Macro Regime Tracker: Gold Unwind
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:
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
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: 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
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.
Breadth follow-through: Do Discretionary/Industrials keep carrying while Utilities/Staples/REITs lag? That’s the durability tell.
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.
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
CPI (Fri): A 0.3% core keeps the grind; 0.4–0.5% risks a brief duration tantrum and a pause in tightening.
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.
US–China tape: De-escalation keeps beta door open; fresh tariff shock would cap further compression.
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
Capital Flows Interest Rate Sensitivity Model:
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Launch video for these models is here: LINK
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