JPMorgan is warning that vulnerability across equity markets is increasing, as investor positioning remains heavily tilted toward stocks despite recent unwinding in some crowded trades.
The bank noted that momentum-driven long positions in precious metals were partially reduced over the past week, with silver experiencing the most pronounced pullback. By contrast, gold positioning has proven more resilient.
“While there has been a sharp reduction in long positions in silver futures over the past week, the unwinding of gold futures longs has been far more limited,” strategists led by Nikolaos Panigirtzoglou wrote in a research note. They added that gold continues to show an “elevated long base” despite the recent correction.
Outside the metals space, JPMorgan said broader positioning adjustments have been modest so far, leaving risk assets exposed should market sentiment deteriorate.
“Overall equity positioning remains elevated and is now at its highest level since mid-2024, having rebounded sharply since late November,” the strategists said, warning that such positioning “leaves equities vulnerable in the near term.”
In contrast, bond positioning remains historically depressed, widening the gap between equity and fixed-income exposure to levels last seen in late 2021. JPMorgan said this divergence points to a near-term environment that increasingly favors bonds relative to stocks.
Currency positioning also continues to show a sizable short bias in the U.S. dollar, excluding the yen, indicating that investors remain positioned for further dollar weakness despite recent volatility.
Overall, the strategists said investors remain “long equities and gold, and short bonds relative to equities and the dollar, excluding the yen.”
Looking beyond positioning, JPMorgan added that it is unlikely the “strong U.S. broad liquidity backdrop” supporting equities in 2026 will change materially following Kevin Warsh’s appointment as chair of the Federal Reserve, even if the central bank moves to shrink its balance sheet.
Any tightening of Fed liquidity would likely be offset by measures that encourage banks to hold more bonds, the bank said, stressing that “it is the size of commercial bank balance sheets—rather than the Fed’s balance sheet—that ultimately drives broad liquidity,” which should continue to provide a tailwind for equities.
