US equities sell-off is easing, says Citi strategist

However, it's too soon for the bulls to take center stage.

Investors are backing off from bets on a continued sell-off in U.S. stock futures, according to Citigroup Inc. strategists.

Although positioning in both S&P 500 and Nasdaq 100 futures remains moderately bearish, “the pace of flows has slowed significantly,” the team led by Chris Montagu wrote in a note dated Monday.

Still, it was “unclear whether the fading momentum could mark the bottom of the selloff, but so far no new bullish trend is evident,” they said. Short positions were still moderately in profit, they added, creating little pressure on positioning regardless of market moves. Their data is as of Oct. 6, before Hamas’s surprise attack on Israel roiled global financial markets.

The S&P 500 has recovered in early October after slumping in the past two months on worries that the Federal Reserve could keep rates higher for longer. But U.S. 10-year yields slid the most since March on Tuesday after dovish comments from Fed officials fueled speculation interest-rate hikes are about done, while jitters over the Israel-Hamas war added haven demand.

Focus is now on minutes from the Fed’s last meeting, due on Wednesday, and on U.S. inflation data later in the week.