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After weeks of extremes, key market indicators are quietly slipping back toward neutral. Risk appetite, fund flows, correlations between assets, and even macro volatility measures are all reverting rapidly — signaling a major cooling off from previous extremes. Let's look more closely at this broad normalization.
The S&P 500 is up 14% since April’s low, with retail loading up and hedge fund positioning still depressed. With re-gross potential rising and the FOMC looming, is this just a bear market rally — or something more?
Pessimism has taken over across the board — from consumers and businesses to analysts, hedge funds, and the media. Inflation fears, earnings downgrades, and relentless bearish sentiment are defining the market mood - just in time for the bounce.
Volatility is collapsing: VIX, MOVE, and credit protection levels are at post-Liberation Day lows. Mean reversion is in full swing, but some pockets like implied correlations remain stubbornly elevated as earnings season kicks off.