For the week ending August 15, hedge funds marked a decisive return to U.S. equities—buying at the briskest clip in more than a month. The catalyst? A swell of confidence in a September Federal Reserve rate cut, as predicted in a note from Goldman Sachs.
This renewed frenzy drove up demand for assets tied closely to economic momentum, particularly large-cap indices and financial instruments built for high sensitivity to policy shifts. In stark contrast, defensive sectors—healthcare, consumer staples, and utilities—were shunned, enduring their most significant outflows in four months. Meanwhile, financial stocks told a different story: modest net selling combined with surging trading activity matched levels unseen since late 2024.
What stands out is how this move stretched across the globe—hedge funds from everywhere piled into U.S. stocks, save for Europe. The timing isn’t coincidental; it's a strategic play fueled by anticipation of insights to be delivered at the Federal Reserve’s Jackson Hole symposium. Investors are betting that Powell’s remarks will tilt the playing field firmly toward easing.
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