Intel stock spikes after report of possible US government stake
Investing.com - Many investor views have become widely held in the early days of the second half of 2025, potentially leaving markets vulnerable if these opinions reverse, according to analysts at HSBC.
In a note to clients, the brokerage said a "broad-based melt-up" has been continuing in risk assets, referring to a rapid jump in stocks underpinned by investor enthusiasm rather than by wider market fundamentals.
The passage of a sweeping U.S. budget bill last week, White House trade negotiations, relatively lower Treasury yields, and resilient labor demand have all been "defying doom-and-gloom calls" and "record-high" policy uncertainty, the analysts said.
At the same time, they predicted that tariff-related headlines are unlikely to cause the stock and bond market ructions experienced after the unveiling of President Donald Trump’s punishing "Liberation Day" duties in early April.
Against this backdrop, "a lot of views going into the second half have become quite consensus," the HSBC analysts said, adding that some of their indicators have shown increased signs that these positions are now becoming "stretched," possibly exposing these to quick reversals.
This has raised the possibility of several "pain trades," or a market movement that inflicts losses on the majority of investors positioned in a particular direction, arising in the final six months of 2025, the analysts argued.
An outperformance in U.S. equities against the rest of the world -- after questions have swirled around the allure of American assets for months -- would be one of these trades, they said.
U.S. and global growth not decelerating strongly in the face of tariff-fueled uncertainty, as predicted by many economists, may be another, as well as a comeback in the beleaguered U.S. dollar.
Yield curve "flatteners" would be yet one more, especially amid the recent popularity of a trade involving bullish bets on short-dated Treasuries and a reduction of longer-dated exposure. These "steepener" trades push yields on longer-dated Treasuries higher than short-term maturities.
Finally, an unwinding of the emerging market carry trade -- a tactic that calls for borrowing in low-yielding currencies to invest in higher-yielding EM ones -- was cited as another potential "pain trade" candidate.