Fed’s Powell wrongfoots hedge funds on dollar, bonds: Jamie McGeever

Fed’s Powell wrongfoots hedge funds on dollar, bonds: Jamie McGeever

(The opinions expressed here are those of the author, a columnist for Reuters) ORLANDO, Fla.- Hedge funds loaded up on the dollar and sold Treasuries ahead of Federal Reserve Chair Jerome Powell's Jackson Hole speech on Friday, anticipating a nod to a bond-buying taper timeline that would push yields and the greenback higher. But based on the initial reaction to Powell's remarks in rates and currency markets, these bets were misplaced. In his virtual address to the Kansas City Fed's annual event in Wyoming, which was held virtually for the second year in a row, Powell gave no firm commitment to when the Fed will start winding down its asset purchases, and said disinflationary pressures that have been a feature of the economy for years are unlikely to lift any time soon. The broad gist of Powell's remarks were dovish relative to several of his Fed colleagues, who last week said they want to start winding down the bond-buying program sooner rather than later. The dollar and U.S. bond yields fell on Friday as a result. Commodity Futures Trading Commission figures for the week to Aug. 24, released on Friday, show that speculators amassed their biggest net long dollar position