Source: Zhitong Finance
Author: Rousseau
Hedge funds are now ramping up bearish bets on U.S. bond prices, at a time when fund managers at traditional asset managers generally expect the most challenging period for the global bond market to be over, so the trend in U.S. bond prices has become more volatile. optimism.
The biggest difference between hedge funds and traditional stock or bond funds is that when the stock and bond markets experience drastic fluctuations, hedge funds can perform reverse operations to make profits (such as shorting), or even leverage (such as margin financing) Expand profitability. Traditional funds such as pension funds and mutual funds that aim to achieve long-term appreciation rarely conduct these high-risk operations, and basically buy and hold for a long time. Therefore, no matter whether the market soars or plummets, hedge funds can seize the opportunity to earn returns for investors, but the risk factor is very high compared to traditional funds.
Zhitong Finance APP has learned that leveraged funds’ short positions in U.S. Treasuries increased to the highest level since October 2020 last week, according to statistics from the U.S. Commodity Futures Trading Commission (CFTC), which has been adjusted to give longer-term bonds higher weight. Traditional asset managers including pension funds, insurers and mutual funds increased their long positions in U.S. Treasury prices to their highest level since April 2020, according to similarly adjusted data.
Hedge funds ramp up their bets on U.S. Treasury prices as traditional asset managers are more bullish on U.S. debt
“Many asset managers tend to buy when they see value in mid- to long-term investments, while hedge funds try to profit from any volatility in the market,” said Akira Takei, global fixed-income fund manager at Asset Management One Co. in Tokyo. Asset Management One Co manages $524 billion in assets. “U.S. Treasuries are undervalued by the market, and the worst of the bond market is over,” said Akira Takei.
The divergence in the positions of the two groups of investors comes as U.S. Treasury prices are seeing their first monthly gain since November, according to an index compiled by Bloomberg. In terms of yields (contrary to the trend of U.S. bond prices), the U.S. 10-year Treasury bond yield has dropped from a high of 3.20% in early May to around 2.74% today. Some analysts believe that this round of U.S. bond yields has peaked. The reason is that the market is worried that the successive interest rate hikes by major central banks will disrupt the pace of global economic growth and may lead to an economic recession, so they have bought U.S. bonds to seek safety.
The worst of the U.S. bond rout appears to be over, some analysts, including analysts at JPMorgan Asset and Morgan Stanley, have said in recent weeks, saying the bond market has largely priced in what it needs to fight inflation. rate hike.
Several other factors also appear to be helping investors view global bonds more positively. “With some expected weaker U.S. data already out, U.S. stocks weakening and the Fed’s rhetoric softening, markets are starting to think that the Fed may not have to raise rates as aggressively as previously thought,” said Andrew Ticehurst, a strategist at Nomura Holdings in Sydney. (A 50 basis point plus rate hike).” “Many asset classes, including U.S. Treasuries, are back in pivotal price territory, but it also reflects the fact that the market is divided on the direction of prices.”
This article is reprinted from: https://news.futunn.com/post/16006660?src=3&report_type=market&report_id=206930&futusource=news_headline_list
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