Head of Commodity Strategy
Summary: The non-commercial dollar long against ten IMM currency futures saw a small reduction from the highest level since December 2015. The $0.6bn reduction to $34.5bn was driven by an 8% reduction in the JPY short on renewed trade war concerns and falling equities.
The euro net-short meanwhile expanded by 561 lots to 106k lots, the highest since December 2016.
Combined dollar position against ten IMM currency futures;
In fixed income leveraged funds kept up the selling pressure in 2’s with the net-short reaching a fresh record while selling of 10’s were being offset by buying of T-bonds
The Cboe VIX received a great deal of attention as it surged in response to renewed stock market weakness. Especially the record short raised concerns about a February 2018 style blowout. In the end the weakness in stocks were orderly and so was the reduction of short VIX positions which up until last Tuesday was cut by 30k lots to 150k lots.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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