TL;DR

• December hike stays my base case while the 2Y holds a weekly close above 4.65% (structural, months)

• The strip prices +33bp more than the policy rules justify, and tomorrow's core PCE decides who is right (structural, months)

• UST 2Y spec longs are stretched at the 96th percentile, so a hot core PCE is the one that forces them out and backs my December lean (positioning, days to weeks)

• Duration is not hedging equities with SPX-10Y at -0.07, so I will NOT run a bond leg yet (positioning, days to weeks)

• Gold fade intact inside a week still grinding lower off 4056 (positioning, days to weeks)

Where We Stand

Yesterday I said the December hike stays my base case near 68% priced and the front end is committed, with me alongside it (structural, months). Today's close confirms it. The Fed left rates on hold as expected, although Cook and Hammack dissented in favour of a 25bps hike, and the 2Y settled at 4.68%, still ABOVE the 4.65% invalidation that keeps the December thesis alive. That is the oldest open view I hold alongside the gold fade, and both survive the day: the December hike thesis stays INTACT, and gold closed at 4056 within a week that is still grinding lower.

My read does not change. I stay long the December thesis as long as we hold ABOVE 4.65% on the 2Y, and I keep the stock-bond correlation flag live because at -0.07 duration still is not hedging my equity book (positioning, days to weeks).

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TL;DR

• December hike stays my base case near 68% priced; the front end is committed and I'm with it.

• The 2Y at 4.68% holds above 4.65% invalidation, so the December thesis is intact until it doesn't.

• Stock-bond correlation at -0.07 means duration still isn't hedging equities; I need it to reassert before I trust a bond leg.

• HY at 330bp is where stress shows first; IG is neutral and not the story.

• FOMC tomorrow decides the week; a hawkish Warsh hold is the risk the strip is braced for.

Where We Stand

Yesterday I said December stays my base case at 70% priced and the front end was committed. Today's close backs that. Durable goods beat and confidence blew the doors off, front-end yields lifted a touch, and the strip still carries roughly 68% odds on a December hike. The oldest open view, the 10Y declining on terminal relief without a growth scare, is holding its shape: the 10Y sat flat on the day at 5% while equities rose, so no scare and no unwind. On the December hike thesis, the 2Y at 4.68% stays above my 4.65% invalidation, so that one is intact and I'm not touching it. Not much changed my read today, and that suits me going into the statement.

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The first place I want to start is in credit spreads. We have seen credit spreads move higher, towards the March 2026 highs and mid April 2025 levels. The key thing to note is that even as this has happened, ES actually set a low and is not being dragged by these movements in credit.

Credit spreads are being dragged wider by fears surrounding oil (which is why we were seeing oil up, bonds up). But I want to emphasise that there is clearly minimal risks to growth in the near-term and if there were to be some type of massive shock to growth, it would have to be exogenous.

However, I’m not discounting the marginal revisions to growth due to higher rates, but the level that both equities and bonds are trading at tells us CLEARLY that growth is not a large enough risk right now to cause any major or sustained drawdown. The risks to equities now sit in inflation in the near-term. Low-beta leadership is showing us that the markets are pricing a margin and demand hit but growth.

The move higher in credit spreads then hit the weakest most levered credit, AI capex and CCCs first which is why we see massive rotations (NOT RISK-OFF) in tech. Sectors inside the S&P have held a low correlation because defensives and energy have been moving in opposite directions (which is why the index has been in a range, because these sectors have neutralised eachother). Falling yields cushioned valuations a little which also provided some support to the index during this rotation.

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TL;DR

• December hike stays my base case at 70% priced; the front end is committed and I'm with it.

• HY at 338bp is where stress shows first; IG at 91bp is firming but not screaming.

• Stock-bond correlation at -0.07 means duration still isn't hedging equities; I need it to reassert.

• The gold fade is being tested but not broken; one up day inside a down week changes nothing.

• FOMC Wednesday is the whole week; a hawkish Warsh lean is the risk the strip is braced for.

Where We Stand

Yesterday I said the December hike stays INTACT and the 2Y at 4.65% hadn't broken my 70 line. Today's close reaffirms that: 2-year +3.2bps at 4.718%, the front end pushing up while the long end slipped. My oldest open thesis, HY credit stress widening, stays alive on the number: HY sits at 338bp at the wide end of its own range, so I'm not closing it. The gold fade thesis I opened yesterday is being tested, gold held a small bid into the close, but one up day inside a down week doesn't change my read yet. The copper crowding flag is quiet; the live flag I'm still watching is oil vol against realised, which remains stretched.

