Head of Commodity Strategy
In the week to May 1 speculators bought dollars against every IMM currency futures that we track in this report. As a result of this the gross dollar short was cut by 21% to $19 billion. The main contributors were net selling of EUR, CHF and GBP.
Surprisingly, the gross long in EUR increased by 4067 lots to 100,443 lots so the 8% reduction in the net-long to an 18-week low was purely driven by a strong pick-up in fresh short selling.
Financials:
In fixed income, leveraged funds extended bearish bets across the US yield curve with all maturities except 10-year notes being sold.
The total value of a one basis point move from 3-months Eurodollar to T-bonds ultra rose to $198 million, the highest in at least a year. This not least due to heavy selling at the front end of the curve where the net-short in 5-yr notes reached 780k lots, a 15-month high.
In equities, aggressive buying of the S&P500 flipped the position from a net-short to the highest net-long since 2009. In addition, specs bought Nasdaq and Dow Jones while selling out some more of the VIX long.
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.
