Since Liberation Day, market participants have focused primarily on adjusting their net, causing EU and US equity pairwise correlations to spike to near 3y highs. According to Goldman, the global recession fears combined with index volatility has led the bank's Prime Global hedge fund net exposure to drop to multi-year lows. And while market volumes have started to normalize from record highs but top of book liquidity remains very dry, implying risk of further squeeze episodes. This environment is creating interesting dislocations and opportunities. 

Below, we highlight what Goldman thematic investing team believes are the top 5 cross-asset dislocations the bank is watching across FX, Commodities, Positioning and Rates. While everyone knows the bad news of this extremely challenging environment, the good news is that ongoing thematic rotations are creating new alpha opportunities which asset baskets can help monetize that traditional indices cannot. 

Thematic Rotation since Q1