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Today's Tear Sheets

The full daily pack is attached below · six PDFs generated from the same computed data set as this note:

• Macro Regime · regime classifier, growth x inflation quadrant, curve regimes, cross-asset drivers, crisis phase, model state card, breadth, credit, vol term structure, liquidity, stock-bond correlation, housing

• Fixed Income · UST complex, term premia, rate risk, auctions, global curves, Fed/ECB/BoE/BoJ implied policy paths, global 2Y and 10Y panels

• Equities · index pages, daily attribution, relatives, vol suite, vol cone, gamma, global relatives, Mag7+ quant sheet, options surfaces

• FX · majors dashboards, carry, correlations, COT positioning, crosses

• Commodities · energy, metals, agriculture, COT crowding, term structure

• Crypto · BTC ladders, ETH, macro correlations, ETF flow proxy

Tearsheet Macroregime 20261023

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Tearsheet Fixedincome 20261023

9.21MB ∙ PDF file

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Tearsheet Equities 20261023

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Tearsheet FX 20261023

11.6MB ∙ PDF file

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Tearsheet Commodities 20261023

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Tearsheet Crypto 20261023

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TL;DR

• Long December hike stays on at 64% odds; a clean break below 70% closes it, and that's the single line I'm defending.

• Oil did the work today, with WTI up 4.38% lifting yields and the inflation premium over the growth scare.

• Duration hedge is on notice: 10Y rose as equities fell, the wrong behaviour for my growth-risk hedge.

• HY at 327bp at the wide end is where stress shows first; IG at 88bp still says nothing.

• Gold no longer hedges risk-off, and its break from the dollar makes that plainer.

Where We Stand

Yesterday I said the oil premium was real but the strip was treating the AI scare as the bigger force. Today flipped the weighting. WTI surged 4.38% into the close while tech steadied, so the inflation side of the ledger did the driving. My oldest open thesis, the duration hedge from 20 October, is on notice: 10Y at 5.13% edged higher as equities fell, which is the wrong way for a growth-scare hedge to behave. I'm keeping it live but watching, because today was an oil-yield story and duration loses that fight.

The December hike long stays on: 64% odds hold above my 70% invalidation only loosely, so I'm honest that it's close. The HY stress flag is still live and remains my cleaner read here.

What Changed

What the Tape Is Arguing About

• Geopolitical risk premium: data agrees (Crude Oil (WTI) +4.4% on the week, 0.7 standard deviations).

• Oil shock: data agrees (Crude Oil (WTI) +4.4% on the week, 0.7 standard deviations).

• Fiscal, supply, Fed independence: data does not agree (US 30Y Yield -10bp on the week, 1.0 standard deviations).

• AI trade leadership: data does not agree (Nasdaq 100 -0.3% relative on the week).

• Yen carry unwind: data agrees (USD-JPY -0.7% on the week, 0.6 standard deviations).

Asset Market Pricing

Sector Attribution

Session 2026-10-23. Sectors plus the unexplained remainder sum to the index move, and the sector split accounts for 78% of it.

Attribution

The S&P 500 closed -1.21% on 22-Oct-2026 and the largest driver was vol (VIX) at -0.59pp; over the five sessions to that close the index summed to -1.03% with vol (VIX) the largest driver at -0.65pp.

Regime State · Momentum vs Mean Reversion

Model State

31 model states flipped inside the last five sessions: SPY put/call OI (2 monthlies) to DEALERS SHORT GAMMA · flip 685, SPY 30d ATM IV to RICH vs RV +5.4, Dollar index to UP-CALM, Nasdaq 100 to DOWN-CALM and more.

Measured Books · E1 to E5

E1 since entry: 15 live rows, 13 positive, average +24.4%, median +1.58 vol-adjusted.

E2 since entry: 9 live rows, 9 positive, average +18.7%, median +1.76 vol-adjusted.

E3 since entry: SHORT US 2s10s from 2026-10-15, +1bp over 4 sessions (+0.15 vol-adjusted).

E4 since entry: LONG S&P 500 from 2026-07-08, +1.9% over 76 sessions (+0.31 vol-adjusted).

E5 since entry: 2 live rows, 2 positive, average +2.6%, median +0.90 vol-adjusted.

Entry Checklist

Sector Snapshot & Breadth

Stock-Bond Correlation

S&P 500 vs TLT, daily returns: 30-day 0.04, 90-day 0.22, near zero, so the hedge is unreliable in either direction.

Scenarios for the Week

Expected moves are conditional means from 2-year betas to the anchor times a 1-standard-deviation event-day shock, not forecasts.

