BofA Traders See Short Sellers Pile Into Rate-Sensitive Stocks
Hedge funds are increasing short positions on stocks most sensitive to interest rate changes after reducing them during a recent rally, according to Bank of America Corp.'s trading desk.
The trading desk at the major U.S. bank observed that hedge funds are reloading their bets against equities most exposed to interest-rate movements. These investors had been forced to reduce their short positions during a recent market rally.
Rate-sensitive stocks typically include financial institutions and other sectors whose valuations are closely tied to borrowing costs. Short sellers profit when stock prices fall.
The renewed bearish sentiment suggests some investors anticipate further market volatility or expect interest rates to move in a direction that would negatively impact these sensitive stocks.
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