7 May 2015
Hedge funds unimpressed by US Q1 growth – SG
FXStreet (Barcelona) - The Societe Generale Team tracks the behaviour of hedge funds and further note that the stakes are high to play the patience game for the Fed hike.
Key Quotes
“Waiting for the Fed is a matter of patience, but the stakes are high. Hedge funds were not overly impressed by the weak US growth in Q1. They turned only slightly less supportive of their biggest conviction of all: long US dollar.”
“Positioning for a flattening of the US yield curve (long 30Y, short 10Y Treasuries) also remained largely in place.”
“If the upcoming labour market data shows signs of a reacceleration, long dollar positions could actually be reinforced, as delays in Fed tightening could prove shorter than now anticipated. However, if US growth fails to show signs of a reversal, waiting for the Fed could turn out to be very costly and some sort of a liquidity squeeze would seem probable. “
Key Quotes
“Waiting for the Fed is a matter of patience, but the stakes are high. Hedge funds were not overly impressed by the weak US growth in Q1. They turned only slightly less supportive of their biggest conviction of all: long US dollar.”
“Positioning for a flattening of the US yield curve (long 30Y, short 10Y Treasuries) also remained largely in place.”
“If the upcoming labour market data shows signs of a reacceleration, long dollar positions could actually be reinforced, as delays in Fed tightening could prove shorter than now anticipated. However, if US growth fails to show signs of a reversal, waiting for the Fed could turn out to be very costly and some sort of a liquidity squeeze would seem probable. “