📝CTAs Re-Risk In Equity Position, Reinitiate Dollar Shorts: UBS Strategy

With the combined effect of the stronger market and cleaner positioning after VaR reduction in March, CTAs have been building up their equity positioning again. They bought an estimated $30-40 bn worth of global stocks in the last two weeks, and UBS model expects them to continue to do so in the coming weeks.

In FX, CTAs have been reinitiating short Dollar positions. They sold an aggregated $40-50 bn of USD in the last two weeks, two thirds of it against G10 FX and one third against EM FX.

Last few weeks have been good for commodities. CTAs bought all four groups (precious, industrials, energy and agricultural) since the last update. Going forward, energy is the group to watch, as it should continue to benefit from the CTAs' buying pressures. - UBS Strategy