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Komfie Manalo, Opalesque Asia:

Hedge funds started March on the right foot as the Lyxor Hedge Fund Index was up 0.8% from the week ending March 07 (+1.5% YTD), with Global Macro managers outperforming, Lyxor Asset Management said in its Weekly Briefing.

Lyxor said that hedge funds particularly thrived from long positions on the USD vs.G10 currencies and constructive views on Europe (i.e. long equities and short bonds). CTAs benefitted the most from their long exposure to equities. Yet, their long stance on commodities and short term models' long positions on bonds were detrimental.

Philippe Ferreira, senior strategist at Lyxor AM said, "The outperformance of cyclical sectors helped L/S equity funds deliver strong results. Meanwhile, fixed income managers also performed well."

U.S. data beat expectations

Ferreira added that the recent U.S. data releases continued to beat expectations, leading to a huge revision of the market outlook about the Fed stance. The implied probability of a rate hike at the next FOMC meeting on March 15th rose to 100%; up from 25% a month ago. The market is currently aligned with the Fed "dot plot", expecting three rate hikes in 2017. This has led to a rise in short dated Treasury yields and boosted the U.S. dollar versus major currencies.

He explained that this environment is broadly in line with the expectations of macro managers, who have maintained long positions on ......................

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