Rotations & Cycles

According to Bloomberg, a large unwind of the global rally is currently taking place with hedge fund managers slashing both long and short sides of their book, essentially trimming their positions in what is called de-grossing – marking a sentiment shift as the S&P500 closes in on erasing the 2022 bear market.?

Asian stocks, however, are on track for its best run since January following bullish sentiment on Wall Street as markets register a global stabilization, culminating in hopes of an end to the global hiking cycle sooner rather than later with investors see no further action from the Bank of Japan following its decision to tweak its YCC, the RBA set to deliver interest rates decision today after keeping cash rates unchanged during its last meeting, a clear cut guidance from the ECB & positive data flows from the US.

Markets also await rate decisions from the Bank of England and earnings from US Tech giants – Amazon Inc. (AMZN), whose CEO on a CNBC Exclusive interview says the company’s prime delivery numbers this year are four times that its numbers in 2019. Also highly awaited - Apple Inc. (AAPL) on Thursday before closing out the week with the US Non-Farm Payrolls report this Friday.?

US 10-Year yields are currently sitting at 3.96% and have been increasing (+12 points on the month and +131 points YTD). With a rate environment that looks to be shifting, I would not be surprised to see yields drop in the medium-term making being in bonds that much more desirable. (Coupon: 3.38%, Price: $95.28. as of 10:57 AM, Aug 1.)

Disclaimer: This research piece is for informational purposes only and is not advice nor solicitation. Readers are responsible for their own research and understand the risks that come with investing their capital in financial assets.