Macro hedge funds are navigating another difficult period for rates trading as renewed inflationary pressure and geopolitical disruption reshape expectations for monetary policy on both sides of the Atlantic, according to a report by eFinancial Careers
The Federal Reserve’s decision to raise interest rates this week for the first time since 2023, combined with signals from the Bank of England that tighter policy could follow, has produced a sharp repricing across fixed income markets and increased the challenge for managers running macro strategies.
There has been market speculation that at least one large hedge fund was caught on the wrong side of recent moves, while some smaller London-based macro managers are also understood to have suffered losses. The scale of those losses has not been independently established, however, and individual fund performance figures have not been disclosed.
The latest volatility follows a difficult period for some macro managers earlier this year. Several funds suffered significant drawdowns in March amid the immediate market reaction to the US-Israeli conflict with Iran, although a number subsequently recovered part of those losses.
Caxton fell 15% in March, while Taula declined 9.6% and Brevan Howard’s Master Fund dropped 6%, according to figures cited at the time. Brevan Howard’s fund had recovered to a 3.7% gain for the year by May, while Taula’s decline had narrowed to about 5% by early August.
