulus, spurring quicker growth and inflation and swelling the supply of Treasuries.
But options traders see the risk of an even steeper selloff. They’re targeting a 4.5% yield on the 10-year note, which would be the highest since May. The evidence of that can be seen in open interest — the amount of new positions held by traders. That measure has been growing in recent sessions in put contracts with a strike price that…
