TheChek News Flow

Instrument set to cut cost of popular hedge fund strategy that has been blamed for adding to market volatility

CME Group, one of the world’s largest derivatives exchanges, is launching a new product designed to simplify and lower the cost of a popular but controversial hedge fund bet known as the basis trade, potentially opening it up to a broader range of investors. 

The Chicago-based firm said it would launch a new feature called Treasury Link, which will turn what is currently a multi-step process — buying a US Treasury bond and placing a short bet on the equivalent future — into a single, electronic transaction. By eliminating the risk of a market move in between transactions, and reducing the need for a broker, CME expects Treasury Link to open the market up to smaller and more risk-averse investors. 

The basis trade has boomed in recent years, with big hedge funds using leverage — sometimes more than 100 times — to try to profit from minuscule discrepancies in the price of a Treasury bond compared with its corresponding futures contract. As of September last year, the Federal Reserve estimated there were $830bn in such bets, double the last peak hit in 2020.

Expanding investor access could fuel a trade that has added to market volatility and prompted warnings from regulators. A rapid unwind of the basis trade shook the Treasury market during the market collapse in March 2020 triggered by the coronavirus pandemic and has since attracted regulatory scrutiny. 

Regulators including the Federal Reserve, the Securities and Exchange Commission and the Financial Stability Oversight Council have all issued warnings about the basis trade. The trade has enormous concentration risk: a handful of big hedge funds control the majority of the basis trade and regulators fear a liquidity crisis among those funds could lead to a rapid unwind in positioning — as was seen in March 2020. The trade is also highly sensitive to geopolitical shocks, such as the US tariff announcement last year, which led to a dramatic unwind of positions that moved the 10-year Treasury yield by 0.6 percentage points over the course of a week.

But the immediate effect of the launch is more likely to make the market safer, CME argues. By decreasing the risk of a multi-part trade and expanding the investor base, the product should make pricing in both markets more efficient and narrow the difference, or basis, between them.

It could also make it easier for traders to jump into the trade when the spread expands, as in March 2020 and other events, potentially reducing market contagion from a rapid deleveraging.

Moving more of these trades to a fully electronic platform would also increase transparency in the still-opaque Treasury cash market, says CME. The electronification of the trade means buyers and sellers are matched transparently and automatically through an algorithm, in a development that could appeal to smaller funds with fewer broker relationships across markets. 

“We believe this is positive structurally for the liquidity and transparency of the market. It adds to the integrity of the Treasury system, which is important given the increasing size of the market,” said Matt Gierke, global head of BrokerTec, the cash Treasuries trading platform owned by CME. 

“We believe that there is a high chance of attracting customers who were not previously clients, or only clients in one market.”  

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How about that? SpaceX’s AI unit is rolling out some AI products of value to businesses. On Wednesday, SpaceXAI—as the unit is called—and its soon-to-be subsidiary Cursor jointly introduced Grok 4.5, a model “built for coding, agentic tasks and knowledge work.” A week ago, SpaceX introduced a “Voice Agent Builder” enabling small businesses to set up an AI that can talk on the phone and handle customer service calls, among other things.

To be clear, SpaceX is late to the party on both fronts. Voice AI agents are already widely available from firms like Sierra, while a model built for coding and agentic tasks is hardly novel. Elon Musk promoted Grok 4.5 as “roughly comparable to [Anthropic’s] Opus 4.7, but much faster.” Even so, the product releases are a reminder that SpaceXAI isn’t just renting out its cloud capacity to other firms. It is still trying to build a regular AI business.

One problem SpaceXAI may find is cutting through the noise and getting attention for its new offerings. While Musk uses his X account to promote what SpaceXAI is doing, his messages won’t reach small businesses unless they’re online constantly. Most of them aren’t. And his strategy of ignoring the regular business media means he is missing out on a marketing channel that OpenAI, Anthropic and Google all use to get the word out. (OpenAI, incidentally, rolled out its latest voice models on Wednesday).

What gets attention in the news media are Musk’s polarizing political activities, as well as the more ambitious moves his companies are making, like Tesla’s Robotaxi push (which we wrote about today here) or SpaceX’s public market debut. (SpaceX stock fell 0.8% today to $148.30, 10% above its IPO price but 30% below the high it reached shortly after the offering.) Meanwhile, his controversial behavior, and Grok’s reputation for racy content, might alienate potential business customers. SpaceX’s planned purchase of Cursor is giving it a leg up in winning AI enterprise business, but the AI unit still faces lots of obstacles to becoming competitive in that market.

Bezos Goes Hat in Hand to Investors

Even Jeff Bezos has his spending limits. His rocket firm, Blue Origin, is raising outside capital for the first time, we and others reported on Wednesday, after years of being financed entirely by the Amazon founder. The company is raising $10 billion, with $2 billion coming from Bezos, as we reported.

Last year, Bezos co-founded an AI startup called Prometheus to focus on AI that can help with engineering and manufacturing. He put in some of the company’s initial $6 billion in funding, but not all of it. And last month, Prometheus raised another $12 billion from a wide range of venture firms, according to PitchBook. Yes, rockets and AI are both massively capital-intensive businesses, no matter how rich you are, as Elon Musk has also demonstrated.

Wonder has previously used such incentives when it sold shares. In its May 2025 Series C funding, it promised investors extra shares if the IPO price is less than 2.5 times the price paid in that round. And if Wonder doesn’t IPO by May 2030, investors in that round potentially get more shares for every month of delay, according to the documents filed to regulators.

Lore started Wonder after selling his company Jet.com to Walmart in 2016 and then running the retailer’s U.S. e-commerce business for several years. Wonder makes money from charging restaurant fees for delivery and for sale of its meal kits and the prepared meals from its ghost kitchens.

Delivery businesses usually need to discount the services to entice more consumers and businesses on their network, which can weigh on margins. Uber’s delivery segment, which encompasses the Uber Eats restaurant and grocery delivery services, had an adjusted EBITDA margin of 21% in 2025, while its ride-hailing segment had a 27% margin.

Existing investor New Enterprise Associates has discussed co-leading Wonder’s new funding round. Accel and Google Ventures, which also previously invested, have also discussed buying shares, the person added. Spokespeople for the firms declined to comment.

If Wonder were to go public next year, it would be following other consumer companies trying to tap into investor interest in companies that are relatively insulated from AI-related market gyrations. Scooter-rental company Lime went public last week, and IPOs from smart ring company Oura and clothing maker Reformation are expected to follow.