New York (HedgeCo.net) – Last Thursday when the European Central Bank announced a cut in rates to -0.3% and an extension of the bond-buying program, they may have inadvertently added the misery that macro-oriented hedge funds have experienced in 2015.

Macro funds have struggled as a whole this year as there have been several surprises from central banks around the world. In January, the Swiss central bank un-capped the Franc against the euro and that hurt a number of funds. Over the summer, the Peoples Bank of China cut rates in order to stem a bearish stock market and to try and spur economic growth and that too went against expectations.

Now, the ECB did what most macro funds were predicting, they just didn’t go as far as many expected. The prevailing bet from macro funds was a short against the euro and bullish on the dollar. The idea being that the ECB would cut further and add more stimulus right as it looks as if the Fed is ready to raise rates. Because the actions of the ECB fell short of expectations, the dollar actually fell against the euro last week.

Rick Pendergraft
Research Analyst
HedgeCoVest