Vix

A flurry of contradictory tariff headlines and a close-door Fed meeting made for another lively start to the week, but there are tentative signs of stability (at least by recent standards) on AUD/JPY and Wall Street indices.

A level of complacency ahead of Trump's tariffs can be seen in last week's futures market exposure, with traders increasing their short exposure to the VIX and Swiss franc, while also closing shorts against the Nasdaq at a notable pace.

Asset managers increased their gross-short exposure to EUR/USD for the first week in six. Asset managers trimmed net-long exposure to the US dollar index for a tenth week. And the large speculators that help flip VIX exposure to net-short may be regretting their move, looking at how Wall Street indices are now trading.

It was another flipping week for futures traders, with the $10.6 billion added to USD longs seeing the dollar flip to net-long exposure, large speculators revert to net-short EUR/USD and asset managers flip to net-short JPY/USD exposure.

Bullish bets for the VIX continued to rise, which saw asset managers flip to net-long exposure and large speculators close to doing so themselves. Bullish interest for the USD index also rose alongside prices, yet traders shied away from cured oil and were more bearish on commodity FX. Positioning was also mixed across Wall Street indices.

Traders seems to be hedging event risk with the VIX heading into the US election, with traders close to net-long exposure despite record highs for the VIX. Asset managers and large specs continue to have opposing bets on the USD index, with the former generally being on the correct side of the dollar’s direction.

It’s been a busy and messy week across global macro markets. The push points behind the tumult are parsed through in this piece.

Large speculators surged into GBP/USD long bets last week, pushing net-long exposure to a record high and at the fastest weekly pace since records began. They also continued to trim net-short exposure to yen futures for a second week, after it nearly reached a record high of its own.

It is the second week in a row that open interest on VIX futures notched up a volatile swing, according to the latest COT report. If the VIX can remain low, perhaps we'll see the S&P 500 reach new highs, unless US economic data deteriorates too quickly and rings recessionary bells.

When open interest on the VIX rises at its second largest weekly pace on record, it’s best to take notice. Especially when it reached a 5-year low before snapping a 4-week losing streak. We also take a look at positioning on the USD index, EUR/USD, GBP/USD, NZD/USD, gold and WTI crude oil.

Asset managers reached a record level of net-short exposure to VIX futures, days before prices fell to a record low. Traders also remain net-long USD despite losses in recent weeks.