Market Note

Short Squeeze

We are beginning to see market rotation out of the AI/semis trade which has dominated price action in recent months.

Market conditions in recent weeks were starting to feel quite frothy.

As we receive May HF performance estimates, the squeeziness on the short side was evident as many fundamental Equity Long/Short managers running low-net strategies were down.

Additionally, the quant equity space remains torturous YTD, which is also partially explained by the extreme squeeze conditions we witnessed since the end of March.

Typically, these periods resolve themselves in a more normalized environment as fundamentals begin to have greater impact in equity market valuations.

Global Markets & Economic Data

• US: May Payrolls were far ahead of estimates and the Unemployment Rate held steady at 4.3%. JOLTS Job Openings data hit the highest level since Nov. 2024. ISM Manufacturing PMI hit the highest reading since May 2022.
• Switzerland/UK/EU: EU consumer price inflation hit 3.2% in May, the highest level since Sep. 2023 and far above the ECB’s 2% target.
• Japan/China: Japanese Consumer Confidence staged a small recovery in May but remains at depressed levels. Chinese Manufacturing PMI figures were in-line with expectations and remained slightly into expansionary territory.

Index Returns Summary

Asset Class	MTD	YTD
MSCI World	4.61%	10.44%
MSCI Asia Pacific	3.80%	13.99%
MSCI Europe	2.79%	7.18%
Bloomberg Barclays Global Aggregate Index	0.34%	0.51%
Bloomberg Commodities Index	-3.84%	24.35%
HFRX Global	1.71%	4.10%
HFRX Macro/CTA	2.12%	6.55%
HFRX Equity Hedge	2.87%	6.74%

*Index data as of May 29, 2026

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Disclaimer: This material has been prepared by MASTERPIECE ADVISORS for informational purposes only and should not be construed as financial advice. Investments in hedge funds are speculative and involve a high degree of risk. This material is confidential and may not be disclosed without the express written approval of MASTERPIECE ADVISORS.

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