Record short bets against global bonds by trend-chasing investors are lifting the stakes for US inflation reports this week. Commodity trading advisers tripled their underweight bond positions at the end of July from two weeks earlier, according to UBS Group AG. The wagers have remained steady, leaving the crowded CTA trade at risk to any bond rally spurred by upcoming readings of consumer and producer prices. Going into the data, CTAs are positioned to gain or lose about $300 million for every one-basis-point move in 10-year yields — the largest such exposure since UBS began compiling the data in 1990.

Government bond yields have been creeping higher globally amid elevated oil prices, expectations for central-bank rate hikes, and concerns about surging government borrowings. The selloff has prompted CTAs — managing more than $400 billion — to pile onto the trend. The risk is that lopsided positioning leaves CTAs vulnerable to a sharp reversal if bonds rally. “There’s not a lot of room to add to short positions,” said Phoebe White, head of US rates strategy at UBS. “Clearly, the risks are asymmetric.”

A major test comes on Wednesday, when the consumer price index data may either strengthen or weaken the case for the Federal Reserve to raise rates as soon as September. Interest-rate swaps show traders see the odds of a quarter-point increase next month as virtually a coin toss. Bank of America Corp. strategists also have detected bearish CTA positioning, saying the group remains “heavily short,” particularly in shorter-dated notes — making Wednesday’s inflation report especially important. A print that does not support a September hike could challenge crowded bearish positioning.