In today’s briefing:
- HEM: Fear of Fear Itself
- The Month Ahead: Key Events in April
- WTI’s Recovery Wavers While Henry Hub Regains Momentum
- Rough Waters subsiding
- [IO Technicals Weekly 2025/13]: Bullish Momentum Builds as IV Eases
- Asian Alpha Hedge Fund (AAHF): INTRODUCTION
- Trump-Russia-China: The Bigger Game
HEM: Fear of Fear Itself
- US surveys indicate a fear of tariffs and DOGE, leading to a negative sentiment.
- Despite these fears, resilient labour markets suggest that concerns may be exaggerated.
- There is an expectation of reversing unnecessary easing in 2026 due to high underlying price and wage inflation.
The Month Ahead: Key Events in April
- Central Bank Rate Decisions in Australia, India, and South Korea.
- Tariffs: US reciprocal tariffs effective from 2 April; secondary tariffs are now a factor.
- Holidays: Good Friday is an exchange holiday in Hong Kong, Australia, India, and the US. Several other national holidays throughout the region.
WTI’s Recovery Wavers While Henry Hub Regains Momentum
- WTI rebounded in March due to geopolitical risks, but oversupply concerns and Trump’s unpredictable policies may limit further gains as OPEC increases output from April.
- Henry Hub rallied in 2025, driven by strong LNG demand, supply constraints, and below-average inventories, positioning it for sustained support despite short-term volatility.
- Henry Hub’s technicals indicate a potential bullish reversal, while WTI’s bullish momentum shows signs of weakening, suggesting divergent trends in the near term.
Rough Waters subsiding
- We often compare investing to sailing; investors can sit in safe harbour (cash) or they can venture out in most, if not all, weather.
- Sometimes it requires a lot of tacking and trimming sails to seemingly achieve very little as the winds and tides fight each other, sometimes it is, as they say, plain sailing and the best thing to do is stick on the same course.
Obviously, and to extend the metaphor, fishing boats need to sail to where the most fish are and sometimes that means going to places where the weather is less predictable.
[IO Technicals Weekly 2025/13]: Bullish Momentum Builds as IV Eases
- SGX IO Futures rose $2.25/ton over the week, closing at $102.25/ton, buoyed by seasonal steel demand and technical support above 9D and 21D DMAs.
- Implied volatility in iron ore options fell sharply YoY (ATM IV -36%, 10-delta puts -41%), making long volatility positions more affordable.
- Futures and options open interest rose 6.85% WoW, with Financial Institutions increasing net long positions, reinforcing bullish positioning.
Asian Alpha Hedge Fund (AAHF): INTRODUCTION
- The Asian Alpha Hedge Fund (AAHF) returned 31.66% in the first quarter of 2025. At 3/31/25 the portfolio had a gross position of 172% and a net position of +5.89%.
- The fund’s outperformance was attributed to high alpha generation and country allocation/positioning. The portfolio gained from its long positions in Hong Kong and shorts in Japan.
- At the end of March, we reduced our long positions in Hong tech names and covered short positions in Japanese steel companies.
Trump-Russia-China: The Bigger Game
- Investors should be targeting US multinationals that had a presence in Russia pre-war.
- Despite recent hiccups and Trump’s ire with Putin, expect a peace deal to be struck, for the US to lead Russia’s re-integrations into the world economy.
- Breaking the Russia-China alliance is the bigger game at play here for Trump/.
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