Citi strategist Chris Montagu warns that U.S. equity upside remains capped as bearish positioning mounts across major indexes. Despite a brief relief rally after the tariff pause, fresh short flows have returned—particularly in the S&P 500, Nasdaq, and Russell 2000—signaling that further downside could lie ahead.
Bearish Positioning Snapshot
S&P 500: Nearly all long positions are underwater, driving positioning profitability to multi-year lows.
Nasdaq 100: Heavy short interest returns, echoing the risk-off mood in tech names.
Russell 2000: Shows the most elevated bearish positioning among U.S. equity benchmarks.
Regional Positioning Divergences
Europe (EuroStoxx & DAX): Near-neutral overall; legacy long positions remain in the red but flows have not skewed aggressively bearish.
China A50: Reverted to neutral after mixed unwinds of longs and shorts.
Hang Seng: Bullish sentiment is rising, in contrast to
Nikkei 225: Now the most bearish major Asian index—though not yet at extreme levels.
Drivers of Positioning Shifts
Tariff Uncertainty: Trump’s flip-flops on China levies have stoked risk-off flows as investors doubt the timing and scope of any de-escalation.
Fed Leadership Signals: Repeated threats against Fed Chair Powell, and subsequent walk-backs, have muddied rate-cut expectations—squeezing long bets.
Macro Data: Mixed earnings reports and GDP readings (e.g., U.S. durable goods, Korea’s Q1 contraction) reinforce cautious stances.
What to Watch Next
FOMC Minutes & Speeches: Clarity on Fed independence and rate paths will directly influence positioning.
Trade Updates: Any concrete tariff cut announcements vs. slog warnings from Washington can trigger rapid re-positioning.
Economic Releases: Flash PMIs and U.S. inflation data will gauge growth vs. policy risk.
Track Index Futures Activity
To see real-time shifts in where liquidity and positioning are most concentrated—across S&P 500, Nasdaq, Russell, and other futures—use the? Market Most Active – Market Overview APIfrom Financial Modeling Prep.
