This summary highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, March 29. A week that saw continued gains across US stocks and with that a drop in the VIX index to an early January low. A fragile rally in the sense the US yield curve continued to flatten, with the 10-2 year spread dropping by 19 bp to 2 bp, thereby signaling heightened risk of an incoming economic slowdown. The dollar traded sideways for a third week with strength across key commodity currencies and the euro being offset by JPY and GBP weakness.
The Bloomberg Commodity Spot index lost 1.5% on the week, thereby pairing back some of the exceptional strong gains that helped sent the sector towards its strongest quarter in more than 100 years. Losses being led by the energy and grains sectors in response to Russia/Ukraine peace talks and worries about the short-term demand outlook in China, where Shanghai emerged as the epicenter of China’s worst virus outbreak since the early days of the pandemic.
Weekly losses in 17 out of the 24 major futures contracts tracked in this drove a broad reduction across all sectors. The agriculture sector, however, was mixed with selling of grains being partly offset by demand for softs and livestock.