http://www.dailymail.co.uk/news/article-2023809/Did-George-Soros-win-10–1‑return-S-Ps-US-credit-rating-downgrade.html

Who ‘made $10bn on 10/1 bet that U.S. cred­it rat­ing would be down­grad­ed’?

- Unknown investor or hedge fund ‘made $850million bet’

- Bet in futures mar­ket report­ed­ly done at odds of 10/1

- George Soros made sim­i­lar bet on cur­ren­cy in 1992 But source says he was­n’t involved in rumoured trade

By Mark Duell

Last updat­ed at 12:08 AM on 9th August 2011

A mys­tery investor or hedge fund report­ed­ly made a bet of almost $1billion at odds of 10/1 last month that the U.S. would lose its AAA cred­it rat­ing.

Now ques­tions are being asked of whether the trad­er had inside infor­ma­tion before plac­ing the $850million bet in the futures mar­ket, or if the bet hap­pened at all.

There were mount­ing rumours that investor George Soros, 80, famous­ly known as ‘the man who broke the Bank of Eng­land’, could be involved.

He made more than $1billion on cur­ren­cy spec­u­la­tion when the British pound left the Exchange Rate Mech­a­nism on Black Wednes­day in 1992.

But a source with knowl­edge of the firm said Soros was not involved in the rumoured trade and ques­tioned whether in fact there had been such a trade at all.

The lat­est bet was made on July 21 on trades of 5,370 ten-year Trea­sury futures and 3,100 Trea­sury bond futures, report­ed ETF Dai­ly News.

Now the investor’s gam­ble seems to have paid off after Stan­dard and Poor’s issued a cred­it rat­ing down­grade from AAA to AA+ last Fri­day.

Who­ev­er it is stands to earn a 1,000 per cent return on their mon­ey, with the expec­ta­tion that inter­est rates will be going up after the down­grade.

The link has been made to Mr Soros in part because he has been tied to Pres­i­dent Obama’s admin­is­tra­tion since 2008, report­ed The Exam­in­er.

He also recent­ly stopped man­ag­ing mon­ey for out­side investors, mean­ing he is under less scruti­ny from the Secu­ri­ties and Exchange Com­mi­sion

But the mys­tery bet could eas­i­ly have been made by anoth­er trad­er with sim­i­lar resources, despite Mr Soros’s links with the Oba­ma admin­is­tra­tion.

The bet also rais­es ques­tions of whether Pres­i­dent Oba­ma and Trea­sury Sec­re­tary Tim­o­thy Gei­th­n­er knew that a down­grade was on the cards.

Mr Gei­th­n­er said in April there was ‘no risk’ of a down­grade — but the gov­ern­ment now appears annoyed, not sur­prised, by last week’s deci­sion.

He has since slammed S&P for show­ing ‘ter­ri­ble judg­ment’ in their deci­sion and a ‘stun­ning lack of knowl­edge’ of U.S. fis­cal bud­get maths.

http://www.rttnews.com/Content/USEconomicNews.aspx?Node=B2&Id=1691017

SEC Probes Pos­si­ble Insid­er Trad­ing Linked To S&P’s U.S. Down­grade: FT
8/12/2011 5:59 AM ET

(RTTNews) — The Secu­ri­ties and Exchange Com­mis­sion is explor­ing any poten­tial insid­er trad­ing linked to Stan­dard & Poor’s down­grade of U.S. debt, the Finan­cial Times news­pa­per report­ed Fri­day, cit­ing peo­ple famil­iar with the mat­ter.

The reg­u­la­tor has report­ed­ly asked S&P to dis­close who among the rat­ing agen­cy’s staff knew its deci­sion to down­grade U.S. debt before it was announced last week. The news­pa­per report­ed that the probe is being car­ried out by the SEC’s exam­i­na­tion staff, who can refer it to the watch­dog’s enforce­ment divi­sion if it believes any laws have been vio­lat­ed.

The agency is not aware of a leak from an S&P insid­er, nor was it aware of an aber­ra­tional trade, FT said. The reg­u­la­to­ry move comes after the Sen­ate Bank­ing Com­mit­tee said it is look­ing at the S&P down­grade.

How­ev­er, the inquiry might not result in a refer­ral, FT said. The report also said that prov­ing some­one leaked infor­ma­tion on the down­grade or trad­ed ahead of it would be chal­leng­ing as the down­grade was wide­ly antic­i­pat­ed.

This is just a reminder that Pim­co is so huge it can poten­tial­ly sin­gle-hand­ed­ly move the biggest mar­ket out there: US Trea­suries:

Zero­hedge
Pim­co Takes Record MBS Posi­tion Even High­er, Dumps Trea­surys
Sub­mit­ted by Tyler Dur­den on 04/11/2012 18:29 ‑0400

The trend con­tin­ues: as has point­ed out here every month for the past five months, Pim­co’s Bill Gross con­tin­ues to lay­er into the “NEW QE” trade, only this time he is mak­ing it more clear than ever that he is cer­tain that the Fed will have no choice but to mon­e­tize Mort­gage Backed Secu­ri­ties. Indeed, in March the firm added anoth­er 100 bps in its MBS expo­sure, bring­ing the total to 54% of total, or a record $134 bil­lion of the fund’s $253 bil­lion in AUM. And while before Gross would buy MBS and TSYs pari pas­su, that is no longer the case. In fact in March, Gross dumped the most Trea­surys since Feb­ru­ary 2011, cut­ting his net expo­sure from 38% to 32%, and like­ly is in part or whole respon­si­ble for the big bond dump in the mid­dle of March, now long for­got­ten (that or he mere­ly pig­gy­backed on the neg­a­tive sen­ti­ment: April hold­ings will be indica­tive of that). Oth­er notable shifts: Gross con­tin­ues to sell Euro­pean sov­er­eign expo­sure, with Non-US Devel­op­ment hold­ings down to 6%, the low­est since April 2011, and sur­pris­ing­ly even cut­ting Invest­ment Grade hold­ings to just 14%, the low­est since Octo­ber 2008: is Gross smelling a bond bub­ble (in both IG and HY) and is get­ting out while the get­ting is good? Sure looks like it.

That is all.