The hot investment scene has set off a wave of waves, and CICC's latest research report reveals that a huge storm is brewing in US and European stocks. This can't help but worry investors in the market, however, please don't rush to sell your chips just yet. The report reveals changes in financial liquidity, which are key factors in determining the fate of the market.
At the moment, reverse repos are still thriving, huge 1$15 trillion makes the market look full. The net issuance of short-term bonds in the first quarter exceeded 460 billion US dollars, which is booming, but it is remarkable that the net issuance momentum of short-term bonds in the second quarter may slow down or even turn negative, which will lead to a slowdown in the release of reverse repos. If the Fed still adheres to the balance sheet reduction policy, financial liquidity will face a severe test in the second quarter. Looking at the current stage of the US stock market, the liquidity crunch has not been highlighted, but the current calm may only be the calm before the storm, and the second quarter of next year may usher in a real test.
Not only that, but the research report also takes a nuanced look at the market sentiment over the past week. Europe and the United States are soaring, and U.S. bonds are also approaching the edge of overbought. Speculative net shorts** in U.S. equities are inflating, while emerging markets are rapidly turning into net longs. At the same time, speculative net longs in the US dollar have decreased, and net shorts in 2-year Treasuries have also declined, while net shorts in 10-year Treasuries have trended upward. This series of changes reveals multiple signals in the market, and it is important for investors to keep an eye on these dynamics and adjust according to their investment strategies.
Overall, market investors urgently need to pay attention to these changes and quickly adjust accordingly. Although US and European stocks have become overbought, there are still huge opportunities lurking in the market. Only by seizing these opportunities may we be able to win handsome returns in a turbulent market. Investors, are you up for the challenge?