The Market Brief
US stock futures slipped as oil jumped on renewed Iran tensions, adding uncertainty to a market already contending with fading earnings momentum and rising global yields.
Impact Snapshot
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Macro Viewpoint
US equities faded after an early rebound, with oil prices and bond yields both pushing higher as markets wait on whether US-Iran talks translate into a concrete agreement.
Stocks have swung in both directions in recent sessions as the tailwind from strong earnings begins to fade against a backdrop of global yields testing multi-year highs.
With the prospect of a prolonged oil supply disruption leaving central banks little room to manoeuvre, equities are once again taking their cue from developments in the Middle East.
Prime Intelligence
Retail participation has reaccelerated sharply, with May on pace to become the most active month on record.
Unlike earlier bouts of activity, flows are concentrating in mega-cap tech and semiconductors rather than speculative names. Retail is no longer selective either, having shifted from selling rallies in March to aggressively buying both up and down days.
What makes this more interesting is what is happening on the other side. Despite the rally to new all-time highs, hedge funds have continued to sell US equities month-to-date. Short exposure in macro products, index and ETF, has now risen above pre-Iran ceasefire levels and sits at a 10-year high.
The Market Brief
In today’s brief we break down the current state of our regime model, where systematic unwind risk actually stands, and why the market looks materially more crowded than it did six weeks ago.
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