According to CNBC’s John Carney some of the hedge funds that made the biggest and most sophisticated bets against European sovereign debt began reversing those trades last week. People familiar with the trading at three large hedge funds that specialize in trading bonds and credit default swaps said that those funds began to cover short trades and actually go long European sovereign bonds last week.
"The idea is that it has gone too far, especially with Italy's debt," a trader at one credit fund said.
Italian bonds briefly traded above the 7 percent yield that many consider the "unsustainable" level. An auction of 3 billion euros ($4.1 billion) of five-year Italian bonds reach a yield of 6.3 percent. That's the highest level since June 1997, according to reports. It's nearly a full point higher than just one month ago.
Read more at http://www.cnbc.com/id/45287233
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