Hedge fund Alphadyne loses $1.5 billion in the global bond market short squeeze

Alphadyne Asset Management was founded by Khuong-Huu and Bart Broadman, who also worked at JPMorgan. Investors in the company include pension funds, insurance companies and sovereign wealth funds, according to its website. In 2017, Alphadyne spun off the Asian team and established Astignes Capital Asia Pte, focusing on interest rate and foreign exchange instrument trading in the region. Broadman is now CIO of Singapore-based Astignes.

The New York-based investment firm suffered losses about $1.5 billion, making it one of the biggest victims of this short squeeze in global bond markets, people familiar with the matter said. The firm's flagship fund, Alphadyne International Fund, fell about 10 percent. The firm also manages a leveraged fund of roughly the same size. Its $12 billion macro trading strategy fund suffered heavy losses from a series of misguided bets on rising interest rates.

The losses show that the sharp rise in U.S. Treasuries over the past four months has caught some of the most professional investors off guard. Falling interest rates come at a time when U.S. inflation is at its highest level in decades, confounding bond traders around the world. Alphadyne, on the other hand, is betting heavily on a steeper yield curve and has been respond slowly.