Goldman Sachs Prime Desk Net Buying Hits Highest Level Since November 2020
Taylor Wilson
Goldman's Prime Desk logged its largest US equity net buying since November 2020 last week, driven almost entirely by short covering — hedge funds pivoted from a record-scale deleveraging to rapid re-grossing within the same week, and the market is now pricing whether the AI capex narrative can sustain the move.
How large was this wave of net buying?
US equity net buying hit its highest since November 2020. Macro products (indices + ETFs) accounted for 58%; single stocks made up the remaining 42%.
Macro product signal strength reached +3.2 standard deviations (one-year), with a short-cover-to-long-sale ratio of 3.4-to-1. This means → the buying was not fresh long capital entering the market but shorts collectively capitulating.
Single-stock signal strength hit +2.3 standard deviations; short-cover-to-long-buy ratio was 2.1-to-1. Eight of 11 sectors posted net buying, led by information technology and consumer discretionary.
How violent was the first-half-of-the-week capitulation?
From Friday through Tuesday, total deleveraging hit the largest on record for Goldman's Prime Desk. Single-name deleveraging was the biggest since March 2025.
Global equity deleveraging was the most severe since the January 2021 meme-stock frenzy — the second-largest in a decade. In plain terms = hedge funds slashed positions to near-extreme levels in just three days.
The short-cover-to-long-sale ratio stood at 1.3-to-1 — longs were selling in tandem, not just shorts covering. This was a "longs and shorts both running for the exit" capitulation.
What signal did Wednesday's Fed meeting send?
The Fed held rates steady but struck a hawkish tone: three members voted for a hike, and Chair Kevin Warsh offered no forward guidance.
The 30-year Treasury yield hit its highest since 2007. This means → the bond market is pricing in "higher for even longer" — or outright hikes — which is inherently bearish for equities.
Yet stocks surged the very next day — the Thursday rally was not a positive Fed reaction but was triggered by entirely separate catalysts.
What ignited Thursday's surge?
The S&P 500 rose 1.67% and the Nasdaq 100 gained 3.36%. The momentum-factor index GSPRHIMO jumped 13% in a single session — its largest one-day move in over a decade.
Two direct catalysts: Microsoft rallied 15% post-earnings; Leopold Aschenbrenner's hedge fund Situational Awareness transferred its public equity positions to Citadel, eliminating forced-selling pressure.
In plain terms = one catalyst was earnings-driven confidence, the other was a large forced seller disappearing — together they squeezed shorts already stretched to the limit from earlier in the week.
Where do leverage levels stand now?
US long-short fund gross leverage rose to 208.1% (18th percentile over one year); net leverage rose to 52.8% (45th percentile over one year).
The long-short ratio (market-cap basis) climbed to 1.68 (81st percentile over one year). This means → overall positioning is still light, but the tilt toward longs versus shorts has already returned to an elevated level.
In plain terms = fund managers have not rebuilt total exposure by much, but directionally they are clearly leaning bullish — a "light but long" stance.
Can this re-grossing last?
Amazon jumped 12% on Friday after AWS revenue grew 37% year-on-year and the company announced a $220 billion capex plan. Hyperscaler outperformance versus the Nasdaq set an all-time record for the week.
Yet Apple fell 7% on soft September-quarter guidance (FX and supply-chain constraints) — the market is not buying indiscriminately but is pricing a clear split between "AI beneficiaries" and "non-AI" names.
This reflects the core question: can the repaired AI-capex narrative sustain re-grossing, or is it merely setting the stage for another round of deleveraging after a technical bounce — the answer hinges on earnings and flow data over the coming weeks.
Content is for reference only, not financial advice.