ORLANDO, Fla., Jan 8 (Reuters) – Hedge funds have started 2023 betting that U.S. interest rates are close to peaking, that the Federal Reserve will keep them higher for longer and that the dollar will weaken slightly.
Judging by the economic data, financial market swings and talk from U.S. policymakers in the first week of the year, this would appear to be a reasonable – and reasonably consensus – macro strategy to employ.
At least for now.
Commodity Futures Trading Commission (CFTC) data show that speculators closed 2022 with one of the smallest three-month SOFR rate futures short positions of the year, a light short dollar position, and substantial short positions cross the U.S. Treasuries curve.
A short position is essentially a wager that an asset’s price will fall, and a long position is a bet it will rise. In bonds and interest rates, yields and implied rates fall when prices rise, and move up when…
