Friday, 14 August 2026

Market regime

Risk-on is the model's read, the same regime as the prior published entry of 13 August 2026. This is consecutive risk-on read #10 in the journal. Breadth extended higher: 70.8% of the universe (690/975) trades above its 50-day EMA, a larger count than the prior read and scoring healthy. SPY closed 776.30, +9.6% over its 200-EMA of 708.43, a narrower cushion than the prior print. VIX at 14.25 sits in the calm band and below the prior read. The rate move was a bull steepener: the 2Y shed 4bps week over week to 4.15% while the 10Y shed 2bps to 4.63%, widening the 10Y–2Y spread 2bps to 0.48%. The long-end decline split evenly between its components breakevens fell 1bp to 2.24%, the real 10Y fell 1bp to 2.39%. HY sits at 2.71%, +1bp on the week and unchanged against the prior published print's level. Claims remain 209K (+9K week over week) and still carry an as-of date of 8 August 2026. FRED market prints carry an as-of date of 13 August 2026 except where noted.

Key numbers

Regime assessment

The model classifies risk-on, but the equity-side inputs did not move together on this print breadth higher and volatility lower, while the price cushion narrowed. The deterioration case built on the two-print breadth decline earlier in this run is weakened. The count rose on this read, 690 against 683, which argues against that decline without by itself establishing a recovery. One observation remains one observation.

The credit watch flagged on the prior read did not extend. HY held its level rather than printing a third higher reading; the +1bp shown is the rolling week-ago comparison, not a fresh move. Whatever directional consistency credit appeared to be building is gone, and the series carries no independent signal into the next print.

The curve deserves a caution the level obscures. The spread stands where it stood on the prior read, but the driver flipped: the prior steepening came from the long end, this one from the front. A spread pinned at one level while its components alternate direction is not a message about growth or policy it is two moves that happened to cancel. The labor line contributed nothing this print; the claims as-of date did not advance, so the 9K jump flagged previously is neither confirmed nor refuted, and every other labor series on the sheet predates it by more than a month.

The structural limit on all of this is unchanged in kind. Ten prints, all drawn from one environment, none taken during a volatility expansion or a genuine credit widening. The classifier has agreed with itself ten times without once being tested.

What would change the call

• VIX at 14.25 is the input every print in this run has shared. A move out of the calm band strips the one condition common to all ten.
• Breadth at 70.8% (690/975) rose against the prior read. A return to falling counts on the next print makes this read noise around a downtrend rather than a recovery.
• SPY at 776.30 is +9.6% over its 200-EMA of 708.43. Compression of that cushion while breadth falls is the only combination on this sheet that pressures the model on equity inputs alone.
• HY at 2.71% held flat. A single move of 10bps or more, or three consecutive higher prints from here, converts credit from noise into the sheet's one directional series.
• The 10Y–2Y spread at 0.48% has now printed the same level twice with opposite drivers. A move in the level itself, either direction, would be the first curve information this run has produced.
• The 10Y decline at 4.63% split evenly between the 2.39% real rate and the 2.24% breakeven. A back-end move led decisively by breakevens changes what the long end is pricing; another even split resolves nothing.
• Claims at 209K carry an as-of date of 8 August 2026 and did not refresh. The next weekly print is the only near-term labor observation; a second consecutive rise would supply a cause no other input anticipates. Nothing dated later than 1 July 2026 unemployment at 4.1%, payrolls at 158.9M is available to check it against.

What to watch

• Claims: the next weekly release is the only high-frequency series on this sheet that updates before the monthly data refreshes.
• Breadth: whether 690/975 extends, stalls, or reverses.
• Credit: whether 2.71% holds its level or begins moving with a consistent sign.
• Curve: whether 0.48% breaks in either direction, and which end drives it.
• Policy rate: Fed Funds is stale at 3.63% (as of 1 July 2026); any refresh is the first policy datapoint inside this run.
• Housing: the next starts release against 1,427K (as of 1 June 2026).

Status

Risk-on; consecutive read #10 in the journal, matching the prior published read of 13 August 2026.