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Hedge funds ramp up market bets as volatility brings the asset class back into favor

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cnbc.com

In this article The extreme market volatility is not causing hedge funds to back down. Hedge funds' total gross trading flow, including both long and short bets, rose for five weeks in a row and had the largest notional increase since 2017 last week heading into the Federal Reserve's rate decision, according to Goldman Sachs' prime brokerage data.

In other words, they are putting money to work in a big way to capitalize on this market volatility for clients, likely mostly from the short side.

The industry was dialing up exposure at a time when the Fed rushed to hike interest rates aggressively to tame decades-high inflation, raising the odds for a recession.

Bank of America's Michael Hartnett even called investor sentiment «unquestionably» the worst since the financial crisis. «Uncertainty over inflation and tightening policy may spur more volatility.

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