"Sell Everything European!" The Third Largest Sell-Off in a Decade as Capital Surrenders Across the Board

Multiple data sources indicate that European assets are undergoing one of the most severe sell-off waves in nearly a decade, with institutional investors slashing European exposure at extreme speeds.

According to Goldman Sachs Prime Brokerage data, the net sell-off of European assets last month recorded the largest single-month decline since March 2025, ranking as the third highest in the past ten years. The ratio of short positions to long positions reached as high as 2.2 to 1.

Meanwhile, JP Morgan data shows that the European aggregate positioning indicator has fallen to its third-lowest level since 2015, with the standard deviation touching below -1.5, and the 4-week positioning change dropping past -2 standard deviations.

This figure implies that current net short pressure on European positioning has reached an extreme situation within the historical distribution of the past decade, appearing only after a few moments of historic market stress.

JP Morgan data further reveals that, measured by the Z-score of the 1-month positioning change, the reduction in European asset holdings by CTA groups has reached the most extreme level ever recorded for this data sequence.

As representatives of trend-following strategies, the concentrated exodus of CTAs often carries a self-reinforcing effect, creating additional downward pressure on the market at the technical level.

The JP Morgan positioning team pointed out that when considering the combination of hedge funds, CTAs (Commodity Trading Advisors), and long-only funds, overall European positioning is at an "extremely low level."

Signs of capital withdrawal are not only evident in equity positioning; the foreign exchange market simultaneously confirms a systemic risk aversion posture.

The skew in the euro options market continues to slide, indicating that option market participants have generally turned to betting on a euro decline.