Hello everyone, and welcome back to our weekly positioning update.

The center of attention currently is the ongoing rise in both US and UK yields, after term premia have been increasing significantly over the past 3-4 weeks as the odds of a Trump victory have risen. Meanwhile, the UK Autumn budget didn’t please markets, despite having some very solid content beneath the surface.

Looking across our positioning metrics, it seems that the increasing support for a Donald Trump victory is to some extent just amplifying the “Fed will cut into a strong economy” trades. The Russell 2000 is starting to gain traction, Financials positioning is rising significantly, and gold is still at the top of the charts in terms of positioning. Geopolitical risk didn’t increase much during Trump’s last term, so why should gold be considered a Trump bet? Inflation expectations have also remained mostly flat during the same period that yields have rallied.

Today’s edition will focus on notable positioning trends ahead of the election in a short and concise manner. Let’s go through our positioning data, asset class by asset class.

Equities

Exposure toward Materials and Financials has increased significantly since the odds of a Trump victory began to rise, while exposure to sectors like Utilities and Real Estate (the classic cutting cycle bets) has remained mostly flat. This suggests that equity positioning, more so than Fixed Income, is Trump-focused. Interestingly, Tech exposure is slowly but surely starting to turn negative, as a win by Kamala Harris is arguably better for industries like Semiconductors.

We’re seeing the same pattern at the index level, with the Russell gaining ground against major indices.

Chart 1.a: Equity Sector Positioning