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COT report: Hedge funds’ positioning ahead of Calamity Wednesday
Key points:
- Our weekly Commitment of Traders update highlights futures positions and changes made by hedge funds across forex and commodities during the week ending Tuesday, 1 April 2025.
- The latest reporting week ended just ahead of last Wednesday, when Trump's aggressive tariff announcement sent global markets into a major downward spiral.
- In the forex market, a small USD long emerged, primarily driven by long liquidation in EUR, GBP, and CHF.
- Hedge funds focused on reducing risk ahead of Wednesday—especially across metals—with energy and Brent being a major exception.
- Weaker cyclical conditions, due to the heightened risk of a recession and retaliatory measures, may push the commodity complex lower in the short term, before several developments may re-establish support.
Forex:
In the forex market, speculators chose to reduce bets ahead of Trump's "Liberation Day," which instead turned out to become a "Calamity Wednesday," sending shockwaves across global markets, hurting the US dollar while sending stocks and bond yields sharply lower. Ahead of this historic event, the activity in the forex market across eight IMM forex futures resulted in the gross US dollar position versus eight IMM forex futures flipping back to a small net long of USD 1.2 billion. Seven of the eight currencies tracked in this saw net selling, led by long liquidation in EUR, GBP, and CHF. Ahead of the end-of-week market turmoil, net long positions remained in the JPY at USD 10 billion equivalent, EUR (USD 7 billion), and GBP (USD 3 billion), while the largest net short positions were in the CAD (USD -9 billion) and CHF (USD -6 billion).
Commodities:
The latest reporting week ended just ahead of last Wednesday when Trump's aggressive tariff announcement sent global markets, including commodities, into a major downward spiral on increased expectations that the president's announcements would trigger a global recession, leading to major repricing of demand expectations. In the days that followed, the Bloomberg Commodity Index, which tracks a basket of 24 major commodity futures, slumped 7.5%, almost wiping out the gains for the year. While the sector has still done a great deal better than the stock market, some significant losses, especially among the cyclical commodities like energy and industrial metals, have forced leveraged traders to minimize their exposures, in the short term exacerbating the declines, examples of which are a 17% decline in WTI crude oil, 14.5% in HG copper, and 13% in silver. Weaker cyclical conditions due to the heightened risk of a recession and retaliatory measures may push the commodity complex lower in the short term before support emerges in response to a renewed focus on tightening market conditions, especially across key industrial metals, lower prices killing supply growth, a weaker dollar, and stimulus support, especially in China but potentially also Europe. In addition, it is also worth noting that periods of stagflation—that is, when inflation and unemployment rise and growth slows—historically have proven to be price supportive for commodities, not least gold. With all these developments occurring after the latest COT reporting week, the latest update highlights which commodities were mostly exposed to the deleveraging move that followed. Energy: A 21% jump in the Brent crude net long left this contract particularly exposed to recession fears and the OPEC+ decision to accelerate production from next month, and together with net buying of diesel and gasoline, the sector was left vulnerable to the selling onslaught that followed. Metals: Ahead of silver's 18% top-to-bottom collapse since last Wednesday, some long liquidation had taken place but not enough to prevent a major negative reaction to a collapse in the COMEX-London spread and heightened recession worries. Gold and copper had also seen some profit-taking, but elevated long positions left both metals exposed.
What is the Commitments of Traders report?
The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.
Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)
The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:
- They are likely to have tight stops and no underlying exposure that is being hedged
- This makes them most reactive to changes in fundamental or technical price developments
- It provides views about major trends but also helps to decipher when a reversal is looming
Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.
Recent commodity articles:
21 Mch 2025: Commodities weekly: High-flying precious metal sees profit taking
19 Mch 2025: Has the gold express already left the station?
17 Mch 2025: COT Report: Silver and copper stands out in week of energy weakness
14 Mch 2025: Gold surges past USD 3,000 as haven demand grows
12 Mch 2025: Tariffs and the energy transition: Key drivers of copper demand
11 Mch 2025: Gold holds steady despite deleveraging risks in volatile markets
10 Mch 2025: COT Report: Wholesale reductions in speculators' USD and commodity longs
7 Mch 2025: Commodities Weekly: Tariffs, trade tensions, fiscal bazooka, and Ukraine
5 Mch 2025: Tariff threat disconnects HG copper from global market
4 Mch 2025: Stagflation and geopolitical tensions fuel renewed demand for gold
3 Mch 2025: COT Report: Broad retreat sees WTI longs slump to 15-year low
28 Feb 2025: Commodities weekly: Broad weakness as tariff fatigue sets in
24 Feb 2025: COT Report: traders turn selective despite ongoing broad rally
21 Feb 2025: Commodities weekly: energy market strength and Trump rethoric fuel surge
18 Feb 2025: COT report: crude, gold and grains see mild profit taking
5 Feb 2025: Broad Strength Drives Commodities sector to 26-month High
4 Feb 2025: Crude Oil Wipes Out 2025 Gains as Tariffs and Demand Weighs
3 Feb 2025: COT Report: Mixed Week Seen Ahead of Trump's Tariff Offensive
1 Feb 2025: YouTube: Joining Kevin Muir on The Market Huddle podcast
Podcasts that include commodities focus:
18 Mch 2025: US market found support, but how durable will it be?
14 Mch 2025: Is silver set to shoot the lights out?
10 Mch 2025: US un-exceptionalism is the theme
7 Mch 2025: US bear market risks ratchet higher. EUR train has left the station
4 March 2025: Are we on the verge of a big whoosh?
25 Feb 2025: Meltdown risks are rising. What to watch next
18 Feb 2025: Europe is on fire
5 Feb 2025: Mag 7 risks underappreciated?
3 Feb 2025: If new Trump tariffs stick, markets have only just begun to react
31 Jan 2025: Does the market think Trump is bluffing?
29 Jan 2025: The DeepSeek winners emerge
27 Jan 2025: DeepSeeking missile strikes global markets
24 Jan 2025: Four days in, Trump continues to dominate headlines, but ...
20 Jan 2025: Trump 2.0 swings into action
17 Jan 2025: Brace for Monday, as a new era begins