Hedge Funds Hold a Record Fed Funds Long, One Week Before the Fed Meets
Long story short: Hedge funds hold the biggest net long in Fed funds futures since the data began in 2006, after adding 231,272 contracts in a single week. The position gains if rates come in lower than priced. The Fed meets on October 27 and 28.
In this story
Watch this storyLong Story Short, Episode 3 · from 0:58on YouTubeSource: CFTC Traders in Financial Futures report, futures only, weekly from September 2, 2025 to October 20, 2026.
Hedge funds hold the largest net long in Fed funds futures since the data began in 2006. The CFTC reports them as leveraged funds. As of October 20, they were net long 376,169 contracts.
The record is new by a narrow margin. It tops the previous peak of December 9, 2025 by 890 contracts. What stands out is the speed. One week earlier, the net long was 144,897 contracts. In a single week, hedge funds added 271,278 longs and 40,006 shorts.
The timing matters as well. The Federal Reserve meets on October 27 and 28, one week after the positions in this report.
What a Fed Funds Long Stands For
Fed funds futures settle on the average federal funds rate of one calendar month. The price is 100 minus that rate, so a lower rate means a higher price. A long position gains when the rate for its month averages below the level the futures price implied when the position was opened.
A net long in Fed funds futures is positioned for lower rates than the market expected.
The report does not say which months these positions cover or why they were taken. Some of them hedge other trades, such as bonds or interest rate swaps. The direction of the change is clear, however. Hedge funds moved hard toward the side that benefits from lower rates.
From a Record Short in July
Three months ago, the picture was reversed. On July 14, hedge funds were net short 333,379 contracts. The Legacy report, which goes back to 1988 in this market, shows the same turn. Its large speculators were net short 407,579 contracts on July 14, the most in the data. Today they are net long 307,293.
In fourteen weeks, the hedge funds’ position swung by more than 700,000 contracts. Each contract covers $5 million.
Who Took the Other Side
Every long has a short on the other side. In this report, the dealers took most of it. These are the banks that make markets in the futures. Their net short grew by 149,309 contracts in the week to 302,239, the most since December 2025.
Asset managers moved the same way as the dealers. Their net short rose from 22,079 to 97,802 contracts. Not every large group in this market is positioned for lower rates.
How the Last Two Peaks Unwound
Positioning describes the market. It does not predict the next rate decision. The two earlier peaks still show how quickly a long of this size has come apart.
Source: CFTC Traders in Financial Futures report, futures only, weekly from January 2019 to October 20, 2026.
The previous record came on December 9, 2025, the first day of a Fed meeting at which the central bank cut rates by a quarter point. Five weeks later, the long was 40% smaller. By February 3, hedge funds were net short.
In May 2020, hedge funds built a net long of 356,687 contracts. Ten weeks later, that long had turned into a small net short as well. Two cases do not make a rule, but they show that peaks in this market have not lasted long.
What to Watch Next
- The meeting. The Fed announces its decision on October 28. The next report shows positions on October 27, the day before. The report after that is the first to show the reaction.
- The new longs. Whether hedge funds keep the 271,278 longs they added in one week once the decision is out.
- The dealers. Their net short is the mirror image of the hedge funds’ long. A shrinking dealer short would show the trade being closed.
Source: CFTC Commitments of Traders, futures only, positions as of Tuesday, October 20, 2026. Hedge funds, asset managers and dealers come from the Traders in Financial Futures report, large speculators from the Legacy report. Meeting dates: Federal Reserve.