Release Playbook

Main Developments in Macro

• TRUMP KEEPS IRAN STRIKES ON TABLE, SAYS US "MAY DO ANOTHER OPERATION"

• BRENT FLIRTS WITH USD 117/BBL, EYES MARCH POST-WAR HIGH ON GEOPOLITICAL PREMIUM

• US FLASH COMPOSITE PMI FALLS TO 57.6, SERVICES MISS OFFSETS MANUFACTURING BEAT

• UOM YEAR-AHEAD INFLATION EXPECTATIONS RISE TO 4.7%, LONG-RUN 3.5%, HIGHEST SINCE MAY

• JAPAN CORE CPI ACCELERATES TO 2.1%, BOJ DECEMBER HIKE BETS FIRM

• TRUMP WEIGHS LIFTING SOME CANADA TARIFFS; UK RETAIL SALES MISS

The growth read is still hot on the surface. Chris Williamson at S&P Global noted the data shows the economy booming, with output pointing to 5% annualised GDP growth after 4% signalled in Q3, and that rising oil prices and supply bottlenecks drove the sharpest selling-price rise in four years. That's the problem in one line: strong output and higher inflation together. Output prices reached 59.8, the highest since August 2022, while one-year inflation expectations rose to 4.7% and longer-term to 3.5%, both the highest since May. Jobless claims at 194 undershot too. Nothing here argues for cuts.

Cross-Asset Read

Energy carried the tape. Consumer staples fell 1.83% and energy rose 2.51%, and by contribution the drag came evenly from discretionary, financials and communication services, each near -0.17pp. Tech added +0.16pp, so the index would have been uglier without the AI steadying. The sector split explains most of the move while leaving a real residual.

The Gold vs DXY correlation flagged a BIG SHIFT, moving to -0.32 from -0.71. Gold is no longer a clean dollar hedge, which matters because gold fell 0.74% as the dollar firmed today. That's the second session running gold refuses to do the risk-off job duration used to.

Credit is where I keep my attention. IG at 88bp sits mid-range and says nothing. HY at 327bp is at the wide end of its own range, and the low-quality end cracking first is my live thesis.

Rates & Fed Pricing

No cut is anywhere on the strip, so this is a hiking story. The first month with a hike at least half-priced is December 2026 at roughly 64% odds, and January 2027 carries the high conviction at about 88%. Cumulative tightening builds to a peak of +68bp by September 2027, with the strip trough essentially flat at +2bp in November.

The terminal barely moved today, +1.5bp, but it's -10bp on the week. So the week faded the far end even as oil lifted the near end. What changes my mind is the December print: if PCE confirms the hot CPI and PPI, that 64% hardens and my long is safe. A soft growth number that breaks 70% closes the trade.

The Week Ahead

• Monday: Chicago Fed National Activity and Dallas Fed Manufacturing, second-tier, unlikely to move my read.

• Tuesday: Durable Goods, consensus +0.6%, a beat feeds the hot-growth case that keeps December alive.

• Tuesday: Case-Shiller and New Home Sales, housing has been soft and won't shift the inflation story.

• Tuesday: CB Consumer Confidence, consensus 80.5 below prior, a weak print is the first thing that could challenge the growth read.

• Through the week: FOMC, PCE and advance Q3 GDP loom as the real deciders for the December long.

Tradeable Levels

Pivots off the last completed session (2026-10-22). Levels marked * sit within 0.6 x ATR14 of the close.

Vol Screen · Rich and Cheap Implied Vol

Positive IV-RV = options priced rich to what the tape is delivering (USO and UNG richest today); negative = vol going cheap (META and SLV). Percentiles are each name's own archive history.

Positioning

Positioning Book · Friday COT

No crowded-and-cracking setups this week · extremes without a price crack are carry, not catalysts.

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Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day's computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

The headline below is the complete truth and exact representation of the situation that France are in. Kazaks said more tightening could be needed if inflaiton persists (which we know), but more importantly emphasised that the ECB can’t fix the French situation. As I laid out in the Substack chat, the problem in France is a fiscal problem (which comes from the budget and politics around that), and the recent riots are making the fiscal side worse EVERY week. These are two inputs that monetary polict CAN’T fix.

When Barnier was getting thrown out in 2024, the OAT/Bund spread was roughly 80bp, we’re now seeing it trade at about 175bp which means that even at the extreme in 2024, we didn’t reach even half of this spread. If the ECB were really the problem, Bunds wouldn’t be rallying as they have been across the last couple of weeks. French OATs are literally moving in the opposite direction to German Bunds…

This French credit event is being driven solely by the budget and politics and the ECB will not be able to fix it without bending its own rules or even worse, pushing the problem into the euro. The TPI was created for countries who are following the fiscal rules, but France is under a massive deficit procedure and parliment is crushing the budget). Until this budget issue is resolved (which once again, is NOT an ECB issue), we will probably hold an extreme in the OAT/Bund spread.

Now I don’t neccesarily think this spread is going to keep blowing out as it has, but for sure I don’t see us trading back to normal levels anytime soon. Even if the sprwad begins to mvoe back up (French OATs outperforming Bunds), we will still be at an extreme.

In the chart below you can clearly see the spread was drifitng up before the 2027 budget came out, then rallied hard after the bill was published October 1st, and then it broke out again this week.

