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Beyond the Crypto Crash, a Big Squeeze Jolts Stock Markets Anew

  • Hedge funds cover short wagers at the fastest rate since 2021
  • Thinly positioned investors play catch-up via call options
A trader works on the floor of the New York Stock Exchange.

A trader works on the floor of the New York Stock Exchange.

Photographer: Michael Nagle/Bloomberg

Being glued to crypto news this week meant missing adventures in regular markets that while lacking the same high drama, made up for it in terms of money at stake.

In case you missed it, stock and bond traders spent the last five days still caught in the thrall of an event that may be hard to recall for people mesmerized by the FTX.com collapse: Nov. 10’s inflation report, which ignited a short squeeze among traders expecting a worse number. Reverberations continued to be felt in terms of positioning, trading in derivatives and probably also in wrongly prepared portfolios.