Kriti Gupta – Bloomberg/Newsroom
Happy Tuesday!
Today’s Chart of the Day shows hedge funds are the most bullish on oil since mid-November based on the combined net-long positions in Brent and West Texas Intermediate crude futures. The positions have been building over the last four weeks as 10-year Treasury yields jumped 50 basis points and the Nasdaq 100 Index tumbled 5.5%. Rising rate-hike bets from hedge funds are a big driver of the tech selloff that’s spilled over into the S&P 500 Index. Oil, meanwhile, is heading in the opposite direction, with WTI and Brent hitting the highest levels since 2014 on Monday morning.
While some investors are betting on a reversal of the 15-year downtrend in value, hedge funds seem unwilling. Instead, they’re once again turning to commodities in search of returns. And now, oil prices have been buoyed by ongoing demand, concerns around Russian output and a Houthi rebel drone attack on the UAE. Add in expectations that energy prices will be an ongoing driver of persistent inflation, and there’s little mystery to why hedge funds are pulling out of collapsing stocks and bonds — and turning instead to commodities in search of precious returns. Read more on the Terminal here or on the web here.
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