Macro Regime Tracker Index:

When we were at the equity lows last night, I published this report explaining that the driver of the selling pressure was from a positioning unwind as opposed to a macro driver. Why does this matter? Because when you understand WHERE the selling pressure is coming from (in this case, the carry trade), you can know if you want to buy the dip or derisk before further downside.

We continue to be in a macro regime where credit is getting pumped into the system but there are going to be significantly more risks to manage into the end of the year. As I laid out in this video, we are seeing unprecedented factors converge to create extreme outcomes. In other words, melt up and melt downs are a higher probability with macro volatility instead of a slow, safe grind.

All of these factors are setting the stage for much bigger forces to begin coming into play. Below are all the systematic models and strategies mapping the major macro changes across asset classes. More on this tomorrow.

Main Developments In Macro

United States: Macro, Fed, and Policy

• FED GOVERNOR STEPHEN MIRAN SPEAKS IN YAHOO FINANCE INTERVIEW

• MIRAN: A LOT OF MY OUTLOOK HINGES ON MORE SHELTER DISINFLATION

• MIRAN: MARKET-BASED CORE PCE INFLATION IS MUCH CLOSER TO 2%

• MIRAN: POLICY SHOULDN’T MECHANICALLY RESPOND TO HIGHER STOCKS

• MIRAN: WOULD THINK IT’S STILL REASONABLE TO CONTINUE RATE CUTS

• MIRAN: KEEPING POLICY THAT RESTRICTIVE RUNS UNNECESSARY RISKS

• MIRAN: I THINK POLICY IS TOO RESTRICTIVE, TOO FAR ABOVE NEUTRAL

• MIRAN: WANT TO GET TO DESTINATION FOR RATES FASTER THAN OTHERS

• MIRAN: DATA SUGGEST RATES CAN BE A LITTLE LOWER THAN THEY ARE

• FED’S MIRAN: BETTER-THAN-EXPECTED ADP DATA WAS WELCOME SURPRISE

US Credit & Household Leverage

• US STUDENT-LOAN DEBT BECOMING DELINQUENT RISES TO RECORD 14.4%

• US CONSUMER DEBT IN DELINQUENCY RISES TO HIGHEST SINCE Q1 2020

• NEW YORK FED RELEASES QUARTERLY REPORT ON US HOUSEHOLD DEBT

US Fiscal, Treasury & Government

• US SETS QUARTERLY REFUNDING AT $125B, IN LINE WITH ESTIMATES

• US TO MAINTAIN JANUARY 10Y TIPS NEW ISSUE AUCTION AT $21B

• US SEES STEADY AUCTIONS FOR `AT LEAST NEXT SEVERAL QUARTERS’

• TREASURY PROJECTS STEADY NOMINAL AUCTION SIZES FOR NOV-JAN

Global Macro & Policy Context

• ECB’S STOURNARAS: MORE EASING CAN’T BE RULED OUT: MNI

• STOURNARAS: NOT JUMPING TO CONCLUSION THAT DEC. CUT NEEDED: MNI

• ECB’S NAGEL: MEDIUM-TERM INFLATION PRETTY CLOSE TO TARGET

• TSCHUDIN: SNB MONETARY POLICY IS EXPANSIONARY

• RBNZ’S HAWKESBY: LABOR MARKET HAS DETERIORATED AS EXPECTED

• RBNZ’S HAWKESBY: EXPECT EMPLOYMENT TO IMPROVE FROM HERE

• RBNZ’S HAWKESBY: NOT YET SEEING RATE CUTS LIFT ASSET PRICES

• RBNZ GOVERNOR CHRISTIAN HAWKESBY SPEAKS AT PARLIAMENT COMMITTEE

• SWEDEN’S RIKSBANK LEAVES POLICY RATE AT 1.75%; EST. 1.750%

China Trade & Tariffs

• CHINA TO LIFT ANTI-MONOPOLY DUTY OVER US COS. EFFECTIVE SEPT. 4

• CHINA TO LIFT SOME EXPORT CONTROL MEASURES ON US FIRMS

• CHINA TO ADJUST UNRELIABLE ENTITIES LIST AFTER US TALKS

• CHINA SAYS TO RETAIN 10% TARIFFS ON US GOODS

• CHINA TO SUSPEND 24% TARIFFS ON US GOODS FOR 1 YEAR

• CHINA TO SUSPEND TARIFFS ON SOME US GOODS FROM NOV 10

🏛️ US Political / Fiscal Dynamics

• SCHUMER, JEFFRIES DEMAND BIPARTISAN MEETING WITH TRUMP

• SCHUMER, JEFFRIES SEEK MEETING TO END GOVERNMENT SHUTDOWN

• TRUMP: SHUTDOWN BIG FACTOR IN ELECTIONS LAST NIGHT

• TRUMP PRAISES CRYPTO, SAYS IT TAKES PRESSURE OFF THE DOLLAR

• TRUMP: XI IS A FRIEND OF MINE, AS MUCH AS HE CAN BE

• US GOVERNMENT SHUTDOWN SETS RECORD FOR LONGEST EVER AT 36 DAYS

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251106

554KB ∙ PDF file

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Tearsheet Crypto 20251106

4.65MB ∙ PDF file

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Tearsheet Fi 20251106

16.5MB ∙ PDF file

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Tearsheet Fx 20251106

17.3MB ∙ PDF file

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Tearsheet Eq 20251106

20.9MB ∙ PDF file

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Tearsheet Comd 20251106

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data,

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

Download

Download

Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Fixed Income

3.04MB ∙ PDF file

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Cfr Model Output Currency

4.57MB ∙ PDF file

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Cfr Model Output Equities

5.31MB ∙ PDF file

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Cfr Model Output Commodities

5.92MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251106

4.2MB ∙ PDF file

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Key Points To Set The Context:

US Market Wrap: “Good Data, Higher Yields, Still Green”; S&P +0.36%, Comm/Disc Lead, Tech Small Drag

Dip-buyers stayed active even as ISM Services re-accelerated and 10s pushed ~7 bp higher to ~4.16%. The tape read the print as “growth > inflation scare,” with cyclicals and communications leadership offsetting a small Tech dip. Breadth improved, and weakness clustered in defensives and rate-sensitives.

Sector Attribution

Weighted contribution (Index +0.36 pp)
Leaders: Comm Svcs +0.16 pp, Cons Disc +0.09 pp, Industrials +0.05 pp, Health Care +0.06 pp, Financials +0.03 pp
Laggards/flat: Info Tech −0.02 pp, Staples −0.02 pp, RE/Utils ≈ 0, Energy/Materials ≈ 0

Unweighted performance (breadth)
Leaders: Comm Svcs +1.59%, Cons Disc +0.86%, Industrials +0.66%, Health Care +0.64%
Mid: Financials/Materials +0.24%, Energy +0.10%
Laggards: Info Tech −0.05%, Real Estate −0.24%, Staples −0.34%, Utilities −0.02%

Read: Participation broadened beyond mega-cap Tech; cyclicals and services-heavy groups did the lifting while duration-sensitives lagged—textbook response to firmer growth + higher yields.

Macro Overlay

• Activity/Prices: ISM Services 52.4 (8-month high) with Prices Paid 70 (3-yr high). Demand firm; inflation signal warm but not regime-changing.

• Rates/Curve: 10y ~4.16% in a modest bear-steepener; rate vol contained, letting equities digest higher yields.

• FX/Crypto: USD little changed; BTC +3.6% / ETH +7.3%, risk tone constructive.

• Earnings/AI: Semis leadership cooled at the margin vs yesterday’s pop; Tech small net drag while Comm Svcs and Disc carried beta.

• Positioning/Flows: Still a buy-the-dip backdrop; systematic re-add + seasonal buybacks aid downside containment.

The Read-Through

1. Growth > rates headwind: Higher yields didn’t derail risk, cyclicals outperformed; defensives and RE/Utils lagged.

2. Leadership broadening: Comm Svcs/Disc/Industrials/HC did the heavy lifting, healthier than a one-factor Tech tape.

3. Valuation still the governor: With Tech a small drag, the index can still climb if breadth persists, but lofty multiples keep pullback risk alive on any earnings/guidance wobble.

What I’m Watching

• Reals & MOVE: A reals-led rates pop with vol would hit long-duration growth and RE/Utils harder.

• Breadth follow-through: Can Industrials/Financials maintain leadership if Tech chops sideways?

• Services-price persistence: Another hot print would test the “cuts-ahead” narrative even if growth is firm.

• Consumer pulse: Disc vs Staples spread—today’s risk-on tilt wants resilient spending.

Bottom Line

A classic “good data, higher yields, still green” session: cyclicals and services leadership offset a mild Tech drag, leaving the S&P up +0.36% with better breadth. As long as rate vol stays tame and earnings breadth holds, dips remain buyable, though the mix (hot ISM prices, firm reals) argues for cyclical over duration on the margin and a wary eye on defensives and RE/Utilities

US IG Credit Wrap: Tighter on “Good Growth” Day; Carry Still the Anchor (IG OAS ≈52.8 bp)

Spreads tightened alongside a broad equity rebound and hotter ISM services print. The tone was risk-positive, not euphoric, primary remains open, rates vol contained, and the market read the data as “growth confirmation” rather than a policy scare. Net: carry intact, beta modestly bid.

Where We Sit (from today’s chart)

• IG OAS: ~52.8 bp (last 52.751)

• 5-yr average: ~61.9 bp → ~9 bp inside

• Cycle tights: ~46.1 bp → ~6–7 bp above

• 2022 wides: ~111.2 bp → ~58 bp tighter
  We’re back toward the lower half of the 50–55 bp equilibrium band, flirting with the low-50s without threatening cycle tights.

Macro & Tape Overlay

• Data: ISM Services 52.4 (8-month high); Prices Paid 70 (3-year high). Demand re-accelerates; inflation signal warm but not disruptive.

• Rates: 10y +7 bp to ~4.16%; curve bear-steepened modestly. MOVE muted → spread beta can live with small rate back-ups when vol is contained.

• Equities/Flows: >300 S&P advancers; Semis +3%, RTY +1.5%, a cleaner risk tone. Credit followed equities, not rates.

• FX/Crypto: USD steady; Bitcoin +3.6%, risk appetite constructive at the margin.

• Energy/Commodities: WTI −1.6% helps the disinflation narrative even as ISM prices run hot; benign for IG.

Mapping to IG Credit

• Fair-value band: 50–55 bp still feels like “carry equilibrium.” At ~52.8 we’re near the middle-low of that range.

• Path to the 40s: Needs a disinflation + softer-labor mix that drags reals lower and compresses rate vol further, plus steady primary.

• What pushes us back to 55–58: A rates-vol pop (reals-led), a broader equity drawdown that dents new-issue demand, or unexpectedly hawkish Fed rhetoric.

Primary & Positioning

• New issue: books well-covered, concessions lean; refinancing windows open.

• Positioning: Not stretched, room for incremental beta add if breadth persists. Financials/Industrial paper benefitting from improved cyclical tone.

Risk Markers to Watch

• MOVE vs. real yields (reals-led bear move matters more than nominal drift).

• Primary health: order multiples/concessions/after-market.

• Earnings breadth & equity leadership: if gains narrow back to mega-cap only, beta tightens less easily.

• ISM prices follow-through: one print is fine; persistence would pressure reals.

The Read-Through

1. “Good growth, tame vol” is the sweet spot, today fit that script, so spreads tightened.

2. Carry remains king inside 50–55; buyers showed up quickly after yesterday’s wobble.

3. Asymmetric risks sit above current levels (a vol shock widens faster than a drift to the 40s).

IG reconfirmed its resilience, tightening with higher yields tells you the market sees growth without stress. Until rates vol bites or primary balks, carry first, volatility later remains the trade.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.3MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

Last night’s comment on carry trade risk:

Tonight’s equity view as the Nikkei is down in the Asia session:

I will be sending out a positioning report to paid subscribers tonight with my views on the current set up we are seeing. You can see the recent videos I recorded here on the big picture macro regime:

As always, all the systematic strategies and models are laid out below. Thanks

Main Developments In Macro

US Macro & Policy

• CHICAGO FED PRESIDENT GOOLSBEE SAYS IN INTERVIEW WITH SEMAFOR

• HOUSE SPEAKER MIKE JOHNSON TALKS TO REPORTERS ABOUT SHUTDOWN

• JOHNSON: IF THE SENATE PASSES SOMETHING, HOUSE WILL COME BACK

• SENATE MAJORITY LEADER JOHN THUNE SPEAKS TO REPORTERS

• THUNE: HAVING CONVERSATION ON NEW STOPGAP FUNDING DEADLINE

• CHAVEZ-DEREMER: SHUTDOWN IS IMPACTING THE LABOR FORCE

• CHAVEZ-DEREMER: UNABLE TO RELEASE OTHER DATA POINTS UNTIL THEN

• CHAVEZ-DEREMER: WILL RELEASE BLS REPORTS WHEN GOVERNMENT OPENS

• US LABOR SECRETARY LORI CHAVEZ-DEREMER SPEAKS TO REPORTERS

• TRUMP: GOP WILL GET EVERYTHING APPROVED WITHOUT THE FILIBUSTER

• TRUMP: SNAP BENEFITS WILL BE GIVEN ONCE GOVERNMENT REOPENS

Central Banks & Monetary Policy

• BULLOCK: CAN RESPOND IN EITHER DIRECTION ON POLICY IF NEEDED

• BULLOCK: THINK PRETTY CLOSE TO NEUTRAL, DON’T HAVE A BIAS

• BULLOCK: DIDN’T CONSIDER RATE HIKE TODAY

• BULLOCK: POSSIBLE NO MORE RATE CUTS, OR MIGHT BE SOME MORE

• BULLOCK: RBA BOARD DIDN’T CONSIDER CUTTING RATES AT MEETING

• BULLOCK: JOB MKT STILL A LITTLE BIT TIGHT VS FULL EMPLOYMENT

• BULLOCK: RBA BOARD IS ALERT TO DOWNSIDE RISKS FROM EMPLOYMENT

• RESERVE BANK OF AUSTRALIA GOVERNOR BULLOCK SPEAKS TO REPORTERS

• BOWMAN: BASEL IS A PRIORITY BUT CAN’T LOOK AT CAPITAL IN VACUUM

• SNB’S SCHLEGEL: INFLATION SHOULD RISE SLIGHTLY IN NEXT QUARTERS

• SNB‘S TSCHUDIN: FX INTERVENTIONS ARE POSSIBLE

• SNB’S TSCHUDIN: INFLATION FORECAST IS ‘WHERE WE WANT IT’

• SNB‘S TSCHUDIN: CURRENTLY NO NEED FOR NEGATIVE RATES

• ECB’S PATSALIDES: EUROPEAN ECONOMY IS SHOWING RESILIENCE

• REHN: CRUCIAL TO MAINTAIN FULL FLEXIBILITY IN DECISION-MAKING

• RBNZ: FINANCIAL STABILITY RISKS REMAIN HEIGHTENED

• RBNZ: FIRMS EXPOSED TO DISCRETIONARY SPENDING ARE CHALLENGED

• RBNZ: FRAGMENTATION OF GLOBAL TRADE AND FINANCE POSES RISK

• RBNZ: BANKS REMAIN WELL PLACED TO MANAGE CURRENT UNCERTAINTY

• RBNZ PUBLISHES SEMI-ANNUAL FINANCIAL STABILITY REPORT

• PBOC RESUMED GOVERNMENT BOND TRADING IN MARKET IN OCT.

Fiscal & Political Developments (Global Relevance)

• CANADA PROJECTS C$78.3B DEFICIT THIS YEAR; PREV EST. C$42.2B

• CANADA SAID TO PREPARE C$50B INFRASTRUCTURE FUND IN BUDGET

• REEVES: SEEKING FISCAL HEADROOM TO WITHSTAND GLOBAL TURBULENCE

• REEVES: SEEK DECISIONS TO BUILD MORE RESILIENT PUBLIC FINANCES

• REEVES: FOCUS ON GETTING DEBT DOWN IS A PRIORITY OF BUGET

• REEVES: MY COMMITMENT TO UK FISCAL RULES IS `IRON-CLAD’

• REEVES: BUDGET DECISIONS WILL BE FOCUSED ON LOWERING INFLATION

• REEVES: CLEAR UK PRODUCTIVITY IS WEAKER THAN THOUGHT BEFORE

• REEVES DECLINES TO REITERATE ELECTION PROMISES ON TAX

• STARMER TELLS CABINET UK WON’T TAKE RISKS WITH MORE BORROWING

• FRANCE SEPT. BUDGET DEFICIT EUR155.40B

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251105

555KB ∙ PDF file

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Tearsheet Crypto 20251105

4.65MB ∙ PDF file

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Tearsheet Fi 20251105

16.5MB ∙ PDF file

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Tearsheet Fx 20251105

17.3MB ∙ PDF file

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Tearsheet Eq 20251105

20.9MB ∙ PDF file

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Tearsheet Comd 20251105

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data,

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

Download

Download

Fred Dashboard V2

8.34MB ∙ XLSX file

Download

Download

Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Fixed Income

3.04MB ∙ PDF file

Download

Download

Cfr Model Output Equities

5.31MB ∙ PDF file

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Cfr Model Output Currency

4.57MB ∙ PDF file

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Cfr Model Output Commodities

5.91MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251105

4.2MB ∙ PDF file

Download

Download

Key Points To Set The Context:

US Market Wrap: Early Pop, Late Fade; S&P −0.09%, Tech/Disc Drag, Financials/Health Care Cushions

A choppy session: a strong open gave way to a midday roll-over as mega-cap beta sagged and the dollar stayed firm. Today, felt like orderly de-risking rather than stress, banks and defensives did the heavy lifting while AI leaders cooled on valuation/guidance fatigue.

Sector Attribution

Weighted return contribution (Index −0.09 pp)
Drags: Info Tech −0.18 pp, Comm Svcs −0.03 pp, Cons Disc −0.07 pp, Industrials −0.01 pp
Offsets: Financials +0.11 pp, Health Care +0.05 pp (Energy/RE/Staples ≈ flat)

Unweighted performance (breadth)
Leaders: Financials +0.81%, Health Care +0.57%, Real Estate +0.15%, Energy +0.13%
Laggards: Cons Disc −0.65%, Info Tech −0.52%, Comm Svcs −0.32%, Utilities −0.14%, Industrials −0.13%, Staples −0.05%, Materials −0.01%

Intraday pattern: early surge, steady bleed into the close—classic “sell the strength” day with Tech/Disc fading and Financials/HC absorbing.

Macro Overlay

Policy/Rates: Long end steady-to-softer (10y ~4.09% on the day), consistent with “slower-not-faster” easing path; rate vol contained.
FX/Crypto: USD firm; crypto heavy, risk appetite thinner at the margin.
Earnings/AI: Guidance resets in AI hardware keep leadership fragile (post-print digestion; expectations still lofty).
Positioning/Flows: Street tone leans “healthy pullback/consolidation” after a powerful six-month run; CTAs skew to small net sellers near-term, which can amplify intraday fades.
Housing check: NAR shows first-time buyer median age at 40, affordability shock implies slower household formation churn, a modest headwind to rate-sensitive cyclicals even with mortgage rates off the highs.

The Read-Through

• Leadership fragility: When Tech pauses, the index wobbles; today’s dip was primarily a mega-cap story.

• No funding stress: Green Financials + firmer REITs argue this is rotation/de-risking, not a credit event.

• Narrow tape, negative skew: Rich multiples + concentrated leadership keep pullback risk elevated until breadth repairs.

What I’m Watching

• Fed speak / data void dynamics: Any hint that “skip-and-see” extends; watch reals and the front-end path.

