ORLANDO, Fla., Dec 19 (Reuters) – Hedge funds slashed their wager on rising U.S. interest rates and deepened their bearish bets against the dollar ahead of the Federal Reserve’s last policy meeting, an indication of how they may be looking to position themselves for the year ahead.
Commodity Futures Trading Commission data show that speculators now hold the smallest net short position in three-month ‘SOFR’ rate futures since April, and the largest net short dollar position since July last year.
The CFTC data is for the week ending Dec. 13, just before the Fed raised rates by 50 basis points and Fed Chair Jerome Powell gave his clearest pledge yet that more tightening is coming and rates will stay higher for longer.
In the very short term, funds will have been caught out by the Fed’s surprisingly hawkish stance. But zoom out, and two broader pictures emerge: they are taking profit on two highly lucrative trades this year, and are…
