Reuters reports that US government bonds continued to rally Friday, partly driven by rumours that a large hedge fund might be in trouble.
The news agency quoted a bond market analyst who said that 'there is word here we are hearing concerning some hedge fund meltdown, but nobody can confirm anything'.
In the meantime, The Wall Street Journal's 'MarketBeat' column reports that Citadel Investment Group has denied that it is the firm said to be dealing with heavy losses. The column quotes Citadel spokesperson Bryan Locke, who said that 'we are aware of the rumours. They are completely unfounded'.
Citadel joined up with JP Morgan just a few weeks back to buy failed hedge fund Amaranth's energy portfolio at a significant discount to book value. Although Locke wouldn't be drawn into giving any performance data, MarketBeat quotes an unnamed Citadel investor who says that, despite the declines in the energy markets in the last fews days, the firm is still around 20% up on the year.