The U.S. bond market firmed Thursday and the iShares 20+ Year Treasury Bond ETF (TLT) posted its best intraday rally in at least a month. A $1 million options trade on the utilities sector ETF (XLU) drove volume to 10 times the 30-day average as traders bet the sector has bottomed, with a maximum payout between $39 and $42 per share. The put/call ratio on XLU peaked at 2.67 late last month, the highest since May, before shifting to heavy call buying Thursday with 74,000 contracts versus just 4,500 puts. Meanwhile, a $4.4 million trade on SOFR futures suggests short-term rates may reverse after the 10-year yield topped 5.3% before rallying.
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