The Federal Reserve downgraded its view of the US labour market and economy on Wednesday after a report earlier in the day showed that the economy grew at an annual rate of just 0.2 percent in the first quarter, suggesting that the central bank may have to wait until at least the third quarter to begin raising interest rates.
Bloomberg reports that crowded trades were hit on Wednesday.
The year’s most-popular market bets got hammered on Wednesday, showing just how risky it is to follow the crowd.
The dollar, which has rallied more than 15 percent during the past 12 months, extended its longest losing streak since August 2013. The euro, which has lost about 19 percent in the period, soared. Oil gained, European stocks tanked, and U.S. Treasures slumped without any obvious reason.
Another Bloomberg report said that 55 billion euros were wiped off the value of eurozone government bonds on Wednesday.
The first Bloomberg report added:
This may give a glimmer of how painful it’ll be for all those investors who piled into now-crowded trades to all pile out when there’s a real catalyst.