Back
4 Sep 2015
Risk aversion at full steam, Nikkei breaks psycho 18k
FXStreet (Bali) - The S&P 500 futures have fallen in tandem with the Nikkei 225, both adding downside pressure to Yen crosses at the Tokyo open ahead of today's US NFP.
Risk-off conditions the 'new normal'?
The Nikkei found some bids at the 18,000 round number, but failed to provide any intraday relief for the pressured Yen crosses, which remain in well established downtrends following August's risk-off dynamics. This time around, the selling had no particular trigger, which reinforces the notion that risk-off conditions are now being accepted as psychologically the 'new normal' - self-fulfilling prophecy -. What's is more, lagging CTA accounts are yet to dump risk assets to re-balance portfolios.
CTA and its unfinished business
In a recent article by the Financial Times, it was noted that: "CTAs (or commodity trading advisers) are trend-following futures funds. They typically rebalance in response to sharp rises in volatility over the course of days or months, and will continue to put pressure on the stock market. RP funds, which tend to have a six-month “look-back” period over which they adjust volatility, will present a bigger and longer-term headwind."
Risk-off conditions the 'new normal'?
The Nikkei found some bids at the 18,000 round number, but failed to provide any intraday relief for the pressured Yen crosses, which remain in well established downtrends following August's risk-off dynamics. This time around, the selling had no particular trigger, which reinforces the notion that risk-off conditions are now being accepted as psychologically the 'new normal' - self-fulfilling prophecy -. What's is more, lagging CTA accounts are yet to dump risk assets to re-balance portfolios.
CTA and its unfinished business
In a recent article by the Financial Times, it was noted that: "CTAs (or commodity trading advisers) are trend-following futures funds. They typically rebalance in response to sharp rises in volatility over the course of days or months, and will continue to put pressure on the stock market. RP funds, which tend to have a six-month “look-back” period over which they adjust volatility, will present a bigger and longer-term headwind."