Trade Ideas Survey: Short Rates and Reduced Equities to Start 2022

Macro Hive Network

Our network starts the year with reduced equity longs, more rates shorts and modest short dollar positions. Here are the details:

• Rates: Participants added aUS 5s30s flattener, short US 5-year, and short US 7-year. However, other participants reduced their short treasury, and short CGB futures positions, while one cut their short bunds trade.
• FX: Divergent views on the euro with one going long euro, another exiting their short euro trade and yet another adding a short euro trade. Elsewhere, two trades were exited: short RUB vs BRL options and short GBP/JPY.
• Equities: One participant reduced their equity exposure again as they expect more volatility. Others have gone short FAANG, and long European banks. Meanwhile, there have been exits to a long Hong Kong stocks trade, and a short FedEx trade.
• Commodities: One participant closed long oil and opened long gold.
• Crypto: The participant that reduced equity exposure also reduced crypto exposure.
• Cash: One participant increased their cash holding to 33% of their portfolio.

Bilal’s Trades

• On my side – no changes. I’m still long EUR/PLN, long China 10y (FX unhedged), long SPX/short RTY, and I have an EU-US convergence EUR-USD 2s10s box trade (US flattener vs German steepener).

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)