Hedge funds are unwinding their short exposure: Hedge fund short positions in US macro products, including index futures and ETFs, are down -1.0 percentage point over the last 2 days, to 11.2%, the lowest since the beginning of March. This comes as US-listed ETF shorts fell -7.4% during Wednesday’s session, the largest 1-day drop since August 2020. This also marks the largest single-day short covering over the last 10 years, led by large-cap stocks. Still, short positioning in US equity macro products remains 4 percentage points above the 2024 low. Over the last 5 years, short exposure has only been higher in 3% of cases. Hedge funds still have a massive amount of short exposure to unwind.(The Kobeissi Letter)