JPMorgan Prime Brokerage Report Shows Hedge Fund Short Covering

The trend towards hedge fund short covering is increasing, a recent report shows, as leverage usage fluctuates among hedge fund strategies.

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Hedge fund short covering seen in stock borrowing

Convertible arbitrage strategies have among the largest leverage ratio increases month to date, up 5.67%, a JPMorgan Prime Brokerage report shows, pointing to positioning trends ahead of an expected rate hike. In a questionable market environment for interest rates, and amid comments from Janet Yellen last Friday indicating rates could rise, it is high grade fixed income which has reduced leverage the most, -9.23% in May.

As the...