• USD & reals: Strong dollar + higher real yields would keep pressure on long-duration growth.

• AI capex vs. monetization: Can guidance (AMD/SMCI et al.) sustain expectations without multiple compression?

• Breadth repair: Do Financials/HC/Energy leadership broaden into Industrials/Materials, or does weakness rotate back into small caps?

• Housing affordability: Turnover and pricing elasticity as a drag, or relief into Q4/Q1.

The setup remains Goldilocks-tilted but narrow. With policy gliding and rate vol subdued, the base case is range-bound churn. Until Tech’s grip loosens and breadth improves, the tape carries a tactical downside skew on any valuation/guidance wobble, though underlying liquidity and credit keep the medium-term bull case intact on dips.

Spreads Drift Wider but Still Calm; Carry Intact (IG OAS ≈53.8 bp)

US IG credit widened modestly alongside a risk-off equity tone and firm dollar, but the move was orderly. The Bloomberg US IG OAS prints ~53.8 bp (from ~52.1 bp yesterday), still inside the lower half of its 5-year range and far from stress. The message remains “carry first, volatility later” so long as rates vol stays contained and primary markets clear.

Where We Sit (from today’s chart)

• IG OAS: ~53.8 bp (last 53.834)

• 5-yr average: ~61.9 bp → ~8 bp inside

• Cycle tights: ~46.1 bp → ~7–8 bp above

• 2022 wides: ~111.2 bp → ~57 bp tighter

We’re near the top end of the 50–55 bp equilibrium band, but still comfortably tighter than the 5-yr mean and miles from the 2022 stress wides.

Macro & Tape Overlay

• Equities: CEOs’ “brace for pullback” chorus hit mega-cap beta; breadth soft. Credit yawned, typical for a valuation-led equity wobble without funding stress.

• Policy/Rates: 10y ~4.09%, path = slower-not-faster easing; that’s neutral-to-supportive for IG while rate vol is subdued.

• FX/Crypto: USD bid, crypto heavy → risk appetite thinner at the margin, but no spillover to spreads yet.

• Housing: NAR shows first-time buyer median age at 40 (affordability shock). Macro read-through is slower turnover, not an immediate IG negative given strong balance sheets and steady employment.

Mapping to IG Credit

• Fair-value band: 50–55 bp still looks like “carry equilibrium.” At ~53.8, we’re near the top of that range.

• Path to re-test the 40s: Needs either a clean disinflation + softer labor mix that pulls cuts forward or another leg lower in rate vol.

• What pushes us 55–60+: A sharper equity drawdown that dents primary demand, a disorderly USD spike, or hawkish surprises that re-price the front end higher and lift rate vol.

Risk Markers to Watch

• Primary market tone: order multiples/concessions, first place slippage shows up.

• Rates vol (MOVE) vs reals: a reals-led back-up with rising vol would matter more than small yield shifts.

• Breadth & credit beta: if narrow equity weakness broadens to cyclicals/credit proxies, expect OAS to test ~55–58.

Bottom Line

Today’s +~1.7 bp drift reflects equity valuation nerves, not funding stress. Carry remains king with IG anchored inside 50–55 bp; dips toward ~55–58 look buyable absent a material shift in the Fed path or a broad risk-off that challenges primary market clearing.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.3MB ∙ PDF file

Download

Download

Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

I spent time breaking down the macro watchlist I use, and you can download it for free here:

I also spent time explaining my views on the credit cycle today on this twitter spaces:

https://x.com/Globalflows/status/1983895466585821446

Finally, here is the most recent trade I opened:

As always, all the systematic models and strategies are updated below. Thanks

Main Developments In Macro

US Macro & Policy

• SOLOMON SEES NO THREAT TO DOLLAR AS WORLD’S RESERVE CURRENCY

• SOLOMON SAYS CHANCE OF A US RECESSION IN NEAR-TERM IS LOW

• SOLOMON SAYS PEOPLE ARE WORRIED ABOUT LEVEL OF US DEBT

• SOLOMON: WE SHOULD STRIVE FOR CENTRAL BANK INDEPENDENCE

• BESSENT: APPLAUD 25 BPS FED CUT, BUT DON’T LIKE LANGUAGE

• BESSENT: IMAGINE WE WOULD HAVE FED CHAIR CANDIDATE BY XMAS

• BLOOMBERG DOLLAR SPOT INDEX RISES 0.4% TO HIGHEST SINCE AUG. 1

• EIA SAYS US NATURAL-GAS STOCKPILES ROSE 74 BCF LAST WEEK

• META LOOKS TO RAISE AT LEAST $25 BILLION FROM BOND SALE

• FHFA’S PULTE POSTS ON X ABOUT FANNIE MAE LAYOFFS

• PULTE: FANNIE MAE EXECUTED LAYOFF OF OVER 62 PEOPLE TODAY

• MILLENNIUM RAISING $5 BLN TO TARGET PRIVATE-MARKET BETS

• THUNE EXPECTS SHUTDOWN TALKS TO GET ‘EASIER’ AFTER NEXT WEEK

US–China Relations / Global Trade

• XI: CHINA, US SHOULD NOT FALL INTO VICIOUS CYCLE OF RETALIATION

• XI SAYS CHINA, US SHOULD MAINTAIN COMMUNICATIONS

• XI: CHINA, US NEED TO REFINE, FOLLOW UP WORKS ASAP

• XI SAYS CHINA, US COULD EXPAND COOPERATION LIST: XINHUA

• CHINA TO WORK WITH THE US TO PROPERLY RESOLVE TIKTOK ISSUES

• CHINA: US EXTENDS SUSPENSION OF 24% RECIPROCAL TARIFF FOR 1-YR

• CHINA TO SUSPEND EXPORT CONTROL ANNOUNCED ON OCT 9 FOR 1 YEAR

• CHINA: US TO SUSPEND 50% ENTITY LIST EXPORT CONTROLS FOR A YEAR

• TRUMP: CHINA TO BEGIN PROCESS OF PURCHASING AMERCIAN ENERGY

• TRUMP: LARGE SCALE DEAL MAY TAKE PLACE ON O&G FROM ALASKA

• BESSENT SAYS CHINA TO BUY 12M METRIC TONS OF SOYBEANS THIS YEAR

• BESSENT: CHINA DEAL SIGNATURES POSSIBLY NEXT WEEK

• Trump–Xi Meeting Receives Skeptical Market Reviews: Macro Squawk

Europe – Inflation, Growth, and ECB Policy

• ECB PRESIDENT LAGARDE SPEAKS IN RAI1 INTERVIEW

• LAGARDE: ECB IS IN A GOOD PLACE

• LAGARDE: INDICATORS OF CORE INFLATION CONSISTENT WITH 2% GOAL

• LAGARDE: US TRADE DEAL, CEASE FIRE HAVE MITIGATED DOWNSIDE RISK

• LAGARDE: GLOBAL ENVIRONMENT IS LIKELY TO REMAIN A DRAG

• LAGARDE: DIVERGENCE OF EXTERNAL, INTERNAL DEMAND TO PERSIST

• ECB NOT PRE-COMMITTING TO PARTICULAR RATE PATH

• ECB DECISIONS TO BE BASED ON INFLATION OUTLOOK, RISKS AROUND IT

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251030

549KB ∙ PDF file

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Tearsheet Crypto 20251030

4.65MB ∙ PDF file

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Tearsheet Fi 20251030

16.4MB ∙ PDF file

Download

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Tearsheet Fx 20251030

17.4MB ∙ PDF file

Download

Download

Tearsheet Eq 20251030

20.9MB ∙ PDF file

Download

Download

Tearsheet Comd 20251030

35.7MB ∙ PDF file

Download

Download

Macro Regime Dashboard: Excel spreadsheet for economic data,

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

Download

Download

Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Fixed Income

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Cfr Model Output Equities

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Cfr Model Output Commodities

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Cfr Model Output Currency

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251030

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Key Points To Set The Context:

US Market Wrap: Mega-Cap Giveback, Breadth Soft; S&P −0.46%

A tech-led pullback and a firmer dollar knocked the index lower as the Fed’s tone nudged the market toward a slower easing path. AI-capex headlines (Meta) hit leadership, while defensives were mixed and rate-sensitives only partially cushioned the tape.

Sector Attribution

Weighted return contribution (Index −0.46 pp)

• Drags: Info Tech −0.33 pp, Comm Svcs −0.10 pp, Cons Disc −0.09 pp, Energy −0.02 pp

• Offsets: Financials +0.02 pp, Real Estate +0.01 pp, Staples +0.01 pp

• Others ≈ flat to −0.01 pp (Health Care, Industrials, Materials, Utilities)

Unweighted performance (breadth)

• Laggards: Comm Svcs −1.02%, Cons Disc −0.92%, Info Tech −0.91%, Materials −0.31%, Energy −0.59%, Utilities −0.48%, Industrials −0.07%

• Leaders: Real Estate +0.56%, Financials +0.19%, Staples +0.13%, Health Care −0.03%

The index decline was overwhelmingly a mega-cap Tech/Comm/Discretionary story. Breadth was negative, but REITs/Staples/Financials posted modest gains, consistent with stable rates and a mild quality bid, too small to offset Tech’s drag.

Macro Overlay

• Policy/Rates: Powell’s messaging trimmed near-term cut odds; 10y ~4.09%, 2y ~3.61%. The guidance implies slower, not smaller, easing, supportive for credit, neutral-to-headwind for long-duration equities.

• FX/Commodities: USD at a 3-month high; WTI ~$60 (soft), helping keep inflation anxiety muted.

• Earnings/AI: Capex escalation across Big Tech is testing risk appetite near stretched valuations; flow into AI remains thematic, but leadership concentration raises fragility.

The Read-Through

1. Leadership risk resurfaced: When Tech stumbles, the index follows, today’s −0.46% came with −0.33 pp from Info Tech alone and further drag from Comm/Disc.

2. No stress signal from cyclicals/credit: REITs and Financials green on the day and IG spreads steady suggest liquidity remains ample; this is rotation/de-risking, not a funding event.

3. Macro still Goldilocks-tilted, but narrower: Growth resilient, inflation contained, liquidity OK, yet USD strength + tech capex angst compress participation.

What I’m Watching

• Fed speak: Any step toward a December “skip”.

• Megacap guidance durability: Cloud/AI monetization vs capex burn, does margin math improve?

• Breadth repair: Can Financials/Staples/REITs leadership broaden to Industrials/Materials, or does weakness rotate back into small caps?

Final Word

The tape is pausing, not breaking. With policy gliding toward slow-motion normalization and rate vol contained, the path of least resistance is range-bound with factor churn. Until breadth repairs, the index remains tactically vulnerable to additional mega-cap headlines, but systemic signals (rates, credit, oil) still point to a soft-landing baseline.

Spreads Hold the Line; Carry Still Dominates (IG OAS ≈52.1 bp)

US IG credit stayed calm despite a wobble in mega-cap tech and a firmer dollar. The Bloomberg US IG OAS prints ~52.1 bp, little changed, and remains in the lower quartile of its five-year range. The tape continues to say “carry first, volatility later”: funding is ample, defaults contained, and macro uncertainty is being absorbed without spread stress.

Where We Sit (from today’s chart)

• IG OAS: ~52.1 bp (last 52.07)

• 5-yr average: ~61.9 bp → ~10 bp inside

• Cycle tights: ~46.1 bp → ~6 bp above

• 2022 wides: ~111.2 bp → ~59 bp tighter

Spreads remain comfortably inside the five-year mean and still within touching distance of the cycle tights. That positioning is consistent with normalized liquidity, compression in idiosyncratic risk premia, and a market willing to clip carry while waiting out policy clarity.

Macro & Tape Overlay

• Fed/Policy: The Fed’s tone trimmed near-term cut odds and nudged the dollar higher, but the guidance didn’t introduce a credit-negative shock. Slower, not smaller, easing remains the message, which IG can live with.

• Equities: A −1% S&P day led by AI capex angst (Meta) hit breadth but not credit; high-quality balance sheets and robust primary reception (jumbo prints clearing) underpin IG resilience.

• Rates/FX: 10y UST ~4.09%, 2y ~3.61%, USD at a 3-month high, mildly restrictive but stable; spread beta to these moves remains low as long as vol stays contained.

• Commodities: WTI ~$60 keeps inflation anxiety muted and cushions Energy IG; gold firmer is more a rates/FX tell than a credit one.

Mapping to IG Credit

• Fair-value band: 50–55 bp remains the “carry equilibrium.”

• Path to the 40s: Requires either softer labor + steady disinflation (pulling the first ’26 cuts forward) or another leg down in rate vol.

• What widens us: A hawkish “skip” signal into December, a disorderly USD spike, or a sharp oil reversal >$70 that jars inflation expectations.

Risk Markers to Watch

1. Fed speak & QT hints: A cut without balance-sheet clarity could nudge OAS toward 55–58; explicit QT-endgame talk would likely richen spreads.

2. Equity breadth: Persistent mega-cap narrowness is fine until it isn’t, credit will care only if it morphs into broad risk-off or funding stress.

3. Primary market tone: Keep an eye on order multiples and concessions; any slippage there is the earliest, cleanest tell.

Credit’s calm persists. IG OAS ~52 bp says the market still believes in a slow-motion soft landing with plentiful liquidity. Expect sideways-to-grind-tighter price action inside 50–55 bp, with dips toward ~55–58 bp likely to be bought unless the Fed meaningfully re-prices the front end or equities’ pullback turns systemic. Carry remains king.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.2MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

The macro regime continues to show strength as equities melt up. This is the theme I have consistently laid out since April. The recent video I did on the credit cycle explained that the Fed is cutting rates into accelerating growth.

As the Fed cuts rates into grwoth, we are seeing the Mag7 names get A TON of capital as market breadth is fairly neutral. In simple terms, the rally in the S&P500 is being driven by Mag7 while everything else just sits there. The macro clearing event tomorrow could cause some short term selling pressure, but this would be another buying opportunity in my view.

As always, all the systematic models and strategies are laid out below. My views on rates are laid out here as we move into tomorrow. Thanks.

Main Developments In Macro

US Policy, Government, and Fiscal

• HOUSE SPEAKER MIKE JOHNSON TALKS TO REPORTERS

• JOHNSON: I DON’T SEE A PATH FOR TRUMP THIRD TERM

• JOHNSON SUGGESTS NO WAY TO AVOID FOOD STAMPS CLIFF ON NOV. 1

• US VICE PRESIDENT JD VANCE SPEAKS TO REPORTERS AT THE CAPITOL

• VANCE: TRYING TO MAKE SURE CRITICAL FOOD BENEFITS GET OUT

• VANCE: WE CAN’T KEEP PAYING ALL FEDERAL WORKERS, FUNDS LIMITED

• VANCE: THINK PEACE IN MIDEAST WILL HOLD DESPITE SKIRMISHES

• THUNE: TRUMP WILLING TO MEET DEMS NEXT WEEK IF SHUTDOWN ENDS

• JEFFRIES SAYS DEMOCRATS REMAIN FIRM IN POSITION ON STOPGAP BILL

• FHFA’S PULTE: NEWS INCOMING SHORTLY ON FANNIE MAE

• DOZENS OF STATES SUE TRUMP ADMIN OVER FOOD STAMP CUTS: NYT

Geopolitical & Global Risk

• HAMAS CALLS ON MEDIATORS TO PRESSURE ISRAEL TO STOP VIOLATIONS

• HAMAS REITERATES COMMITMENT TO GAZA CEASEFIRE AGREEMENT

• HAMAS SAYS IT HAS NOTHING TO DO WITH RAFAH SHOOTING

• NETANYAHU ORDERS IDF TO CARRY OUT ‘POWERFUL’ GAZA STRIKES

• KATZ: HAMAS TO PAY HEAVY PRICE FOR ATTACKING IDF SOLDIERS

• RUSSIAN, SYRIAN DEFENSE MINISTERS DISCUSS COOPERATION

• VENEZUELA DECLARES TRINIDAD’S PRIME MINISTER PERSONA NON GRATA

• MEXICO’S SHEINBAUM: US BOATS ATTACK WAS IN INTERNATIONAL WATERS

• SHEINBAUM: MEXICO AGAINST US BOAT ATTACK IN INTERNATIONAL WATER

• SHEINBAUM: MEXICAN NAVY HELPED RESCUE SURVIVOR AFTER US ATTACK

US–China / Tech–Industrial Policy Interface

• NVIDIA CEO SAYS US STILL AHEAD OF CHINA IN AI

• NVIDIA CEO SAYS POSSIBLE THAT US COULD FALL BEHIND CHINA IN AI

• NVIDIA HASN’T SOUGHT LICENSE TO SHIP BLACKWELL TO CHINA: HUANG

• HUANG SAYS UNSURE ABOUT STATUS OF LICENSES FOR SAUDI ARABIA

• HUANG SAYS HE ASSUMES CHINA MARKET TO REMAIN AT ZERO FOR NVIDIA

• HUANG SAYS HE’S CONFIDENT TRUMP WILL REACH GOOD DEAL W/ CHINA

• HUANG: US NEEDS A LOT MORE ENERGY TO SUSTAIN INDUSTRY GROWTH

• HUANG SAYS `I DON’T BELIEVE WE’RE IN AN AI BUBBLE’

• US ENERGY DEPARTMENT RELEASES STATEMENT ON SUPERCOMPUTERS

• US SELECTS HPE, NVIDIA AS PARTNERS FOR 2 NEW SUPERCOMPUTERS

• NVIDIA TO HELP BUILD SEVEN SUPERCOMPUTERS WITH US ENERGY DEPT

• SUPERMICRO, NVIDIA EXPAND GOVERNMENT SOLUTIONS PARTNERSHIP

• SUPERMICRO EXPANDS COLLABORATION WITH NVIDIA

• NVIDIA, NOKIA IN NEW PARTNERSHIP

• NVIDIA TO MAKE $1.0B EQUITY INVESTMENT IN NOKIA

• Nvidia, Nokia: T-Mobile U.S. 6G Trials Expected to Start in 2026

• Nvidia, Nokia: T-Mobile U.S. Working to Integrate AI-RAN Technologies Into 6G Development Program

• NVIDIA CEO SAYS BLACKWELL IN ‘FULL PRODUCTION’ IN ARIZONA

• Nvidia CEO Huang at GTC: Nvidia Partners with Uber to Connect ‘Robo-Taxi Ready’ Computing Platform

• Nvidia: Palantir Integrating Nvidia Accelerated Computing Into Ontology Framework

• Nvidia: Lowe’s Pioneering Operational AI for Supply-Chain Logistics With Palantir, Nvidia

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Crypto 20251028

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Tearsheet Fi 20251028

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Tearsheet Fx 20251028

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Tearsheet Eq 20251028

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Tearsheet Comd 20251028

35.7MB ∙ PDF file

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Tearsheet Stockbond 20251028

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Macro Regime Dashboard: Excel spreadsheet for economic data,

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Currency

4.58MB ∙ PDF file

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Cfr Model Output Fixed Income

3.03MB ∙ PDF file

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Cfr Model Output Equities

5.31MB ∙ PDF file

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Cfr Model Output Commodities

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251028

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Key Points To Set The Context:

US Market Wrap: Tech Offsets Weak Breadth Ahead of Fed; Index Flat (S&P −0.02%)

Markets traded sideways into Wednesday’s Fed decision and a critical stretch of megacap tech earnings. The S&P 500 ended marginally lower (−0.02%), masking a sharp dispersion beneath the surface: Tech strength kept the tape afloat, while defensives and interest-sensitive sectors extended declines. Liquidity stayed ample and rates were contained, but breadth deteriorated again, nearly 400 stocks fell on the day.

