Sentiment Survey: Bonds vs Stocks

This article reviews the data from the latest weekly sentiment survey we conduct over on Twitter.  The survey measures respondents’ equity and bond positioning/view – differentiating between whether the view is bullish or bearish for technical or fundamental reasoning.  The latest results show an extension of the rebound in technical driven bullish sentiment, while fundamental net-bulls continue to range.

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Probably the most interesting part of the survey is the interrelation between the bond and equity surveys.  I also run the same survey for bonds, and as I show below the movement in bond and equity sentiment is largely as you would expect.  That is, when bullishness rises on equities, it usually falls for bonds (makes sense, because stocks and bonds are typically either low or negatively correlated assets).
In terms of the actual trends, bond fundamentals sentiment has become the most net-bearish overall since October last year. When you think about the proximity of the FOMC meeting this week and the likelihood that the Fed introduces QT, it makes for what might be a very interesting week for the bond market!
Fundamentals sentiment continues to run in a tight range for equities, whereas technical sentiment has rebounded after deeply bearish readings recently - which in hindsight turned out to be a false alarm.  At present there's not much in the way of extreme readings on either chart, so no immediate signal as such.

Tracking the course of overall net-bulls for equity and bonds sentiment, you can see the moves have been fairly consistent for bonds vs equities (bonds tend to move inversely to equities, so it makes sense - note the bond sentiment line in that chart is inverted).

Looking in particular at the "fundamentals" net-bullish sentiment for bonds and equities (note the chart shows a rolling 4 week average) you can see the broader trend is being shaped by the perception of fundamentals.  Interestingly the perception of fundamentals has been very consistent across bonds and equities (again, this makes sense because a stronger economy is typically good for stocks, but bad for bonds).  In the latest reading bond fundamentals sentiment is moving lower, which may herald a move higher for equity fundamentals sentiment...  the better global economic backdrop would support this.

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Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.