Systematic Macro Models: The Set Up Into ISM Services (04/08/26)
Proprietary systematic macro models · daily signals across rates, equities, FX, commodities and crypto
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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 · curve regimes, growth x inflation quadrant, breadth, credit, vol term structure, liquidity, stock-bond correlation, crypto cross-asset, housing
Fixed Income · UST complex, global curves, Fed/ECB/BoE/BoJ implied policy paths, global 2Y and 10Y panels
Equities · index pages, relatives, vol suite, global relatives, Mag7+ quant sheet, options surfaces
FX · majors dashboards, correlations, COT positioning, crosses
Commodities · energy, metals, agriculture, COT crowding, term structure
Crypto · BTC ladders, ETH, macro correlations, ETF flow proxy
Every number in this note is computed by the desk's own systematic engines across 44 markets, then read in plain language. Five minutes and you're caught up.
Where We Stand
Our oldest running view, the 2s10s steepener opened two days ago, sits at 45.00 and we extend it while the terminal keeps drifting lower. Yesterday we said WTI down 7.81% eased the inflation squeeze and changed nothing for our hawkish front end, and this morning's 1.1% crude bounce on the Kuwait base and Oman vessel strikes does not challenge that. The 2-year at 4.23% still holds the short-duration stance, and we treat the strong ISM Manufacturing beat as the reason to keep it.
Today's Three · Highest-Conviction Signals
The three signals the desk engines rank highest right now, each with the level that proves it wrong.
EUR/JPY · mean-reversion long, conviction 87/100, new, on for 0 sessions. The fade targets the 21-day average at 184.9 and ends on a touch of it; a further stretch through 180.7 (one more average daily range against it) says the regime has turned and the fade is wrong.
AUD/JPY · mean-reversion long, conviction 81/100, new, on for 0 sessions. The fade targets the 21-day average at 112.9 and ends on a touch of it; a further stretch through 110.0 (one more average daily range against it) says the regime has turned and the fade is wrong.
FTSE 100 · momentum long, conviction 80/100, new, on for 0 sessions. The trend gate holds while the quote stays above the 21-day average at 10683; seven consecutive closes back below it kills the call.
Asset Market Pricing
Momentum Book · Sticky Regimes
Assets whose regime is sticky (Markov persistence 6+ days): trends run, so the momentum engine sets the direction, and conviction rises with the strength bar.
Mean Reversion Book · Choppy Regimes
Assets whose regime is choppy : trends get faded, so the mean-reversion engine sets the direction against the stretch from the 21-day average.
What's Driving the S&P 500
The S&P 500 is in a sticky regime (Markov persistence 12 days), so momentum is driving it: the trend engine reads bullish with conviction 24/100.
Across the 44-market universe, 27 are trend-driven (momentum) and 17 are range-driven (mean reversion).
Sector Snapshot & Breadth
Main Developments in Macro
TRUMP SAYS IRAN TALKS ONGOING, STRAIT OF HORMUZ COULD REOPEN BY TUESDAY
IRGC REPORTEDLY STRUCK US BASE IN KUWAIT WITH THREE DRONES, VESSEL HIT OFF OMAN
ATLANTA FED Q3 GDPNOW REVISED UP TO 6.2% FROM 5.0%, ISM MANUFACTURING BEAT
TREASURY SEES USD 739BN Q3 BORROWING, UP FROM 671BN PRIOR ESTIMATE
TRUMP PRESSES OIL MAJORS TO CUT RETAIL PRICES, ENERGY LAGS THE RALLY
SENATE VOTES 89-4 TO ADVANCE STOPGAP FUNDING THROUGH DECEMBER 11TH
MORE THAN TWO DOZEN US STATES SUE OVER LATEST TARIFFS
The growth read firms rather than fades. The Atlanta Fed's GDP now Q3 estimate was revised up to 6.2% from 5.0%, while ISM Manufacturing PMI beat in July, driven by increases in production and new order indices. We would treat a JOLTS print near the 7.45 consensus as confirmation the labour market is not cracking; a large miss below 7.0 is what changes it.
The inflation side stays two-handed. Trump reiterated a call for oil companies to cut retail prices and said Exxon and Chevron are making too much money. That jawboning caps the crude bounce, so our hawkish front-end read leans on the firming growth data while energy stays contained.
The Tape
Consumer discretionary did the heavy lifting on Thursday. XLY added +0.36pp on a +3.29% day, with communications next at +0.15pp, so the leadership sat squarely in high-beta growth. We read that as risk-on rotation as the high-beta names led, and it keeps us comfortable in the steepener.
Cross-asset, the scoreboard flagged one thing we act on. The SPX versus dollar correlation moved to -0.33 now from -0.68 a month ago, a BIG SHIFT, so the dollar is no longer the clean equity hedge it was. Until that correlation re-tightens, we would not lean on DXY to cushion an equity drawdown and we hedge growth risk elsewhere.
Credit stays inside the carry regime. IG OAS at 80bp sits below the 91bp long-run mean, which our litmus framing calls complacency, and HY at 284bp confirms no stress bid. If OAS breaks decisively above 91bp, then we close the fade and treat it as a regime shift; until then, we hold the carry stance and fade panic.
Rates & Fed Pricing
No month on the strip has a cut half-priced, so this remains a tightening set-up. The first month with a hike at least half-priced is September at roughly 68% odds, and November carries a near-certain hike at about 98%. We treat the 2-year at 4.23% as the clean expression while those odds hold.
The strip peaks in June 2027 at 4.180%, some +55bp cumulative over the 3.63% funds rate, with the near trough in August at 3.715%. The terminal repriced just -2.5bp on the week, so the market is nudging the endpoint lower even as the front end firms. That divergence is exactly why the steepener works.
The move is driven by firming growth rather than fear. The 10yr UST unwound some of the post-FOMC steepening after settling higher, with little reaction to the increased borrowing in the Treasury Financing Estimates for Q3. If ISM Services on Wednesday prints above the 54.5 consensus, then we size the belly short into the September meeting; until then, we wait.
Bottom Line
2s10s at 45.00 extends the steepener while the terminal drifts lower.
IG at 80bp holds the carry regime and fades panic short of the mean.
September hike at 68% waits for Wednesday's ISM Services before we size the belly.
WTI's 1.1% bounce fades against Trump's price jawboning and changes nothing hawkish.
The 91bp mean is the line credit watches before we reverse the fade.
The Week Ahead
Tuesday: JOLTS job openings, consensus 7.45. A print holding near consensus keeps our firm-labour read; a slide below 7.0 challenges the September hike and we trim the front-end short.
Tuesday: Factory Orders, consensus +0.2% against -1.3% prior. A clean rebound confirms the manufacturing turn behind our short duration; a second negative print softens it.
Tuesday: Balance of Trade, consensus -73 against -77.6 prior. A narrower deficit supports the strong Q3 GDPNow; a wider gap trims that growth optimism.
Wednesday: ISM Services, consensus 54.5 against 54 prior. Above consensus and we size the belly short into September; below 54 and we hold the steepener without adding.
Wednesday: ADP employment, consensus 70 against 98 prior. A beat firms the labour read into payrolls; a sub-50 print flags cooling and we wait on the belly.
Vol Screen · Rich and Cheap Implied Vol
Positive IV-RV = options priced rich to what the tape is delivering (AVGO and XLE richest today); negative = vol going cheap (AMZN and MSFT). Percentile ranks unlock at 60 archived sessions per name · currently 17/60 · the archive deepens automatically every build.
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.