Hedge Funds, Eying Fed Shift, Boost SOFR Bets to a Record High
- Shows speculation that Fed rates near peak as inflation cools
- JPMorgan survey finds that neutral Treasury positions surged
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Hedge funds have built up record long positions in short-term interest-rate futures pegged to the Secured Overnight Financing Rate. The positioning comes amid speculation that a slowdown in inflation and economic growth will drive the Federal Reserve to start easing monetary policy in the second half of 2023.
Meanwhile in Treasuries, JPMorgan Chase & Co.’s latest client survey showed mounting doubts about where yields are heading: Both long and short positions dropped sharply, leaving neutrals gaining 12 percentage points in the week up to Jan. 3.