Thursday, August 13, 2026

Market Regime

RISK-ON is the regime engine's read, the same regime as the prior published entry of 2026-08-12. This is consecutive RISK-ON print #8 on the public ledger (n=8). Breadth turned up: 66.7% of the universe (651/976) trades above its 200-EMA, a higher count than the prior read and still scoring healthy. SPY closed 772.54, +9.3% over its 200-EMA of 706.93. VIX at 15.28 sits in the calm band, lower than the prior read. Rates firmed at the long end: the 10Y added 3bps WoW to 4.68% and the 2Y added 1bp to 4.20%, steepening the 10Y–2Y spread 2bps to 0.48%. Breakevens rose 1bp to 2.26%; the real 10Y added 2bps to 2.42%. HY widened 1bp to 2.71%. Claims stand at 209K (+9K WoW, as of 2026-08-08). FRED market prints carry an as-of date of 2026-08-12 except where noted.

Key Macro Reads (real data)

Regime Assessment

Measured: the engine classifies RISK-ON and every input sits inside its favourable band. Inferred: the two legs that dissented on the prior read both stepped back. Breadth stopped falling after two consecutive lower counts, and the price cushion widened rather than compressed. That removes the case for reading the prior print as the start of a deterioration, but it does not build a case in the other direction either one reversing observation is a reversal of the same weight as the two-point line it interrupts.

Credit is the input that did not participate. HY at 2.71% widened a second consecutive basis point. Two basis points of cumulative drift is inside any reasonable noise band and carries no independent signal, but the direction has now been consistent across two observations while the equity-side inputs oscillated. That is the only series on this sheet where the sign has repeated.

The labor line moved for the first time in weeks with something to say. Claims at 209K jumped 9K WoW and now carry an as-of date of 2026-08-08, four days fresher than any prior read in this run. A single 9K move in a weekly series that routinely swings that much is not a labor turn, and nothing else on the sheet is dated later than 2026-07-01 to corroborate it. What changed is that the labor input is no longer stale enough to ignore. Rate decomposition offered a cleaner story than the prior read: the 10Y's 3bps came 2bps from the real rate and 1bp from breakevens, so the back-end move was led by the real component rather than by inflation expectations. Eight prints in a single window, none taken during a volatility expansion or a genuine credit widening, is still a short series measuring one environment.

What Would Invalidate

• HY at 2.71% widened for a second straight observation. A third widening print, or any single move of 10bps or more, converts a two-basis-point drift into the one directional series on the sheet.
• Breadth at 66.7% (651/976) interrupted a two-print decline. A resumption of lower counts on the next read makes the 651 an outlier rather than a floor.
• SPY at 772.54 is +9.3% above its 200-EMA of 706.93, up from +9.1%. Compression back through the prior cushion while breadth falls removes the price leg.
• VIX at 15.28 fell back after rising on the prior read. A move out of the calm band strips the input common to all eight prints.
• Claims at 209K (as of 2026-08-08) rose 9K. Two or three more prints climbing from here would supply a labor cause that no current input anticipates; there is no unemployment or payroll data dated later than 2026-07-01 to check it against.
• The real 10Y at 2.42% led the back-end move, adding 2bps against 1bp on the 2.26% breakeven. A reversal to breakeven-led moves changes what the curve is pricing; both going flat resolves nothing.
• The 10Y–2Y spread at 0.48% steepened from the long end this print after steepening from the front end on the prior one. Alternating drivers at an unchanged level means the curve is carrying no consistent message.

Forward Catalysts

• Credit: whether the 2.71% HY print extends to a third consecutive widening or reverses.
• Breadth: whether 651/976 holds as a floor or the prior two-print decline resumes.
• Labor: whether the 209K claims print is a one-week jump or the start of a series, and whether the next unemployment and payroll reads arrive fresher than 2026-07-01.
• Rates: whether the real 10Y keeps leading the back end from 2.42%, or breakevens retake the move from 2.26%.

Status

RISK-ON, print #8 consecutive on the public ledger; same regime as the prior read of 2026-08-12.

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