Now look at the 20d change across the curves. If it was some type of global duration sell off or the ECB being way too hawkish, then we’d see Bunds leading it. But instead what we’re seeing is money leave France, and a MASSIVE chunk of that money head into Germany.

France has also sat between Germany and Itay when it comes to credit. But these dynamics are shifting and yields in France are more than BOTH Spain and Italy.

The front-end is just as important becaue whn the short-end of a soverign curve sarts moving this aggressively, the market is pricing something that can happen real fast (a downgrade, government failing, censure vote, intervention). The French-German 10s30s has also flattened to a 1 year low at the same time. When the curve is flattening from the front-end, it means there is credit stress and people are more worried about the next 6 months than they are about 2050.

This entire idea surrounding the ECB just being able to step in isn’t practical. You’re going to see people throw comparisons like 2012 around where an ECB memebr can come out and say they’ll do whatever it takes, then spreads collapse without ANY ECB buying. But it is key to note that just because something worked previously, it does NOT mean it will work in this scenario.

Now firstly from a rates POV, there’s only one policy set out for 20 countries. The ECB have already hiked in both June and September, and the inflation backdrop STILL causing tail-risks. So let’s pretend the ECB cut to help France, they’d also be cutting for Germany, and everyone else just when they should be tightening. Kasaks is telling us clearly that the bias is going the other way (see headline at the top of this report).

France will get wrecked by every hike from the ECB and all hawkish comments from them and both of these functions will likely keep OATs trading at these extreme levels. Once again, I don’t expect them to continue selling off as they have, but I don’t expect any type of longer-term recovery here, pinned lower until fiscal policy changes in my view.

As I said above, the TPI was literally built to fight unwarranted and disorderly moves. Remember, to qualify for it you need to have NO servere macro imbalances, a sustainable debt path and most of all… steady policies.

Lagarde also made it clear that the tool comes with CLEAR conditions. So for the ECB to use TPI here, it needs to look at a spread move driven by a budget that hasn’t even passed and then call it unwarranted. Sorry France, not sure you make the cut.

Now let’s pretend the ECB did step in. All that means is that the bonds move from private balance sheets onto the Eurosystem. The deficit will still exist and more importantly, the interest bill is STILL there. It would just mean that the risk moves into the currency because unconditional support for a country that is not fixing its budget (and inflation above target) is actually a form of debasement. That is WHY the euro has been falling with the spread (but the USD has mitigated some of these effects, and you will notice EUR/USD pair a little stronger. But broadly, the euro has been dragged).

Also for anyone thinking the ECB is of use, there is also a budget gap that they can’t close. French government deficit is RISING and none of these figures below care about a 25bp move by the ECB (up or down).

Monetary policy sets the PRICE of money for the every country inside of the eurozone, but France’s problems are the QUANTITY of debt it has to sell and a fiscal policy that is struggling to shrink it. You literally cannot fix one country’s quantity problem with a price tool that hits every single eurozone member at once.

France is the 2nd biggest economy in the eurozone so none of this stays in OATs. This whole situation could easily spread into the euro and we’ve already seen the euro follow the spread almost tick for tick. Considering the currency pair is meant to trade differentials, it’s been trading VERY closely to the spread and risks inside of France.

To emphasise on the fact that this is still just a France issue rather than a eurozone issue, German, Spanish, and Swiss stocks have all held up MUCH better and are diverging from French stocks. French banks are dragging the CAC (down over 11%) because they own a lot of the governments debt which means that every single time OATs sell off, there is a hit to their capital and funding costs.

German yields dropping as French yields RISE is a clear flight to quality inside the eurozone. This takes away the ECB’s excuse to act because if you average financial conditions across the eurozone, they look fine (German and French yields are neutralising eachother).

These government bond spreads will only stop widening when somene credible removes the fiscal risk (which doesn’t seem likely or close at all right now for France). Either the central bank backstops the market, forced sellers run dry or the government backs down. France today has neither a government with votes to cut the deficit nor a central bank willing or able ot step in fast (especially with inflation rising and growth flat). So even if this move is stretched short-term, it doesn’t mean we will see any fast recovery.

If we get Moody’s downgrading French debt into this weekend then there could be a further blowout in the spread (OAT/Bund). Selling exhaustion is likely going to be a factor in OATs right now too, but that doesn’t stop bonds continuing to sell off, there is just need for another catalyst for that. If Moody’s affirms and the government get through the budget vote on the 27th, then the spread could begin trading back tighter pretty fast.

Thanks

Alfie

Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day’s computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

TL;DR

• Long the December hike is on notice while it stays alive: 62% odds hold the trade for now, but a clean break below 70% closes it.

• Today was a narrow AI unwind, with tech alone draining 1.05pp from the index while staples rallied.

• Duration is still my hedge, with 10Y at 5.12% rallying as equities sold; gold no longer does that job.

• HY at 333bp is where I watch for the first real stress; IG at 87bp says nothing yet.

