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Investing.com — Commodity trading advisers are set to significantly increase their exposure to U.S. equities in the coming weeks, according to a note from UBS analyst Nicolas Le Roux on Monday.
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UBS’s simulation framework “paints a uniformly positive picture for U.S. equities,” with CTAs strongly positioned to buy S&P 500 futures regardless of near-term price direction.
“Even if equity prices stay flat, their S&P exposure could quadruple by end of April,” the bank said.
The outlook is said to be far less constructive outside the U.S., with UBS projecting outright CTA selling in the U.K., Japan and emerging markets. European flows are expected to be modestly positive.
In fixed income, UBS noted that CTA activity has been limited, but conditions for a rapid shift are in place. The bank added that the reaction function is “clearly skewed towards buying,” adding that a constructive bond backdrop, with global yields falling roughly 30 basis points, could prompt CTA demand of as much as $250 million to $300 million in global DV01.
In credit, CTAs have returned to selling spread protections in size after a brief period short, a pattern UBS said mirrors activity seen in April 2025.
On currencies, UBS stated that dollar selling has re-emerged on CTAs’ agenda, with the funds offloading $60 billion to $70 billion of the greenback over the past two weeks.
The bank believes a similar wave of selling appears likely ahead, with the Canadian dollar emerging as a standout currency in its projections.
CTA activity in commodities has been limited this month, with modest trimming of agricultural exposure and incremental additions to industrial metals, UBS added.