According to the latest Citi Equity Markets Positioning Model note, the early focus on US elections, sparked by the presidential debate, has not curbed the risk appetite and bullish positioning in US equities.
Positioning has been "getting more extended," according to analysts. "Nasdaq futures and ETF positioning have both become very extended and this is now the most bullish positioning by some margin."
Meanwhile, the most recent S&P flows have also been bullish, although the analysts note that mixed historical futures flows and recent ETF outflows leave a more balanced setup.
In Europe, the recent UK and French elections resulted in European futures positioning turning neutral in the past month.
Ahead of those elections, Citi said investors were mostly de-risking, with open interest falling. "Previously bullish positions across Europe had started fading before the election campaigns began but have now turned neutral or slightly bearish," they stated.
"Elections have now passed but for France there is little visibility on the formation of a government, not to mention uncertainty on French policies," the analysts write. "At this juncture it's hard to see a meaningful change in positioning for continental Europe without some clear positive catalysts. The upcoming reporting season could be a catalyst."