Bears Pounce on Biggest Junk ETF With 52% of Shares Sold Short

Short bets against the biggest high-yield bond ETF are building quickly as conviction grows that the Federal Reserve will have to inflict more pain upon the economy to curb inflation.

Short interest as a percent of shares outstanding in the $13.2 billion iShares iBoxx High Yield Corporate Bond ETF (ticker HYG) currently stands at about 52% and hit a record high of 58% last week, IHS Markit Ltd. data show. As measured by financial analytics firm S3 Partners, short interest stands at 55% of the fund’s floating shares.

The rebound in bearish wagers against junk bonds comes after a ...