Traders cut cyclical bets

Still betting on reflation though

Chart of the Day

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This chart shows the aggregate positioning of various cyclical trades, like long oil, copper or short Treasuries. Traders have been cutting their bets on cyclical gains in the past four weeks, though as you can see they are still far positioned in the direction of the “relation” trade compared to the past.

Macro

The latest job reports showed Canada added 303,000 jobs in March, which was impressive compared to the 900,000 jobs added in the US, as Canada’s population is about ten times smaller.

German export growth fell to -2.1% YoY in January, but export orders suggest growth will accelerate sharply.

US producer price inflation rose sharply to 4.2% in March, while core PPI inflation increased to 3.1%.

There’s no sign yet of inflationary pressures in the US velocity of money data though.

TSA traveler throughput is now 46% below the pre-Covid peak, an 18%-point improvement from a month ago.

Markets

Non-commercial traders decreased their net short position in the USD last week.

Real 5-yr/5-yr yield differentials still point to a stronger USD, though the relationship is not great.

Over the past week, value stocks have risen by 1.2% while growth stocks have risen by 4.1% , so they are once again outperforming.

Stocks have been benefitting from decreased fears about downside risks. The VIX has fallen to 16.7 in the past week, while the SKEW has fallen to 132.9.

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