BofA Securities has identified several surprising “pain trades” for Q1 2026 that have caught traders off guard. Notably, Treasury bills (SHY) have outperformed AI hyperscaler bonds, the U.S. dollar (DXY) has surpassed Bitcoin (BTC-USD), and oil (USO, BNO) has outstripped gold (GLD). Additionally, the yield curve flatteners have proven more profitable than steepeners, indicating a shift in market expectations.
These developments are significant as they highlight unexpected trends in asset performance that could reshape portfolio strategies. The strong showing of T-bills suggests a flight to safety amid market volatility, while the dollar’s strength against Bitcoin may reflect a renewed confidence in traditional currencies. The outperformance of oil over gold points to potential inflationary pressures and changing energy dynamics.
Market professionals should reassess their positioning in light of these pain trades, particularly in sectors like energy and fixed income, where traditional correlations may no longer hold.
Source: seekingalpha.com