Longer-term trend followers have had a difficult first half of the year, according to Bank of America Securities, but are now back buying U.S. equities, News.az reports citing Xinhua.
The SG CTA benchmark snapped a four-month losing streak in June posting a 93 bps gain on the month, but trend followers are likely still down on the year with the benchmark falling 7.6% in the first half of 2025.
While CTAs [commodity trading advisors] have been supported by short U.S. dollar and long gold positions for most of the year, equity, bond, and oil fluctuations have caused difficulties for the trend following community.
According to the U.S. bank’s model, short-term trend followers already have meaningful S&P 500, Nasdaq 100, Russell 2000 and Nikkei 225 long positions, while medium- and long-term models lag with smaller longs or, in the case of Russell 2000, short positions.
“However, over the next week, these medium- and long-term trend followers are expected to buy across these markets, and this could be significant given that we have shown that most trend followers are somewhere in the medium- to long-term range of model speed,” analysts at Bank of America Securities said, in a note dated July 3.
“Meanwhile, our models still indicate that CTAs have consensus EURO STOXX 50 longs that could slightly shrink next week.”
In foreign exchange, the U.S. dollar declined again this week despite a pop higher in reaction to the strong U.S. jobs report on Thursday.
