Traders are betting heavily that the 10-year Treasury yield will return to 4% within weeks.

Traders are piling into Treasury options, betting that the yield on the 10-year US Treasury will rise back to 4 per cent in the coming weeks - a level not reached since late November. The bullish bet comes as yields have actually edged higher recently, with the 10-year yield hitting a high near 4.20 per cent earlier this month before moving to 4.16 per cent on Monday as investors weigh in on the latest economic data and look to Fed officials for clues about the size and timing of future rate cuts. CME non-position squaring contract data released on Monday showed heavy buying of 10-year Treasury options contracts maturing in March over the past week. The total premium paid out on the position to date is unusually large, at around $80 million, and the number of unpositioned squaring contracts has soared to 171,153 contracts, a 300% surge in a week.