The below summary highlights futures positions and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, January 26. A week that saw global stocks continuing their stimulus-fueled rally while vaccine rollouts continued to off-set an increased number of lockdowns. Also in China where in addition a chill swept through financial markets after the central bank withdrew cash over growing worries about the risk of liquidity driven asset bubbles in the stock and property market. The S&P 500 and Nasdaq both reached record highs while the dollar and bond yields drifted lower and commodities rose.
These developments, however, all unfolded just ahead of last weeks 61% spike in the VIX index driven by the biggest one-day drop in stocks since October. US 10-year bond yields briefly returned to 1% while dollar shorts got squeezed. All in response to weaker company earnings, and not least after the buying attack on some of the most shorted US stocks triggered some major hedge fund losses and with that, the risk of contagion to the wider market.
Speculators increased bullish commodity bets by 4% to 2.6 million lots, a fresh record, representing a nominal value of $133 billion. All sectors except softs saw net buying led by cattle, Brent crude oil, soybean oil, corn and gold while the limited amount of selling was concentrated in WTI crude oil and sugar.