Goldman: hedge funds are capitulating
Goldman Sachs traders flagged what they call 'capitulation' among hedge funds and systematic desks — heavy selling and disposals that could set the stage for a violent short‑covering rally once macro risk eases. Citadel also notes bonds are reasserting their hedge role as investors pivot from inflation worries to growth‑risk concerns. ( )
On a trailing six‑week basis, Goldman’s prime desk found US net selling was the third‑largest of the past decade, with selling approaching levels seen during the Covid crash but still below April 2025’s peak outflows. (finance.yahoo.com) Goldman reports trend‑following CTAs sold roughly $190 billion over the past month and remain about $50 billion net short across global equities, a positioning the bank’s Cullen Morgan says leaves little systematic selling left to fuel further declines. (finance.yahoo.com) The bank flagged roughly $7 billion of option‑dealer negative gamma that is due to roll off at month‑end, a published note from Brian Garrett said would remove a notable squeeze point for volatility and liquidity. (finance.yahoo.com) Goldman’s weekly recap through March 26 showed hedge funds cut global equity holdings for a sixth consecutive week and that short exposure in Europe’s macro‑trading products hit about 11%, a 10‑year high cited by Vincent Lin. (finance.yahoo.com) Market breadth data in Goldman’s note put the Nasdaq‑100 in a formal correction (off more than 10% from its peak) while the Stoxx 600 was down almost 9% in March, trading toward its worst monthly performance in six years. (finance.yahoo.com) Citadel Securities’ EMEA head Nohshad Shah quantified a regime shift: initial tightening from the Iran conflict saw rates and the dollar explain about 56% of financial‑conditions tightening, but that later flipped so risk assets drove roughly 61%—leading the firm to argue longer‑dated bonds should begin to act as a hedge if growth fears dominate. (bloomberg.com)
