Synopsis:

BofA’s recent FX and Rates Sentiment Survey indicates growing concern about crowded rate long positions, surpassing long equities for the first time. Despite a significant sell-off in USD FX, evidence of crowded USD shorts remains minimal.

Key Points:

1. Rate Longs Perception: The global rates rally has intensified perceptions that long rate positions are the most crowded trade, now exceeding long equities.
2. Positioning Trends: While global duration longs are at historically high levels, they remain unchanged, suggesting an initial concentration in the front-end of the curve.
3. USD Shorts Concern: Despite a sharp decline in USD FX, there is limited evidence of crowded USD shorts. Current positioning is slightly bearish but remains close to neutral, consistent with BofA’s FX flow data.

Conclusion:

BofA’s survey highlights a significant shift in sentiment, with concerns about crowded rate long positions rising. In contrast, despite a USD sell-off, the positioning in USD shorts appears balanced and close to neutral.