Surprise! Last week’s selloff in US equities, the worst since March, was in no small part attributable to the not-at-all-virtuous feedback loop between hedging flows (as spot careened through the gamma flip line and VIX futures rose through short strikes) and systematic de-leveraging.

Obviously, there was a fundamental catalyst: The new FOMC dot plot and the “higher for longer” message it conveyed. But the acceleration lower for equities (as distinct from the impetus for the move) came courtesy of dynamics which should by now be familiar to market participants.

“The rapid spot descent [was] a function of the feedback loop from index options dealer positioning pushed into short gamma territory, feeding into a monster negative delta change on the week, a similar dynamic for VIX options dealers, and all clustering around CTA signal flip levels across a number of US equities positions, which triggered mechanical selling of longs, then tilting into outright short positions,” Nomura’s Charlie McElligott wrote Monday.

The figures above tell the story: $35 billion in selling across CTAs and vol control, the enormous weight of options hedging flows and, separately, the largest one-week outflow of the year from US equity-focused ETFs and mutual funds, nearly $18 billion as documented here late last week.

McElligott described “a substantial ‘positioning shed’ across equities” which pulled in virtually every investor type. (The asset manager outlier is “through 09/19.” The data doesn’t capture the FOMC meeting or anything after it.)

The short postmortem shown above confirms that “index options negative delta and the systematic positioning puke were the flows into the downtrade,” Charlie said, adding that the EPFR outflow (i.e., the outflow from equity funds) was likely indicative of tax-related selling.