Though a few days doesn’t equal a trend, this week’s action may be evidence that one or more investors are gearing up for a change of pace.
“This is a hedge against risk,” said Andrew Brenner, head of international fixed income at Natalliance Securities in New York. “It could be a hedge against the equity market because if equity markets fall, the yield curve steepens.”
To be sure, shares outstanding can rise along with short interest demand, as market makers snap up the security to appease bearish clients. However, that’s not the case this time. Short interest relative to the float sits at 0.33 percent, far below the 9 percent record reached in October, data from S3 Partners show.
“I am not sure why there has been such a sudden rush into this ETF, with a 98 percent probability of a Fed hike on the 13th,” Ihor Dusaniwsky, head of research at S3, said in an email. “But this is purely long (bullish) trading, nothing to do with the short side.”
This article was provided by Bloomberg News.