Macro Regime Tracker: Macro Flows
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:
I laid out all the macro view here:
Interest Rates, Equity Sectors, and Macro Positioning
Interest Rates, Equity Sectors, and Macro Positioning
As always, all the systematic models and strategies are updated below.
Main Developments In Macro
Tariffs / Trade Policy
NIKE LIFTS VIEW OF INCREMENTAL TARIFF COSTS FROM PRIOR $1B
NIKE CFO SEES $1.5B OF INCREMENTAL COSTS FROM TARIFFS
FED’S GOOLSBEE SAYS US SEEMS HEADED INTO NEW WAVE OF TARIFFS
GOOLSBEE: MOST OF RECENT INFLATION RISE FROM TARIFFS
GOOLSBEE: HOPING FOR MODEST, ONE-TIME IMPACT FROM TARIFFS
GOOLSBEE: IF INFL. MORE PERSISTENT, WOULD BE DIFFICULT SCENARIO
COLLINS: PRODUCTIVITY GROWTH MIGHT HELP LIMIT TARIFF INFLATION
COLLINS: NO LONGER EXPECTING AS LARGE A TARIFF INFLATION IMPACT
USTR GREER EXPECTS TRUMP TO SIGN TRADE DEALS ON ASIA TRIP
Fed / Monetary Policy
FED TO EASE MORGAN STANLEY’S CAPITAL REQUIREMENTS AFTER REVIEW
GOOLSBEE: UNCOMFORTABLE FRONTLOADING A WHOLE BUNCH OF RATE CUTS
GOOLSBEE: HOLDING RATES STEADY AS INFLATION RISES IS LIKE A CUT
GOOLSBEE: HARD TO EXPLAIN RISE IN SERVICES INFLATION
GOOLSBEE: SHORT GOV. SHUTDOWNS HAVE LITTLE IMPACT ON ECONOMY
GOOLSBEE: BLS IS BEST DATA PROVIDER IN THE WORLD
COLLINS: VERY STRONG EQUITY MARKETS BOOSTING HOUSEHOLD WEALTH
COLLINS: HIGHER HOUSEHOLD WEALTH PART OF STRONGER CONSUMPTION
COLLINS: MODESTLY OR MILDLY RESTRICTIVE STANCE IS APPROPRIATE
FED’S COLLINS: MANY INDICATORS MAKE LABOR SOFTENING QUITE CLEAR
Shutdown / Fiscal Risk
TRUMP: HAVE TO DO LAYOFFS WITH SHUTDOWN
TRUMP ON SHUTDOWN: PROBABLY LIKELY
TRUMP: WE CAN DO THINGS DURING SHUTDOWN THAT ARE IRREVERSIBLE
CHAVEZ-DEREMER: SHUTDOWN WILL HALT UNEMPLOYMENT PROGRESS
CHAVEZ-DEREMER: BLS REPORT WILL BE DELAYED IN EVENT OF SHUTDOWN
SCHUMER: GOP HAS UNTIL MIDNIGHT TO ‘GET SERIOUS’ ON HEALTH CARE
SCHUMER: HOUSE SPEAKER ENSURED SHUTDOWN BY SENDING MEMBERS HOME
SCHUMER: WE ARE HEADING INTO A SHUTDOWN
CBO: 750,000 EMPLOYEES COULD BE FURLOUGHED EACH DAY IN SHUTDOWN
Alex Bolton: Sen. Lisa Murkowski (R-Alaska) tells reporters she will vote for the House-passed seven-…
Sahil Kapur: Senate Majority Whip @SenJohnBarrasso tells me there won’t be negotiations during a shut…
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: Health Care Leads; Shutdown Shadows Jobs Data (S&P +0.51%)
The S&P 500 climbed 0.51%, with the quarter closing on a firmer note despite looming risks around Friday’s nonfarm payrolls release. Sector performance was bifurcated: Health Care surged on policy-sensitive flows, while cyclicals like Energy and Financials lagged. The overarching backdrop remains defined by the approaching government shutdown, which could black out key labor and inflation data that anchors the Fed’s reaction function.
Sector Attribution
Weighted Return Contribution to Index
Leaders: Info Tech (+0.27%), Industrials (+0.08%), Health Care (+0.22%).
