Journal ·
Tuesday, 7 July 2026
Regime Risk-onMarket regime
Risk-on holds, the twelfth consecutive read (n=12) and a direct continuation of Monday's print on 6 July 2026. Vol ticked up: VIX rose to 16.13, still inside the calm zone. Breadth narrowed to 62.5% (611/977), still a healthy majority well clear of the 50% line. SPY closed 747.77, +8.3% over its 200-EMA of 690.74, a shade less stretched than the last read. Rates ran opposite to Monday's back-end selloff: the front end did the moving this time, the 2Y easing 4bps to 4.13% while the 10Y held flat at 4.48%, which nudged the 10Y–2Y spread 4bps wider to 0.35%. Inflation compensation barely twitched, the breakeven up 1bp to 2.24% and the real 10Y down 1bp to 2.24%. Credit stayed on side: HY tightened another 2bps to 2.72%, pressing toward the tight end of its range.
Key numbers
| Metric | Level | Read |
|---|---|---|
| Regime | Risk-on | Consecutive print #12, continuation from 07-06 |
| VIX | 16.13 | Calm |
| Breadth >50-day EMA | 62.5% (611/977) | Healthy, narrowed but above 50% |
| SPY close | 747.77 | +8.3% vs 200-EMA (690.74) |
| 10Y Treasury | 4.48% | week over week flat |
| 2Y Treasury | 4.13% | week over week −4bps, front-end eased |
| 10Y–2Y spread | 0.35% | week over week +4bps, steeper |
| 10Y breakeven | 2.24% | week over week +1bp |
| Real 10Y rate | 2.24% | week over week −1bp |
| HY credit spread | 2.72% | week over week −2bps, tighter |
| Fed Funds | 3.63% | as of 1 June 2026 |
| Initial claims | 215K | week over week −1K (as of 27 June 2026) |
| Unemployment | 4.2% | as of 1 June 2026 |
| Nonfarm payrolls | 159.0M | as of 1 June 2026 |
| Housing starts | 1,177K | as of 1 May 2026 |
Regime assessment
The character of the rate move flipped and improved. Monday's steepening came from the long end selling off; today's came from the front end easing with the 10Y anchored, the friendlier version, consistent with a market still leaning on cuts rather than bracing for a growth scare. The two signals that carry the most weight read the same as before: HY inside 2.72% and VIX still in the calm zone both argue for holding cluster-confirmed leaders, not trimming into calm. Participation holding well above half means the advance keeps a broad base, so one leader rolling over is less likely to drag the tape with it. The real 10Y easing a basis point removes, for now, the live pressure on long-duration multiples. But at +8.3% above trend the index carries limited slack, so fresh high-conviction adds still want a pullback or a clean setup, not a chase.
What would change the call
- VIX at 16.13 sits in calm; a push above ~18 re-arms the vol gate and pulls the read toward caution.
- Breadth at 62.5% is broad and healthy; participation slipping under 50% flips the regime faster than any single macro print.
- HY at 2.72% just tightened again; a reversal wider strips out the cleanest confirm and drags the read toward neutral.
- The real 10Y sits at 2.24% and eased this print; a renewed push higher hits the longest-duration narratives first, breakeven steady or not.
What to watch
- Next CPI against a 2.24% breakeven: a hot print revives the real leg and pressures duration.
- Labor: claims at 215K (−1K week over week, as of 27 June 2026) stays firm; the test is whether the 159.0M payroll trend and 4.2% unemployment hold into the next release.
- The HY path from 2.72%: whether this fresh tightening sticks or unwinds is the quickest route to re-rating credit.
- Fed path against a 3.63% funds rate, with the curve at 0.35% and the front end now leading it steeper as the market keeps pricing cuts not yet delivered.
Status
Risk-on since 18 June 2026; consecutive print #12 in the journal, continuation of Monday's read on 6 July 2026. Research only no positions, sizes, entries, stops, or P&L.