Investor Positioning Strategy Update and Flows Another Post Earnings Season Lull

Global Asset Allocation Date 21 August 2026 Investor Positioning Strategy Update and Flows

Another Post-Earnings-Season Lull Parag Thatte Another post-earnings-season lull. The S&P 500 in recent quarters has shown a Strategist clear pattern of rallying through the first four weeks of earnings seasons (+3.1% on average), when the bulk of results are reported, then a lull over the next four weeks Binky Chadha (-0.5%) as the pace of reporting slows to a trickle, and a pickup again as the next Chief Strategist season approaches (+1.9%). This reflects in our view the delivery during earnings season of off-the-charts earnings growth, but also the recurring skepticism that it can be sustained, and then a revival of confidence on the back of robust corporate Karthik Prabhu Strategist guidance. We are currently in the middle lull period.

A lot of fear in equities about moves in rates but rates volatility, which is the key Dag Workayehu for equities, is well contained. The correlation between daily equity returns and Strategist movements in 10 Treasury yields is currently running at extremely negative levels,

even more than during the 2022 rates panic. But unlike then, rates volatility is well contained and the 10y within the 1pp range it has inhabited for the last 3 years, a period in which equities have trended up strongly. The recurring lesson from over the last 4 years is that it is rates vol which is key for equities, not the level of rates (Higher Rates Or Higher Vol? Nov 2022).

Equity positioning is overweight but well below levels implied by booming earnings growth. Overall equity positioning (0.18sd, 52nd percentile) is modestly overweight. Discretionary investors remained cautious and slightly underweight (- 0.18sd, 35th percentile) while systematic strategies’ positioning is well above neutral (0.62sd, 77th percentile). Large-cap positioning is clearly overweight but well within historical range (0.48sd, 77th percentile), as is that for large-cap Tech after sliding over the last two weeks (0.73sd, 78th percentile). Equity positioning remains well below levels implied by booming earnings growth.

Large inflows continued to roll in this week into equity ($40bn) as well as bond funds ($21bn). Within equities, inflows were led by the US ($29bn) and broad global funds ($12bn) while Japan (-$1.7bn), EM Asia (-$2.2bn) suffered outflows and Europe ($0.2bn) saw modest inflows. Across sectors, Tech ($2.3bn) flipped back to inflows after a couple of weeks of outflows but Financials (-$2.0bn) saw their largest outflows in 11 weeks. Within bonds, inflows were broad-based across categories but led by government bonds ($7.4bn) and broad-mandate funds ($7.1bn). EM bonds ($3.3bn) also saw robust inflows but those to IG ($0.5bn) and HY ($0.7bn) moderated.

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Investor Positioning and Flows

Figure 1:The pattern in recent quarters has been a rally for the S&P 500 in the first four weeks of the earnings season followed by a lull and then a pickup again as the next season approaches

S&P 500 performance around earnings seasons* (%) Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026

We are in the 5 4 post-season lull First 4 weeks Next 4 weeks Remaining weeks *Start of the season defined as when the mega-banks begin to report Source : Bloomberg Finance LP, Deutsche Bank Asset Allocation

Figure 2: This reflects the boom in earnings delivered through recent earnings seasons

Evolution of S&P 500 consensus earnings ($bn) 820 820 Earnings season shaded Q Q3 2026 Q Q1 2026

Source : Bloomberg Finance LP, Deutsche Bank Asset Allocation

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