Feb. ETF Short Report: HYG Shorts Up 52%


ETF market short-sellers ganged up on the junk bond fund “HYG,” pushing short interest up more than a half amid growing views the bond market may be closer to correction.

The number of shares short on the $15 billion iShares iBoxx $ High Yield Corporate Bond Fund (HYG) spiked 52 percent, with the huge fund appearing on the Top 10 list of the biggest shorts in the ETF market for the first time, according to data compiled by IndexUniverse.

HYG’s conspicuous appearance on the list is consistent with the view in financial markets that the bond market rally of the past generation may be near its top. More to the point, if the mass movement into fixed-income funds since the market collapse of 2008 should reverse, those short-selling bond ETFs such as HYG are sure to profit handsomely.

Rising equity markets and solid economic reports—including a U.S. February employment report showing more than 200,000 new jobs were created last month—have fueled increasing optimism, though concerns that political rancor in Washington, D.C., could upset the recovery remain a troubling aspect of the economic outlook.

Separately, the number of shares short on the CurrencyShares Euro Trust (FXE)—a long euro bet against the dollar—rose by almost a third in February after falling by almost 12 percent in January , according to data compiled by IndexUniverse.

Investors are again becoming nervous about Greece’s ability to pay its bills and about the outcome of Italian elections, the latter concerns having called into question Italy’s commitment to honor all its debt obligations.

However, the euro hardly moved last week against the dollar, according to IndexUniverse’s latest currency report , a sign that southern Europe’s challenges perhaps aren’t entangling the entire eurozone anymore.

Big Bets
Ticker Name % Float Short 1 Month % Change $Short ($, M)
SPY SPDR S'P 500 26.86 11.16 33,556.93
IWM iShares Russell 2000 71.23 4.32 13,678.45
QQQ PowerShares QQQ 12.33 -1.06 3,807.91
IYR iShares Dow Jones U.S. Real Estate 68.10 19.09 3,697.02
GLD SPDR Gold 4.66 -10.04 2,970.56
EEM iShares MSCI Emerging Markets 5.21 3.20 2,624.77
XLE Energy Select SPDR 34.15 11.96 2,574.39
XRT SPDR S'P Retail 250.19 25.17 2,450.69
XLF Financial Select SPDR 18.91 26.08 2,052.11
HYG iShares iBoxx $ High Yield Corporate Bond 13.03 51.89 1,971.56


Really Really Short
Ticker Name % Float Short 1 Month % Change $Short ($, M)
FXE CurrencyShares Euro 259.02 32.35 553.41
XRT SPDR S'P Retail 250.19 25.17 2,450.69
XOP SPDR S'P Oil ' Gas Exploration ' Production 187.07 27.23 1,702.60
RTH Market Vectors Retail 158.10 -40.01 31.06
VXZ iPath S'P 500 VIX Mid-Term Futures ETN 126.00 3.35 66.50
FXY CurrencyShares Japanese Yen Trust 117.59 23.91 236.30
CVOL C-Tracks Citi Volatility ETN 78.90 7.04 2.09
DUST Direxion Daily Gold Miners Bear 3X 74.55 16.60 26.82
DSLV VelocityShares 3X Inverse Silver ETN 73.86 49.64 10.65
KBWR PowerShares KBW Regional Banking 71.78 8.46 10.65


Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

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