Happy Saturday, and welcome back to the weekly Positioning Watch, where we crunch through the positioning data and point out the biggest positioning trends in global markets.

Main takeaway

Bond bears had a significant setback this week following a mild inflation report – and that comes after a substantial surge in yields the previous week. Now, we eagerly examine the market’s repositioning here in the aftermath of the reversal. As avid readers of our complimentary series, Portfolio Watch (see yesterday’s release here), are aware of, we strongly advocate for caution in the current circumstances. The volatility trend is showing signs of life from its low levels and data surprises are triggering rather potent market reactions.

With S&P above 4500, equity analysts’ consensus starting to back higher earnings, and the job market still to surprise on the downside, trap-like conditions are certainly there. The disinflationary pressures are starting to get a hold on the increasingly volatility-compressed inflation prints. We think bonds may start to gather some traction relative to equities that are already looking a tad frothy. But how is the market positioned in this environment?

We remain long equities in our diversified book, for now, which you can track live right here.