Speculation that a slowdown in inflation and economic growth will force the US Federal Reserve to begin easing monetary policy in the second half of the year has prompted hedge funds to build up record long positions in short-term interest-rate futures pegged to the Secured Overnight Financing Rate. 

Speculation that a slowdown in inflation and economic growth will force the US Federal Reserve to begin easing monetary policy in the second half of the year has prompted hedge funds to build up record long positions in short-term interest-rate futures pegged to the Secured Overnight Financing Rate. 

The report cites JPMorgan Chase & Co’s latest client survey as revealing that, in December, hedge funds turned net long on SOFR futures for the first time since March. 

In a sharp pivot from September when net short holdings were the highest on record, net long SOFR positions are now at their highest level ever.