European Sentiment Turning More Bearish; Hedge Fund Exposure Nears Two Yr Low

European equities took a hit after last week’s ECB meeting, but sentiment has been turning more bearish for the last few months and Morgan Stanley’s market timing index (MTI) based on a collection of sentiment metrics is now at the lowest level in two years and fully in Buy territory.

“Price action suggests that markets appear to be experiencing a growth/deflation scare at this time even though economic surprise indices are not breaking down and US 2Y yields remain resilient,” write Morgan Stanley analysts Matthew Garman...