Hedge Fund Bet Turns Sour As Retail Recovers

Bloomberg reports that shorting the CDS index composed mostly of retail mortgages has posted a +8% gain this year, causing pain for hedge funds who took the short side of the trade. These indexes have been rising together with the SPDR S&P Retail ETF (XRT), which is at an important support level:

Source: Bloomberg

These hedge funds would love to see XRT broke this trendline, taking the two CDS indexes with it.

Disclosure: We don’t have any positions in XRT.