Leveraged funds hold record short positions in SOFR futures, signaling expectations for prolonged high U.S. interest rates.
Hedge funds have built their largest-ever short position in Secured Overnight Financing Rate (SOFR) futures, reflecting growing skepticism about imminent Federal Reserve rate cuts. The move suggests conviction that U.S. interest rates will stay elevated longer than markets anticipate.
Data shows leveraged funds increased short exposure as futures pricing still reflects expectations for rate reductions later this year. The positioning contrasts with recent market pricing, which had priced in multiple cuts starting mid-2024.
The shift underscores a divergence between hedge fund sentiment and broader market expectations, potentially signaling further volatility in rate-sensitive assets.