Sector Attribution

Weighted Return Contribution (Index −0.02%)
Leaders: Info Tech (+0.23%), Cons Discretionary (+0.05%), Materials (+0.01%)
Drags: Financials (−0.09%), Health Care (−0.05%), Industrials (−0.06%), Real Estate (−0.03%), Comm Services (−0.04%), Utilities (−0.04%), Staples (−0.02%), Energy (−0.02%)

Unweighted Performance (Breadth)
Leaders: Info Tech (+0.65%), Materials (+0.63%), Cons Discretionary (+0.47%)
Laggards: Utilities (−1.53%), Real Estate (−1.39%), Industrials (−0.80%), Energy (−0.68%), Financials (−0.68%), Health Care (−0.61%), Staples (−0.46%), Comm Services (−0.41%)

The index stayed near record highs thanks entirely to Tech’s +0.23 pp contribution, masking broad underperformance elsewhere. Weakness clustered in rate-sensitive groups (Utilities, REITs, Financials) as investors trimmed duration exposure ahead of the FOMC. Cyclicals like Materials and Discretionary held up modestly, consistent with resilient growth expectations.

Macro Overlay

Fed and Policy Context
The market is marking time before Wednesday’s expected quarter-point rate cut. Futures imply high confidence in the move but little clarity on the guidance, most expect Powell to keep optionality open on ending quantitative tightening. A calm front end and contained term premium continue to support valuations, but the weaker sector breadth shows some unease about follow-through beyond Tech.

AI & Earnings Focus
Five megacaps; MSFT, GOOGL, META, AMZN, AAPL all report within 48 hours. Nvidia’s +5% gain and suppliers’ blowout prints (SK Hynix +4%, Advantest +20%) reinforced the “AI-supercycle” theme, while expectations remain elevated: the Magnificent 7 are projected to post +14% profit growth versus +8% for the broader S&P. The test now is whether guidance sustains that gap.

Macro Backdrop
Consumer confidence fell for a third month (Conference Board 94.6), underscoring a softer household outlook even as spending stays firm. Oil held near $60 and gold bounced modestly, while the USD drifted lower for a third session. The 10-yr yield was steady at 3.98%. Trump’s Asia trip, featuring talk of tariff relief and a prospective US-China tech-cooperation deal, added a mild geopolitical tailwind.

The Read-Through

1. Narrow leadership: The rally’s dependency on Tech is deepening, breadth deterioration despite record-high prints signals fragility beneath the index.
2. Rates pause helps valuation, not participation: Stable yields are supporting multiples, but rate-sensitive sectors remain sellers’ territory.
3. Growth narrative intact: Cyclicals’ relative resilience and commodity stability suggest no sharp downgrade to the macro growth view yet.

What I’m Watching

• FOMC tone: Whether Powell signals a pause in QT or a dovish bias beyond this cut.

• Megacap guidance: Cloud, AI-infrastructure, and capex commentary, do they validate current leadership?

• Breadth check: Does participation rebound if the Fed confirms a soft-landing stance?

A flat index that hides a hollow advance, Tech’s strength offset broad sector weakness. Markets are holding steady into the dual catalysts of Fed guidance and Big Tech earnings. The next move hinges on whether policy reassurance and profit momentum can reignite breadth or whether leadership concentration tightens further.

US IG Credit Wrap: Fed in Focus, Spreads Steady; Carry Still the Core Story (IG OAS ≈50.7 bp)

Investment-grade credit remains locked in a remarkably tight range, with the Bloomberg US IG OAS holding near 50.7 bp, barely changed on the week. The stability underscores just how anchored credit risk has become in a market balancing strong liquidity, contained volatility, and an improving macro narrative into the Fed’s expected quarter-point rate cut.

Where We Sit (from today’s chart)

• IG OAS: ~50.7 bp (last 50.74)

• 5-yr avg: ~61.9 bp → ~11 bp inside

• Cycle tights: ~46.1 bp → ~4–5 bp above

• 2022 wides: ~111.2 bp → ~60 bp tighter

The OAS sits comfortably in its lower quartile of the 5-year range, reflecting normalized liquidity and well-anchored risk appetite. Despite cross-asset rotation under the surface, rate-sensitives soft, Tech still dominant, credit spreads show zero sign of strain. Carry remains the defining theme: slow grind, low vol, and asymmetric upside to holding risk.

Macro & Tape Overlay

Fed and Macro:
Markets are coiled ahead of Wednesday’s FOMC, where a 25 bp rate cut is fully priced. The debate has shifted to guidance, whether Powell hints at an end to quantitative tightening. A dovish-leaning communication would reinforce the current “liquidity cushion” narrative, key to maintaining tight credit spreads.

Equities:
The S&P 500 closed −0.02%, masking weak breadth as rate-sensitives (Utilities, REITs, Financials) lagged while Tech stayed strong. The leadership concentration in megacaps hasn’t disturbed credit yet; balance-sheet quality in those names keeps IG confidence high.

Rates/FX:
The 10-yr UST yield held near 3.98%, with the front end steady (~3.50%), preserving the curve’s shallow slope. Dollar drifted modestly lower for a third session, and gold regained footing after a three-day pullback.

Commodities:
WTI around $60 after a three-day slide; stable energy prices remove inflation anxiety and support the Fed’s latitude to cut. Oil’s round-trip from mid-60s to low-60s helped Energy credit remain resilient, no sectoral spread contagion.

Global Tone:
Asia firmed on AI optimism ahead of megacap earnings (MSFT, GOOGL, META, AMZN, AAPL). Trump’s Asia tour, including tariff-reduction hints and US-China tech cooperation headlines, further underpinned the global risk tone.

Mapping to IG Credit

Fair value remains 50–55 bp, representing “carry equilibrium.” Absent a rates shock or policy misstep, the 40s remain a plausible target range by year-end.

Risk Markers to Watch

• Fed tone: A cut without QT clarity could nudge spreads wider, but liquidity remains abundant.

• Oil path: Sustained <$60 could tighten Energy spreads; a sharp reversal above $70 might test cyclicals.

• Equity breadth: Continued narrow leadership without stress in credit = late-cycle melt-up, not fragility.

• Systemic tell: Only a decisive break above 60 bp OAS would flag a regime shift; still a low-probability tail.

Bottom Line

Credit’s calm persists, spreads are steady, carry is king, and liquidity is ample.
Even as equities wobble under sector rotation and macro data show mild consumer fatigue, US IG remains the anchor of cross-asset stability. With the Fed expected to reinforce a patient, liquidity-friendly stance, expect OAS to hover near 50 bp and grind tighter on dips, a quiet affirmation that the credit market still believes in the soft-landing narrative.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.2MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

I have laid out the macro views for the cycle and the short end in the following reports:

As always, all the systematic models and strategies are laid out below. Thanks

Main Developments In Macro

Global Macro & Trade Developments

• KOREA SAYS IT MAY BE HARD TO REACH DEAL WITH US AT APEC: YONHAP

• BESSENT: OVERALL FRAMEWORK IS READY ON SOUTH KOREA TRADE

• BESSENT: VERY CLOSE ON SOUTH KOREA, NOT QUITE READY BY WEDS.

• LULA: WILL HAVE DEFINITIVE SOLUTION WITH US ‘WITHIN A FEW DAYS’

• ALCKMIN: PRIVATE SECTOR PARTICIPATION IN US-BRAZIL TALKS IS KEY

• ALCKMIN: MORE THAN 1/3 OF BRAZIL EXPORTS SUBJECT TO 50% TARIFFS

• BRAZIL’S ALCKMIN: US GOVERNMENT IS YET TO MAKE SPECIFIC DEMANDS

• SHEINBAUM: CLOSE TO REACHING US DEAL ON NON-TARIFF BARRIERS

• SHEINBAUM SAYS US EXTENDING TRADE DEADLINE FOR SEVERAL WEEKS

• SHEINBAUM SAYS SHE SPOKE WITH TRUMP ON SATURDAY

• SHEINBAUM TO DISCUSS TRADE AGAIN WITH TRUMP IN SEVERAL WEEKS

• TRUMP: THINK WE’LL HAVE A SUCCESSFUL TRANSACTION WITH XI

• BESSENT SAYS WE HAVE A FRAMEWORK FOR TRUMP, XI TO DECIDE ON

• TRUMP: WE’LL LET CANADA KNOW WHEN TARIFFS TAKE EFFECT

• CARNEY SAYS HE WILL MEET WITH CHINESE PRESIDENT XI AT APEC

• CARNEY TO DISCUSS BILATERAL ‘COMMERCIAL RELATIONSHIP’ WITH XI

• WANG YI HOPES US WORKS IN SAME DIRECTION WITH CHINA: XINHUA

• RUBIO HAD CALL WITH CHINESE FOREIGN MINISTER WANG YI TODAY

• RUBIO, FOREIGN MINISTER WANG YI DISCUSSED TRUMP-XI MEETING

• STATE DEPARTMENT COMMENTS ON RUBIO CALL IN A STATEMENT

• LI QIANG CALLS FOR SUPPORTING HONG KONG IN JOINING RCEP: XINHUA

US Macro & Market Data

• AMD PACT WITH US TO CONSTRUCT TWO SUPERCOMPUTERS: RTRS

• NEXTERA, GOOGLE TO ACCELERATE NUCLEAR ENERGY DEPLOYMENT IN US

• GOOGLE, NEXTERA ENERGY PARTNER TO REOPEN IOWA NUCLEAR PLANT: FOX

• Solid Inflows to US Equity Funds: Deutsche Bank Strategists

• Trade Progress Boosts Risk Appetite as Gold Slumps: Macro Squawk

• HOUSE SPEAKER MIKE JOHNSON TALKS TO REPORTERS ABOUT SHUTDOWN

• JOHNSON: MORE CHALLENGING TO FIND WAYS TO SHIFT FUNDS AROUND

International Macro & Policy Backdrop

• BULLOCK: RBA’S RATE MIGHT NOT COME DOWN AS FAR AS OTHERS

• BULLOCK: CENTRAL BANKERS BIT CONFUSED ABOUT SANGUINE MARKETS

• BULLOCK: EMPLOYMENT MARKET OUTCOMES BETTER THAN SOME COUNTRIES

• OPEC+ BASE CASE SCENARIO IS SMALL HIKE FOR NOW, DELEGATES SAY

• PAN SAYS PBOC TO RESUME GOVT BOND TRADING IN MARKET: XINHUA

• ARGENTINA’S MERVAL STOCK GAUGE SURGES 20% AFTER MILEI WIN

• ARGENTINE PESO JUMPS 10% AFTER MILEI’S MIDTERM ELECTION WIN

• TRUMP: MILEI HAD A LOT OF HELP FROM US

• ZELENSKIY: UKRAINE TO EXPAND STRIKES AGAINST RUSSIAN REFINERIES

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251027

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Tearsheet Crypto 20251027

4.65MB ∙ PDF file

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Tearsheet Fx 20251027

17.4MB ∙ PDF file

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Tearsheet Eq 20251027

20.8MB ∙ PDF file

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Tearsheet Fi 20251027

16.4MB ∙ PDF file

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Tearsheet Comd 20251027

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data,

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

******** UPDATED CODE TO BE RUN TOMORROW ********

Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251027

3.81MB ∙ PDF file

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Key Points To Set The Context:

US Market Wrap: Tech Steady, Breadth Improves as Trade Tensions Ease (S&P +0.32%)

Risk stayed constructive with the S&P 500 up +0.32%. The tone was buoyed by continued US-China trade de-escalation headlines and a supportive earnings backdrop, while rate markets were calm and liquidity healthy into a heavy megacap results week.

Sector Attribution

Weighted Return Contribution (Index +0.32%)
Leaders: Info Tech (+0.18%), Comm Services (+0.06%), Discretionary (+0.04%), Health Care (+0.03%), Industrials (+0.01%), Real Estate (+0.01%), Utilities (+0.01%)
Drags: Staples (−0.01%), Materials (≈−0.00%), Energy (≈−0.00%); Financials flat

Unweighted Performance (Breadth)
Leaders: Comm Services (+0.56%), Utilities (+0.50%), Info Tech (+0.51%), Discretionary (+0.38%), Health Care (+0.29%), Real Estate (+0.29%), Industrials (+0.08%)
Laggards: Staples (−0.26%), Energy (−0.15%), Materials (−0.14%)

Read: Participation broadened beyond megacaps. Tech and Comm Services stayed in charge on AI/data-center momentum, while Utilities and Health Care caught a steady-rates bid. Weakness in Staples/Energy/Materials looked like rotation, not stress.

Macro Overlay

Tape & Catalysts

• Trade thaw: Negotiators lined up deliverables for a Trump–Xi summit, keeping risk appetite intact and supporting US-listed China proxies.

• Earnings in focus: With MSFT, GOOGL, META, AMZN, AAPL reporting mid-week, the market is leaning on resilient profit stories; sales beats are running strong.

• Rates/FX: 2-yr auction cleared essentially on-the-screws (~3.50%) with solid indirect participation, signaling steady foreign demand. The USD was little changed; gold steadied after slipping below $4,000; crypto mixed.

• Global tone: Asia mixed after Nikkei > 50,000; Australia softer. Oil was little changed near the low-60s.

The Read-Through

• Re-risking via earnings + diplomacy: Equities are digesting macro noise as trade headlines improve and profit momentum holds.

• Quality + duration mix: Tech leadership persists, but Utilities/Health Care participation hints at a balanced “growth plus carry” bid.

• No rates shock: Calm auctions and contained yields keep the equity multiple supported.

What I’m Watching Next

• Megacap prints & guides: Do AI capex and cloud run-rates validate Tech’s leadership?

• Trade optics: Any concrete deliverables from the Trump–Xi track that sustain the risk bid.

• Rotation durability: Whether Utilities/Health Care outperformance extends (maturing momentum) or flips back to pure cyclicals.

Bottom line: A calm, earnings-led grind higher with trade diplomacy as a tailwind and rates cooperation keeping the runway clear.

US IG Credit Wrap: Risk-On Holds, Spreads Anchored; Trade Optimism Keeps Carry Alive (IG OAS ≈50.2 bp)

Investment-grade credit stayed resilient even as equities pushed to new highs and oil held near $60. The index option-adjusted spread remains locked around 50 bp, well inside the five-year average (~61.9 bp) and still roughly 6 bp above cycle tights (~46 bp). Despite sharp moves in equities and commodities, credit markets continue to signal a stable, low-vol environment, classic carry conditions rather than stress or exuberance.

Where We Sit (from today’s chart)

• IG OAS: ~50.2 bp (last 50.22)

• 5-yr avg: ~61.9 bp → ~12 bp inside

• Cycle tights: ~46.1 bp → ~4 bp above

• 2022 wides: ~111.2 bp → ~61 bp tighter

Read: The OAS remains mid-range, comfortably normalized and anchored. The spread market refuses to chase the equity rally or flinch at cross-asset volatility, reflecting confidence in liquidity, fundamentals, and a benign policy path.

Tape & Macro Overlay

Equities:
The S&P 500 added +0.32%, extending record territory as US–China trade diplomacy and a solid corporate earnings slate buoyed sentiment. Breadth improved, with Tech, Communication Services, and Health Care leading.

Rates/FX:
USTs were little changed (10-yr ~4.00%, 2-yr ~3.50%), maintaining curve stability after last week’s auctions. The USD held steady, and gold hovered near $4,000 after its sharp correction.

Commodities:
Oil (~$61) remains subdued after last week’s spike, helping stabilize inflation optics. Energy equities traded mixed, but credit spreads in the sector remain firm.

Global tone:
Asian equities mixed following Japan’s milestone Nikkei 50,000 print; European data (IFO, M3) show steady if subdued growth. Trade-related headlines remain the key swing factor for cross-asset tone.

Mapping to IG

Base case: The 50–55 bp zone is still home base, fair value in a low-vol, liquidity-rich market.
Bias: Modestly tighter toward high-40s if trade momentum endures and earnings confirm macro resilience.

Financials:
Senior bank paper holds firm, aided by steady issuance absorption and confidence in regulatory flexibility.

Cyclicals (Energy, Materials, Industrials):
Credit impact muted; oil stability keeps Energy carry intact, while tariff headlines drive only marginal idiosyncratic movement.

Defensives (Staples, Health Care, REITs):
Still rich but well-supported by flows, duration stability keeps these sleeves attractive.

Tech/Comms:
Earnings in focus this week (MSFT, GOOGL, META, AMZN, AAPL). Balance sheets remain fortress-like; minimal spread beta to equity volatility.

Risk Markers to Watch

• Trade tone: Any concrete progress from the Trump–Xi track anchors the risk tone through month-end.

• Oil path: Sustained >$60 brings marginal widening pressure in cyclicals but little systemic impact.

• Equity follow-through: A melt-up without credit confirmation would flag late-cycle exuberance, but we’re not there yet.

• Systemic tell: Watch 60 bp OAS, only a decisive break above signals a regime shift, still a low-probability tail.

Credit remains calm, carry-focused, and orderly. With equities setting records and macro risks contained, US IG spreads remain comfortably rangebound, a picture of stability amid optimism. Until the trade narrative breaks or oil reawakens inflation fears, expect OAS to hover near 50 bp and grind tighter on dips.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.1MB ∙ PDF file

Download

Download

Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

I laid out the main macro bets I am taking right now here:

As always, all the systematic models and strategies are updated below. Thanks.

