Asset managers starting to get long

 

What are fixed income managers thinking about the direction of rates? Look at their revealed preferences based on their position taking. We can measure their exposure to bond futures, both long and short, to see how their net exposure is changing. Short exposures have increased, but that gain is much smaller than the increase in long exposure since mid-August. Short positions have increased by $100 billion, while long exposure has increased by $150 billion. This may not seem like much, but consider that expectations in the press are very negative. Note that asset managers, including mutual funds, may be responding to asset flows.