• The oil premium is real with WTI near 99.26, but the strip is treating the AI scare as the bigger force.

Where We Stand

Yesterday I said I stay long the December hike near 78% priced, dead only below 70%. Today's close challenges that directly: the strip no longer fully prices a 25bp hike, with December sliding to roughly 62% odds as the AI scare took the front out of the money. I'm not reversing yet, but I'm putting the thesis on notice, because the move came from growth fear while the inflation print stayed firm. My oldest open view, that housing weakness doesn't dislodge the inflation narrative, is now the thing being tested by a different crack entirely. The duration hedge earned its place today, and the HY stress flag I raised is still live with the index at the wide end of its range.

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TL;DR

• I stay long the December hike near 78% priced; the trade dies only if odds break below 70%.

• Housing is the crack I'm watching, with pending sales down 7.3% on the month; it has not yet reached inflation pricing.

• Duration is my hedge after the gold-dollar correlation weakened to -0.41, and gold no longer does that job for me.

• HY at 329bp is where stress shows first; IG at 87bp says nothing yet.

• Tech leadership carried a flat index; the S&P book flipped to an up-trend regime today.

Where We Stand

Yesterday I said I was long the December hike near 78% priced, leaning on inflation data even as housing cracked. Today's close keeps me there: December sits at roughly 78% odds, with 2027-01 near 100%, and nothing on the strip dislodged that. The oldest open thesis, dollar weakness invalidated above 102, stays intact with DXY at 101.68 and flat on the day, so I leave it running. My December thesis is challenged only by housing, and the number that keeps it alive is the strip itself, which did not budge on the hike. The SPHB/SPLV crowding flag is still live after another heavy week. For now I'm not reversing anything.

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TL;DR

• Long the December hike near 78% priced; housing is cracking but inflation data keeps me in the trade.

• Record pending home sales collapse is the first genuine dent in the growth backbone I have leaned on.

• Duration stays my only hedge; SPX-Bitcoin correlation at 0.58 rules crypto out.

• HY at 331bp, the wide end of its range, is where I watch for stress before the index shows it.

• Small caps and health led a broad tape while Tech lagged; the rotation is the signal I am trading, and the index level barely registers.

Where We Stand

Yesterday I said I was long the December hike near 82% priced and not fading hot inflation, and tonight's close keeps me there. The oldest open thesis, the December hike holding elevated on composition that limits further pricing, survives: Fed hike pricing via CME FedWatch has December at 25.8bps, versus 26bps prior, with the strip still assigning roughly 78% odds. That barely moved, so I am not changing my read. My duration hedge thesis, on notice yesterday, got a reprieve: 10Y edged down into a mixed tape rather than selling off with stocks, so the haven bid held one more session. The EUR crowding flag is still live, specs sit at the 2nd percentile and washed out, which is why I am wary of chasing dollar weakness here even with DXY below 102.

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TL;DR

• Long the December hike near 82% priced; the hot PPI and retail sales keep me in it and I'm not fading hot inflation.

• My duration hedge is on notice: 10Y fell into a risk-on tape, and one more session like it breaks the haven thesis.

• Crypto is no hedge here with SPX-Bitcoin correlation at 0.59; I'm using duration or nothing.

• HY at 323bp is my credit tell; the index is calm but the low-quality end is at the wide end of its range.

• Dollar sits exactly on my 102 invalidation; a close above it and I shelve the weak-dollar view.

Where We Stand

Yesterday I said duration stays my hedge while 10Y holds 5.10 and rallies into risk-off, with bear flattening the thing that flips it. Today challenged that read head on. 10Y yield fell 9bp to 5.1% while equities rose, so the haven bid I leaned on simply was not there on a risk-on tape. My oldest open thesis, that 10Y keeps rallying through hot prints as a haven, is the one under pressure, and the number keeping it barely alive is that 5.1% level itself, which held even as yields fell 9bp at settlement. I'm not changing my read yet, but one more session of yields up with equities up and I treat the hedge as broken. The copper crowding flag is still live, and the dollar invalidation sits right on the line.

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TL;DR

• Long the December hike near 76% priced; the inflation data keeps building and I'm not fading it.

• Nasdaq led the sell-off on AI valuation fears; I treat this as a positioning flush until credit confirms otherwise.

• Dollar thesis challenged at 101.8, under my 102 invalidation; one more soft session and I change my read.

• Duration stays my hedge while 10Y holds 5.10 and rallies into risk-off; bear flattening is the signal that flips it.

• SPX-Bitcoin correlation at 0.59 means crypto is no hedge here; copper crowding flag still live.