Main Developments In Macro

U.S. Policy, Trade & Foreign Relations

USTR GREER TO MEET WITH CHINA COUNTERPART ON TRADE
DEMOCRATS URGE ADMIN TO ACT AGAINST CHINA SANCTIONS EVASION
BESSENT TO DISCUSS TRADE WITH CHINA’S HE LIFENG
BESSENT TO TRAVEL TO MALAYSIA, JAPAN, AND SOUTH KOREA
TRUMP TO MEET WITH XI JINPING NEXT THURSDAY
LEAVITT: NEXT THURSDAY HAVE MEETING WITH XI
LEAVITT: TRUMP TO HAVE BILATERAL MEETING WITH JAPAN PM
US TO PROBE CHINA’S COMPLIANCE WITH 2020 TRADE DEAL: NYT
CARNEY HOPES TO MEET CHINA’S XI NEXT WEEK: CANADA OFFICIAL
MACRON SAYS CHINA RARE EARTH CURBS ARE ECONOMIC COERCION
FORD CEO: TARIFF IMPACT NOW AT ‘A MORE REASONABLE LEVEL’
GM, STELLANTIS TO LOSE PART OF CANADA TARIFF EXEMPTION
BOE’S DHINGRA: TARIFFS WILL PUT DOWNWARD PRESSURE ON PRICES

Energy, Commodities & Industrial Policy

TRUMP PLANS TO OPEN ALMOST ALL OF US COAST TO OFFSHORE DRILLING
TRUMP ADMINISTRATION OPENS ALASKA COASTAL PLAIN TO OIL DRILLING
PUTIN: REDUCTION OF RUSSIAN OIL WILL LEAD TO HIGHER PRICES:TASS
RUSSIA MAY RAISE OIL TRANSIT FROM KAZAKHSTAN TO GERMANY: TASS
TURKEY CUTS ONE-WEEK REPO RATE BY 100BPS TO 39.5%; EST. 39.50%
AKAZAWA: CHANGING ENERGY SOURCES MAY PUT PRESSURE ON JAPAN ECON

Global Geopolitics & Security

PUTIN: RUSSIA SUPPORTS DIALOG WITH US
PUTIN: NEW SANCTIONS WON’T AFFECT RUSSIAN ECONOMY: TASS
PUTIN: US SANCTIONS HARM RELATIONS WITH RUSSIA: IFX
PUTIN ABOUT SANCTIONS: IT’S AN ATTEMPT TO PUT PRESSURE: IFX
PUTIN: US PROPOSED BUDAPEST AS PLACE FOR MEETING: IFX
PUTIN: TRUMP MADE A DECISION TO POSTPONE MEETING: IFX
EU LEADERS DEFER RUSSIA FROZEN ASSET PLAN DECISION TO DECEMBER
LEAVITT: SANCTIONS PUT A LOT OF PRESSURE ON RUSSIA
LEAVITT: RUSSIA HAS SHOWN NOT ENOUGH INTEREST IN PEACE
ZELENSKIY: CHINA IS NOT INTERESTED IN UKRAINE’S VICTORY
ZELENSKIY: DISCUSSED AIR DEFENSE, ENERGY RESILIENCE WITH MACRON
UKRAINIAN PRESIDENT ZELENSKIY MEETS FRENCH PRESIDENT MACRON
ZELENSKIY, MERZ DISCUSS UKRAINE’S AIR DEFENSE, ENERGY

Market/Trade-Relevant Political Notes

TRUMP: THINK WE’RE GONNA COME OUT VERY WELL ON XI MEETING
TRUMP PARDONED BINANCE FOUNDER CHANGPENG ZHAO ON WEDNESDAY: WSJ
TRUMP TO MAKE AN ANNOUNCEMENT AT 3PM IN WASHINGTON
TRUMP: WE’RE NOT HAPPY WITH VENEZUELA
TRUMP DENIES REPORT THAT US FLEW B-1 BOMBERS NEAR VENEZUELA
TRUMP: DID NOT SEND B-1 BOMBERS NEAR VENEZUELA
US FLEW AIR FORCE B-1 BOMBERS NEAR VENEZUELA: WSJ
TRUMP: ‘LAND DRUGS’ WILL BE TARGETED NEXT
LEAVITT: TRUMP INCREASINGLY FRUSTRATED WITH UKRAINE, RUSSIA

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251023

565KB ∙ PDF file

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Tearsheet Crypto 20251023

4.63MB ∙ PDF file

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Tearsheet Fi 20251023

16.4MB ∙ PDF file

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Tearsheet Fx 20251023

17.3MB ∙ PDF file

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Tearsheet Eq 20251023

20.8MB ∙ PDF file

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Tearsheet Comd 20251023

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data,

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Commodities

5.9MB ∙ PDF file

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Cfr Model Output Equities

5.35MB ∙ PDF file

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Cfr Model Output Fixed Income

3.03MB ∙ PDF file

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Cfr Model Output Currency

4.59MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251023

4.03MB ∙ PDF file

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Key Points To Set The Context:

US Market Wrap: Tech Lifts, CPI Looms — Risk Appetite Returns (S&P +0.51%)

Wall Street shook off the recent wobble and pushed higher into the CPI print, led once again by Big Tech and cyclical pockets. The S&P 500 rose +0.51%, approaching its all-time highs as hopes of de-escalation in US-China trade tensions boosted risk sentiment. President Trump confirmed he’ll meet Xi Jinping on Oct 30, while oil surged on fresh sanctions against Russian producers, a reminder that the inflation fight isn’t over. Bonds sold off modestly (10-yr +6 bp to 4.00%) as traders priced in another Fed cut next week despite lingering price pressures.

Sector Attribution

Weighted Return Contribution (S&P +0.51%)
Leaders: Info Tech (+0.34%), Discretionary (+0.18%), Industrials (+0.07%), Health Care (+0.03%).
Drags: Comm Services (−0.05%), Staples (−0.02%), Utilities (−0.02%); Energy and Financials flat.

Unweighted Performance (Breadth)
Leaders: Discretionary (+1.69%), Info Tech (+0.97%), Industrials (+0.90%), Materials (+0.43%), Health Care (+0.28%).
Laggards: Utilities (−0.74%), Comm Services (−0.51%), Staples (−0.37%), Real Estate (−0.24%).

Read: Momentum and cyclicals drove the tape — Tech, Industrials, and Discretionary carried the load while defensives were unwound. The index advance was broad enough to offset small-cap softness and commodity volatility, suggesting positioning clean-up rather than fresh risk aversion.

Macro Overlay

Catalysts / Tape Feel
The mood brightened as trade diplomacy headlines broke — confirmation of a Trump-Xi meeting and early signs of thaw in US-China tensions. The quantum-computing “arms race” narrative added to optimism in AI-linked names. Oil’s +5% spike on Russian sanctions sparked a fleeting inflation scare but failed to derail the risk bid; investors leaned into cyclical growth themes ahead of CPI.

Policy / Rates / FX
Treasuries softened with 10-yr yields touching 4.00% and 2-yr +5 bp to 3.49%. Markets still price two Fed cuts this year (Oct + Dec), with inflation seen as a bump not a barrier. The USD held firm while gold stabilized and crypto extended gains. The easing bias narrative remains intact, but higher oil clouds the timing of additional rate cuts.

Cross-Asset Pulse
Oil +5.4% (WTI ≈ $61.6), Gold +0.5%, Bitcoin +2.3%, Ether +1.9%. The rotation back into energy and AI shows traders are comfortable fading last week’s de-risking — at least until CPI confirms that the inflation impulse is contained.

The Read-Through

Re-risking ahead of CPI: Traders stepped back into Tech and Discretionary leadership on optimism over Fed easing and trade progress.
Energy & inflation risk: Crude’s spike adds short-term inflation risk, but the market’s calm response shows confidence the Fed will look through it.
Defensives under pressure: Staples, Utilities, and Comm Services lagged as yields rose and duration proxies lost appeal.
Momentum rebuild: Breadth improved, suggesting last week’s correction may have reset positioning rather than ended the cycle.

What to Watch Next

• CPI (Friday): Core 0.3% keeps the soft-landing script alive; 0.4% or higher revives “higher for longer” fears.

• Fed path: Focus shifts to how the Fed communicates easing under political pressure, Bessent/Waller commentary in view.

• Oil vs Equities: If crude holds > $60, watch for renewed inflation-hedge flows into Energy vs. Tech rotation.

• China Trade Tone: Any follow-through from the Trump-Xi meeting could anchor risk sentiment into month-end.

US IG Credit Wrap: Risk-On Into CPI, Oil Pops; OAS Still Glued to Low-50s (IG OAS ≈52.1 bp)

IG spreads held firm as equities rallied, oil spiked on Russia sanctions, and rates cheapened ahead of CPI. Despite the macro noise, the index OAS remains classic carry, anchored in the low-50s and refusing to chase cross-asset volatility.

Where We Sit (from today’s chart)

• IG OAS: ~52.1 bp (last 52.08)

• 5-yr avg: ~61.9 bp → ~10 bp inside

• Cycle tights: ~46.1 bp → ~6 bp above

• 2022 wides: ~111.2 bp → ~59 bp tighter

Read: Still mid-channel between cycle tights and the 5-yr mean—comfortably “normal,” not stretched.

Tape & Macro Overlay

• Equities: Risk appetite rebuilt (S&P +0.6%) on cooling US-China tension and confirmation of a Trump–Xi meeting; Big Tech led.

• Rates/FX: USTs sold off modestly (10-yr ~4.00%, +6 bp; 2-yr ~3.49%, +5 bp). USD steady; gold stabilized.

• Commodities: WTI +5.4% (~$61.6) on sanction headlines; inflation optics worsened but didn’t dent credit.

• Policy: Market still leans toward two Fed cuts this year (Oct & Dec); CPI Friday is the near-term arbiter.

• Positioning feel: Vol spikes are being faded; drawdowns treated as add-risk windows, constructive for primary and secondaries.

Mapping to IG

• Base case: The 50–60 bp corral remains the center of gravity. A calm CPI keeps the grind-tighter bias toward high-40s; a hot print likely just pauses the grind rather than triggers disorder.

• Financials: Senior hold firm; friendlier capital-rules chatter offsets the rate backup. Supply windows open, new issues well-absorbed.

• Cyclicals (Energy/Materials/Industrials): Oil pop is credit-positive for Energy; broader cyclicals two-way with tariff/export-tech noise, but BBB/A compression persists.

• Defensives (Staples/HC/REIT IG): Rich but stable carry dominates unless rates rally hard.

• Tech/Comms: Equity headlines noisy, balance-sheet strength keeps spreads insulated.

Risk Markers to Watch

• CPI (Fri): Core 0.3% = carry on. 0.4–0.5% risks a brief rates tantrum and stalls tightening momentum.

• Oil path: Sustained >$60 with product draws nudges breakevens up; watch beta sleeves for any cheapening.

• China/trade tone: Follow-through on Trump–Xi could underpin risk and reopen Asia-linked issuance.

• Regional-bank vibe: A decisive break back above ~60 bp OAS would be the early systemic tell, low probability near term.

Even with stocks higher, oil spiking, and yields up, US IG is still in carry mode. Barring a hot CPI or policy shock, expect OAS to hug the low-50s and grind, with any risk-off widening shallow and fadeable.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.1MB ∙ PDF file

Download

Download

Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

My view on equities has not changed. My equity strategy remains long and the warning signals are NOT flashing neutral or bearish, YET.

The key thing to remember is that during this period of time, we are seeing interest rates remain stable. The decrease in inflation risk has allowed more cuts to be priced without causing risk to the long end of the curve. I laid out the logic for this and how it impacts the cycle in the recent report.

As always, all the systematic models and strategies are laid out below. Thanks

Main Developments In Macro

US Policy, Treasury & Fed-Linked

BESSENT: MIGHT SEE CPI COMING DOWN NEXT MONTH, MONTH AFTER
BESSENT: I THINK HOUSING PRICES ARE A LAGGING INDICATOR
BESSENT: GOING TO SEE SUBSTANTIAL TAX REFUNDS FOR AMERICANS
BESSENT: TREASURY BILL AUCTIONS HAVE NEVER BEEN SO SOLID
BESSENT: URGING OUR ALLIES TO JOIN US IN RUSSIA SANCTIONS
BESSENT: INCOMING RUSSIA SANCTIONS TO BE AMONG BIGGEST
BESSENT: CONTEMPLATING US, ALLIES NEXT MOVE IF CHINA TALKS FALL
BESSENT: GOING TO MEET WITH CHINESE COUNTERPART THIS WEEKEND
BESSENT: SOON REVEAL ‘SUBSTANTIAL’ PICK UP IN RUSSIA SANCTIONS
BESSENT: WILL ANNOUNCE RUSSIA SANCTIONS TODAY OR TOMORROW
BESSENT: WANT TO GET MONEY TO FARMERS, BUT GOVERNMENT IS CLOSED
BESSENT: EVERYTHING IS ON THE TABLE IN TALKS WITH CHINA
TREASURY SECRETARY BESSENT TALKS TO REPORTERS
FED FLOATS PLAN WITH MUCH SMALLER CAPITAL HIKES FOR BIG BANKS
US ‘PREPARED TO TAKE FURTHER ACTION’ IF NEEDED AGAINST RUSSIA
US TARGETS ROSNEFT, LUKOIL IN LATEST ROUND OF RUSSIA SANCTIONS
US DEMANDS MOSCOW AGREE TO ‘IMMEDIATE CEASEFIRE’: STATEMENT
US SEEKS TO QUADRUPLE BEEF PURCHASES FROM ARGENTINA: POLITICO
OIL RISES POST SETTLE AS US SET TO RAMP UP RUSSIA SANCTIONS
TREASURY WI 20Y YIELD 4.518% BEFORE $13 BILLION AUCTION

Geopolitics – US / Russia / China / NATO

RUTTE: IF NECESSARY, NATO CAN TAKE DOWN RUSSIA AIRCRAFT
RUTTE: RUSSIAN INCURSIONS IN NATO AIRSPACE MUST STOP
RUTTE: NEXT BIG THING AFTER THE MIDEAST MUST BE RUSSIA, UKRAINE
TRUMP: WILL TALK WITH XI ABOUT HOW TO END RUSSIA WAR IN UKRAINE
TRUMP: THINK XI CAN HAVE A BIG INFLUENCE ON PUTIN
TRUMP: MIGHT ADD CHINA INTO NUCLEAR DEESCALATION TALKS
TRUMP: THINK WE’LL MAKE A DEAL WITH CHINA ON EVERYTHING
TRUMP: FELT IT WAS TIME FOR RUSSIA SANCTIONS
TRUMP: CANCELLED MEETING WITH PUTIN, DIDN’T FEEL RIGHT
TRUMP: THINGS GOING ALONG WELL REGARDING UKRAINE, RUSSIA
US ‘PREPARED TO TAKE FURTHER ACTION’ IF NEEDED AGAINST RUSSIA
ZELENSKIY: UKRAINE IS READY FOR DIPLOMACY, SUPPORTS CEASEFIRE
ZELENSKIY: STILL NEED TO DISCUSS EUROPEAN PEACE PLAN PROPOSALS
KREMLIN: PUTIN WON’T GO TO G-20 SUMMIT: INTERFAX

Trade & International Relations

KOREA AIMS TO FINALIZE TRADE DEAL WITH US DURING APEC: KOO
FINALIZED US TRADE DEAL A KEY TO STABILIZING KOREAN WON: KOO
RECENT WON WEAKNESS REFLECTS CONCERN DEAL NOT FINALIZED: KOO
US UNDERSTANDS KOREA’S FX CONSTRAINTS IN INVESTMENT DEAL: KOO
SOUTH KOREA TO LAUNCH 24-HR FX AS SOON AS POSSIBLE: KOO
EU Prepares Trade Options to Counter China Rare Earth Curbs
GREER: TRUMP, XI HAVE GREAT RELATIONSHIP
GREER: THERE IS A GOOD LANDING ZONE FOR US, CHINA TRADE
GREER: CHINA MOVE ON RARE EARTHS WAS ‘AGGRESSIVE’
GREER: IT HAS TO BE A MUTUAL DECISION FOR XI, TRUMP TO MEET

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251022

567KB ∙ PDF file

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Tearsheet Crypto 20251022

4.63MB ∙ PDF file

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Tearsheet Fi 20251022

16.4MB ∙ PDF file

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Tearsheet Fx 20251022

17.3MB ∙ PDF file

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Tearsheet Eq 20251022

20.8MB ∙ PDF file

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Tearsheet Comd 20251022

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Fixed Income

3.02MB ∙ PDF file

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Cfr Model Output Currency

4.59MB ∙ PDF file

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Cfr Model Output Equities

5.35MB ∙ PDF file

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Cfr Model Output Commodities

5.91MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251022

3.97MB ∙ PDF file

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Key Points To Set The Context:

US Market Wrap: Tech Drags, Cyclicals Crack — Risk Tone Fades (S&P −0.50%)

Wall Street lost traction overnight as the post-rally fatigue turned into a broad de-risking. The S&P 500 slipped −0.5%, with Tech and Industrials leading the retreat while Energy was the lone standout. The move was part of a wider cross-asset shakeout as momentum-heavy names AI, crypto, and precious metals were hit again. A mix of weaker earnings tone (Netflix, Tesla), renewed US-China tension on export curbs, and sanction-driven oil strength as reasons for the rotation.

Sector Attribution

Weighted Return Contribution (S&P −0.50%)
Leaders: Energy (+0.02%), Staples (+0.03%).
Drags: Info Tech (−0.25%), Industrials (−0.13%), Financials (−0.09%), Discretionary (−0.07%), Comm Services (−0.02%), Utilities (−0.01%); Materials and Health Care flat.

Unweighted Performance (Breadth)
Leaders: Energy (+0.81%), Staples (+0.59%), Real Estate (+0.14%).
Laggards: Industrials (−1.63%), Financials (−0.65%), Info Tech (−0.70%), Discretionary (−0.64%), Utilities (−0.44%), Comm Services (−0.25%).

Read: The index fell on concentration risk, Tech and Industrials weighed most while Energy’s oil-linked rebound offered limited offset. Breadth skewed sharply negative, revealing profit-taking across growth and momentum pockets, particularly AI and semis.

Macro Overlay

Catalysts / Tape Feel
The risk unwind followed a cluster of catalysts: US sanctions on Russian oil majors lifted crude ~2%, Tesla’s earnings miss dampened animal spirits, and talk of potential export curbs to China revived trade anxiety. Retail momentum and AI-linked names extended their drawdown, echoing the “music-stopped” feel noted by Bespoke.

Policy / Rates / FX
Treasuries were steady (10-yr 3.95%, −1 bp) with a firm $13 bn 20-yr auction signaling healthy demand. The Fed narrative turned political as Governor Waller’s measured quarter-point vote reinforced independence amid Trump pressure for deeper cuts. The USD held firm; gold pared losses after an intraday −2.9% swing.

Cross-Asset Pulse
Oil +2% (WTI ~$60) on sanctions headlines. Gold and crypto slipped as liquidity rotated back to the USD. Momentum baskets especially AI, metals, and beta proxies saw further liquidation, tightening overall financial conditions at the margin.

The Read-Through

• De-risking, not panic: Losses clustered in high-beta, high-valuation sectors while defensives stabilized, classic “risk fatigue” rather than fundamental stress.

• Energy lone bright spot: Crude’s rally turned Energy into the day’s ballast; cyclical correlation flipped.

• Fed independence theme: Waller’s stance and chatter of Bessent’s shortlist framed the Fed’s credibility as the next macro debate.

• Rotation check: Momentum unwinds are widening beyond AI, watch if Staples/Real Estate follow-through to confirm a defensive tilt.

What to Watch Next

• CPI (Friday): Core 0.3% keeps the soft-landing script intact; 0.4–0.5% risks reigniting the USD and pressuring duration.

• Breadth test: Does Energy leadership broaden or stay isolated while Tech/Industrials lag?

• Fed politics: Follow Waller and Bessent commentary for hints on institutional independence vs. Trump influence.

• Oil vs. Growth: If crude sustains above $60 while demand data softens, inflation-vs-growth trade-offs may re-price quickly.

US IG Credit Wrap: Momentum Unwinds, Oil Pops; OAS Still Anchored in Carry Range (IG OAS ~53.0 bp)

IG spreads stayed resilient as equities wobbled and crude jumped on fresh Russia sanctions. With 10-yr USTs essentially unchanged (~3.95%) and a solid 20-yr auction, OAS is still camped in the low-50s, textbook carry behavior despite noisier headlines around tech earnings, China export-curb chatter, and the momentum unwind in AI/crypto/metals.

Where We Sit (from today’s chart)

• IG OAS: ~53.0 bp (last 53.05)

• 5-yr avg: ~61.9 bp → ~9 bp inside

• Cycle tights: ~46.1 bp → ~7 bp above

• 2022 wides: ~111.2 bp → ~58 bp tighter

Read: We’re mid-channel between cycle tights and the 5-yr mean, comfortably “normal,” not stretched.

Tape & Macro Overlay

• Equities: Broad risk-off day (S&P −0.5%); Tech/Industrials led the drag while Energy outperformed on oil strength. Momentum baskets have been bleeding for days, classic de-risking, not disorderly.

• Rates/FX: 10s steady; $13bn 20-yr sale came through well. USD mixed; gold swung hard intraday again.

• Commodities: WTI ~+2% (≈$60) on sanctions headlines; distillate/gasoline draws add to the bid.

• Policy: Fed politics in focus, Waller reaffirmed the incremental/cuts-but-independent stance; regulators are exploring a softer bank-capital path, marginally constructive for IG financials.

• China/Trade: Talk of software-export curbs keeps a lid on animal spirits but hasn’t migrated into credit risk premia.

Mapping to IG

• Base case: The 50–60 bp corral remains the center of gravity. With rates contained and funding windows open, grind-tighter bias persists toward high-40s only if macro stays calm and oil doesn’t morph into an inflation scare.

• Financials: Senior paper steady to a touch better, capital-rule relaxation chatter offsets equity volatility. Supply windows remain healthy.

