How The "Blue Wave Bull" Could Rewrite The Current Correlation Playbook

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As markets digest the midterm results and the emergence of the "Blue Wave Bull," investors may need to rethink more than just their political and sector positioning. A shift in the political landscape could also trigger a broader change in the trading regime, challenging some of the cross-asset relationships that have defined markets in recent months.

And the pre-election correlation backdrop was already unusual. Average cross-asset correlations had collapsed toward multi-year lows, traditional stock/bond relationships had shifted, and the divide between AI and the rest of the market had become increasingly pronounced.