Long-term return reversal begins - winners and losers since 2025 set to swap places as Nikkei <50,000, JGB 10Y <2% tail risks rise

We, the QDS team, believe that market conditions have changed. Following the results of the US midterm elections, uncertainty regarding the future of policies surrounding AI development and data center construction has increased, triggering a massive sell-off in AI-related stocks globally. It is becoming increasingly urgent to view this recent movement not merely as a rotation among sectors but as a transition into an adjustment phase accompanied by deleveraging pressure. Today (November 6) the Nikkei Average dropped below 60,000, falling sharply to the 57,000 level. Supply-and-demand conditions in the futures market are approaching the area of tail risk. Until yesterday, CTAs had maintained a wait-and-see posture at the 62,000 level, but once the Nikkei Average dropped to around or below 57,800, which we estimate is the average cost of their net long positions for October 2025 and beyond, CTAs simultaneously shifted to selling focused on triggering stop-loss orders. According to our e