• Cyclicals (Energy/Materials/Industrials): Oil pop helps Energy credits; broader cyclicals are two-way with tariff/export-curb noise, but high-quality BBB/A compression continues.

• Defensives (Staples/HC/REIT IG): Rich but stable; carry dominates unless we get a sharp duration rally.

• Tech/Comms: Equity noise (guidance/misses) hasn’t translated into spread stress for mega-cap balance sheets.

Risk Markers to Watch

• CPI (Fri): 0.3% core = carry on; 0.4–0.5% risks a brief rates tantrum and stalls further tightening.

• Oil path: Sustained move >$60 with draws would nudge breakevens up and could cheapen beta sleeves.

• Fed personnel/politics: Waller vs. “bigger cuts” pressure and independence headlines matter for term premium, not today’s OAS.

• China export-curb escalation: A headline shock could widen Tech/Comms secondaries and cap the grind.

• Regional-bank updates: A clean break back above ~60 bp would be the early systemic tell.

Despite equity chop and sanction-driven oil, IG remains in carry mode. Absent a hot CPI or policy shock, OAS should hug the low-50s and grind, with any risk-off widening likely shallow and fleeting.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.1MB ∙ PDF file

Download

Download

Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

We remain in the same regime I have been laying out since April: The credit cycle is in full swing, inflation is not coming in above expectations yet, the Fed is cutting, and capital is moving out the risk curve. All of these factors are systematically constraining capital because the market is always pricing the REAL purchasing power of money.

Today, gold and silver sold off marginally but this was primarily driven by positioning as opposed to a fundamental macro shift. Notice that implied vol has blown out in gold as traders are paying a massive premium for calls. In simple terms, short-term positioning is paying a massive premium, so the 5% pullback today was not incredibly surprising after being up almost 60% YTD:

My view on gold that I shared in the chat earlier:

I laid out the macro picture for everything into FOMC in this video:

As always, all the systematic models and strategies are laid out below. Thanks

Main Developments In Macro

U.S. Policy, Trade, and Geopolitics

• HASSETT: HIGH CONFIDENCE TRUMP, XI WILL COME TO AGREEMENT

• HASSETT: AI PRODUCTIVITY BOOM IS TOTALLY IN THE DATA

• TRUMP: I WANT XI TO HAVE A GOOD DEAL FOR CHINA

• TRUMP: CHINA, JAPAN USED TARIFFS AGAINST US FOR MANY YEARS

• TRUMP: WE CAN START PAYING DOWN OUR DEBT WITH TARIFFS

• TRUMP: SHOULD WIN TARIFF LEGAL CASE

• TRUMP: CHINA WANTS TO DISCUSS TARIFFS

• TRUMP: WILL SEE PRESIDENT XI IN TWO WEEKS IN SOUTH KOREA

• TRUMP ADMIN BACKS EFFORT FOR US-KAZAKHSTAN TUNGSTEN MINE DEAL

• SCHUMER: URGED TRUMP TO SIT DOWN AND NEGOTIATE WITH US

• SCHUMER: REACHED OUT TO TRUMP TODAY

• THUNE: HOPEFUL THIS WILL BE THE WEEK SHUTDOWN ENDS

• US SHUTDOWN MAY FORCE STATCAN TO POSTPONE NOV. 4 TRADE RELEASE

• STATCAN SAYS IT HASN’T RECEIVED US IMPORT DATA DUE TO SHUTDOWN

• US TO BUY 1 MILLION BARRELS FOR STRATEGIC PETROLEUM RESERVE

• US OFFICIAL SAYS NO PLANS FOR TRUMP-PUTIN MEETING SOON: CBS

• RUSSIA EFFECTIVELY REJECTED TRUMP UKRAINE PLAN ON WEEKEND: RTRS

• NATO’S RUTTE SET TO MEET WITH TRUMP TOMORROW: WH OFFICIAL

• VANCE: HAMAS WILL ‘BE OBLITERATED’ IF IT DOES NOT COOPERATE

• VANCE: PAST WEEK GIVES ME ‘GREAT OPTIMISM’ CEASEFIRE WILL HOLD

• VANCE: THERE’S A ROLE FOR THE TURKS TO PLAY IN GAZA DEAL

• US VICE PRESIDENT VANCE SPEAKS IN ISRAEL

• VANCE: THINGS ARE GOING BETTER THAN I EXPECTED

• KUSHNER: RECONSTRUCTION FUNDS WON’T GO TO AREAS HAMAS CONTROLS

• TRUMP: AN END TO HAMAS WILL BE ‘FAST, FURIOUS, & BRUTAL’ IF NOT

Central Banks, Inflation & Macro Conditions

• FED’S WALLER ASKED STAFF TO EXPLORE IDEA OF ‘PAYMENT ACCOUNT’

• MANN: WE ARE ENTERING ENVIRONMENT OF INCREASED SUPPLY SHOCKS

• MANN: CLEAR UK BEHAVIOR STILL AFFECTED BY INFLATION CONCERNS

• MANN: INFLATION VOLATILITY MORE DIFFICULT THAN INFLATION RATE

• MANN: UK INFLATION EXPECTATIONS HAVE DRIFTED FROM 2% TARGET

• MANN: SCARRING FROM INFLATION IN UK MORE SIGNIFICANT THAN US

• MANN SAYS SHE PLAYS CLOSE ATTENTION TO INFLATION STICKINESS

• BANK OF ENGLAND RATE-SETTER CATHERINE MANN SAYS AT LAZARD EVENT

• REEVES WANTS TO SEE INTEREST RATES COME DOWN FURTHER: FT

• REEVES SAYS TO BE TARGETED ACTION IN BUDGET AROUND PRICES: FT

• REEVES TO TAKE STEPS IN BUDGET TO CUT HOUSEHOLD BILLS: FT

• CANADA INFLATION QUICKENS TO 2.4% Y/Y IN SEPT, EST. 2.2%

• CANADA SEPT. CORE CPI TRIM RISES 3.1% Y/Y

• US OCT. PHILADELPHIA FED NON-MANUFACTURING INDEX -22.2

• KGANYAGO: TERMS OF TRADE IMPORTANT VARIABLE FOR S. AFRICA, RAND

Global Macro & Trade

• ARGENTINA’S CENTRAL BANK SOLD DOLLARS TO SUPPORT PESO

• ARGENTINE CENTRAL BANK RESERVES TODAY AT $40.54B

• LULA GOVT PLANS TAXES ON BANKS, BETTING TO EASE FISCAL WOES

• CHINA OFFICIAL SAYS EXPORT CONTROLS TARGET WORLD STABILITY

• EUROPE, UKRAINE SAID TO READY 12-POINT PLAN TO END RUSSIA’S WAR

• TAKAICHI: US-JAPAN ALLIANCE IS FOUNDATION OF JAPAN’S DIPLOMACY

• TAKAICHI: WILL TAKE JAPAN-US RELATIONS TO NEW HIGH

• TAKAICHI: WILL DO ALL NEEDED TO COUNTER IMPACT OF TRUMP TARIFFS

• TAKAICHI: ORDERED CABINET TO COMPILE NEW ECONOMIC PACKAGE

• TAKAICHI: WILL COOPERATE DEEPLY WITH LIKE-MINDED COUNTRIES

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251021

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Tearsheet Crypto 20251021

4.62MB ∙ PDF file

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Tearsheet Comd 20251021

35.7MB ∙ PDF file

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Tearsheet Fx 20251021

17.3MB ∙ PDF file

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Tearsheet Eq 20251021

20.8MB ∙ PDF file

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Tearsheet Fi 20251021

16.4MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Fred Dashboard V2

8.34MB ∙ XLSX file

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Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Fixed Income

3.02MB ∙ PDF file

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Cfr Model Output Currency

4.58MB ∙ PDF file

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Cfr Model Output Equities

5.35MB ∙ PDF file

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Cfr Model Output Commodities

5.91MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251021

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Key Points To Set The Context:

US Market Wrap: Pause at the Highs, Gold Buckles; Mixed Breadth With Defensives Heavy (S&P −0.01%)

The tape cooled after a strong run, with buyer fatigue and a firmer dollar clipping risk appetite. The S&P 500 finished basically flat (−0.01%) while the Dow notched a record on upbeat industrial guidance. Precious metals cracked lower as gold/silver saw their biggest slide in years. Rates stayed friendly (10-yr −2 bps to ~3.96%) but leadership rotated and participation narrowed.

Sector Attribution

Weighted Return Contribution (S&P −0.01%)

• Leaders: Consumer Discretionary (+0.10%), Industrials (+0.05%), Health Care (+0.02%).

• Drags: Communication Services (−0.07%), Information Tech (−0.03%), Utilities (−0.02%), Staples (−0.02%), Real Estate (−0.01%), Energy (−0.01%), Financials (−0.01%); Materials (0.00%).

Unweighted Performance (Breadth)

• Leaders: Consumer Discretionary (+0.92%), Industrials (+0.56%), Materials (+0.25%), Health Care (+0.16%).

• Laggards: Utilities (−0.91%), Communication Services (−0.68%), Real Estate (−0.27%), Energy (−0.43%), Staples (−0.34%), Financials (−0.07%), Info Tech (−0.08%).
  Read: The index held up on cyclical Discretionary/Industrials while classic defensives (Utilities/Staples/REITs) and Comm Services weighed; Tech slipped at the margin. Breadth was positive in pro-growth pockets but defensives were a clear headwind.

Macro Overlay

Catalysts / Tape Feel

• A rally at record-adjacent levels wavered as “breather” calls grew; exposure among macro and long-only cohorts remains elevated, making dips choppier.

• Gold’s sharp unwind (profit-taking + stronger USD + stretched positioning) stole the macro spotlight; volatility gap vs. equities widened.

• Earnings flow turned more mixed at the edges (e.g., TXN tepid guide; NFLX tax noise), though Dow strength was supported by upbeat industrial commentary.

Policy / Rates / FX

• USTs firmed (10-yr ~3.96%, −2 bps); energy’s drift lower keeps the “disinflation assist” narrative alive.

• USD firmer, contributing to metals pressure; Bitcoin bounced.

• US-China: talks remain on track, keeping tariff tail-risk on simmer rather than boil. Shutdown maintains a data vacuum, elevating single-print sensitivity.

The Read-Through

• Late-cycle, not risk-off: Defensives underperformed even as the index stalled, this looks more like fatigue at highs than a duration scare.

• Cyclicals doing the holding: Discretionary/Industrials leadership with Tech soft says “growth/animal spirits” > pure rates beta on the day.

• Gold’s reset is a positioning/FX/rates cocktail, not (yet) a macro regime turn; watch whether dip buyers re-engage quickly.

What to Watch Next

1. CPI (Fri) in a data-thin week: a benign 0.3% core would preserve the soft-landing glide and keep 10-yr yields anchored; a 0.4–0.5% re-tests risk appetite.

2. Breadth follow-through: Do Discretionary/Industrials keep carrying while Utilities/Staples/REITs lag? That’s the durability tell.

3. Metals vs. USD/rates: If the dollar stays bid and real yields hold, gold’s bounce attempts may be shallow; a quick recapture would signal the bull trend’s resilience.

4. Earnings micro: Watch capex/AI monetization tone from mega-caps and the guidance bar for semis/industrial beta, key for whether this pause is consolidation or handoff lower.

US IG Credit Wrap: Flat Equities, Hard Gold Reset; OAS Holds the Groove, Carry Still in Charge (IG OAS ~52.9 bp)

IG held firm while the equity tape paused near highs and metals cracked lower. With 10-yr USTs a touch richer (~3.96%, −2 bp) and USD firmer, spreads were steady in the low-50s, classic “carry regime” behavior despite noisier cross-asset headlines.

Where We Sit (from the chart)

• IG OAS: ~52.9 bp (last 52.85)

• 5-yr avg: ~61.9 bp → ~9 bp inside

• Cycle tights: ~46.1 bp → ~6–7 bp above

• 2022 wides: ~111.2 bp → ~58 bp tighter

Tape & Macro Overlay

• Equities: S&P little changed; Dow record on upbeat industrial guidance; positioning elevated, calls for a breather growing.

• Metals/FX: Gold & silver slumped on stronger USD/positioning; volatility spiked in metals, not in credit.

• Rates: Mild bull tone; oil drift keeps the “disinflation assist” narrative alive.

• Earnings: Still supportive overall, though semis/hardware guidance (e.g., TXN) turned more mixed; idiosyncratic, not systemic.

Mapping to IG

• Base case: The 50–60 bp corral remains the center of gravity. With rates contained and earnings broadly fine, grind-tighter bias persists toward the high-40s only if macro stays calm.

• Banks: Senior IG stable; equity jitters around isolated events haven’t propagated. Funding windows open, terming out continues.

• Cyclicals (Energy/Materials/Industrials): Two-way to commodities and tariffs, but quality BBB/A compression continues on constructive guidance.

• Defensives (Staples/HC/REIT IG): Rich, steady carry dominates unless duration rally accelerates materially.

• Tech/Comms: Headlines are micro; large-cap balance sheets remain spread-supportive.

Risk Markers to Watch

1. CPI (Fri): A 0.3% core keeps the grind; 0.4–0.5% risks a brief duration tantrum and a pause in tightening.

2. USD & real yields vs. metals: Sustained USD firmness/real-rate stability keeps gold in reset mode, credit insensitive unless it snowballs into broader risk-off.

3. US–China tape: De-escalation keeps beta door open; fresh tariff shock would cap further compression.

4. Regional-bank disclosures: Any shift from idiosyncratic to systemic would show up first as a clean break back above ~60 bp.

With equities pausing but not breaking and rates friendly, carry is doing the work. Barring a hot CPI or shock headline, IG OAS hugs the low-50s and grinds.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.1MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

You can find the macro video breakdown I recorded here:

As we progress into FOMC, we are seeing confirmation of the views I laid out and the updated tensions around inflation risk from yesterday’s report:

As always, all the systematic models and strategies are updated below. I will be launching some new sections of research and trading for Capital Flows soon. I would appreciate it if you could provide feedback on how helpful you find the systematic macro regime tracker that is sent out daily:

Main Developments In Macro

US Macro, Trade & Policy

• HASSETT ON US ECONOMY: RIGHT NOW, THE NUMBERS ARE GREAT

• HASSETT: BESSENT IS GOING TO `LAND THIS PLANE’ ON CHINA

• HASSETT: CHANCES FOR PROGRESS ON SHUTDOWN THIS WEEK

• TRUMP: I WANT CHINA TO THRIVE, WE HAVE TO THRIVE TOGETHER

• TRUMP: EXPECT WE’LL WORK OUT A FAIR DEAL WITH CHINA

• TRUMP: CHINA MAY PAY 155% TARIFF IF NO DEAL BY NOV 1

• TRUMP: CHINA PAYING A LOT OF MONEY TO US VIA TARIFFS

• TRUMP: CHINA HAS BEEN VERY RESPECTFUL OF US

• TRUMP: CAN THREATEN CHINA WITH AIRPLANES

• TRUMP: WILL BE BIG PRICE IF NO DEAL ON ENDING WAR IN UKRAINE

• TRUMP: UKRAINE COULD STILL WIN WAR

• TRUMP: I THINK XI AND I WILL GET ALONG WITH REGARD TO TAIWAN

• TRUMP: MEETING WITH XI IN SOUTH KOREA IN COUPLE OF WEEKS

• TRUMP: CHINA PUNISHING OUR FARMERS BY NOT BUYING SOYBEANS

Europe: Monetary Policy & Geopolitics

• ECB’S NAGEL: WE CAN STAY IN WAIT-AND-SEE MODE ON RATES

• ECB GOVERNING COUNCIL MEMBER NAGEL SPEAKS IN NEW YORK

• ECB EXECUTIVE BOARD MEMBER ISABEL SCHNABEL SPEAKS IN FRANKFURT

• SCHNABEL: EURO’S GLOBAL POSITION STRONG, SHOULD BE STRENGTHENED

• EU’S KALLAS: HOPE TO ADOPT RUSSIA SANCTIONS PACKAGE THIS WEEK

• KALLAS: RUSSIA DOESN’T WANT PEACE, ONLY UNDERSTANDS STRENGTH

• EU’S KALLAS: WE SEE TRUMP’S EFFORTS TO BRING PEACE TO UKRAINE

• THUNE: RUSSIA SANCTIONS BILL POSTPONED UNTIL TRUMP-PUTIN TALKS

• HUNGARY’S SZIJJARTO: WON’T BLOCK EU’S RUSSIA SANCTIONS PACKAGE

• ITALY SIGNALS IT’S READY TO HELP UKRAINE BUY US WEAPONS

Japan Monetary & Political Developments

• BOJ’S TAKATA: NEED TO ADJUST MONETARY EASING FURTHER

• BOJ’S TAKATA: PRICE TARGET IS MORE OR LESS ACHIEVED

• BOJ’S TAKATA: NOW IS PRIME OPPORTUNITY TO RAISE POLICY RATE

• BOJ MAY `SLIGHTLY’ REVISE UP THIS YEAR’S GROWTH FORECAST: RTRS

• JAPAN’S NIKKEI RISES 3% AS RULING LDP REACHES COALITION DEAL

• JAPAN’S TOPIX INDEX RISES 2% TO 3,234.09 AT MORNING CLOSE

China & Emerging Markets

• CITI NO LONGER EXPECTS CHINA TO CUT POLICY RATE OR RRR IN 4Q

• CHINA’S 4TH PLENUM GOES UNDERWAY: XINHUA

• XI BRIEFS PLENUM DRAFT OF NEXT FIVE-YEAR PLAN: XINHUA

• US, CHINA SHOULD RESOLVE ISSUES ON BASIS OF EQUALITY: GUO

• ETHIOPIA IN TALKS WITH CHINA ON CONVERTING DOLLAR LOANS TO YUAN

• ARGENTINA CENTRAL BANK, US TREASURY SIGN $20 BILLION SWAP DEAL

• JAMIE DIMON HEADS TO ARGENTINA BEFORE KEY TEST FOR MILEI

Global Trade & Supply Chain Themes

• WHITE HOUSE: DOD TO INVEST IN GALLIUM REFINERY IN AUSTRALIA

• WHITE HOUSE RELEASES US-AUSTRALIA CRITICAL MINERALS FRAMEWORK

• US, AUSTRALIA SETTING UP CRITICAL MINERALS SUPPLY SECURITY UNIT

• TRUMP: CHINA MAY PAY 155% TARIFF IF NO DEAL BY NOV 1

• TRUMP: CHINA PAYING A LOT OF MONEY TO US VIA TARIFFS

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251020

564KB ∙ PDF file

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Tearsheet Crypto 20251020

4.62MB ∙ PDF file

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Tearsheet Eq 20251020

20.8MB ∙ PDF file

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Tearsheet Fx 20251020

17.3MB ∙ PDF file

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Tearsheet Fi 20251020

16.4MB ∙ PDF file

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Tearsheet Comd 20251020

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Fred Dashboard V2

8.34MB ∙ XLSX file

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Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Equities

5.35MB ∙ PDF file

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Cfr Model Output Currency

4.57MB ∙ PDF file

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Cfr Model Output Commodities

5.89MB ∙ PDF file

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Cfr Model Output Fixed Income

3.01MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251020

4.17MB ∙ PDF file

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Key Points To Set The Context:

US Market Wrap: Earnings Beat Streak, Easing Trade Tension; Broad Risk-On With Defensives Lagging (S&P +0.47%)

The tone flipped as solid prints from Corporate America and a cooling US-China temperature steadied risk. About 85% of reporters have beaten estimates, helping the S&P 500 add +1.1% on the day at the close of cash trading and log its best two-day run since June, with 10-year yields easing to ~3.98 bps and small caps outpacing. The bid was earnings-led, not multiple-led, and breadth improved meaningfully.

