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THIS WEEK the first MIXED-Risk week after 1 Risk-ON:
US Stocks MIXED, Foreign Stocks MIXED, Bonds UP and Gold UP.
#1 ASIA-PACIFIC Dips Below 50-day Support—
AAXJ fell 2.5% this week, after losing 5.2% last week. That left it very bullish and ranked #1 globally and more attractive than cash. The index is up 23.1% for the quarter (13 weeks), and up 41.2% for the year (52 weeks).
#2 JAPAN Holds Short-term Support—
EWJ rose 0.4% this week, after losing 3.6% last week. That left it very bullish and ranked #2 globally and more attractive than cash. The index is up 15.0% for the quarter (13 weeks), and up 37.0% for the year (52 weeks).
#3 US SMALL-CAP Rally Slows-- IWM fell 0.8% this week, after gaining 1.4% last week. That left it very bullish and ranked #3 globally and more attractive than cash. The index is up 24.6% for the quarter (13 weeks), and up 34.9% for the year (52 weeks).
#4 LATIN AMERICA Off Fractionally-- ILF fell 0.4% this week, after losing 0.3% last week. That left it bearish and ranked #4 globally and more attractive than cash. The index is up 0.3% for the quarter (13 weeks), and up 35.2% for the year (52 weeks).
#5 EUROPE’s Advance Pushes Ever Higher-- IEV rose 2.6% this week, after losing 0.9% last week. That left it very bullish and ranked #5 globally and more attractive than cash. The index is up 14.0% for the quarter (13 weeks), and up 21.4% for the year (52 weeks).
#6 US LARGE-CAPS Play Catch-Up –
SPY rose 2.2% this week, after losing 2.4% last week. That left it very bullish and ranked #6 globally and more attractive than cash. The index is up 18.2% for the quarter (13 weeks), and up 20.5% for the year (52 weeks).
#7 US Cash Yield Steady--
The three-month T-Bill yield is 3.69%, up from last week. The cash yield is close to the Fed overnight rate (3.625%) following the 6/17 FOMC meeting at which no changes in rate policy were expected or made. Meanwhile, the two-year Treasury is yielding 4.18%, a 56 basis-point premium to cash
#8 Gold Bullion Gets Bearish Bounce: GLD rose 1.2% this week, after losing 3.5% last week. That left it very bearish and ranked #8 globally and less attractive than cash. The index is down 8.8% for the quarter (13 weeks), but up 23.1% for the year (52 weeks).
#9 LONG US TREASURIES Sink Into Neutral Zone –
EDV fell 2.6% this week, after gaining 0.1% last week. That left it very bullish and ranked #9 globally and less attractive than cash. Long bonds are up 4.1% for the quarter (13 weeks) and up 5.8% for the year (52 weeks) as yields have risen.
COMMODITIES Remain Oversold--
The CRB fell 3.1% this week after losing 0.8% last week. Commodity prices are down 5.7% for the quarter (13 weeks), but up 21.2% for the year (52 weeks). Crude Oil: The broader oil complex (USO) fell 1.4% this week, following last week's loss of 8.2%, and remains bearish. US oil prices are down 8.3% for the quarter (13 weeks), but up 40.6% for the year (52 weeks).
US DOLLAR Backs Off Latest High—
UUP fell 0.4% this week, after gaining 0.6% last week. It remains very bullish, up 2.4% for the quarter (13 weeks) and up 5.5% for the year (52 weeks).
SEE MOOSECALLS PDF FOR CHARTS AND DETAILS
THIS WEEK the first MIXED-Risk week after 1 Risk-ON:
US Stocks MIXED, Foreign Stocks MIXED, Bonds UP and Gold UP.
Asia-Pacific ex-Japan leads in regional global momentum since 6/3/2026, despite a 7.7% loss in the last two weeks.
AAXJ leads in overall confidence. Technical strength is very bullish. Though AAXJ is the #1 regional choice, it is very volatile. The best offshore alternative at the moment remains emerging markets (EEM), but US Small-caps are coming on strong after rate hikes in Europe and Japan.
(SEE PDF FOR REGIONAL GLOBAL ASSET CHARTS AND WEEKLY PERFORMANCE NOTES)
Below we rank 27 major US equity sectors according to their momentum and technicals. We also identify what sectors are working now and have been for awhile. There is no specific sector model to time the group as the ETFs involved may be thinly traded, extremely volatile, and require daily monitoring to avoid disasters. The rankings are more useful for longer term swing trade investors.
This week’s US equity sector momentum is up; positive; broad-- 82% of our sectors are buy or hold (L74%) with BUYS up to 52% (L41%) and HOLDS down to 30% (L41%). Avoids are steady at 18% (L18%). Top performers in the past two weeks: Pharma, Biotech, Health Providers. Worst: Semiconductors, Energy Services, and US Technology.
Below we show the top 10 US stock sectors by year-to-date return. We also identify what sectors are working in the last 2, 13, 26,, 39 and 52 weeks, and over 3 years. Ranking is based on momentum over about six months (26 weeks). It is necessary to monitor more recent returns to make sure a high momentum reading does not mask a sudden weakness in price.
Indications fell into neutral (3 of 4) for the global economy.
An international shipping measure and proxy for current global trade, the Baltic Dry Index is at 2717 this week, up from 2524 last week and up 32% after 13 weeks, a positive signal.(After opening 2026 at 1882, BDI is still well below its 2010 peak @4640.)
