Fund Managers Add S&P 500 Longs, Trim Treasury Shorts

Fund managers added to S&P 500 futures and cut bearish Treasury wagers in the week ended May 5, Commodity Futures Trading Commission data released Friday showed. Rate-cut expectations remain anchored in 2027.

Non-commercial traders added 16,562 long contracts across consolidated S&P 500 futures. Short positions rose by 14,620 contracts. The longs outpaced the shorts, but only just. Total open interest stood at 2,008,969 contracts. In the E-mini S&P 500, longs climbed 12,542 contracts and shorts added 14,987, a more cautious split than the consolidated print. The Micro E-mini contract, one-tenth the notional size of the standard E-mini, saw non-commercial shorts plunge 45,758 contracts. Nonreportable traders, the small-account category, held 68 per cent of open interest on the short side in that contract. The skew is lopsided: retail and small prop accounts are positioned heavily against the index.

The shift came during a week when Bank of America analysts published a forecast showing no Federal Reserve rate cuts until the second half of 2027, considerably later than markets had priced at the start of the year. The higher-for-longer rate environment raises the cost of sitting in cash or holding defensive hedges. Fund managers have few alternatives to maintaining equity exposure, tight financial conditions or not. The S&P 500 closed the May 5 week little changed, unable to push materially higher as the rate backdrop kept equity multiples in check. Positioning was additive on both sides, not a directional bet.

In fixed income, speculators pared net shorts across the Treasury complex, dialling back bearish bets accumulated through the first quarter. The CFTC data showed a reduction in aggregate short exposure to Treasury futures. The legacy-format COT release does not break out figures by individual tenor. The Treasury short trim came as a broader repricing of rate expectations accelerated. The April employment report showed US employers added 115,000 jobs, more than double the consensus estimate of 65,000. The labour market strength damped near-term recession concerns and pushed short-end yields higher, steepening the curve. The two-year/10-year spread widened to its steepest level in three weeks, consistent with traders pricing a longer hold rather than a near-term cutting cycle. Analysts use COT data as a contrarian indicator when positioning hits extremes. The current configuration in equities and rates is short of levels that typically signal a crowded trade.

Currency positioning was mixed, with no clear directional consensus in the major pairs. In commodities, net long gold positions held near multi-year highs at $4,710 an ounce, supported by geopolitical hedging demand tied to the US-Iran de-escalation talks. Gold was on track for a weekly gain early in the month.

The COT report captures positioning as of each Tuesday’s close and is published each Friday. It is the broadest public snapshot of how speculative and commercial traders are deployed across US futures markets. The next report, covering the week ended May 12, is scheduled for release on May 15.