Journal ·
Friday, 6 November 2026
Regime Risk-offMarket regime
The 10-year breakeven inflation rate fell 10 basis points (hundredths of a percentage point) week over week, the largest weekly move among the rate and credit measures in Federal Reserve data, so markets are pricing less inflation while inflation-adjusted borrowing costs climb. The 10-year Treasury yield fell only 4 basis points, which left the real 10-year rate, the yield after expected inflation, up 6. That shift is context and does not enter the regime rules. The risk-off call rests on one input: the VIX, the Cboe measure of expected stock volatility, at 28.18 at the 5 November 2026 close against a limit of 28. The other two tests are not triggered. SPY, the S&P 500 exchange-traded fund, closed above its 200-day exponential moving average (EMA), and breadth is well clear of the 40% rule. The 6 November 2026 VIX close is not published yet, so the call rests on the prior session's reading.
Key numbers
| Metric | Level | Read |
|---|---|---|
| Regime | Risk-off | Close-of-day read |
| VIX | 28.18 | Stressed; 5 November 2026 close |
| Breadth above 50-day EMA | 51.4% | Mixed; 503 of 978 names above their own 50-day EMA |
| SPY close | 735.4 | +0.1% vs 200-day EMA (734.88) |
| 10-year Treasury | 4.90% | As of 4 November 2026; -4 bps week over week |
| 2-year Treasury | 4.58% | As of 4 November 2026; +2 bps week over week |
| 10-year minus 2-year spread | 0.38% | As of 5 November 2026; flat week over week |
| 10-year breakeven inflation | 2.24% | As of 5 November 2026; -10 bps week over week |
| Real 10-year rate | 2.66% | As of 4 November 2026; +6 bps week over week |
| High-yield credit spread | 3.48% | As of 5 November 2026; +4 bps week over week |
| Fed funds rate | 3.88% | As of 1 October 2026 |
| Initial jobless claims | 189K | As of 31 October 2026; -6K week over week |
| Unemployment rate | 4.1% | As of 1 October 2026 |
| Nonfarm payrolls | 159.3M | As of 1 October 2026 |
| Housing starts | 1,221K | As of 1 September 2026 |
Regime assessment
This read suggests a market pricing stress through expected volatility, without broad damage to stocks. SPY is holding its long-term trend by a thin margin, and participation is split rather than collapsing. Outside the regime rules, Federal Reserve data show no sharp strain in the background: high-yield spreads widened only 4 basis points in a week, and jobless claims fell. The higher real rate is the item to watch in that context, because it raises the return stocks must offer against Treasuries.
What would change the call
The call changes on the VIX alone. Risk-off is held by VIX above 28 (28.18 at the 5 November 2026 close). It leaves risk-off only when VIX is back at 28 or below. The call then reads neutral unless the risk-on conditions are also met: SPY more than 0.5% above its 200-day EMA (now +0.1%), breadth above 60% (now 51.4%) and VIX below 28 (28.18 at the 5 November 2026 close).
The view that stress is confined to volatility would be wrong if SPY closed more than 2% below its 200-day EMA or breadth fell under 40%. Either one would show weakness spreading into stock prices themselves.
What to watch
- VIX close for 6 November 2026: the first available test of the 28 limit, and the only one of these items that can change the call.
- SPY against its 200-day EMA: a +0.1% margin leaves the long-term trend finely balanced, and the risk-on test needs more than 0.5%.
- Next breakeven and real-rate updates in Federal Reserve data: these show whether the week's fall in inflation pricing and rise in real rates persist. They are context for the reading only.
- Next weekly jobless claims: a check on whether the labor backdrop remains firm, also context only.
Status
Close-of-day regime for 6 November 2026: risk-off; second consecutive risk-off read in the journal, after 5 November 2026.