Hedge Funds Went Into the Fed Meeting With a Record Bet on Lower Rates
Long story short: On the first day of the Fed meeting, hedge funds held a net long of 513,581 Fed funds contracts, 37% above the record they set a week earlier. The position gains if rates come in lower than priced. The next day, the Fed kept its target range at 3.75% to 4%.
In this story
Source: CFTC Traders in Financial Futures report, futures only, weekly from September 2, 2025 to October 27, 2026.
A week ago, hedge funds held the largest net long in Fed funds futures since the data began in 2006. That record stood at 376,169 contracts. One week later, the position is 37% larger. As of October 27, the first day of the Federal Reserve’s two-day meeting, hedge funds were net long 513,581 contracts. The CFTC reports them as leveraged funds.
In the week, they added 113,580 long contracts and closed 23,832 shorts. Over the last two weeks, they added 384,858 longs in total. Each contract covers $5 million.
A net long in Fed funds futures is positioned for lower rates than the market expected when the position was opened. The Fed announced its decision the next day. It kept the target range for the federal funds rate at 3.75% to 4%. Two of the twelve voting members preferred a quarter-point increase.
The Last Snapshot Before the Decision
The positions in this report date from Tuesday, the day before the Fed’s statement. The report shows the bet as hedge funds took it into the meeting, not their reaction to the decision.
The data also does not show which contract months these positions cover, or what rate path the market priced in on that day. Some of the longs hedge other trades, such as bonds or interest rate swaps. Whether the position made or lost money cannot be read from the report.
The Legacy Report Shows the Same Bet
The Legacy report groups all large speculators together and goes back to 1988 in this market. Its speculators were net long 410,981 contracts on October 27, the most since June 2020. The record is 489,012 contracts, set on May 26, 2020.
The turn is as sharp as the size. On July 14, the same group was net short 407,579 contracts, the largest short in its data. Since then, the position has swung by 818,560 contracts.
Source: CFTC Legacy report, futures only, weekly from January 2019 to October 27, 2026.
Who Took the Other Side
The dealers took most of it. These are the banks that make markets in the futures. Their net short grew to 382,537 contracts, the most since June 2008. They hold 896,877 short contracts, more than at any time since the data began in 2006.
Asset managers sold as well. Two weeks ago, their net short was 22,079 contracts. As of October 27, it is 152,987, the largest since January 2023.
The hedge funds’ record long is matched by the largest dealer short since 2008.
What to Watch Next
- The reaction. The next report, with positions as of November 3, is the first to show the market after the decision.
- The new longs. Hedge funds added 384,858 long contracts in two weeks. How many of them they keep is the clearest sign of whether the bet stays on.
- The dealers. Their net short mirrors the hedge funds’ long. A shrinking dealer short would show the trade being closed.
The last record, in December 2025, shrank by 40% within five weeks. A record says how large a position is, not how long it lasts.
Source: CFTC Commitments of Traders, futures only, positions as of Tuesday, October 27, 2026. Hedge funds, asset managers and dealers come from the Traders in Financial Futures report, large speculators from the Legacy report. Decision and vote: FOMC statement of October 28, 2026, Federal Reserve.
