Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

CTA stock exposure is long US, short Europe, UBS analysts say

Published 11/27/2024, 09:56 PM
© Reuters.
US500
-
STOXX
-

Investing.com -- UBS analysts said in a note Wednesday that Commodity Trading Advisors (CTAs) have adopted a "risk-on" stance, with a notable preference for U.S. equities over European and Latin American stocks.

According to the firm's biweekly update on CTAs' positioning and flows, equity beta exposure has remained stable despite subdued momentum across global markets in November.

"CTAs' overall equity beta is close to its long-term average," UBS noted, highlighting that the bulk of their equity risk is expressed in relative terms: long U.S. versus short EU and LatAm.

This positioning is said to reflect a broader divergence in market sentiment between regions.

In bond markets, UBS said CTAs have made significant sales in U.S. and Japanese durations, offloading $25 to $30 million in DV01 exposure since the last update.

However, UBS expects European bonds to attract inflows, with Korean and Italian bonds highlighted as "high conviction trades" for CTAs.

Currency-wise, CTAs continue to favor a stronger U.S. dollar. UBS pointed out that recent rounds of dollar buying, totaling $50 to $60 billion, have left little room for additional upside.

The firm also anticipates profit-taking in currencies such as the Indian rupee (INR) and Canadian dollar (CAD), though the dollar remains the model's "main conviction."

On commodities, CTAs have pivoted from selling metals to focusing on energy and agricultural assets, with a bullish outlook on these sectors.

Overall, current CTA signals reflect a bullish stance on U.S. stocks and credit markets, a bearish view on U.S., Australian, and U.K. bonds, and mixed positioning in commodities.

The strategic allocation underscores CTAs' tilt toward the U.S. amid global economic uncertainties, with hedges in gold and the U.S. dollar serving as protection against risk-off events, UBS noted.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.