Where We Stand

Yesterday I said I was long the December hike near 90% and that duration was still my equity hedge. Today's close keeps both honest. The Nasdaq underperformed as the rout in technology, AI, chip and memory stocks continued, with reports that Anthropic's valuation expectations had been lowered to USD 1.5tln from USD 2tln adding to concerns over elevated valuations across the AI sector. The 10Y caught its haven bid intraday then gave it back to oil, so my long-end thesis from 14 October is now challenged. The yield still sits at 5.10 but fell 9bp on the day, so no bear flattening yet. I'm keeping the view alive on that level. The dollar thesis opened 12 October is also challenged at 101.8, below my 102 invalidation, and one more soft session changes my read. The copper crowding flag stays live at the 87th percentile.

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TL;DR

• Long the December hike near 90% after hot PPI; the energy-driven composition is why I'm not pricing more.

• Dollar uptrend sits on its 102 invalidation after today's 0.52% fall; one more soft session and I change my read.

• Duration stays my equity hedge; the 10Y caught the haven bid again despite hot inflation.

• Copper crowding flag still live at the 87th percentile.

• Watching whether the long end keeps rallying through hot prints or finally bear flattens; that decides the next leg.

Where We Stand

Yesterday I said I'm long the December hike near 84%, with hot core the reason and PPI the next test. Today's PPI cleared that test and then some, and the strip now has December at roughly 90% odds, the first month with a 25bp hike at least half-priced. The December hike thesis, my oldest open call from three days ago, is comfortably intact and I'm staying long it.

My dollar uptrend thesis is the one in trouble. DXY settled at 102.00, 1d -0.52%, sitting right on the 102 invalidation I drew. I'm not closing it yet, but one more soft session and I change my read. The copper crowding flag stays live at the 87th percentile, with copper at 6.56.

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TL;DR

• Long the December hike, now near 84%; core at 0.335% M/M is why, and PPI tomorrow is the next test.

• Duration beats gold and Bitcoin as my equity hedge; the long end caught the flight-to-quality bid today.

• Gold's growth-asset thesis is challenged; it fell while yields fell, and one more session like it and I change my read.

• Dollar uptrend intact at 102.55, holding above the 102 invalidation; cleanest macro trend I've got.

• Copper crowding flag still live at the 87th percentile.

Where We Stand

Yesterday I said I was long the December hike at 76% and that core CPI was the only thing that could move it. Today's print moved it my way: core CPI rose 0.335% M/M, above the expected 0.2%, while the annual rate accelerated to 2.6% from 2.4%. That reaffirms the December thesis opened two days ago, now sitting near 84% on the strip. The oldest open thesis, gold as a growth asset firming with equities, is the one I'm watching hardest: gold slipped as equities sold and yields fell at the long end, which is the opposite of how that regime is meant to behave, so it's challenged. I'm keeping it alive only because the 5d is still +1.10 and the correlation to the 10Y at -0.55 holds, but one more session like this and I'm changing my read. The copper crowding flag at the 87th percentile is still live.

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Firstly, I just wanted to inform you guys that I am hosting Market Macro Hub’s first livestream on October 26th at 4pm BST with . I have done a previous recording with this channel and I HIGHLY recommend that you subscribe to all social media content from them:

Less Noise More Signal - Youtube

Less Noise More Signal - Substack

Less Noise More Signal - Twitter

This was the previous recording:

This report today is slightly different.

I am going to be producing a LOT of additional content, alongside the structured macro reports, daily systematic models and continuously sharing live market thoughts & models.

This report here is written as a joint report with my good friend , who is predominantly a crypto trader & analyst, coder and global macro researcher.

Let’s dive in!

We are seeing the rapid emergence of financial trading onto blockchain networks creating many different opportunities in the world of decentralised finance. In particular, this moment is defining as many development teams publish to the world their version of how investors should access markets via blockchain technology. Established competitor Hyperliquid is an exchange based on an order book model, whereas the focus of today’s writing Variational takes a different approach.

Variational has its own embedded market maker known as the Omni Liquidity Provider (OLP) who quotes the users prices for assets. Upon the user accepting the quote, OLP that takes the other side of the trade and manages exposure to the position. This design allows for users to be able to trade a variety of traditional assets alongside crypto with ease. The collateral for the positions is secured on the Arbitrum network, an Ethereum Layer-2. The distinction between Hyperliquid and Variational lies in how they provide liquidity. Hyperliquid brings trade participants together on the order book whereas Variational’s Omni platform utilise a dealer-based model quite similar to what we see in traditional finance.

The way how Hyperliquid and Variational launch new markets is very different. Hyperliquid has a variety of ways to launch new markets: both natively and via its introduced HIP-3 protocol. HIP-3 allows for permissionless opening of new markets by independent operators (known as builders) given they stake at least 500,000 HYPE as collateral for safety purposes. Trade.xyz is currently the leading builder and has deployed multiple markets covering stocks, indices and commodities on Hyperliquid. Builders define the market and rules surrounding it such as the maximum leverage and what external price does the market track. Once a market goes live, market makers and traders provide buy and sell orders to effectively price the market well. Comparing this to Variational, the immediate advantage is that it can offer a new market without having to develop an active order book for that asset. OLP provides the pricing which crucially needs to be reliable and accurate and needs to have sufficient capital and way to hedge and manage its exposure. The subsequently can allow for much broader market coverage but brings forth greater reliance on the mechanisms behind OLP.

