In this week’s market recap, we dive into the latest trends in flow and positioning metrics for global futures, US-listed ETFs, and various asset classes. Here’s a breakdown of the notable activity:

Key Highlights

Futures Flows

Last week, there was significant net buying across several futures markets. High buying volumes (over 1.5 standard deviations) were observed in the NIFTY, Canada/Italy 10-year bonds, Germany’s 10- and 30-year bonds, and USD/CNH futures. However, notable selling pressure (below -1.5 standard deviations) hit EAFE and SONIA futures.

CTA Positioning

Commodity Trading Advisors (CTAs) continue to show a preference for certain markets and asset classes based on key momentum signals:

• Long Positions: US and Asia-ex Japan equity markets, particularly Korea, remained strong points of focus.
• Reductions: In Europe, CTAs trimmed their equity exposures week-over-week, likely in response to regional economic signals.
• Fixed Income: CTAs are now predominantly short in US fixed income futures, as US rates continue their upward trend.
• Commodity and FX Positions: Energy (excluding natural gas) remains a short play, while CTAs maintain a long position in precious and base metals (excluding nickel). Additionally, the data suggests a generally short stance on global FX against the USD.

Looking ahead, if prices stay stable, CTAs could incrementally turn negative across assets like Nasdaq, EAFE, TSX 60, and a variety of bond futures, while potentially increasing their positive exposure in select global indices and commodities.

CFTC Positioning

• Asset Managers: Positioned very long on US equity and fixed income futures. However, they have slightly trimmed equity holdings and increased positions in US Treasuries, with the exception of ultra-long contracts.
• Leveraged Funds: Maintain a historically short position in US fixed income but have extended the duration (moving towards long/ultra-long bonds). Additionally, they have increased VIX shorts over the week.
• Managed Money: Reduced exposure to precious metals and cut shorts in corn futures.

ETF Flows

ETFs saw significant inflows, particularly into fixed income and currency/multi-asset categories:

• Fixed Income ETFs: Recorded robust inflows totaling $11.1 billion (1.8 standard deviations above average).
• Currency/Multi-Asset ETFs: Attracted $2.5 billion, marking a strong week at 2.1 standard deviations.
• Equities and Commodities: Equity ETFs had near-average inflows of $11.8 billion, while commodities ETFs were relatively flat at $0.1 billion.

Regionally, US equity funds drove the bulk of ETF inflows with $12.1 billion. Internationally, however, flows were weak, particularly in Developed Market Asia (-2.6 standard deviations), Europe (-1.5 standard deviations), and India (-1.4 standard deviations).

In terms of styles and sectors:

• Equity Styles: Call/put writing funds showed the strongest inflows, reaching 2.7 standard deviations above average, followed by Thematic (1.7) and Growth (0.7) funds.
• Sector Performance: Industrials led with 2.5 standard deviations in inflows, while sectors like Real Estate (-1.3), Materials (-0.9), and Energy (-0.7) experienced outflows.

Bond ETFs saw diversified interest, with Aggregate/Multi-sector bonds (2.7 standard deviations), long-term Treasuries (1.3), Mortgages (1.1), Municipals (1.0), and Money Market (0.9) all seeing inflows.

Crypto ETFs also attracted significant attention, marking their highest inflows in seven months at $2.4 billion, or 2 standard deviations above average.

Final Thoughts

The past week’s flows and positioning trends underscore a mixed sentiment among market participants. While CTAs adjust to various macro signals and futures flows show regional and asset-specific divergences, ETFs remain popular among investors seeking fixed income, currency, and equity exposure. With crypto ETFs also gaining traction, it’s clear that investors are exploring a wide array of asset classes to navigate the current economic landscape.