📝Liquidity Continues to Dry Up In S&P 500 Futures: UBS

S&P futures liquidity continues to decline, and now is at a level that it has only touched four times since 2020 (mostly mid-summer). The liquidity in single stocks has echoed the S&P futures, which has led to the large magnitude of moves seen as of late.

This remains consistent with what the desk has heard from investors: the tone is now cautiously optimistic near term in equities, but they're far from 'investable' until there is some clarity on tariffs, immigration, budget, conflicts, etc. As such, flows have been skewed towards Hedge Funds and away from Long Onlys over the last few sessions. Again, it feels like the buyers of stocks remain higher, waiting for more clarity before they jump in head-first.

Some of the names that performed the best yesterday were those that have been most de-risked. What also stood out, is that some of the higher short-interest names rallied hard, yesterday, too but the high short-interest basket really didn't outperform meaningfully. While it is hard to pinpoint, the conclusion from this would be suggestive that grosses are being added back to, but nets are remaining suppressed. It doesn't seem like investors believe the S&P is going to rip back above 6000 anytime soon. - UBS Strategy