CROSS ASSET: BofA Survey: Risk More Concentrated In FX Than Rates
Bank of America’s latest FX & rate sentiment survey finds that “USD shorts are viewed simultaneously as the most crowded trade, as well as the highest conviction view. And it is true that on a z-score basis the USD underweight position stands out both on 1-Year and full history horizons. The fact that positioning is seen as the biggest headwind to USD performance is counterintuitive but could be explained by the fact that investors see room for USD shorts to extend (given that sentiment remains more negative than positioning)”.
- They go on to that note “not surprisingly, given these concerns around the crowded nature of the USD short, positioning has moderated slightly. However, the main take-away from this month's edition of the survey is that risk taking remains much more concentrated in FX than in duration”.
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US: Bessent Says "Rebalancing" Between US And China Is Possible
US Treasury Secretary Scott Bessent is delivering testimony to the House Ways and Means Committee on President Donald Trump’s tax and trade agenda and the President’s budget request for FY26. The hearing is ongoing. Questions from lawmakers are likely to be dominated by the trade framework struck with China in London. LIVESTREAM
- Per prepared remarks, Bessent said in his opening address: “…Treasury has just completed its most successful tax filing season in years—and we did so while improving efficiencies and cutting costs at the IRS.”
- Bessent noted that, “April receipts this year were up 9.5% over the previous year. And receipts in May were up 14.7% over the previous year... against the backdrop of one of the most consequential tax proposals ever to come before Congress,” referring to the One Big Beautiful Bill.
- Bessent said OBBB, "will make the 2017 tax cuts permanent," adding: “The legislation will provide 100% expensing for new factories, as well as existing factories that expand operations and support Made-in-America. And it will streamline burdensome permitting processes...”
- On trade, Bessent touted “the historic US-UK trade deal,” which he claimed “is a preview of what’s to come. Dozens of countries have engaged the administration thus far with offers to improve their trade relations with the United States. This includes China.”
- On China, Bessent said: “If China will course-correct by upholding its end of the initial trade agreement we outlined in Geneva last month, then a big, beautiful rebalancing of the world’s two largest economies is possible.”
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FOREX: FX Exchange trade Roll pace update
FX Exchange traded Rolls dominates, at least over 75% of the front Month in EURUSD is spread related. Expects these to be all but done on Friday.
- EUR: 55%.
- GBP: 44%.
- JPY: 55%.
- CHF: 42%.
- CAD: 38%.
- AUD: 46%.
- NZD: 38%.
- SEK; 38%.
- NOK: 47%.
