Australian bank shorts rocket with funding costs

Short positions in the banks have skyrocketed over the past 12-months – and are now worth more than $8 billion.

While that $8 billion is still only about 3 per cent of the Big Four’s combined market capitalisation, it is the biggest short position since the corporate regulator started compiling data in 2010.

And, while there is no easy way to prove it, traders reckon it matches the sort of numbers seen in the financial crisis. And, anecdotally on prime broking desks, they reckon the phone calls from fast money hot spots like Hong Kong aren’t slowing.

Meanwhile, yesterday the CBS CDS price saw some relief at last as global spreads come in on the new rush into oil falling seven points to 129.53bps:

And if you put those two things together with yesterday’s shiny bubble GDP and the rally in commodities and you could be forgiven for concluding that a little bank short squeeze is in the offing…