Head of Commodity Strategy
Summary: Hedge funds and money managers made a big move to cover open JPY short positions in the week to May 15 as trade tensions between China and the US ratcheted higher on new tariffs and an apparent stall in negotiations.
Among the other major changes seen were the largest cut in euro short positions since January while short-bets in the Australian dollar rose the most since November on a combination of trade war and uncertainty ahead of this weekend’s election. The result of the Aussie vote saw Prime Minister Scott Morrison hold on to power despite trailing in the opinion polls for months.
Financials
Leveraged funds maintained their selling pressure across the US yield curve with the DV01 (the dollar value of a one basis point yield move) rising to a fresh record led by record short positions in two-year notes and T-Bonds Ultra. Asset managers, meanwhile, continue to buy what specs are selling.
Two weeks of aggressive short covering cut what was a record Cboe VIX net-short in half. This has reduced the risk of an out of control short-covering spike in volatility, as was feared during initial spike in volatility above 20%.
A new fragmented world order can render some of today's infrastructure obselete, but it also calls for massive new investments across the globe, which requires a new set of strategic and tactical investment strategies.
Steen Jakobsen,
Chief Investment Officer
As globalisation turns to fragmentation, China seems set on playing a role in the global economy, while simultaneously working towards proofing its own economic situation from external shocks and crises.
Redmond Wong,
Market Strategist
The recent bank runs and ensuing challenges are reminicent of something we've seen before. Will it end like the S&L crises of 1986 and 1995?
Chris Dembik,
Head of Macroeconomic Research
Equity markets need to recalibrate to another - fragmented - global world. What's your view on equities in this market - are they going up or down?
Peter Garnry,
Head of Equity Strategy
With every development comes new opportunites, some of which could be in India. Have you considered the country as a part of your diversification strategy?
Charu Chanana,
Market Strategist
A collar is an option strategy that allows some protection while maintaining some upside potential. What investment would you like to use a collar strategy for?
Hans Oudshoorn,
Trainer Academy
There are arguments to be made for many commodities to have upside. Which are you paying the most attention to this quarter?
Ole S. Hansen,
Head of Commodity Strategy
In a very challenging macro environment, which currencies do you think will come out on top?
John J. Hardy,
Head of FX Strategy