Sector Attribution

Weighted Return Contribution (S&P +0.47%)

• Leaders: Financials (+0.10%), Communication Services (+0.10%), Information Tech (+0.09%), Health Care (+0.07%), Industrials (+0.04%), Discretionary (+0.05%).

• Tails: Energy (+0.02%), Materials (+0.01%), Real Estate (+0.01%); Staples (−0.01%), Utilities (−0.02%).
  Read: The index advance was broad and cyclically tilted, with classic defensives (Staples, Utilities) subtracting at the margin, consistent with easing growth angst and lower rates.

Unweighted Performance (Breadth)

• Leaders: Communication Services (+0.99%), Financials (+0.79%), Health Care (+0.75%), Materials (+0.65%), Real Estate (+0.59%), Industrials (+0.54%), Energy (+0.55%), Discretionary (+0.47%); Tech (+0.24%).

• Laggards: Utilities (−0.80%), Staples (−0.16%).
  Read: Broad participation beyond megacap tech; beta and cyclicals outperformed while bond-proxies lagged despite softer yields, an earnings/animal-spirits day rather than a pure duration chase.

Macro Overlay

Catalysts:

• Earnings season doing the heavy lifting (beat rate ~85%); Apple to fresh record on upgrade; small caps +1.9% as “profits-catch-up” narrative builds.

• US–China tone a shade warmer (talks/meeting signals), even as tariff threats linger; traders faded worst-case escalation.

• AWS outage headlines mostly idiosyncratic; didn’t dent the broader risk tone.

Policy/Rates/FX:

• Front-to-back yields drifted lower (10y −3 bps to ~3.98%), easing the equity cost of capital; markets still lean to an October 25 bp cut with CPI (delayed by shutdown) now the week’s key macro print.

• Dollar little changed; gold firmer on residual headline risk; crude flat.

The Read-Through

• Earnings > Macro (for now): when beats are this broad, the market will fund risk even with tariff chatter in the background.

• Cyclical breadth matters: leadership from Financials/Comm Services/Industrials/Materials/Real Estate alongside negative Utilities/Staples says this was growth/confidence, not merely lower-rates.

• If US-China de-escalation holds and big-tech guidance confirms AI spend → profitability, the path into year-end tilts higher; watch CPI for any services stickiness that could cap duration support.

What to Watch Next

• Megacap prints (AI monetization, capex efficiency).

• CPI (Fri): a 0.3% core keeps the soft-landing glide path; hotter would re-tighten financial conditions.

• Breadth follow-through: do Financials and Comm Services keep leading while defensives lag? That’s your tell that this rebound is earnings-driven and durable, not just a relief rally.

US IG Credit Wrap: Earnings Lift, Trade Chill; OAS Grinds Into Low-50s, Carry in Control (IG OAS ~52.2 bp)

IG tightened with the risk tone. As equities rebounded (S&P +1.1%, small caps +1.9%) on strong beats and a warmer US-China temperature, credit spreads ground into the low-50s and stayed orderly with yields a touch softer (10y ~3.98%). Tone = “earnings-led risk-on, carry still king.”

Where We Sit (from the chart)

• IG OAS: ~52.2 bp (last 52.16)

• 5-yr avg: ~61.9 bp → ~10 bp inside

• Cycle tights: ~46.1 bp → ~6 bp above

• 2022 wides: ~111.2 bp → ~59 bp tighter

Tape & Macro Overlay

Catalysts: Beat rate near ~85% has investors rewarding cyclicals and beta; tariff rhetoric persists but talks/meetings signal de-escalation risk.
Policy: Market still leans to an Oct 25 bp cut; CPI (Fri) is the swing print for dose and path.
Rates/FX/Commodities: Mild bull-steepening bias with 10y −3 bp; USD little changed; gold firmer on headline hedging; crude flat.

Mapping to IG

• Base case: 50–60 bp range remains the center of gravity with a grind-tighter bias while earnings surprise positive and policy glides toward easing.

• Banks: Equity nerves faded; senior IG stable on ample term funding and easier rates. Watch idiosyncratic names, not the beta.

• Cyclicals (Energy/Materials/Industrials): Two-way to tariffs/oil, but the earnings tone helps quality BBB/A compress modestly.

• Defensives (Staples/HC/REIT IG): Rich and steady; carry dominates unless duration rally accelerates.

• Tech/Comms: Headlines (cloud outages, AI monetization) are idiosyncratic, no systemic read to IG; large-cap balance sheets still a support.

Risk Markers to Watch

• CPI core (0.3% m/m consensus): hot print risks a brief rates tantrum → pause the grind; in-line keeps carry bid intact.

• US-China tape: de-escalation keeps beta open; renewed tariff shock would cap spread tightening.

• Regional-bank disclosures: breadth of charge-offs still the canary; systemic signal would be a clean break back above ~60 bp.

With earnings doing the heavy lifting and policy bias easing, IG OAS compresses toward cycle tights but respects the 50–60 bp corral. Absent a growth or funding shock, carry does the work; fade breaks wider without corroborating macro stress.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.1MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

I took an extended period of time in the livestream today explaining how to think about the macro picture, equities, gold, Bitcoin, and bonds. This video brings everything together:

The Bitcoin report I referenced in the video is here:

And Friday will be the last day to lock in the lower rate for the Substack before the price increase. I will be publishing some important pieces for paid subscribers tomorrow as well, so be on the lookout for this.

As always, all the systematic models and strategies are updated below. Thanks.

Main Developments In Macro

U.S. Macro, Policy & Banking

• KASHKARI: DEMAND FOR LABOR SEEMS LIKE IT’S SOFTENED A BIT

• FED’S KASHKARI: TARIFF IMPACT IS TAKING LONGER THAN I’D GUESSED

• FED’S MIRAN SAYS NO MATERIAL SIGNS OF GROWTH DRAG FROM TARIFFS

• FED’S MIRAN SAYS NOT FOCUSED ON ASSET PRICE BOOM: REUTERS

• MIRAN: 25 BPS CUTS IS MAKING ADJUSTMENT SLOWER THAN NEEDS TO BE

• MIRAN: LONGER POLICY STAYS RESTRICTIVE, GREATER THE DOWNSIDE

• FED GOVERNOR STEPHEN MIRAN SPEAKS AT EVENT IN WASHINGTON

• FED’S MIRAN: ECONOMY IS IN PRETTY GOOD PLACE, BUT HAS NEW RISKS

• WALLER: FED’S BASIC STRUCTURE HAS SERVED THE COUNTRY WELL

• WALLER: STABLE FISCAL POLICY BEST WAY TO KEEP YIELDS DOWN

• WALLER: POLICY MORE RESTRICTIVE FOR SOME GROUPS THAN OTHERS

• WALLER: WE’D BE ‘HURTING’ IF NOT FOR DECLINE IN LABOR SUPPLY

• FED GOVERNOR CHRISTOPHER WALLER COMMENTS IN Q&A

• FED’S WALLER SAYS IMMIGR. SHIFT MASKING DROP IN LABOR DEMAND

• FED’S WALLER REPEATS HE FAVORS QUARTER-POINT OCTOBER RATE CUT

• WALLER: RATE OUTLOOK AFTER OCTOBER DEPENDENT ON LABOR MARKET

• FED SAYS LENDERS SHOULD BE RESILIENT TO A RANGE OF FACTORS

• FED TO RELEASE NEW STRESS TEST PLANS FOR BIG BANKS THIS MONTH

• US BANK RESERVES RESUME DECLINE, FALL BACK BELOW $3 TRILLION

• US OCT. 2025 HOMEBUILDER INDEX AT 37; HIGHEST SINCE APRIL

U.S. Trade/Tariffs & Industrial Policy

• US ANNOUNCEMENT ON AUTOS TARIFF RELIEF MAY COME SOON AS FRIDAY

• COMMERCE DEPT SET TO EASE CAR PARTS TARIFFS ON US AUTO INDUSTRY

• US NEARS TARIFF RELIEF FOR AUTO INDUSTRY: PEOPLE FAMILIAR

Europe (Macro/Central Banks)

• ECB’S SCICLUNA: WE WILL HAVE MUCH MORE DATA IN DECEMBER

• ECB’S SCICLUNA SAYS PRICE EFFECTS OF US TARIFFS STILL UNCLEAR

• ECB’S SCICLUNA: WOULD NEED TO BE CONVINCED ON ANOTHER CUT

• ECB’S NAGEL: NOT SO CONCERNED ABOUT INFLATION UNDERSHOOT

• ECB GOVERNING COUNCIL MEMBER NAGEL SPEAKS ON BLOOMBERG TV

• ECB’S NAGEL: FOR THE MOMENT `IT’S GOOD WHERE WE ARE’

• WUNSCH: ECB ESSENTIALLY IN A GOOD PLACE

• WUNSCH: RISKS A BIT MORE ON DOWNSIDE FOR INFLATION

• WUNSCH: ECB HAS DONE CLOSE TO PERFECT JOB

• ECB GOVERNING COUNCIL MEMBER WUNSCH SPEAKS IN WASHINGTON

• ECB’S WUNSCH: EUROPE’S ECONOMY HAS BEEN RESILIENT

• LAGARDE: ECB WELL POSITIONED TO FACE FUTURE SHOCKS

• ECB’S KOCHER: NO NEED TO BE OVER-ACTIVE

• KOCHER: ECB POLICY IS IN A `GOOD PLACE’

• ECB GOVERNING COUNCIL MEMBER MARTIN KOCHER SPEAKS IN WASHINGTON

• FRENCH-GERMAN 10Y SPREAD FALLS BELOW 76BPS TO LOWEST SINCE AUG

UK (Macro/Central Bank)

• BOE’S GREENE: TRADE UNCERTAINTY COULD ‘CHILL’ ECONOMIC ACTIVITY

• BOE’S GREENE: IMPROVED EU TIES WOULD HELP CONTROL INFLATION

• GREENE: PRETTY HIGH LIKELIHOOD OF SIMULTANEOUS SUPPLY SHOCKS

• BOE’S MANN: WOULD BUY INTO ‘MORE RESTRICTIVE FOR LONGER’ PATH

• BOE’S MANN: DON’T AGREE SHOULD LOOK THROUGH INFLATION SPIKE

• BOE’S MANN: EXPECTATIONS DRIFTED FROM TARGET-CONSISTENT RATES

• BOE’S MANN: TRADE IS NOT WEIGHING ON INFLATION

• BOE’S MANN: DOMESTIC PRICE FACTORS DOMINATE EXTERNAL FACTORS

• BOE POLICYMAKER CATHERINE MANN SPEAKS AT EVENT IN WASHINGTON

• BOE’S MANN: COULD BE MORE FINANCIAL TURBULENCE GOING FORWARD

• BOE’S MANN: INFLATION PERSISTENCE IS MAIN POLICY CHALLENGE

• BOE’S MANN: RESTRICTION NEEDED TO REIN IN PRICE EXPECTATIONS

• BOE’S MANN: ECONOMIC ACTIVITY MODEST, LABOR MARKETS SOFTENING

• BOE POLICYMAKER CATHERINE MANN SPEAKS IN WASHINGTON

• BOE’S MANN: DOMESTIC COMPONENT IS DOMINANT INFLATION FEATURE

Japan (Macro/Central Bank / FX Backdrop)

• BOJ’S UEDA: WILL COLLECT MORE INFORMATION BEFORE OCT. DECISION

• BOJ’S UEDA: WILL TIGHTEN IF EXPECTED OUTLOOK MATERIALIZES

• BOJ’S UEDA: TARIFF IMPACT HAS BEEN EMERGING WITH A LAG

• BOJ’S UEDA: GEOPOLITICAL, TRADE TENSIONS POSE DOWNSIDE RISKS

• BANK OF JAPAN GOVERNOR UEDA SPEAKS IN WASHINGTON

• BOJ’S UEDA: THE GLOBAL ECONOMY REMAINS RESILIENT SO FAR

• JAPAN’S VICE FINANCE MINISTER MIMURA SPEAKS IN WASHINGTON

• JAPAN’S MIMURA: WELCOME NATIONS INTRODUCING STABLECOIN RULES

China/Asia–U.S. Relations

• YONHAP CITES STATE DEPT ON CHINA SANCTION AGAINST SKOREA HANWHA

• US SAYS CHINA BIDS TO WEAKEN US-SKOREA SHIPBUILDING TIES:YONHAP

• CHINA’S WANG YI CALLS FOR EFFECTIVE COMMUNICATION WITH US

• DECOUPLING BETWEEN CHINA, US ISN’T RATIONAL CHOICE: WANG YI

• CHINA’S WANG BLAMES US’S RESTRICTIVE MEASURES FOR TRADE TENSION

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251016

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Tearsheet Crypto 20251016

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Tearsheet Fi 20251016

16.4MB ∙ PDF file

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Tearsheet Eq 20251016

20.9MB ∙ PDF file

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Tearsheet Fx 20251016

17.3MB ∙ PDF file

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Tearsheet Comd 20251016

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Currency

4.59MB ∙ PDF file

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Cfr Model Output Fixed Income

3.01MB ∙ PDF file

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Cfr Model Output Equities

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Cfr Model Output Commodities

5.93MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251016

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Key Points To Set The Context:

US Market Wrap: Credit Jitters Dominate; Fed Caution vs. Growth Risk; Banks Lead Drawdown (S&P −0.96%)

The tape cracked as regional-bank stress returned to center stage and credit worries overwhelmed a steady Fed message. The S&P 500 fell −0.96%, a broad de-risking that pushed gold to fresh highs and pulled Treasury yields lower (10y ~4%, 2y making new cycle lows). With earnings unable to offset the macro overhang (tariffs, shutdown, AI froth), the path of least resistance was down, and most painfully for Financials.

Sector Attribution

Weighted Return Contribution (S&P −0.96%)
Financials (−0.34%) was the single largest drag, eclipsing Tech (−0.14%). Discretionary (−0.12%), Communication Services (−0.09%), Industrials (−0.09%), and a cluster of defensives—Staples, Utilities, Health Care, Energy (each around −0.04%)—added steady bleed. Materials and Real Estate were marginal (each −0.01%). The message: this was a credit-led draw, not a pure growth/tech unwind.

Unweighted Performance (Breadth)
Breadth was decisively risk-off. Financials (−2.56%) collapsed on renewed regional-bank concerns (bad-loan disclosures), with Utilities (−1.47%), Energy (−1.34%), Discretionary (−1.19%), Staples (−1.10%), Industrials (−1.05%), and Real Estate (−0.58%) all weak. Tech (−0.40%) and Materials (−0.40%) slipped but were not the epicenter. Communication Services (−0.87%) rounded out the broad deterioration. This is classic “credit scare → beta and yield-sensitives sell together.”

Macro Overlay

Catalyst mix: Headlines around bad loans at two regional lenders reignited fears about the health of U.S. credit just as shutdown risk and tariff noise linger. Asia is set to follow lower. Haven demand surged, gold to new records, while oil slipped to fresh five-month lows on rising de-escalation hopes around Russia supply.

Policy: The Fed tone stayed steady but split on dose. Governor Waller leaned into “careful cuts” (25 bp steps, watch the labor softening), while Miran argued for a larger move given tariff-driven downside risks. Markets still price a gradual easing path through 2026, but today’s price action said the growth/credit channel, not inflation, is steering risk.

Rates/FX: Bullish duration with curve rally led by the front end (labor cooling + credit nerves). The dollar eased as havens rotated to gold and JPY, but FX stayed orderly, this was about domestic credit first, global risk second.

The Read-Through

This was a credit-led risk-off, not a simple cyclical wobble. Financials’ outsized weighted drag confirms the locus of stress; Utilities’ and Staples’ weakness alongside falling yields flags de-risking rather than a clean “defensive bid.” If the bank headlines remain contained, the damage stays tactical; if not, the equity-bond correlation flips back to “bad is bad.”

US IG Credit Wrap: Credit Nerves, Fed Dovish Drift, Spreads Still Anchored in Mid-50s (IG OAS ~54.9 bp)

IG took the bank-scare headlines in stride. Despite equities rolling over (S&P −0.96% with Financials the heaviest hit), gold at fresh records and a front-end rates rally, cash IG stayed orderly and OAS held the familiar mid-50s channel. Tone = “risk wobbly, carry intact.”

Where We Sit (from the chart)

• IG OAS: ~54.9 bp (last 54.87)

• 5-yr avg: ~61.9 bp → ~7 bp inside

• Cycle tights: ~46.1 bp → ~8–9 bp above

• 2022 wides: ~111.2 bp → ~56 bp tighter

Tape & Macro Overlay

• Catalyst mix: Regional-bank charge-off headlines reignited credit worries; Asia is set to open softer.

• Policy: Waller keeps pushing “careful cuts” (25s, watch the softening labor market). Miran argues for a larger move given tariff-shock downside risk. The market still embeds a steady easing glide through ’26.

• Rates/FX/Commodities: Bullish duration (2y to new cycle lows, 10y ~4%). DXY softer; JPY steadier. Gold makes new highs; oil sits near five-month lows on rising odds of freer Russian flows.

Mapping to IG

• Base case: 50–60 bp range persists. Fed easing + potential QT flexibility cushion funding; tariff/geopolitics cap the upside for spreads.

• Banks: The locus of equity stress, but senior IG remains supported by abundant term funding and a friendlier rates backdrop; watch for idiosyncratic widening, not systemic.

• Cyclicals (Energy/Materials/Industrials): Two-way with oil and tariff tape; stay up-in-quality, duration neutral.

• Defensives (Staples/HC/REIT IG): Rich but resilient; carry over capital gains unless rates rally accelerates.

Risk Markers to Watch

• Regional-bank disclosures/charge-offs breadth (does it spread beyond a couple names?).

• Front-end OIS vs. data vacuum from the shutdown (labor signals will steer the dose of cuts).

• Gold ↑ / oil ↓ mix: clean credit hedge vs. creeping growth scare.

This was a credit-led equity drawdown day, but IG beta didn’t crack. As long as bank stress looks contained and the Fed stays in easing mode, IG OAS should remain range-bound with a slight grind-tighter bias inside 50–60 bp. A decisive break wider likely needs a genuine growth or funding shock; absent that, carry still does the work.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12.1MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

You can find the recent Bitcoin report I published here:

See all the details for locking in the lower price before it increases on Friday here (bonus reports included):

As always, the systematic models and strategies are updated below.

