Citi says global equity positioning improved as risk sentiment strengthened following the US-Iran MoU
Newsquawk Staff ·
- In the US, increased small-cap positioning suggests broader participation, while large-cap exposure remains bullish but elevated Nasdaq longs leave risks skewed to negative catalysts.
- EuroStoxx positioning rebounded strongly on short covering, leaving a cleaner setup reliant on new risk flows.
- In Asia, Korean positioning surged back toward extremes, contrasting with continued weakness in China-related markets and steady gains in Japan, leaving KOSPI's stretched positioning as a key risk.
- Elsewhere, Citi's macro-regime clustering model indicates markets remain in a "Normal" environment, though recent oil price declines and resilient economic data suggest a potential shift towards a "Goldilocks" regime of higher growth and lower inflation, which the bank says would favour commodity short volatility strategies, multi-asset vol carry, and CTA-style trends.
- Citi adds that, in the current regime, curve carry, congestion strategies, and US equity momentum show stronger-than-average risk-adjusted returns; a key risk is a persistent oil shock or rollback of the current US-Iran detente, which could tighten financial conditions and push markets toward stagflation.
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