Macro hedge funds find 2021 has not gone to script
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So far 2021 has not quite gone to plan for macro hedge funds. They will be hoping that a prospective rise in inflation will soon start providing some more attractive trades.
Macro funds, which bet on global bonds, currencies and stocks, enjoyed a spectacular 2020. Tumbling bond yields, as central banks slashed interest rates in response to coronavirus and investors rushed into safe havens, provided a dream trade. Then a huge rebound in stocks from late March onwards offered another. Funds such as Caxton Associates and Brevan Howard posted record years.
Many managers entered this year believing profits would come from the so-called reflation trade. Huge levels of government and central bank stimulus, plus a resurgence of global demand as lockdowns were lifted, were bound to…