Borrow Rates React Faster Than Short Interest Ever Will

Borrowing markets are constantly changing. Short positions are not.

When conditions change, borrowing rates are often the first signal. They reflect real-time negotiations, changes in risk tolerance, and supply decisions. Short positions, which are reported with a delay, reflect the outcome only after positions have already been adjusted.

This lag explains why borrowing may decline well before short positions peak - and why relying on short positions as an early warning signal consistently leads to disappointment.