Michael A. Gayed, CFA

macro-observations

Mortgage Rates Hit 7.4%. The 10-Year Did Most of It.

The mortgage rate rose 113 basis points in a year and the 10-year yield rose 115, so the gap barely changed. Over the last five weeks, half the jump was spread.

Leaders-Laggards

Tech Falls From Three Sigma. Credit Is the Vote That Counts.

XLK/SPY drops to +1.92 sigma in eleven sessions while JNK/GOVT holds above +1.0 sigma. Eleven comparable credit slips say the level, not the month, is the signal.

Sponsored

The Fed Finally Hiked. The Bond Market Is Doing the Tightening For It. TSPY Was Designed For Both.

How a daily 0DTE covered call strategy on the S&P 500 seeks to generate monthly distributions in a market shaped by the first rate hike since 2023, a 5.28% 10-year yield, and a still-compressed VIX.

macro-observations

The 10-Year Hit 5.31%. The Bond Market Says It Is Not Inflation.

The 10-year yield rose 97 basis points this year, and 87 of them were real yield. Oil is up 78%, yet 10-year inflation expectations moved 10 basis points.

macro-observations

Volatility Jumped 21% On Friday. High Yield Credit Moved Three Weeks Earlier.

The VIX rose 21.4% on a 1.1% stock decline, a combination seen on only four days in three years. High yield credit spreads have been saying the same thing since September 22.

Macro Observations

Small Caps Are Paying The 10-Year's Bill

The Nasdaq set a record on October 5 while the Russell 2000 sat 8.6% below its August peak. The index is not diverging from the economy. It is diverging from the price of money.

The yen is near 158. Who is borrowing it?

The yen is weak, Japanese yields are near 3 percent, and the carry trade question that matters is who has to sell.

Leaders-Laggards

Tech Slips From Three Sigma as Credit Turns and the Utilities Streak Ends

XLK/SPY eases to +2.09 sigma, JNK/GOVT logs its first negative month, and utilities end a ten-week losing streak in a hot-CPI week.

Macro Observations

The Labor Market Stopped Hiring And Has Not Started Firing

Payrolls rose 29,000 in September, claims sit near 197,000 and wage growth hit its lowest since 2021. The recession signals are missing and the expansion signals are fading.

Macro Observations

The Yen Is The Other Side Of The 10-Year

The Bank of Japan has raised rates twice this year and the yen still trades near 158 per dollar. With the 10-year Treasury above 5%, the funding currency has nowhere to go.

Macro Observations

The Fed Is Hiking Into A Supply Shock

Gasoline is up 39% in a year and crude has round-tripped from $56 to $115 to $96, yet the Fed is raising rates against it. A central bank can tighten demand. It cannot produce a barrel.

High Yield Spotlight

BlackRock's Troubled BDC Pays 17%. The Loan Sale Is The Tell

A valuation probe, three dividend cuts, and now a $523 million portfolio sale at 95% of marks. The stress test is live.