Macro Regime Tracker: Bitcoin, Macro Flows, and Tariff Risk
Macro regime and risk assets qualified clear
The Macro Regime Tracker offers a daily lens on how shifts in growth, inflation, and liquidity affect short-term risk and reward. Leveraging machine learning, AI, and cross-asset data, it identifies macro changes and their impact on market positioning.
Macro Regime Tracker Index:
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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
Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.
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
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: 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:
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Equity Indices:
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