Bank of America: Hedge funds are increasing their short bets on interest rate-sensitive stocks again.

Bank of America's trading division noted that hedge funds are re-betting that interest rate-sensitive stocks will fall. Data from Bank of America traders showed that as of 1:40 p.m. New York time on Thursday, small-cap stocks with predominantly short positions were down an average of 2.47%. As of 2:43 p.m., the Russell 2000 index was down 1.4%. John Egan, head of global short selling analytics and tactical solutions at Bank of America, said that stocks with widespread short positions are underperforming, which favors short selling.