Column: Hedge funds strike it right on dollar, yield curve: McGeever

U.S. 100 dollar notes are seen at a bank in this picture illustration in Seoul. REUTERS/Lee Jae-Won

ORLANDO, Fla., Aug 15 (Reuters) – Hedge funds slashed their long dollar positions and bet harder on a flatter yield curve, two macro trades that have come up trumps.

The dollar last week fell to its lowest level on a broad basis since June, while the yield curve inversion reached levels not seen in over 20 years.

The question now for currency and bonds speculators is whether they buy into the notion that inflation has peaked, the economy will achieve a soft landing, and the Federal Reserve won’t tighten monetary policy so aggressively.

That’s a scenario that could keep the dollar under pressure, but re-steepen the curve and get the 10-year yield back above the two-year yield.

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