(Reuters) – Hedge funds are doubling down on their bets that the U.S. yield curve will steepen, just as it flattens to within 20 basis points of inversion, historically a sure-fire indication that the economy is headed for a slowdown.
Whether slowdown morphs into recession, as every curve inversion in the last 45 years has reliably predicted, is almost irrelevant for those betting on the shape of the curve. What matters is they’re on the wrong side of the trade and losing money. Fast.
The latest Commodity Futures Trading Commission figures show hedge funds and speculators now hold a record net short position of 700,514 contracts in 10-year Treasury futures, and a short position of 97,333 contracts in two-year futures.
