Published September 26, 2023 at 10:18 am
Hedge funds increased their short positions in U.S. stocks in five of the past six weeks, reaching the highest level of notional short selling since Sept. 22, according to information from Goldman Sachs’ (NYSE:GS) prime brokerage team on Monday emerges. This trend was primarily focused on macro products, including equity index and exchange-traded funds.
According to a separate report from Goldman Sachs, the pattern of growing short flows in US stocks has been evident since the start of this year, with an overall increase of over 20%. The financial institution closely monitors this data through its Prime Brokerage unit, which provides lending and trading services and tracks the investment behavior of hedge funds.
This latest surge in short positions comes after a turbulent week for stocks that saw Treasury yields hit a 16-year high. The instability led to weekly losses in all three major U.S. stock indexes. Both the S&P 500 and the Nasdaq experienced their largest weekly percentage declines since March Friday to Friday.
In addition to increasing short positions, hedge fund managers also opted to reduce risk last week, primarily by reducing long equity positions. Combined long and short degrossing activity in Japan last week was described as the largest since December 21st.
Meanwhile, the Bank of Japan reiterated its commitment to maintaining ultra-low interest rates on Friday. She also reiterated her pledge to continue supporting the economy until inflation reliably reaches its 2% target.
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Written by: Investing.com