Drags: Financials (–0.06%), Consumer Discretionary (–0.04%), Energy (–0.01%).
Net: S&P 500 +0.51%.
Sector Performance (Unweighted Breadth)
Winners: Health Care (+2.45%), Materials (+1.00%), Industrials (+0.92%), Info Tech (+0.79%), Real Estate (+0.38%), Staples (+0.31%).
Losers: Energy (–0.49%), Financials (–0.42%), Discretionary (–0.37%).
Net: S&P 500 +0.51%.
Macro Overlay
Shutdown & Data Risk
Markets remain fixated on the shutdown countdown. If triggered, Friday’s BLS payrolls release would be delayed, depriving the Fed of high-frequency labor signals at a critical juncture. Historical precedent shows limited GDP and equity fallout from short shutdowns, but the information vacuum risk is acute for a data-dependent Fed.
Fed Speak
Goolsbee (Chicago): Warned tariffs are contributing to stickier inflation and cautioned against “frontloading” cuts.
Collins (Boston): Signaled further easing may be needed given labor softening, though inflation persistence remains a risk.
Jefferson (Vice Chair): Stressed the Fed faces downside risks on jobs alongside upside risks on inflation, highlighting the two-sided policy bind.
Macro Data
Consumer Confidence fell to 94.2 (five-month low), with the “jobs plentiful” share at its weakest since 2021.
JOLTS showed little change in job openings (7.23m), reinforcing the view of gradual labor market cooling.
The Read-Through
The Fed’s path remains gradual and conditional: October cut odds are alive but not pre-signaled. The sharper divergence in sector leadership; Health Care, Tech, Materials carrying the tape while Energy and Financials fade, reflects positioning for a world of slower growth, policy easing, and tariff-related inflation tail risks.
Takeaway: With consumer confidence slipping and shutdown risks muddying the data stream, the market is leaning on defensives and rate-sensitive growth, hedging uncertainty rather than embracing a risk-on narrative.
US IG Credit Wrap: Low-50s Hold; Shutdown Fog, Fed Split (IG OAS ~52.1 bp)
Investment-grade spreads remain locked in the “carry channel,” Bloomberg US IG OAS printing at ~52.1 bp (chart last: 52.070). That’s virtually unchanged from yesterday and still ~10 bp inside the 5-yr average (~62.4). The regime remains firmly low-50s: carry-positive, resilient to macro chop, but capped by headline risk.
Credit Context (where we sit)
IG OAS: ~52.1 bp
5-yr avg: ~62.4 bp → ~10 bp inside
Cycle tights: ~43.8 bp → ~8–9 bp away
’22 wides: ~111 bp → ~59 bp tighter
Read: Spreads are grinding, not breaking. The carry-friendly zone is intact; the only way tighter is if shutdown risks fade and labor cools smoothly.
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.
What Changed Today (macro tape)
Shutdown risk: Friday’s payrolls release may not print if the government closes. Markets are treating this as visibility risk, not GDP risk, but event-gap danger rises the longer the data blackout lasts.
Data: JOLTS showed job openings steady at 7.23m, consumer confidence slumped to 94.2 (five-month low). Labor cooling is visible, but without Friday’s NFP, confirmation may be delayed.
Fed speak:
Goolsbee (Chicago): Tariffs feeding into inflation, warns against over-frontloading cuts.
Collins (Boston): Further cuts plausible on labor weakness, but inflation risk lingers.
Jefferson (Vice Chair): Both sides of the mandate under pressure — jobs softening, inflation sticky.
Risks to Watch
Data blackout: Missing NFP/Inflation prints complicates Fed communication and repricing risk.
Tariff pass-through: Sector-specific cost pressure (importers) could widen idiosyncratic IG names.
Rates dynamic: Bull steepener from growth scare is more credit-hostile than a parallel rally.
The Read-Through
Base case: IG OAS grinds sideways in low-50s. Carry appeal intact; insurers, pensions, and LDI buyers stay engaged.
Risk case: If shutdown prolongs and jobs data blackout coincides with tariff noise, credit could cheapen toward high-50s.
Mag7 Model:
See the intro published for how to use the Mag7 models here: Link
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
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