After the turmoil in the Hang Seng/CSI this week, with the Hang Seng dropping roughly 10 percent, one would expect sentiment to decrease rather dramatically. However, that’s not the case among retail investors, who are still piling into the China trade, while hedge funds appear to have been caught off guard by the sudden increase in Chinese equities.

We’ve seen a significant spike in SOFR-EFFR spreads over the past 48 hours, which feels reminiscent of September 2019, though on a smaller scale. The Fed may be facing a liquidity problem and could feel tempted to address it.

The outflow from US into EUR/GBP assets continues as everything seems to be more or less priced into USD assets, while China positioning continues to soar. How are markets positioned going into NFP?

With the cutting cycle more or less priced in in USD assets, there are signs that markets are now piling into EUR and GBP assets instead to play the cutting cycle of the BoE and ECB. Everything positioning here as usual.

How tight is the liquidity outlook for the month- and year-end? 2024 will bring a tight September quarter-end, but a much more benign year-end. Here’s why and how to manage it.

Is the Fixed Income market repricing rates up on the back of a frontloaded cutting cycle? It’s an interesting dynamic, one that will be impacted by the election cycle and debt ceiling dynamics.

Ahead of tonight’s FOMC meeting, we take a quick look at positioning across asset classes to summarize which ones are likely to move the most if there are any major surprises from Powell.

With Powell taking the stage later, we have scanned through the asset universe to assess which trades that normally perform during a cutting cycle. Enjoy!

A portfolio needs a “soft USD rates” lean to perform in the current environment, a dynamic often seen around the first Fed rate cut. Here’s how we plan to reshuffle the portfolio.

The Fed is not going to cut by 50bp given this report, which contrasts somewhat with market expectations. The initial response may not be risk-negative, but if we continue to see weak labor markets and growth paired with sticky inflation, it’s time to run for the hills!

With the CPI report just around the corner, we examine whether markets may have become too positioned for a complete meltdown in both growth and inflation.

With the lukewarm NFP report out, we share our portfolio watch, update you on last week’s allocations, and offer some thoughts on where assets may be heading next!

Markets have jumped into the growth rebound trades with both legs after they found out the NFP report was likely a bit better than what it showed at first glance. However this doesn’t mean that growth will rebound right around the corner, and it looks like markets could be wrongfooted big time!

Two overwhelming themes are at the top of our watchlist for September: fading USD liquidity and a sudden halt in Chinese activity. Here’s how we plan to address them.

While markets are flooded with sluggish employment data and revisions to the tight labor market, there are no immediate signs of a labor market recession in positioning data, with flows still appearing robust.

The Chinese rebound story is losing momentum fast, which has important implications for Western economies and assets, while the impact from freight rates on inflation might not be as large as previously feared.

The cutting cycle is now a done deal, and Powell is urging you not to resist it. The question remains whether this is positive or negative for risk sentiment. A lot of negativity is building beneath the surface in our models as we approach September.

The outlook on interest rates is exceptionally tricky, yet increasingly predictable. Everyone seems eager to cut rates, and it’s generally unwise to go against a trend without a compelling reason. Enter the debt ceiling!

Markets are jumping right back into the soft landing trades we saw building throughout Spring and early summer at a rapid pace, while JPY positioning has turned outright bullish ahead of Jackson Hole on Friday. Will Powell destroy the positioning comeback or bolster an Autumn rally?

There is still a substantial weakness in the Chinese domestic cycle, which impacts the overall commodity cycle. Gold is one of the few commodities that hasn’t been a victim of the Chinese cycle, but is the sell-off broadly over in commodities? Doubtful.

The short metals trade seems exhausted..

The usual inflation culprits, shelter and transportation, are back, but this also means that PCE inflation will print at softer levels than CPI inflation. This report is weak enough for the Fed to continue shifting its focus to employment.

The positioning squaring phase is over across our positioning gauges, and it coincides with a rebound in the growth sentiment. This is the perfect cocktail for risk assets for now! USD and GBP fixed income is substantially less crowded than EUR fixed income, while Gold (for good reasons) remains the most consensual trade on earth.

As European gas prices post a weekly jump due to Ukraine giving Putin his very own “Operation Citadel” moment, we delve into the data. Is this Nat Gas rally solely a supply story?

Tides and stakes have been high this week in the markets, making it crucial to stay both reactive and adaptable to shifting narratives. Read about our portfolio insights here.