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Macro hedge funds taking full advantage of soaring inflation

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Ray Dalio’s Bridgewater Pure Alpha is one of a group of macro hedge funds which are taking full advantage of headline-grabbing inflation rates to generate big returns, according to a report by the Financial Times.

Pure Alpha has chalked up a 21.5% gain in the first seven months of the year as elevated global inflation rates have brought some of their favourite bond and commodity markets traders back into play. 

The yield on the two-year Treasury bond for instance has umped 0-7% to 3.1% as central banks attempt to curb consumer price growth. The report also highlights the near continuous narrowing of the gap between two-year and 10-year US bond yields as another attractive trade for trend-seeking macro funds.

A macro fund managed by Caxton chief executive Andrew Law, meanwhile, has also performed well with a 24.9% return, helped by bets on stagflation.

According to the latest data from HFR, macro funds on average are up 8.5% in the first half of the year.

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