Appearing on the When Shift Happens podcast, Variational’s CEO Lucas Schuermann gave the comparison of Hyperliquid being similar infrastructure wise to the exchange such as Nasdaq and CME whereas Variational was much similar to brokerage such as Interactive Brokers. He made it clear that he believes both products can coexist where exchanges provide trading venues whilst brokers connect customers to liquidity across them. The underlying conclusion that remains is which product offers customers the most competitive trading experience. This competitive experience is based on execution and cost of completing the transaction.

Investors simply want to understand how does the trading activity on Variational translate into value for VAR, its planned token to launch in Q4. Variational’s current revenue model works on basis of no commission but captures the difference between spread on buy and sell prices. 80% of this revenue stays within the OLP vault, which is used for managing and supply exposure to trades (given it takes the other side of user trades). The remaining 20% is redirected to the protocol’s treasury where they are currently awaiting to be utilised for token buy back and burning of VAR tokens from circulation once it officially launches. This is a similar measure that Hyperliquid does with their HYPE token creating a link between platform adoption and demand for the token.

Upon the VAR token launch, 32% of the supply will be allocated to early users eligible for an airdrop which is determined based on their trading activity that accumulates points. With this being the immediate catalyst, the longer-term investment case will depend on whether such early users can be retained alongside new users once the farming incentives end. 50% of the supply is allocated to the team and investors, locked fully for 12 months with a gradual unlock over a period of at least 3 years. Another 18% is earmarked for ecosystem development. These allocations matter alongside demand when assessing the token’s valuation.

We are now wondering, what would the launch valuation possibly be? As of the 12th October, Polymarket displays a 59% probability of VAR exceeding $1 billion fully diluted valuation (FDV) a day after launch.

FDV = token price x total supply (including locked tokens).

Reports in the crypto space surrounding OTC transactions for points prior to launch have taken place at prices of $20-37.50 per point which would imply an FDV of $1.29 billion at the upper bound. Traders on social media report earning points are currently at a cost of around $8-15 each. The farming of points takes place through engaging in trading activity on Variational, mainly delta neutral strategies by taking offsetting long and short position across various exchanges on assets with favourable funding rates and low cost to execute. It is important to note that these still positions still carry liquidation risk if not handled correctly. These estimates are unverified, however, earning points through such farming methods could prove profitable if VAR launches at a valuation consistent with the expectations laid out above or higher.

Post launch, the longer-term investment case strongly lies on whether users can be retained into the future alongside the growth revenue so that the revenue buy back model can continue as we have seen with the success of Hyperliquid. In the bull case scenario, the broad access to a range of markets (especially Trad-Fi based assets) could attract a lasting demand allowing for the token buy back and burn events to continue with the bearish scenario being such demand dies when the incentives disappear. The current and past trajectory of Hyperliquid and Lighter are useful comparisons for the potential of VAR, but cannot be held as a guarantee.

I’ll end with the question being: how much of that future success is already reflected in the launch price?

Now onto the macro backdrop and what I want to see after the CPI release to adjust or add to the positions sent out to paid subscribers.

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TL;DR

• Long the December hike at 76% into tomorrow; the core CPI print is the only thing that moves it.

• Dollar at 102.2 took a dovish-Williams knock but stays my cleanest macro trend.

• Duration beats gold as my equity hedge while gold's correlation to the 10Y sits at -0.56.

• The S&P-Bitcoin correlation at 0.64 means crypto is no equity diversifier right now.

• Copper crowding flag still live at the 87th percentile; watching for the downside it threatens.

Where We Stand

Yesterday I said I'm long the December hike at around 82% and that Wednesday's core is the only print that changes it. Today's close keeps me there. The December hike engine I opened two days ago is still firmly on, with the strip holding 76% odds into the print and the calendar doing nothing to force a rethink. The dollar thesis I opened yesterday took a small knock, with the index back to 102.2, but one soft session on a dovish Williams headline does not break the cleanest trend I have, so I keep it. The copper crowding flag I put up at the 87th percentile is still live, and copper edged lower again today.

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TL;DR

• Long the December hike at around 82%; Wednesday's CPI core is the only print that changes it.

• Dollar printed a fresh 2026 peak and strength is the cleanest macro trend right now.

• Gold read is challenged: it fell with yields today, so if the 10Y keeps dropping I change it.

• Tech weakness on China memory competition did the index damage; breadth elsewhere was green.

• Duration is my preferred equity hedge over gold while that correlation stays broken.

