Deutsche Bank's liquidity data shows that as global stock markets rebounded last week, investors who had reduced their stock investments during the market turmoil in early August have significantly increased their holdings of stocks. Against this backdrop, the US stock market continued its hot rebound on Monday, with the S&P 500 index rising for the eighth consecutive trading day overnight, setting a record for the longest consecutive rise since November last year.
Deutsche Bank stated in a report on Monday that as a sign of the market's rapid recovery from a sharp sell-off, the holdings of discretionary investment fund management companies that judge when to buy or sell surged last week, fully recovering from the previous week's decline and now far above average levels.
Deutsche Bank added that cash has flowed into index options, large tech stocks, cyclical stocks, and defensive stocks.
In addition, trend tracking investment portfolios, including volatility controlled funds (whose positions are opposite to the realized volatility), have significantly increased their stock investments. These funds buy when the market is relatively calm and sell when the market is volatile to contain losses.
Less than two weeks after the global stock market plummeted due to heightened concerns about the US economy heading towards recession, investor confidence has rapidly recovered.
The significant appreciation of the Japanese yen has accelerated the reversal of the so-called 'yen arbitrage trade', leading to the most intense single day sell-off in the Japanese stock market since Black Monday in 1987 earlier this month. In Japan and the United States, the stock prices of ultra large cap technology stocks also experienced significant declines at that time, and the hasty exit of a few very crowded trades exacerbated the decline.
Mandy Xu, head of derivatives market intelligence at CBOE Global Markets, said, "In just two weeks, the US stock market seems to have fully recovered
Global stock markets just achieved their best weekly performance since November last week, as reduced volatility and a series of stronger US economic data eased market concerns about an impending recession. The good retail sales and initial jobless claims data released last week, as well as the strong financial report of Wal Mart, a retail giant, calmed investors' sentiment.
On Monday of this week, the S&P 500 index closed up nearly 1% again, and the index is currently only about 1.1% lower than the historical high set in July. Louise Dudley, Global Equity Portfolio Manager at Federated Hermes, said, "The market has rebounded and now feels more stable. In the medium term, there is some volatility in the market, and we will certainly seek to take advantage of the opportunities brought by price fluctuations. However, some large cap stocks still have good opportunities
Neil Shearing, Chief Economist of Capital Economics, pointed out that even for those long-term bears, it is difficult to find too many valid reasons for recent economic recession concerns in the series of data released in the past week.
In the bond market, overnight US bond yields of various maturities generally do not fluctuate significantly. As of the end of the New York trading session, US Treasury yields have fluctuated, with 2-year yields rising 1.2 basis points to 4.072%, 5-year yields falling 0.5 basis points to 3.76%, 10-year yields falling 1.4 basis points to 3.874%, and 30-year yields falling 1.7 basis points to 4.125%.
The US federal funds rate futures show that investors' expectations for a 25 basis point rate cut by the Federal Reserve in September continue to dominate. Just two weeks ago, some investors had called for the Federal Reserve to urgently cut interest rates by 50 basis points before its September meeting.
A survey by Bank of America shows that credit investors seem to be equally optimistic about the US economy, with the vast majority expecting a "soft landing".
Bank of America stated on Monday that three-quarters of respondents currently expect US inflation to slow down but not trigger an economic recession, which is the highest proportion of predictions for this soft landing scenario. Geopolitics remains the top concern, and this is the second consecutive survey showing this result. Following closely behind is the central bank's policy mistakes
During the four days ending on August 16th, Bank of America conducted the aforementioned survey on high-level and high-yield credit customers of 48 banks, insurance companies, pension funds, asset management companies, and hedge funds. Bank of America stated that the overall market turbulence this month has actually strengthened investors' confidence in the macro environment of the 'blonde girl'.
The blonde girl economy refers to an economic state in which high growth and low inflation coexist within an economy, and interest rates can be maintained at a lower level. This economic state is considered ideal because it can achieve moderate economic growth and stable price levels, while maintaining low interest rates, which is conducive to the healthy development of the economy.