Bank of America (BofA) has released its FX and Rates Sentiment Survey for August, revealing noteworthy shifts in the perception of crowded trades among respondents.

Key Points:

1. Long Risk Perception:

   • Despite various shifts in the market sentiment, the long risk trade continues to dominate as the most perceived crowded trade.

2. Shift in Long Rates View:

   • A significant change is observed in the respondents' views regarding long rates. There's a sharp decline in those who consider long rates as a crowded trade. This is an intriguing development, especially considering the extended duration positioning seen in both the US and EUR markets.

3. USD Short Positioning:

   • There is an increase in the number of respondents who believe that short USD positioning is crowded. However, it's crucial to note that these numbers haven't reached the peak levels observed in May.

Summary:

BofA's latest FX and Rates Sentiment Survey for August has spotlighted some intriguing shifts in market sentiment. While the perception of the long risk trade as crowded remains unchanged, there's a substantial decline in the number of market participants viewing long rates as crowded, despite prevailing market positions in the US and EUR. Moreover, the sentiment around short USD positioning being crowded is growing, although it hasn't returned to its May highs.