The Bounce… Or The Breakdown?
Range or breakdown?
Markets are at a decision point. The big range is still holding, but short-term trends, bond stress, and positioning shifts are building pressure. These setups don’t linger, one side eventually wins.
Who wins?
Does the big range hold… or does the short-term trend channel take over?
Source: LSEG Workspace
Who do you trust?
The SPX bounce… or stressed bond markets. The gap between SPX and MOVE (inverted) is wide, and these gaps don’t tend to last. Bonds aren’t buying the bounce. More here.
Source: LSEG Workspace
Script bounce?
So far the SPX has followed the geopolitical risk event well.
Source: GS
Huge de-grossing
In our "Are We There Yet" note earlier this week, we highlighted the need for proper de-grossing in order to believe in a tradeable bounce. Looks like it happened yesterday.
GS trading desk: "In % terms, US equities saw the largest 1-day de-grossing since Sep '25 (-2.6 Z score one-year), driven by long sales outpacing short covers (2.5 to 1). Macro Products (Index + ETF) / Single Stocks made up 60% / 40% of the total $ risk unwinds"
The chart shows the general explosion of ETF trading in March - a good proxy for macro hedging activity. More here.
Source: GS trading desk
Resilient EWZ
EWZ has pulled back from recent highs, but Brazil continues to trade bid through the chaos. The dip barely tested the 100-day, never even getting close to the longer-term trend, and price has already bounced back to the short-term downtrend. A close above that level could quickly reignite the squeeze.
Source: LSEG Workspace
Brazil loves BCOM
Brazil is a pure commodity expression. When commodities bid, Brazil doesn’t just participate, it outperforms. Latest note on the bull do Brasil here.
Source: LSEG Workspace
Europe getting downgraded again
GS: "We have downgraded GDP growth in 2026 by around 0.7pp". More on soggy Europe here.
Source: Goldman
Unusual in gold volatility
Gold generally exhibits an upside volatility skew, with implied vol increasing during rallies and declining during sell-offs. However, crowded positioning drove a sharp rise in vol on the downside as investors sought protection. Should gold stabilize or move higher, the elevated hedges are likely to decay quickly, creating conditions that could support spot through reallocation flows. Latest gold note here.
Source: LSEG Workspace
Not calm at all
Oil vol and bond volatility have exploded higher, and remain "stubbornly" elevated.
Source: LSEG Workspace
Could still get nasty
Index and volatility control rebalancing projections show that downside still has the potential to get nasty.
The range is holding. The pressure isn’t. More here.
