In October, hedge funds significantly reduced risk and concentrated on liquidating their AI positions, which ironically improved the positioning environment for US stocks, especially the AI sector, before the end of the year. If AI stocks gradually stabilize in November, and retail investors continue to buy equity funds, hedge funds may begin to increase their AI exposure again from the end of November. However, long-term capital allocation to bonds may still limit further declines in yields, and subsequent interest rate reductions may rely more on momentum and other speculative funds.
