The latest CFTC Commitments of Traders report reveals a notable increase in speculative short positions in the VIX, indicating a decreased demand for volatility protection among investors. This trend suggests growing confidence in market stability, as traders appear less concerned about potential market disruptions. The report also highlights significant short positions in EUR, CAD, and NZD, reflecting expectations of a stronger USD, while net buying in equity indices like the SPX and Russell points to positive sentiment towards equity market performance.
In the fixed income space, net buying of longer-duration bonds such as 5s, 10s, and ultra 10s suggests expectations of decreasing yields, as investors shift towards longer-term assets. Meanwhile, short-covering in SOFR indicates a potential stabilization in short-term interest rates. The aggregate long USD positioning underscores increased confidence in the USD's strength, influencing FX movements and tactical allocations towards currencies like yen and sterling.
As of 15:50 on December 13, the VIX is trading at 13.69, down from its last close of 13.92, with an intraday low of 13.24. This decline aligns with the increased short positions in the VIX, reflecting reduced demand for volatility hedges amid perceived market stability.