S&P 400 and Hang Seng futures saw heavy selling last week

Investing.com -- Last week’s market activities reveal a significant shift in futures flows, with substantial selling observed in several key indexes. Notably, the S&P 400 and MSCI EAFE, along with the VIX, S&P TSX 60, Hang Seng, and Gasoline futures, experienced large selling flows exceeding the -1.5z threshold.

Commodity Trading Advisors (CTAs) adjusted their strategies in response to the market rally witnessed last week. They likely unwound short positions in equities, particularly in the EMEA region, while maintaining a mixed stance in the US and APAC markets.

Amidst bond sell-offs since mid-last week, CTAs also likely scaled back their positions in US Treasuries (USTs), although they continue to favor the front end and hold short positions in the long end of both US and European rates. Their current positions include being short on the US dollar against international foreign exchange, short on Energy, long on Gold, and displaying mixed exposures in Base Metals and Agricultural commodities.

The latest CFTC positioning data indicates that asset managers have increased their long positions in the Nasdaq (NDX) and shifted from 2-year to 5-year USTs week over week. Conversely, leveraged funds have intensified their short positions in the NDX, MSCI EAFE, emerging markets, and 5-year USTs, but have reduced their shorts in Long Bonds. Managed Money has dialed back long positions in Gold and Corn futures and augmented their shorts in Wheat over the past week.

Exchange-Traded Fund (ETF) flows from last week show a varied landscape, with equities experiencing below-average inflows of $2.8 billion, marking a -0.9z change. Fixed Income, on the other hand, saw near-average inflows amounting to $6.9 billion. Commodities registered moderate outflows of $0.1 billion, while Currency/Multi-asset funds enjoyed robust inflows totaling $2 billion.

Regionally, US equity ETFs faced their third consecutive week of outflows, with a $3 billion departure from the market. A notable rotation from Eurozone equities to broader international funds, such as EAFE and World ex-US, was observed, alongside significant inflows into Brazilian equities totaling $0.3 billion. Sector-wise, Materials and Industrials ETFs experienced outflows, whereas Energy and Health Care funds attracted inflows.

In terms of equity styles, Thematic, Call/Put writing, and Multi-factor funds saw strong inflows, while Volatility ETFs, particularly inverse VIX funds, faced substantial outflows. Levered Tech funds, including TQQQ/SOXL/NDVL, reported approximately $2 billion in outflows, with their inverse counterparts attracting about $0.8 billion.

The bond ETF sector witnessed strong inflows into Corporate bonds, especially high yield (HY), along with substantial inflows into Mortgages and Municipal bond funds. Treasury funds, however, saw outflows. Crypto funds continued to attract strong inflows of $1.9 billion, and while broad commodities funds faced outflows, Gold funds experienced only muted inflows.

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