Gold and longer-maturity bonds are getting outsized inflows.
Protective equity options are outdrawing speculative contracts, while
volatility markets are positioning for fresh disruptions.
Whether it’s a
bearish portent of a sell-off to come or prudent hedging after a fierce stock
rebound, traders are bolstering their defenses against an end to this vertiginous
rally.
Gold and longer-maturity bonds are getting outsized inflows. Protective equity options are outdrawing speculative contracts, while volatility markets are positioning for fresh disruptions.
It comes as signs
of froth are emerging. The S&P
500 Index is on the cusp of its best quarter in more than 80 years even as
fears of a second coronavirus wave grow. Speculative mania reigns among retail
investors, while the likes of JPMorgan Chase & Co. are turning bullish on
U.S. stocks.
But for all the
fears that Wall
Street is running headlong into risk in one of the fastest rebounds ever,
hedging demand shows the frenzy is being met with some vigilance.
Yellow Metal
Net bullish bets
on gold in futures and options have risen for the first time in four weeks,
recovering from a one-year low, Commodity Futures Trading Commission data
showed on Friday. The SPDR Gold Shares, the world’s biggest exchange-traded
fund holding bullion, took in the most in about a year at $1.3 billion on
Friday. Overall, gold ETFs boosted their holdings by almost 30 tons, a sign of
enduring faith in the defensive asset.
One reason: bulls
keep finding their faith rewarded, with the price of bullion edging toward the
highest since 2012.
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