Where We Stand

Yesterday I said December hike pricing holds above 75% into Wednesday's CPI unless core runs cold, and nothing today challenges that. My oldest live thesis, opened five days ago, is that December holds above 75% on a hot core print; the first month with a 25bp hike at least half-priced is December 2026 at around 82% odds, so it sits comfortably. I flagged gold yesterday as a growth asset firming with equities, and that one is under more strain now. Gold fell with yields dropping, which is the opposite of how a growth-linked gold should behave, and the gold-versus-10Y correlation has swung hard. I'm not closing the gold read yet, but if the 10Y keeps backing lower and gold keeps sliding with it, I change it. The copper crowding flag is still live at the 87th percentile.

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TL;DR

• Still long the December hike near 76%; a hot core on Wednesday is what keeps it honest.

• Oil firming on Middle East supply fear is the live inflation risk pushing the front end.

• Changing my read on copper: regime flipped to uptrend, but 87th percentile crowding caps how hard I chase.

• SPX-Bitcoin correlation at 0.63 means Bitcoin is not hedging equity risk right now.

• Tech dragged again while breadth held; I treat the 0.26% dip as mere noise.

Where We Stand

Yesterday I said I was still long the December hike near 78% and treating gold as a growth asset that sells with equities. Today's close does not challenge that. The front end sold with 2s10s steepening +3bp on the day, and December sits around 76% on the strip, so the call that opened on 7th October holds above 75% and stays INTACT. Gold did nothing, down a rounding error, so the growth-asset read is neither helped nor hurt today. The copper crowding flag is no longer my worry in the same way: its regime flipped to uptrend. I'm changing my read on copper chasing because the engine now trends it, though the 87th percentile crowding still argues against piling in.

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TL;DR

• Still long the December hike near 78%; Waller and Musalem both argued today that more tightening is coming.

• Gold has stopped hedging rates at -0.58 to the 10y, so I treat it as a growth asset that sells with equities.

• Today's slide was a tech derate while breadth stayed positive under a -0.19pp drag from Technology.

• Copper stays a no-chase at the 87th percentile, and its regime just flipped to mixed.

• Next real test is Wednesday's CPI at 3.4% prior; a hot core is what keeps the hiking strip honest.

Where We Stand

Yesterday I said the December hike was still my call near 76%, kept alive by the minutes and sticky inflation expectations even with soft payrolls. Today's close doesn't break it. December pricing on the strip sits around 78%, and Waller plus Musalem both spent the session arguing more hikes are needed. So the December hike thesis, the oldest open view I'm engaging, stays intact and I'm not touching it. On gold, I flagged yesterday that its link to yields at -0.58 means it sells with equities now rather than hedging rate moves, and nothing today changes that read. The copper crowding flag is still live at the 87th percentile, and copper's regime just slipped from uptrend to mixed, which only reinforces why I won't chase it.

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TL;DR

• Still long the December hike near 76%; the minutes and rising inflation expectations keep it alive and soft payrolls haven't broken it.

• The curve bull steepened as the front end rallied; I read that as the labour data biting the short end while the long end stayed anchored.

• Bitcoin at 0.63 to SPX hedges nothing here, so I'm treating it as pure risk beta.

• Gold's tightening link to yields at -0.58 means it sells off with equities now; it's no longer my rate-easing hedge.

• Copper longs stretched at the 87th percentile; I'm cautious on chasing any upside there.

Where We Stand

Yesterday I said I'm long the December hike near 82% and that soft payrolls hadn't shifted it. Today's close backs that: the strip still puts the December hike around 76%, and FOMC minutes read hawkish on inflation risk, so the conviction holds even with the probability a touch lower. My oldest live thesis, December holds above 75%, stays intact and I'm not touching it. The copper crowding flag I've carried is still live, specs sitting at the 87th percentile, and nothing on the tape today gives me a reason to drop it. IG at 83bp against its 89bp mean still says no broad stress, so I'm reading today's equity weakness as a growth-and-supply story rather than a credit one.

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TL;DR

• Long the December hike near 80%, still my core view, and today's minutes decide whether it extends.

• Oil back above USD 90 is the inflation channel I'm watching, while broad credit stress stays absent.

• Copper crowding flag still live at the 87th percentile, I'm not chasing the metal.

• SPX and Bitcoin now move together at 0.62, so crypto is risk beta and hedges nothing.

• Growth cooling not cracking, with payrolls at 29 the one number that framed the week.

Where We Stand

Yesterday I said I was long the December hike near 82% and that soft payrolls had not shifted it. This morning's tape backs that up. The December hike is still the first month with a 25bp move at least half-priced at around 80% odds, and January carries a near-certain hike. That is my oldest open thesis from 5 October, and it stays INTACT. The copper crowding flag is still live at the 87th percentile, and with the metal barely moving I'm still not chasing it. My IG thesis also holds: credit is sitting mid-range and is not the marginal story today.

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