Barclays PLCBARC
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Citigroup Inc.C
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Hedge Funds Ramp Up Dollar Shorts Ahead of Bessent's Fiscal Plan
MacroDigital Finance
Hedge funds are ramping up bearish dollar bets as they await more details on Treasury Secretary Scott Bessent's new fiscal plan to address the highest borrowing costs in years. The dollar extended a drop on Friday triggered by Bessent's Aug. 19 decision to increase the size of buybacks for longer-dated securities by at least double, sparking the dollar's worst single-day decline in nearly three weeks. Barclays' Torsten Schoeneborn said dollar selling accelerated among hedge fund clients against a backdrop of persistent dollar supply throughout August, while real-money flows have been much less directional. The premium to hedge the dollar's downside over the next month relative to its upside has climbed to its highest since February, according to a Bloomberg gauge, and Citigroup's Akshay Saxena noted broader demand for dollar downside hedges across the FX options market. Demand for dollar put options versus the euro was 47% larger than that of dollar call options on Aug. 21, according to Depository Trust and Clearing Corp. data based on contracts valued at $150 million or more.
Barclays PLCCitigroup Inc.