Investing.com — UBS analysts stated in a word Wednesday that Commodity Buying and selling Advisors (CTAs) have adopted a “risk-on” stance, with a notable choice for U.S. equities over European and Latin American shares.
In response to the agency’s biweekly replace on CTAs’ positioning and flows, fairness beta publicity has remained steady regardless of subdued momentum throughout world markets in November.
“CTAs’ overall equity beta is close to its long-term average,” UBS famous, highlighting that the majority of their fairness danger is expressed in relative phrases: lengthy U.S. versus quick EU and LatAm.
This positioning is claimed to mirror a broader divergence in market sentiment between areas.
In bond markets, UBS stated CTAs have made important gross sales in U.S. and Japanese durations, offloading $25 to $30 million in DV01 publicity because the final replace.
Nonetheless, UBS expects European bonds to draw inflows, with Korean and Italian bonds highlighted as “high conviction trades” for CTAs.
Forex-wise, CTAs proceed to favor a stronger U.S. greenback. UBS identified that latest rounds of greenback shopping for, totaling $50 to $60 billion, have left little room for added upside.
The agency additionally anticipates profit-taking in currencies such because the Indian rupee (INR) and Canadian greenback (CAD), although the greenback stays the mannequin’s “main conviction.”
On commodities, CTAs have pivoted from promoting metals to specializing in vitality and agricultural property, with a bullish outlook on these sectors.
Total, present CTA indicators mirror a bullish stance on U.S. shares and credit score markets, a bearish view on U.S., Australian, and U.Okay. bonds, and blended positioning in commodities.
The strategic allocation underscores CTAs’ tilt towards the U.S. amid world financial uncertainties, with hedges in gold and the U.S. greenback serving as safety in opposition to risk-off occasions, UBS famous.
