Market Extra: These crowded trading positions are ringing alarm bells

U.S. equities are going through their least volatile 30-day period in more than two decades, according to BlackRock, but a danger is lurking under the seemingly calm surface: crowded trades.

Appetite for assets perceived as risky has surged, fueled by expectations for interest rates to remain lower for longer, leading investors to pile into similar asset classes. That could set the stage for a violent unwinding if volatility picks up again, said Richard Turnill, BlackRock’s global chief investment strategist, in a Monday note.

Some popular positions are now “approaching extreme levels,” Turnill said, which makes them vulnerable to a market shock or rising volatility, especially when combined with high valuations.

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