Main Developments In Macro

U.S. Macro and Policy

• US OCT. EMPIRE STATE FACTORY INDEX AT 10.7; EST. -1.8

• API Reports US Crude Stockpiles Rose 7.4M Bbls Last Week

• SUPREME COURT CASTS DOUBT ON USE OF RACE IN DRAWING VOTING MAPS

• JUDGE BLOCKS FEDERAL FIRINGS DURING GOVERNMENT SHUTDOWN FOR NOW

• JEFFRIES: WE BELIEVE THE SHUTDOWN FIRINGS ARE ILLEGAL

• JEFFRIES EXPECTS LAYOFFS TO BE REVERSED BY CONGRESS OR COURTS

• HOUSE DEMOCRATIC LEADER HAKEEM JEFFRIES SPEAKS TO REPORTERS

• MIRAN: FED MUST BE SEEN AS NONPOLITICAL TO REMAIN INDEPENDENT

• MIRAN: SEE INFLATION RETURNING TO 2% A YEAR AND A HALF FROM NOW

• MIRAN: TWO MORE RATE CUTS THIS YEAR SOUNDS REALISTIC

• MIRAN: I SEE SUBSTANTIAL DISINFLATION COMING A YEAR FROM NOW

• MIRAN: DON’T SEE RISK PREMIUM EMBEDDED IN MARKETS BESIDES GOLD

• MIRAN: DON’T KNOW WHAT BENEFIT OF MORE BALANCE-SHEET RUNOFF IS

• FED’S MIRAN: US-CHINA TENSION POTENTIALLY IMPORTANT FOR OUTLOOK

• FED GOVERNOR STEPHEN MIRAN SPEAKS AT CNBC EVENT

• BESSENT: GOOD CHANCE WE SEE 1990S-LIKE PRODUCTIVITY MIRACLE

• BESSENT: MAY BE IN THE THIRD INNING OF THE AI INVESTMENT BOOM

• BESSENT: EMPLOYMENT BOOM ALWAYS FOLLOWS A CAPITAL-SPENDING BOOM

• BESSENT: WE ARE PAYING OUR MILITARY TODAY

• BESSENT: SEEN ESTIMATES SHUTDOWN HURTING ECONOMY UP TO $15B DAY

• BOFA’S MOYNIHAN SAYS BANK’S CREDIT QUALITY HAS BEEN IMPROVING

• UNITED AIRLINES SEES 4Q ADJ EPS $3 TO $3.50, EST. $2.82

• UAL PLANS TO INVEST AN ADDED $1B IN CUSTOMER EXPERIENCE IN 2026

• BLACKROCK AND NVIDIA IN $40B DATA CENTER TAKEOVER: FT

U.S.–China Trade & Global Supply Chain

• BESSENT: CHINA ‘CAN’T BE TRUSTED WITH THE GLOBAL SUPPLY CHAIN’

• BESSENT: IF CHINA AIMS TO BE UNRELIABLE, WORLD MUST DECOUPLE

• BESSENT: WILL BE GROUP RESPONSE TO CHINA

• BESSENT: CHINA’S RUSSIA OIL BUYING FUELS RUSSIA WAR MACHINE

• BESSENT: PERHAPS CHINA VICE COMMERCE MINISTER WENT ‘ROGUE’

• BESSENT SUGGESTS POSSIBILITY OF LONGER CHINA TARIFF TRUCE

• BESSENT: LONGER TARIFF TRUCE POSSIBLE FOR RARE EARTH DELAY

• GREER: CHINA RARE EARTHS MOVE IS GLOBAL SUPPLY CHAIN POWER GRAB

• GREER: THERE IS ROOM FOR POSITIVE ECONOMIC TIES WITH CHINA

• WALDRON: US-CHINA TENSIONS DO SEEM TO BE MOVING MARKETS

• WALDRON: MARKETS GENERALLY UNEMOTIONAL ABOUT GEOPOLITICAL RISK

• BESSENT: WILL SEE TRADE ANNOUNCEMENTS DURING TRUMP-ASIA TRIP

• BESSENT: AS FAR AS I KNOW, TRUMP ‘IS A GO’ ON XI MEETING

• BESSENT: US-CANADA IS ‘BACK ON TRACK’

• BESSENT: BESSENT TARIFF-TRUCE COMMENT TIED TO CHINA RARE-EARTH DELAY

• GLOBAL TIMES: TRUMP’S THREAT ON CHINA COOKING OIL ‘INEFFECTIVE’

• MEXICO TO TALK US TARIFF DISCOUNTS ON HEAVY TRUCK PARTS: EBRARD

• MEXICO, US AGREE TO KEEP CONSTRUCTIVE DIALOG IN DC MEETING

Monetary Policy (Global)

• ECB’S NAGEL: STICKY SERVICES INFLATION MEANS NO COMPLACENCY

• ECB’S NAGEL: TOO EARLY TO GIVE INDICATIONS ABOUT NEXT RATE MOVE

• ECB’S VILLEROY REITERATES RATE CUT MORE LIKELY THAN A RATE HIKE

• ECB’S MULLER: INFLATION RISKS ARE MORE OR LESS BALANCED NOW

• ECB’S MULLER: I DON’T SEE WHY WE SHOULD HAVE AN EASING BIAS

• ECB’S MULLER: CHINA EXPORT CONTROLS COULD BE INFLATIONARY

• ECB’S VILLEROY: GLOBAL ECONOMY SURPRISINGLY RESILIENT

• RBA’S BULLOCK: 4.2% UNEMPLOYMENT AT THE MOMENT IS GOOD

• RBA’S BULLOCK SAYS HER JOB IS NOT DONE ON POLICY OBJECTIVES

• RBA’S KENT: EASING FINANCIAL CONDITIONS HELP BALANCE ECONOMY

• BULLOCK SAYS RBA POLICY IS CURRENTLY ‘MARGINALLY TIGHT’

Macro Themes

• IMF PREDICTS GLOBAL PUBLIC DEBT TO EXCEED 100% OF GDP BY 2029

• BESSENT: THE EURO SHOULD BE STRONG, POINTING TO FISCAL POLICY

• BESSENT: WE URGE WORLD BANK TO FINANCE RELIABLE ENERGY SOURCES

• BESSENT: SUPPLY CHAINS FOR CRITICAL MINERALS IS A US PRIORITY

• BESSENT URGES WORLD BANK TO END SUPPORT FOR CHINA

• WALDRON: ANIMAL SPIRITS ARE THERE, BUILDING AND GROWING

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Crypto 20251015

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Tearsheet Stockbond 20251015

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Tearsheet Fx 20251015

17.3MB ∙ PDF file

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Tearsheet Fi 20251015

16.4MB ∙ PDF file

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Tearsheet Eq 20251015

20.8MB ∙ PDF file

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Tearsheet Comd 20251015

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Currency

4.6MB ∙ PDF file

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Cfr Model Output Fixed Income

3.01MB ∙ PDF file

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Cfr Model Output Commodities

5.93MB ∙ PDF file

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Cfr Model Output Equities

5.36MB ∙ PDF file

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251015

4.12MB ∙ PDF file

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Key Points To Set The Context:

US Market Wrap: Tariff Volatility Meets Fed Calm — Defensive Rotation as Growth Wobbles (S&P −0.23%)

Markets gave back early-week gains as renewed trade-war rhetoric from President Trump collided with resilient but cautious Fed signals. The S&P 500 slipped −0.23%, reversing intraday gains as tariff headlines once again dictated direction. Treasury yields edged higher after briefly testing year-to-date lows, while gold briefly topped $4,200/oz as haven demand resurfaced. The session’s tone was one of indecision, neither panic nor conviction, caught between policy optimism and geopolitical anxiety.

Sector Attribution

Weighted Return Contribution (S&P −0.23%)
Losses were concentrated in cyclicals. Industrials (−0.08%), Consumer Discretionary (−0.06%), and Financials (−0.05%) led the drag, while Tech (−0.14%) was the single largest detractor, erasing Monday’s AI-led gains. Offsetting that, modest strength in Real Estate (+0.03%), Health Care (+0.03%), and Communication Services (+0.06%) cushioned the downside.

Unweighted Performance (Breadth)
The breadth picture was defensive. Real Estate (+1.36%) topped the leaderboard alongside Utilities (+0.61%) and Communication Services (+0.57%) — a clear pivot toward yield and stability. Cyclicals bore the brunt: Industrials (−0.94%), Materials (−0.61%), and Energy (−0.50%) all weakened on concerns that the tariff escalation could dent trade-sensitive earnings. Discretionary (−0.57%) and Tech (−0.39%) followed, underscoring fading momentum in high-beta sectors.

Macro Overlay

Catalyst & Tape:
President Trump formally declared the U.S. is “in a trade war” with China, following Treasury Secretary Bessent’s attempt to de-escalate tensions by proposing a longer tariff truce tied to China’s rare-earth export controls. Markets initially rallied on Bessent’s remarks before reversing as Trump doubled down on a 100% tariff threat, warning that “without tariffs, we’d be exposed as nothing.” The intraday whipsaw reflected investor unease at the policy inconsistency, stimulus hopes clashing with protectionist reflexes.

Rates & FX:
Two-year yields closed near 3.50%, up slightly but still hugging their lowest levels since 2022, while 10s held near 4.02%. Fed Governor Miran reiterated expectations for “two more rate cuts this year,” keeping easing priced near 125 bps through end-2026. The dollar eased modestly (−0.3%), yen steadied around 151.1, and the euro hovered near 1.1650. The policy narrative remains one of gradual disinflation against a backdrop of rising global trade risk.

Commodities & Crypto:
WTI rebounded +0.9% to $58.80/bbl after Trump claimed India would halt purchases of Russian oil, a move that could tighten global supply. Gold briefly breached $4,200/oz as traders rotated toward havens. Crypto was stable, Bitcoin +0.2%, Ether +0.3%, after the prior session’s sharp pullback.

Corporate & Credit:
Earnings were mixed. United Airlines beat expectations and guided higher on travel demand; banks extended strength from earlier in the week with Morgan Stanley and BofA posting solid results. AI enthusiasm steadied after ASML’s upbeat guidance on chip demand, though rotation into defensives hinted that investors are hedging the policy risk premium.

The Read-Through

This was a risk-parity unwind day. modest index losses masking deep internal rotation. The market remains torn between Fed relief and tariff escalation, with the market unwilling to fully commit to either risk-on or risk-off. The outperformance of Real Estate, Utilities, and Communication Services tells the story of, capital preservation is moving into focus.

The broader takeaway is that liquidity and policy reassurance can slow volatility but not suppress it in a politically charged environment. With Trump openly framing the U.S.–China relationship as a “trade war,” the market now faces another bout of headline risk just as the Fed signals its easing phase is intact. Breadth suggests risk appetite isn’t dead, it’s defensive.

US IG Credit Wrap: Tariff Whipsaw, Fed Cushion — Spreads Hold the Mid-50s Channel (IG OAS ~52.8 bp)

Another headliney session, Bessent floated a longer tariff truce on rare earths, Trump declared “you’re in a trade war” but IG held firm. Equities chopped, gold stayed bid, front-end yields edged up from the lows, yet spreads barely blinked. The read from credit remains “carry intact, nerves audible.”

Where We Sit (from the chart)

• IG OAS: ~52.8 bp

• 5-yr avg: ~62.4 bp → ~9.6 bp inside

• Cycle tights: 43.8 bp → ~9.0 bp above

• Pandemic wides: 151.8 bp → ~99 bp tighter
  (Chart stats: Last ~52.79 | High 151.8 on 03/20/20 | Avg 62.36 | Low 43.75 on 02/13/20.)

Credit Context

• ≤50–60 bp: Carry-positive zone for IG beta; room to oscillate with headlines without breaking trend.

• 60–70 bp: The “noise band” where trade or growth scares can nudge beta wider temporarily.

• >90 bp: Needs a real macro shock — still low probability with easing expectations firm and QT-pause talk in play.

Tape & Macro Overlay

• Policy vs. politics: Bessent’s de-escalation attempt (longer tariff pause if China backs off rare-earth controls) briefly steadied risk; Trump’s “100% tariff” posture re-introduced uncertainty. Markets are toggling between liquidity relief and policy risk.

• Rates/FX: 2y closed ~3.50%, near YTD lows; 10y ~4.0%. The street leans to at least one outsized cut by year-end, with ~’26 cumulative easing still embedded. A potential QT pause remains a tailwind for spreads via funding/swap-spread channels.

• Commodities: WTI +0.9% off five-month lows on chatter India could curb Russian barrels; gold >$4,200/oz on hedging demand.

• Asia handoff: Futures signal a choppy open as the region digests the “trade-war” framing; volatility there matters at the margin for EM-heavy IG corporates but not thesis-changing while U.S. funding stays benign.

Mapping to IG

• Base case: 50–60 bp range, with a grind-tighter bias if earnings stay constructive and tariff rhetoric cools into November.

• Sectors:

  • Banks: Supported by cleaner earnings prints and easier term funding; senior preferred should remain well-bid.

  • Cyclicals (Energy/Materials/Industrials): Two-way with tariff headlines and oil. Keep duration neutral and lean up-in-quality.

  • Defensives (Staples/HC/REITs IG): Benefit from dip-buying on any wobble; spreads already rich, so carry > capital gains.

We’ve shifted from “holiday-quiet mid-50s” to “headline-tested but anchored mid-50s.” The Fed cushion (cuts priced, QT-pause risk) keeps the downside contained for IG even as trade friction caps the upside. Until policy rhetoric decisively escalates or growth data crack, the path of least resistance is sideways-to-slightly-tighter in a 50–60 bp channel. Upside risk to OAS (wider) = a sudden growth scare or disorderly tariff step; downside (tighter) needs a clean risk tape and a live duration bid.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Equity Indices:

Read more

Macro Regime Tracker Index:

All of the macro views are linked here in the recent video I recorded for paid subscribers. The main question is, HOW MUCH risk is left in equities?

As always, see all of the systematic models and strategies updated below. Thanks

Main Developments In Macro

U.S. Monetary Policy and Fed Commentary

• FED’S POWELL: ECONOMIC ACTIVITY DATA HAVE BEEN SURPRISING TO UPSIDE

• POWELL: THERE ARE LESS GOOD SUBSTITUTES FOR GOVT INFLATION DATA

• POWELL: LABOR DEMAND IS MOVING A LITTLE FASTER THAN SUPPLY

• POWELL: LABOR MARKET SHOWS PRETTY SIGNIFICANT DOWNSIDE RISKS

• POWELL: PERSISTENT TARIFF INFLATION IS CERTAINLY A RISK

• FED’S COLLINS: INFLATION CERTAINLY CONTINUES TO BE TOP OF MIND

• COLLINS: DOWNSIDE RISKS TO LABOR MARKET HAVE LIKELY RISEN

• COLLINS: EXPECT RELATIVELY MODEST FURTHER RISE IN UNEMPLOYMENT

• COLLINS: INFLATION RISK SOMEWHAT LESS THAN PREVIOUSLY THOUGHT

• COLLINS: POLICY WOULD REMAIN RESTRICTIVE EVEN WITH MORE EASING

• FED’S COLLINS: PRUDENT TO NORMALIZE RATES A BIT FURTHER IN 2025

• BOWMAN: CONTINUE TO SEE TWO MORE RATE CUTS BEFORE END OF YEAR

• FED’S BOWMAN SAYS SUPERVISION SHOULD FOCUS ON MATERIAL RISK

• BOWMAN: FED SEEKING INPUT ON REQUIREMENTS FOR STABLECOIN RULES

• BOWMAN: OFFERING MORE STRESS TEST PLANS IN NEXT WEEK OR SO

U.S. Politics, Fiscal, and Trade

• WHITE HOUSE BUDGET OFFICE SAYS WILL ‘RIDE OUT’ SHUTDOWN

• WHITE HOUSE BUDGET OFFICE SAYS WILL CONTINUE LAYOFFS

• WHITE HOUSE BUDGET OFFICE POSTS ON X ABOUT LAYOFFS, SHUTDOWN

• HOUSE SPEAKER MIKE JOHNSON SPEAKS TO REPORTERS AT THE CAPITOL

• JOHNSON: TRUMP ADMIN HAS THE RIGHT TO MOVE FUNDS TO PAY TROOPS

• JEFFRIES: THERE HAS TO BE GOP WILLINGNESS TO TALK ON SHUTDOWN

• JEFFRIES: HOUSE DEMOCRATS ON DUTY IN DC READY TO OPEN GOVT

• MINORITY LEADER HAKEEM JEFFRIES SPEAKS TO REPORTERS

Trump and Trade / Geopolitics

• TRUMP: CONSIDERING TRADE MEASURES TOWARD CHINA AS RETRIBUTION

• TRUMP: CHINA NOT BUYING US SOYBEANS IS ECONOMICALLY HOSTILE ACT

• TRUMP: HAVE TO BE CAREFUL WITH CHINA

• TRUMP: GREAT RELATIONSHIP WITH XI, SOMETIMES IT GETS TESTY

• TRUMP: THINK RELATIONSHIP WITH CHINA WILL BE FINE

• TRUMP: BRICS WAS AN ATTACK ON THE US DOLLAR

• TRUMP: I LIKE THE DOLLAR, VERY STRONG ON THE DOLLAR

• TRUMP PRAISES CURRENT OIL, GASOLINE PRICES

• TRUMP: TRADE AGREEMENT WITH ARGENTINA WILL BE POSSIBLE

• TRUMP: MILEI IS ON THE VERGE OF ECONOMIC SUCCESS

• TRUMP SAYS HE WILL ENDORSE MILEI

• TRUMP: WANT TO SEE ARGENTINA SUCCEED, VERY IMPORTANT COUNTRY

• TRUMP: RUSSIAN ECONOMY IS GOING TO COLLAPSE

• TRUMP: PUTIN DOESN’T WANT TO END WAR

• TRUMP: PROBABLY STILL HAVE GOOD RELATIONSHIP WITH PUTIN

• TRUMP: IF HAMAS DOES NOT DISARM, WE WILL DISARM THEM

• GREER: CHINA TARIFF COULD HAPPEN SOONER, AS TRUMP SAID

• GREER: 100% CHINA TARIFF DEPENDS ON WHAT CHINESE DO

• GREER: CHINESE REALIZE THEY OVERSTEPPED

• GREER: CHINA RARE EARTHS MEASURE IS DISPROPORTIONATE

• GREER: HAVE HAD CONSTRUCTIVE TALKS WITH CHINA OVER PAST 6 MOS

• US TRADE REPRESENTATIVE JAMIESON GREER SPEAKS ON CNBC

Europe

• LAGARDE: RISKS TO ECONOMIC OUTLOOK ARE MORE BALANCED

• LAGARDE: MONETARY POLICY IN EUROPE HAS DONE ITS JOB

• LAGARDE: ECB WELL-POSITIONED TO RESPOND TO POTENTIAL SHOCKS

• LAGARDE: WOULD NEVER SAY ECB IS DONE CUTTING RATES

• ECB’S LAGARDE: ECONOMY HAS BEEN RELATIVELY RESILIENT TO TARIFFS

• ECB GOVERNING COUNCIL MEMBER MAKHLOUF SPEAKS IN WASHINGTON

• MAKHLOUF: EUROPEAN ECONOMY IS SHOWING RESILIENCE

• MAKHLOUF: ECB IN GOOD PLACE WITH DISINFLATIONARY PROCESS OVER

• ECB’S MAKHLOUF: INFLATION IS WHERE WE WANT IT TO BE

Broader Global Context

• BESSENT: EUROPE NEEDS TO RATCHET UP PRESSURE ON RUSSIA

• BESSENT: HAPPY WITH THE CURRENCY ARRANGEMENT WITH ARGENTINA

• BESSENT: US AID TO ARGENTINA NOT CONDITIONED TO CHINA SWAP END

• BESSENT COMMITED TO WORKING WITH G7 PARTNERS TO PRESS RUSSIA

• WHITAKER: EXPECT ‘BIG’ UKRAINE WEAPONS ANNOUNCEMENTS TOMORROW

• WHITAKER: NO CARVE-OUTS FROM NATO DEFENSE SPENDING

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251014

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Tearsheet Crypto 20251014

4.63MB ∙ PDF file

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Tearsheet Fx 20251014

17.3MB ∙ PDF file

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Tearsheet Fi 20251014

16.4MB ∙ PDF file

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Tearsheet Eq 20251014

20.8MB ∙ PDF file

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Tearsheet Comd 20251014

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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Fred Dashboard V2

8.34MB ∙ XLSX file

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Currency

4.6MB ∙ PDF file

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Cfr Model Output Fixed Income

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Cfr Model Output Commodities

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Key Points To Set The Context:

US Market Wrap: Trade Friction Tempers Fed Relief — Cyclicals Lead as AI Euphoria Fades (S&P +0.83%)

Markets struggled to reconcile Fed reassurance with resurgent trade tension after President Trump’s remarks reignited friction with China. The S&P 500 clawed out a modest +0.83% gain, sustained by rotation into cyclicals and banks, but under the surface the mood turned fragile. Powell’s speech at the NABE conference affirmed an October rate cut and hinted that quantitative tightening could end soon, but traders were distracted as Trump threatened new restrictions on Chinese cooking-oil trade, pulling risk appetite back to neutral.

