Hedge funds are positioning for a slow down in this year’s stellar start for Treasuries by quietly building up the biggest bearish bet on bond futures on record, according to a report by Bloomberg.
The report cites the latest data from the Commodity Futures Trading Commission which reveals that as of 24 January, an aggregate measure of net-short non-commercial positions across all Treasuries maturities hit 2.4 million contracts. The positions cover a raft of investment strategies including outright short bets, yield curve wagers, relative trades and hedges.
Widespread anticipation that falling inflation and a wider cooling of the US economy will see the Fed end its rate hike programme, fuelled a January boom in Treasuries with a Bloomberg index of the bonds having climbed 2.3% so far this month, after falling 12.5% last year.
But the record short positions built up by hedge funds suggest that the bond market rebound may be short-lived.
