Happy Friday from Copenhagen.

The trend in Nasdaq, Bitcoin, and other high-beta risk assets looks a little exhausted into month-end, but that’s no big surprise to us. Rebalancing flows of a technical nature were always to be expected, given the colonormous outperformance in Nasdaq/equities versus long bonds throughout the month.

We basically haven’t seen such material outperformance in relative terms since April 2020, which once again underscores how spot-on we’ve been with our historical comparison to the “lockdown”/“reopening” playbook from the pandemic era—mirrored in today’s stop-and-go trade policy environment under the Trump administration.

When equities see this kind of relative outperformance, pension funds, sovereign wealth funds, and other big players are mechanically forced to readjust their allocations into month-end, as their equity holdings have gained relative weight. That likely explains the bond buying and light equity selling (spilling over to Bitcoin, etc.) we’re seeing in the final days of the month. Expect the tide to turn already on Monday, with June shaping up to be another strong month for risk assets—this rebound is still largely underbought by the big investors.

Judging from the chart of the week, we also have a cluster of 2–3 very strong outperformance months ahead (equities/Bitcoin outperforming bonds) if our 2020 analogy continues to play out—see arrow in the chart.

Chart of the week: The biggest outperformance in risk assets since April 2020