Top basis traders at hedge funds are ex-Lehman, Goldman Sachs veterans
As the Treasury basis trade appears to be at risk of maybe blowing up, which would in turn risk big losses at big hedge funds and at the prime brokerage businesses of the major banks (and therefore the banks themselves) that have financed it, we can at least draw some comfort from the fact that the top basis traders have been around. They are not the sorts of spring chickens who would panic about the sudden unwinding of the global financial system.
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Bloomberg helpfully identified some of the key players over a year ago. Many are in their 50s. Coincidentally (or not), many previously worked for Lehman Brothers, where the trade was popularised by Munir Dauhajre, a former prop trader (now retired) and Suresh Sundaresa (now a professor at Columbia).
The big basis traders who are possibly having a bad day might include:
Jonathan Hoffman: A 52-year-old trader at hedge fund ExodusPoint. Hoffman already has his own Wikipedia page, which may need some additions soon. He is famous for having been the global head of rates at Lehman Brothers and for having been paid $83m to join Barclays in 2008 and then complaining that he was owed the same amount again for all the profits he generated while at Lehman before it blew up. Business Insider claimed that he was a "lone wolf" at Lehman. Aged 35 in 2008, Hoffman said he himself generated $550m of Lehman's profits. He also claimed to have made $1.25bn in profit for Barclays in the five years to 2014.
Hoffman joined ExodusPoint for its launch. Hoffman worked closely with Alexander Phillips, another Lehman veteran who joined ExodusPoint from Millennium. Phillips left for Tudor in 2022. Hoffman is at ExodusPoint still.
Michael Gelband, the founder of ExodusPoint and himself a major player in basis trading according to the Financial Times, was Hoffman's boss at Lehman. The world is small. When the basis trade blew up in 2020, the WSJ says ExodusPoint initially lost $360m.
Jonathan Tipermas: Tipermas was once a wrestler and also once the head of dollar swaps trading at Goldman Sachs. He joined Citadel in 2014. Tipermas is a mere 42 years old. The WSJ says Citadel initially lost "hundreds of millions" when the basis trade blew up in March 2020, although this may not all have been Tipermas' doing.
John Bonello: Six years ago, the Financial Times described John Bonello - then aged in his late 40s as one of the "biggest risk takers" in the basis trade market. Bonello is thought to be at Millennium (which didn't immediately respond to a comment on his continued employment). He worked at Millennium with Gelband before Gelband founded ExodusPoint. He's also thought to have worked with Munir Dauhajre in the past (possibly also at Lehman). He lives in New Jersey, but has a $20m Manhattan apartment next to Central Park and a $34m mansion in Los Angeles.
In 2020, Bloomberg says Bonello's team at Millennium lost $100m before the Fed bailed out the basis trade.
Lorenzo Rossi: 38-year-old Rossi is based in London, where he's the chief investment officer of Kedalion Capital Management. Rossi spent nearly seven years until 2022 at LMR Capital Management. In 2019, Bloomberg says he made $250m for LMR from the basis trade. He then made a large loss in 2020 before the Fed bailout. Rossi began his career at Morgan Stanley, where he was a government bond trader in London.
Feng Guo: Based in Hong Kong, Guo is a Cambridge University mathematician and CIO of Millennium spin-out Symmetry Investments. He was a prop trader at Deutsche Bank during the financial crisis. He's thought to be aged in his early 40s.
Ivan Chalbaud: Chalbaud is based at Citadel in London, where he's a partner according to Companies House filings. In the distant past, he was a rates trader at UBS. He previously worked for Capula.
Ryan Letchworth: Also based in London, Letchworth is still at Capula, where he's worked for nearly 16 years. He was a trader at JPMorgan during the (last) financial crisis.
Yan Huo: Letchworth's boss at Capula is Yan Huo, the firm's managing partner. Huo founded Capula in 2005. When the basis trade blew up in 2020, the Wall Street Journal said that Capula at one point lost $572m.
Steve Brown: Brown is based at Balyasny Asset Management, where he's became a partner last March. Brown is a macro portfolio manager. He runs the Texas office for BAM, and like many on the list he previously worked for Lehman Brothers and the Barclays.
Other hedge funds historically deep in basis trades include LMR Partners, which at one point lost 15% of its alpha trading fund in March 2020. The fixed income CIO at LMR is Danny Mitchell, who joined from Scotiabank and previously worked for Morgan Stanley. Lewis Morton also had a long history as a major basis trade portfolio manager at Eisler, but is currently resting after resigning to join a rival fund (possibly Taula).
The basis trade sounds easy - arbitrage price differences between treasuries and treasury futures - but is not. Unexpected dramatic changes in treasury prices can lead to large losses as the heavily leveraged trades are refinanced. Hedge funds sit in the middle of everything.
It's not a given that basis traders will relive the experience of March 2020, though. Treasury secretary, Scott Bessent told Fox Business that the selloff is "nothing systemic" and just "normal deleveraging" from hedge funds experiencing losses. Bloomberg suggested that portfolio managers are maybe just selling a few treasury bonds to make way for the new issuance due later this week.
it’s the basis boiz pic.twitter.com/KN18Nl8zQN
— Conks (@conksresearch) April 9, 2025
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