The end of the zero interest rate policy (ZIRP) era has reshaped financial markets—and for CTAs, it’s been a long-awaited reset. After a decade of distorted signals, compressed volatility, and policy-driven markets, the return of rate dispersion, inflation risk, and macro uncertainty has reawakened many of the classic momentum strategies that define CTA performance.

Contrary to the narrative that systematic trend-following would lose relevance in structurally low-rate environments, 2022–2024 told a different story. CTAs not only held their ground—they outperformed, particularly during episodes of bond market chaos, commodity spikes, and central bank divergence. As we move deeper into the post-ZIRP world, momentum is back—not as a gimmick, but as a durable source of uncorrelated alpha.

Why the Macro Backdrop Now Favors CTAs

In the ZIRP era, central banks muted volatility and compressed trends, making it difficult for CTAs to extract persistent signals. But with inflation re-entering the conversation and monetary policy no longer synchronized, directional moves have returned with force. Yield curves are moving independently across geographies. FX markets are responding to real differentials. Commodities are reflecting both supply-side disruption and geopolitics.

This new macro regime is fertile ground for trend strategies. CTAs thrive when markets exhibit sustained directionality, and in today’s fragmented global environment, opportunities exist across every asset class—rates, FX, equities, and commodities. With lower correlation across sectors, diversified models have more room to breathe, allowing true cross-asset trend-following to shine.

Momentum Models Are Evolving—But the Core Still Works

Today’s momentum strategies are far more sophisticated than the simple moving average crossovers of the past. Leading CTAs incorporate volatility-adjusted signals, breakout models, price persistence measures, and regime-switching frameworks. They use machine learning to adapt to changing trend speeds and incorporate macro overlays to avoid noise.

But at their core, these systems are still powered by the simple logic that markets overreact, trends persist, and crowd behavior is predictable. The return of volatility and dispersion only makes this logic more powerful. Markets are moving more freely, which means momentum strategies can reassert their natural advantage—catching trends, cutting losses, and compounding gains in asymmetric ways.

Fixed Income Is a New Source of Trend Alpha

One of the most significant shifts in recent CTA performance has come from the fixed income space. After years of range-bound rates and central bank dominance, sovereign bond markets are once again trending independently. U.S. Treasuries, European bunds, and Japanese JGBs are no longer anchored by forward guidance—they’re reacting to inflation surprises, fiscal risk, and policy recalibration.

This has created a new alpha engine for CTAs, especially those with multi-duration trend models and exposure across global bond curves. Long/short rates strategies are benefiting from directional moves, steepeners and flatteners, and divergence across geographies.

Execution and Risk Management Are the Differentiators

In the post-ZIRP world, it’s not just about having the right model—it’s about implementation. Slippage, execution quality, and real-time risk management now play a critical role in determining whether a CTA captures the full value of a trend. Leading firms are investing heavily in low-latency infrastructure, smart order routing, and intra-day signal updating.

Moreover, dynamic volatility targeting has become a critical tool. With markets moving faster, strategies need to adjust position sizing in real time to manage risk without whipsawing the portfolio. This blend of robust signal generation and institutional-grade execution is what separates the durable performers from the pack.

CTAs Are No Longer on the Defensive

After years of underperformance narratives, CTAs have returned to the spotlight. Institutional allocators are once again viewing them as essential components of diversified portfolios—not just for crisis alpha, but as consistent return generators in their own right. The macro landscape has shifted, and CTAs are positioned to thrive in it.

Momentum isn’t dead—it was dormant. And in this new post-ZIRP world, it’s wide awake.