rates +0.5sd, growth -0.6sd this week; prior 4 weeks had no persistent direction; curve shape unchanged over the month
Leading now
Agricultural inputsnew+2.6
Steel2nd wk up+1.9
Dry bulk shippingnew+1.7
Beauty and cosmetics3rd wk up+0.9
Look at
Agricultural inputsnew+2.6
Steel2nd wk up+1.9
Dry bulk shippingnew+1.7
Beauty and cosmetics3rd wk up+0.9
Datacentre cooling and thermalnew+1.6
Drug distribution and pharmacy2nd wk up+1.1
Move out of
Cruise lines4th wk down-1.3
Vertical SaaSreversal-2.1
Optics and datacentre interconnect3rd wk down-1.2
Insurance brokersnew-1.6
Railroads and rail equipmentnew-1.6
Defence electronics and services3rd wk down-0.8
Look at = up this week, most members together, and a second week running or over 1.5sd. Move out of = same rules, downward. Mechanical ranking, not a forecast. sd = size of the move vs a normal week for that series; under 0.75 is no move, 2 is big.
The view
The market leaned toward stagflation fear without committing. Driven by crude, core CPI, front-end breakevens more than the back end. That shape is a near-term repricing, not a change in the long-run anchor. Nominal yields did not keep up with breakevens, so real yields slipped. Cyclicals underperformed defensives (-0.6sd). The dollar firmed.
The baskets that rose were hard-asset and commodity-linked and AI capex; the ones that fell were domestic cyclical and defence. Datacentre baskets rising while software fell says AI capex is intact and the software sell-off is about rates and the application layer, not tech. Rails down with dry bulk up means seaborne commodity demand firm, domestic freight soft.
The most unusual move is Agricultural inputs at +2.6sd with 100% of members up. The discovery layer found that group on its own from raw co-movement, which makes it a real driver rather than noise. One unnamed cluster of 6 names moved together (+1.3sd, cohesion 0.41). Look at the ticker list before believing it; low cohesion clusters are usually noise. What decides next week: whether the 10-year clears the deadband, which would decide the quadrant; whether cyclicals against defensives clears the deadband.
Rotation quadrant
undecided
rates +0.5sd · growth -0.6sd
Big dot = this week, small = prior weeks. Right = 10y up, up = cyclicals beat defensives. Grey cross = no real move.
XLK+0.3
XLC-0.4
XLY-0.8
XLF+0.0
XLI-0.6
XLB-0.6
XLE+0.7
XLV+0.1
XLP-0.6
XLU+0.3
XLRE-0.6
Sectors: each ETF’s week vs its own normal week.
Rates and curve
2 moved
2 up of 12
nowa month agoa year ago
Yields by maturity, today vs a month and a year ago.
5y breakeven+7bp+1.1
10y breakeven+4bp+1.0
10y Treasury+4bp+0.5
3m10y+4bp+0.4
-3sd0+3sd
Bars: this week’s move vs a normal week for that series; grey band = noise.
Credit, liquidity, risk
4 moved
4 up of 17
CCC OAS+28bp+1.3
WTI+8.17%+1.0
Broad dollar+0.58%+1.0
Brent+6.99%+0.8
IG OAS+2bp+0.7
HY OAS+8bp+0.7
BBB OAS+2bp+0.6
Gold vol (GVZ)+5.80%+0.4
-3sd0+3sd
Spreads, Fed plumbing, vol, dollar, oil. Right = wider, bigger or higher this week. CCC widening before HY is the early warning.