"Victim" of the Iran war: Heavy investment in gold and copper, renowned hedge fund Caxton suffers a $1.3 billion loss in a single month, net value plunges 15%.

The Middle East conflict has triggered dramatic shocks in global markets, with London hedge fund Caxton becoming one of the institutions suffering the most severe losses amid this turmoil.

On March 25, according to the UK Financial Times citing two sources, Caxton's flagship $9 billion macro fund has fallen 15% since March, with total losses exceeding $1.3 billion as of last Friday.

Previous reports indicated that the fund had already recorded a loss of about 7%, over $600 million, in the first week of March, with losses continuing to mount afterwards.

The root cause of this wave of losses is the sudden deterioration of the Middle East situation. Oil and gas prices soared, while the bond market was hit by a sell-off. Several of Caxton’s positions came under pressure in this environment, with the fund's macro strategies led by CEO Andrew Law.

Bond Holdings Suffer Core Blow, Metal Holdings Also Hit

In this round of hedge fund losses, the bond market is the main “culprit.”

The market generally expects soaring oil and gas prices will significantly push up inflation, forcing central banks to resume rate hikes, leading investors to sell off global government bonds en masse.

This has severely impacted funds that previously bet on rate cuts or held so-called “steepener” trades, which bet that short-term bonds would outperform long-term bonds.

However, since March, global central banks’ rate cut expectations have shifted, and the market generally believes the probability of rate hikes this year outweighs that of rate cuts, causing sharp declines in rate-sensitive short-term bonds.

(Policy rate expectations for the US, Europe, UK, and Japan)

At the end of last year, Caxton CEO Andrew Law was optimistic about the outlook for UK government bonds, stating that gilt yields were “mispriced” and that borrowing costs would align with other major economies.

But in the current global bond rout, British gilts were hit especially hard, with the 10-year yield rising to its highest level since the 2008 financial crisis.

Besides bonds, Caxton’s losses in commodities are also significant. The fund had previously profited from long positions in gold and copper, but both assets retraced sharply after the outbreak of conflict.

Gold is usually regarded as a safe-haven asset, yet has fallen 15% since the outbreak of war at the end of February, with copper prices also declining in tandem.

Policy Reversals Leave Macro Traders Caught in a Dilemma

Market participants pointed out that a particularly difficult feature of this market is the extremely chaotic geopolitical signals.

One macro hedge fund manager noted that Trump’s frequent posts on social media created “false dawns and abrupt U-turns,” making trading decisions extremely challenging.

According to CCTV News, US President Trump stated on the 23rd that he had ordered a five-day suspension of all military strikes against Iran's power plants and energy infrastructure. Previously, he had threatened to bomb Iran's energy facilities.

Wallstreetcn reported that this statement by Trump immediately triggered a rebound in government bond prices and a pullback in oil prices. Brent crude once fell over 14% intraday.

(Brent crude oil futures fell more than 14% intraday on Monday)

According to CCTV News, after the US submitted a ceasefire proposal with 15 provisions to Iran, Brent crude briefly fell below $100 per barrel.

The frequent reversal of policy signals has made it difficult for macro funds to establish stable directional views, making losses especially pronounced for Caxton and others who rely on macro trends in this round of shocks.

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