Sector Attribution

Weighted Return Contribution (S&P +0.83%)
Leadership came from Financials (+0.23%), Industrials (+0.17%), and Consumer Discretionary (+0.15%), together accounting for roughly two-thirds of the index’s move. Communication Services (+0.11%) added follow-through momentum, while Energy, Health Care, and Staples each chipped in modestly (~ +0.04–0.07%). Technology lagged slightly (–0.05%) as the AI trade paused for breath.

Unweighted Performance (Breadth)
Breadth was surprisingly healthy despite the macro noise. Industrials (+2.02%) and Financials (+1.68%) topped the table, followed by Materials (+1.63%) and Consumer Discretionary (+1.47%), underscoring rotation into real-economy cyclicals. Energy (+1.27%) and Staples (+1.35%) also advanced, hinting that investors remain anchored to quality earnings and pricing power. Tech (–0.15%) fell for a second session as talk of an AI bubble grew louder, reflecting fatigue rather than fundamental reversal.

Macro Overlay

Catalyst & Tape:
The day began with optimism after Powell signaled that the Fed is firmly on track to deliver another quarter-point cut in October and may halt QT to preserve liquidity. Two-year yields hovered near 3.47%, their lowest since 2022, reinforcing the “policy-easing but data-dependent” narrative. Yet any dovish tailwind was blunted by renewed U.S.–China trade tension, reminding investors that geopolitical risk still trumps policy comfort.

Rates & FX:
Treasuries flattened at the front end; the 10-year yield slipped to 4.02%. The dollar eased (–0.1%) as haven demand supported the yen (+0.4%) and euro (+0.3%). Markets continue to price ~125 bps of cumulative Fed cuts by end-2026 with a terminal near 3%.

Commodities & Crypto:
Oil retraced (–1.7% WTI to $58.47) on concern that weaker global trade could sap demand, while gold rose (+0.8% to $4,144/oz) as traders sought protection against policy uncertainty. Bitcoin (–2.6%) and Ether (–4.1%) fell sharply, mirroring fading risk appetite in tech.

Corporate & Credit:
Earnings season unofficially kicked off on a strong note, Goldman and Citi beat estimates across divisions, JPMorgan flagged credit vigilance but solid trading income, and Wells Fargo raised profitability guidance. BlackRock reported $205bn inflows as private-credit exposure expanded. Yet the AI theme wobbled: Citigroup’s CFO warned of “frothiness” in valuations, and AMD slipped after reports of a slower chip-order pipeline.

The Read-Through

This was a rotation day, not a breakout. The index advance masked internal divergence: cyclicals outperformed as defensives and tech decoupled. Powell’s assurance of imminent cuts soothed rate fears, but Trump’s tariff rhetoric revived growth anxiety. a reminder that liquidity and policy support can’t fully offset political shocks. The AI trade looks stretched, while bank strength hints at stabilizing credit conditions. For now, markets are balancing between easing expectations and external risk; breadth says “risk is alive,” but leadership says “it’s tired.”

US IG Credit Wrap: Trade Friction Tests Nerves, Fed Dovish Tilt Keeps OAS Anchored (IG OAS ~53.4 bp)

A fresh bout of U.S.–China tension knocked equities and oil, while haven bids supported gold and the front-end. Credit held its ground: IG OAS stayed pinned in the low-to-mid-50s as Powell reaffirmed an October cut and hinted QT may end soon, both supportive for liquidity and swap spreads. The message from spreads is “uneasy but intact carry.”

Where We Sit (from the chart)

• IG OAS: ~53.4 bp

• 5-yr avg: ~62.4 bp → ~9 bp inside

• Cycle tights: 43.8 bp → ~9.6 bp above

• Pandemic wides: 151.8 bp → ~98 bp tighter
  (Chart stats: Last ~53.37 | High 151.8 on 03/20/20 | Avg 62.36 | Low 43.75 on 02/13/20.)

Credit Context

• <55–60 bp: Carry-positive, duration-friendly zone for insurers/pensions; room to oscillate without breaking trend.

• 60–70 bp: Noise band where tariff or growth scares can push beta wider temporarily.

• >90 bp: Requires a genuine macro shock—still a low-probability tail given the policy backdrop.

Tape & Macro Overlay

• Equities: Soft risk tone as tariff rhetoric re-emerged; AI leadership wobbled, banks resilient into earnings.

• Rates/FX: 2y ~3.47% (cycle lows), 10y ~4.02%; easing expectations sticky (Oct cut priced, Dec likely). QT pause talk = supportive for spreads via funding/swap-spread channel.

• Commodities/Crypto: WTI –1.7% (demand anxiety), gold +0.8% (hedging bid). Crypto heavy alongside tech fatigue.

Mapping to IG

• Beta: With rates stable-to-softer and QT pause on the table, base case is a grind within 50–60 bp.

• Sector color: Cyclical sleeves (Energy/Materials/Industrials) are two-way with tariff headlines; banks benefit from earnings clarity and a friendlier funding backdrop.

• Primary/flows: Expect constructive reception for high-quality supply while volatility stays contained; liability-driven accounts keep clipping carry.

The Read-Through

We shift from “holiday-quiet mid-50s” to “headline-tested but anchored”. Powell’s dovish tilt caps downside in credit even as trade noise caps upside. Path of least resistance: 50–60 bp channel with a slight grind-tighter bias if earnings stay constructive and tariff escalation cools. Upside risk to OAS (wider) is a sharp growth scare; downside (tighter) needs a clean risk tape plus a live rates bid.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

I have laid out all the macro views in the following reports:

As always, all the systematic models and strategies are updated below.

Main Developments In Macro

U.S. Policy & Fed Commentary

• FED’S PAULSON: I SUSPECT BREAKEVEN JOB GROWTH IS LOWER THAN 75K

• FED’S PAULSON SIGNALS SUPPORT FOR TWO MORE 25 BPS CUTS IN 2025

• PAULSON: SEE NARROW BASE OF SUPPORT FOR GROWTH AND LABOR MARKET

• PAULSON: DON’T SEE TARIFFS CAUSING SUSTAINED INFLATION

• PAULSON: LABOR MARKET RISKS INCREASING, BUT ‘NOT OUTRAGEOUSLY’

• PHILADELPHIA FED PRESIDENT ANNA PAULSON COMMENTS IN SPEECH

U.S.–China Relations & Trade Dynamics

• STATE DEPARTMENT ISSUES STATEMENT ON CHINA, SCARBOROUGH REEF

• US CONDEMNS CHINA’S TARGETING PHILIPPINE VESSEL IN S. CHINA SEA

• US REAFFIRMS MUTUAL DEFENSE TREATY COMMITMENT TO PHILIPPINES

• CHINA TO ADJUST SPECIAL PORT FEES ON US SHIPS AS NEEDED

• CHINA EXEMPTS CHINA-MADE SHIPS OWNED BY US COS. FROM PORT FEES

• CHINA SETS YUAN FIX AT STRONGEST SINCE NOV. AMID TRADE TENSIONS

• BESSENT: WORKING-LEVEL TALKS WITH CHINA THIS WEEK

• BESSENT: OPTIMISTIC THAT CAN DE-ESCALATE WITH CHINA

• BESSENT: IDEA IS TO GIVE CHINA TIME TO MEET, TALK

• BESSENT: WE WON’T LET CHINA EXPORT RESTRICTIONS GO ON

• BESSENT: THIS IS CHINA VS WORLD

• US SHOULD ENGAGE WITH CHINA IN DIALOG, LIN SAYS

• CHINA SEPT. EXPORTS IN USD TERMS RISE 8.3% Y/Y; EST. +6.6%

• CHINA SEPT. IMPORTS IN USD TERMS RISE 7.4% Y/Y; EST. +1.8%

• CHINA SEPT. TRADE SURPLUS $90.45B; EST. +$98.05B

• CHINA’S 30Y BOND FUTURES SURGE 0.5% ON RISKS OF TRADE TENSIONS

• CHINESE PROPERTY STOCK GAUGE FALLS AS MUCH AS 3.5%

• SPOT GOLD RISES TO RECORD ABOVE $4,060/OZ AMID US-CHINA SPAT

• TREASURY FUTURES RETREAT AS TRUMP CHINA TONE SOFTENS

• COPPER IN NEW YORK GAINS 2.2% AS TRUMP EASES TONE ON CHINA

• BRENT CRUDE EXTENDS GAIN ABOVE 1% AS TRUMP EASES TONE ON CHINA

U.S. Politics & Global Diplomacy

• PRESIDENT TRUMP SPEAKS AHEAD OF PEACE SUMMIT IN EGYPT

• TRUMP SPEAKS AT SIGNING CEREMONY IN EGYPT

• TRUMP: WOULD LOVE TO TAKE OFF IRAN SANCTIONS IF THEY TALK

• TRUMP: IRAN WANTS TO MAKE A DEAL

• TRUMP: THE HAND OF FRIENDSHIP, COOPERATION ALWAYS OPEN TO IRAN

• TRUMP, ZELENSKIY TO TALK AIR DEFENSE, WEAPONS ON FRIDAY: RTRS

• TRUMP PLANS TO WELCOME ZELENSKIY IN WASHINGTON ON FRIDAY: FT

• ZELENSKIY PLANS TO DISCUSS WEAPONS, AIR DEFENSE IN US

• TRUMP, ZELENSKIY TO ALSO TALK POSSIBLE RUSSIA NEGOTIATION: RTRS

• EGYPT’S SISI: CONFIDENT TRUMP ONLY ONE ABLE TO ACHIEVE PEACE

• TRUMP: GAZA NEEDS A LOT OF CLEANUP

• TRUMP ON PHASE 2 OF GAZA DEAL: IT’S STARTED

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251013

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Tearsheet Crypto 20251013

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Tearsheet Fi 20251013

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Tearsheet Eq 20251013

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Tearsheet Fx 20251013

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Tearsheet Comd 20251013

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Real Estate Spreadsheet V1

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Fred Dashboard V2

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Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income, and Currencies

You can find the educational primer and video explanation of these models here: LINK

Cfr Model Output Fixed Income

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Cfr Model Output Equities

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Cfr Model Output Commodities

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Cfr Model Output Currency

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Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker

The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.

Macro Regime Tracker 20251013

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Key Points To Set The Context:

US Market Wrap: Relief Rally Reclaims Risk, AI Drives Recovery (S&P +1.6%)

Markets rebounded sharply as traders reversed Monday’s tariff-driven sell-off, embracing signs of renewed diplomacy between Washington and Beijing. President Trump’s administration hinted at “openness to a deal,” while China’s Commerce Ministry echoed calls for further talks, enough to unwind the prior session’s panic. The move was turbo-charged by an AI-led melt-up: Broadcom (+10%) soared after striking a multiyear chip-supply deal with OpenAI, reigniting the semiconductor complex (+5%) and restoring confidence in the bull market’s tech backbone.

Sector Attribution

Weighted Contribution to Index (0.39%)
Leadership was concentrated in high-beta growth: Consumer Discretionary (+0.14%), Information Technology (+0.09%), and Communication Services (+0.05%) delivered over two-thirds of the S&P gain. Energy and Utilities chipped in (+0.02% each), while defensives such as Staples, Health Care, and Real Estate stayed marginally positive but irrelevant to performance breadth.

Unweighted Performance (Breadth)
Gains were broad but not euphoric. Consumer Discretionary (+1.32%), Energy (+0.87%), and Materials (+0.70%) led the charge as cyclical risk appetite returned. Utilities (+0.67%) and Real Estate (+0.61%) rounded out the gainers, reflecting a subtle bid for yield defensives even as growth rallied. Tech (+0.25%) lagged the headline narrative but dominated by weight. The S&P 500 rose 0.39% on a cap-weighted basis.

Macro Overlay

Catalyst & Tape:
The shift from confrontation to negotiation flipped sentiment on a dime. With Middle East tensions cooling and AI enthusiasm reignited, traders resumed chasing momentum. The “buy-the-dip” reflex, suppressed just one session ago returned in force.

Rates & FX:
Treasury futures were closed for Columbus Day, muting cross-asset signals. The dollar firmed (+0.2%) as risk appetite rebounded but not enough to pressure yields. Yen weakened (~0.8%) on renewed carry interest, while euro and sterling slipped modestly.

Commodities & Crypto:
WTI (+1.3%) and gold (+2.3% to $4,109/oz) both advanced, an unusual pairing that underscores how tariff relief coexists with persistent geopolitical hedging. Bitcoin (+0.7%) and Ether (+2.8%) added to the risk-on rotation.

Corporate & Credit:
JPMorgan’s pledge to direct $1.5 trillion toward U.S. security industries framed a domestic re-industrialization narrative aligned with Washington’s policy tone. AI infrastructure spend (Broadcom–OpenAI) reaffirmed the productivity-boom thesis that underpins equity valuations.

The Read-Through

The rebound illustrates how little conviction underpinned the prior sell-off. Markets remain liquidity-rich and headline-sensitive: remove the policy overhang, and risk demand snaps back instantly. Breadth and sector symmetry—cyclicals and defensives both green—suggest re-engagement rather than rotation. The macro mix (steady rates, easing trade tension, AI exuberance) keeps growth assets in control.

US IG Credit Wrap: Relief Bid Meets Holiday Lull; OAS Holds Mid-50s (IG OAS ~56.7 bp)

A risk-on reversal in equities (AI/semis leading) met a quiet rates backdrop with the US bond market shut, leaving IG spreads effectively unchanged on the day and still camped in the mid-50s. The tone improved, but without an active Treasury hedge and primary tape, there was little mechanical tightening to print. Base case: carry intact, two-way beta around headlines/earnings until cash reopens.

Where We Sit (from the chart)

• IG OAS: ~56.7 bp

• 5-yr avg: ~62.4 bp → ~5.7 bp inside

• Cycle tights: 43.8 bp → ~12.9 bp away

• Pandemic wides: 151.8 bp → ~95 bp tighter
  (Chart stats: Last ~56.7 | High 151.8 on 03/20/20 | Avg 62.37 | Low 43.75 on 02/13/20.)

Credit Context

• < 60 bp: Duration-friendly, carry-positive zone for insurers, pensions, and liability-driven buyers.

• 60–70 bp: Macro noise threshold, where volatility or inflation threats prompt positioning cuts.

• > 90 bp: Systemic stress unlikely unless global macro or geopolitical shocks return.

Tape & Macro Overlay

• Equities: Broad rebound as Washington/Beijing signaled talks; chips/AI re-accelerated.

• Rates/FX: UST cash closed; dollar a touch firmer. With no duration impulse, spreads largely marked time.

• Commodities/Crypto: WTI +1.3%, gold +2.3%, hedging bid persists even as risk re-engages.

• Event path: Earnings kick-off (money center banks first) with tariff rhetoric still the key macro swing factor.

Mapping to IG

• Carry > Convexity (still): Mid-50s is a carry-positive zone for A/AA duration buyers; yesterday’s widening hasn’t broken the channel.

• Beta pockets: If the equity tone holds into a live rates market, look for 1–2 bp relief in cyclicals (Energy/Materials/Industrials) that bore the tariff shock; BBB remains dispersion-heavy around guidance.

The read-through

We shift from “wider on shock” to “mid-50s with upside if risk holds.” The relief rally alone doesn’t compress OAS without rate-complex participation, but the setup favors a grind-tighter bias into earnings, conditional on constructive guidance and no fresh tariff escalation.

Mag7 Model:

See the intro published for how to use the Mag7 models here: Link

Mag7 Tear Sheet

12MB ∙ PDF file

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Capital Flows Interest Rate Sensitivity Model:

All of the interest rate sensitivity models are now reserved exclusively for paid subscribers. If you would like to do a free trial, you can with this LINK.

Launch video for these models is here: LINK

Read more

Macro Regime Tracker Index:

I have laid out my view on equities here:

As always, all the systematic models and strategies are updated below. I will be publishing another important report later today so keep an eye out for that.

Main Developments In Macro

Federal Reserve / Monetary Policy

• FED: REPORT IS DELAYED, NEED DATA FROM OTHER GOVT. AGENCIES

• FED: INDUSTRIAL PRODUCTION REPORT WON’T BE RELEASED OCT. 17

• FEDERAL WORKER UNIONS SEEK IMMEDIATE HALT TO SHUTDOWN LAYOFFS

• FEDERAL LAYOFFS HIT INTERIOR, TREASURY, COMMERCE DEPT: POLITICO

• FEDERAL LAYOFFS ARE SUBSTANTIAL: PUNCHBOWL

• FEDERAL LAYOFFS WON’T HIT EVERY AGENCY: PUNCHBOWL

• BLS WILL PUBLISH SEPTEMBER CPI REPORT ON OCT 24 AT 8:30AM ET

Fed Speakers:

• MUSALEM: NEED TO CONTINUE LEANING AGAINST INFLATION PERSISTENCE

• MUSALEM: LIMITED ROOM FOR CUTS BEFORE WE’RE TOO ACCOMMODATIVE

• MUSALEM: I’M OPEN-MINDED ABOUT POTENTIAL FURTHER RATE REDUCTION

• MUSALEM: I EXPECT LABOR MARKET TO SOFTEN SOME, IN ORDERLY WAY

• MUSALEM: INFLATION IS MATERIALLY ABOVE OUR TARGET

• FED’S MUSALEM: RIGHT NOW, MANDATES SEEM LIKE THEY’RE IN TENSION

• WALLER: OPEN TO QUARTER-POINT CUTS AT COMING MEETINGS

• WALLER: SEES NEED FOR RATE CUTS, BUT SHOULD BE CAUTIOUS

• WALLER: US LABOR MARKET IS NOT DOING GREAT

• WALLER: FED CAN USE ALTERNATIVE DATA DURING GOVERNMENT SHUTDOWN

US Macro Data

• UMICH PRELIM OCT. CONSUMER SENTIMENT FALLS TO 55; EST. 54

• UMICH PRELIM OCT. CONSUMER SENTIMENT WEAKEST READING SINCE MAY

• MICHIGAN OCT. CURRENT CONDITIONS RISES TO 61.0 VS 60.4

• MICHIGAN PRELIM. OCT. EXPECTATIONS INDEX FALLS TO 51.2 VS 51.7

• UMICH 1-YR INFLATION EXPECTATIONS FALL TO 4.6% VS 4.7%

• MICHIGAN 5–10 YR INFLATION EXPECTATIONS UNCHANGED AT 3.7%

Trade, Geopolitics, and Policy

• TRUMP THREATENS ‘MASSIVE INCREASE’ OF TARIFFS ON CHINESE GOODS

• TRUMP: MIGHT BE FORCED TO FINANCIALLY COUNTER CHINA’S MOVE

• TRUMP: MANY COUNTERMEASURES UNDER CONSIDERATION ON CHINA

• TRUMP: CHINA MADE A SINISTER MOVE WITH RARE EARTH CONTROLS

• TRUMP: CALCULATING INCREASED TARIFFS ON CHINESE PRODUCTS

• TRUMP: THERE SEEMS TO BE NO REASON TO MEET XI IN S. KOREA

Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities

Tearsheet Stockbond 20251010

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Tearsheet Crypto 20251010

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Tearsheet Fi 20251010

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Tearsheet Fx 20251010

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Tearsheet Eq 20251010

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Tearsheet Comd 20251010

35.7MB ∙ PDF file

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Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.

Fred Dashboard V2

8.34MB ∙ XLSX file

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Real Estate Spreadsheet V1

4.22MB ∙ XLSX file

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