The most-shorted stocks outran hedge funds' favourite longs before the Fed, while the Fed's Williams saw no need for a 2027 hike. Semis led a rally fewer than half the S&P 500 joined; tomorrow's Fed and hyperscaler prints meet a market holding few hedges.
Three things
- This was a squeeze, not a buying spree. Goldman's most-shorted basket beat the hedge-fund favourites by the widest margin since 4 August, ranking 154th of more than four thousand sessions since 2008.
- A dovish Fed voice is getting louder before the meeting. Williams said he currently sees no need for a hike in 2027, yet the 2-year yield still rose 2.1bp because the front end wants to hear it from the chair.
- The rally has thin legs and almost no hedges under it. Fewer than half of S&P 500 members rose while Nasdaq 100 puts sit near a five-year low, so a bad hyperscaler print meets dealers who have to sell into the drop.
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Cambridge Sigma Daily, written after the US close. For information only; not investment advice.