Hedge funds expand dollar shorts after Treasury buyback move

Hedge funds are expanding short positions against the U.S. dollar following Treasury Secretary Scott Bessent's decision to double long-term bond buybacks.

The Details: • Market reaction: The dollar marked its largest single-day drop in nearly three weeks after the Treasury expanded debt repurchases. • Options positioning: The premium to hedge one-month dollar downside reached its highest level since February, • Currency flows: Institutional demand for dollar put options versus the euro exceeded call options by 47% on August 21, per DTCC data. • Trading desk reports: Barclays ($BCS) and Citigroup ($C) cited accelerated institutional selling and higher implied volatility across major currency pairs.