Meanwhile, another proxy for world activity, WTI oil price is down to $68.78 this week, and down (-38%) in the latest quarter, a negative economic signal. (Oil remains below its 2022 peak ($130), but well above the 2020 Covid low ($10).)
Our proxy for global construction, copper is $6.22, downup this week, and up 11% this quarter, a positive signal.
Domestically, the 10Y US bond yield is at 4.49% this week, a 18 basis point rise over the past 13 weeks, a positive bet on the largest world economy.
US ECONOMY: WEEK ENDING JUL.03.2026:
OVERALL: WEAK
PRODUCTION: MANUFACTURING POSITIVE BUT SLOWING
(-) WEEKLY EIA Crude Oil Inventories (-3.78M) draw lessens as oil prices fall.
MAY Industrial Production (+0.1%) lagged prior and targets.
MAY Capacity Utilization (76.2) improved by less than anticipated.
(-) JUN S&P Global U.S. Manufacturing PMI – (53.9) expanding, DOWN from previous.
(+) MAY S&P Global U.S. Services PMI – (51.3) expanding, up from previous.
(-) JUN ISM Manufacturing Index (53.3) BELOW prior and consensus.
(+) MAY ISM Services Index (54.5) beat prior and consensus.
CONSTRUCTION: MAY WEAKER THAN EXPECTED
(-) MAY Housing Starts (1177K) below previous and well below expectations.
(-) MAY Building Permits (1413K) below consensus and prior.
(+) MAY Existing Home Sales (4.17M) beat previous and consensus.
(-) MAY New Home Sales (580K) down from prior more than expected.
(-) MAY Construction Spending (+0.1%) LAGGED prior and consensus.
INFLATION: PCE PRICES RISING
MAY CPI (+0.5%) in line less hot than previous. (+4.2% y-o-y)
MAY Core CPI (+0.2%) cooler than previous (+2.9% y-o-y)
MAY PPI:(+1.1%) hot as prior and above consensus. (+6.5% y-o-y)
MAY Core PPI (+0.4%) hotter than prior and consensus. (+4.9% y-o-y)
MAY Import Prices (+1.9%) in line with previous. (+6.7% y-o-y)
MAY Export Prices (+1.3%) hotter from previous. (+11.2% y-o-y)
(-) MAY PCE Prices (+0.4%) as expected. (1yr 4.1% up.)
(-) MAY PCE Prices – Core (+0.3%) as expected. (1yr 3.4% up.)
JOBS: JUNE PAYROLL DATA WEAK
(+) Weekly initial Claims (215K) below previous and forecasts.
(-) Weekly Continuing Claims (1814K) slightly higher this week after prior revisions.
(-) JUN ADP Private Payrolls (98K) DOWN from previous more than expected.
(-) JUN Nonfarm Payrolls (57K) much weaker than previous and consensus.
(-) JUN Unemployment rate (+4.2%) down a tick due to shrinking labor force participation.
(-) JUN Average Hourly Earnings (+0.3%) in line, but below inflation rate.
(-) JUN Average workweek (34.3) unchanged.
(+) MAY JOLTS Job openings (7.594) UP from prior after revision lower.
JOLTS Separations
CONSUMPTION: JUNE CONFIDENCE UNIMPRESSIVE
MAY Retail Sales (+0.9%) beat consensus and previous.
JUN Consumer Confidence (91.2) UP from prior after downward revision, but below consensus.
(-) MAY Durable Orders (-4.5%) correcting after 8.5% surge in April.
(+) MAY Personal Income up strong (+0.7%), better than expected and prior.
(+) MAY Personal Spending (+0.7%) better than expected and prior.
(+) MAY Michigan Consumer Sentiment (49.5) still contracting but improving and better than anticipated.
MAY NFIB Small Business Optimism (95.3) strong but below prior (95.6).
(-) MAY Trade Deficit (-105.8B) greater than previous.
GDP & RECESSION INDICATORS: IMPROVE
(+) Q1 GDP - Third Estimate (+2.1%) up from previous and consensus.
(-) Q1 GDP Deflator - Third Estimate (+3.6 %) up a tick from previous and still hot.
Q1 Employment Cost Index (0.9%) hotter than expected and previous.
Q1 Productivity – (+0.3%) revised weaker than prior and consensus
Q1 Unit Labor Costs – Warm but revised cooler (+1.8%) than previous and consensus.
(-) Q1 Current Account Balance (-$226.8) deficit greater than previous quarter and consensus forecast.
US ECONOMY: FEDERAL RESERVE
week of JUL.03.2026
RECESSION THREAT: MINIMAL, FALLING
US recession chances one year out: 14.98% (MAY 2027) per NY Fed. (Recession expected if chance > 30%.) As of May 2025, the Fed model’s chance of recession fell below 30%, the threshold signaling a recession one year out. It has been going lower since. The risk of recession was the highest in 40 years in May 2024, but it was avoided amid threeyears of massive Federal deficit spending and historic data falsification at the Bureau of Labor Statistics.
ATLANTA FED: US Q2 GDP NOW at 1.2%
Atlanta Fed Current GDP Model (7/1/2026): Q2 Annualized 1.2% (Last week: Q2 Annualized +2.5%)
FED BALANCE SHEET ($6.72T); FFR @ (3.50-3.75%)
Currently, the Fed’s balance sheet is 6.72T, (DOWN +.02T) in the latest week (7/1/2026). The Fed Funds Rate was lowered 25 BPS to 3.50-3.75% at the DEC10 FOMC meeting. No change since at the January, March, April or June FOMC meetings.
The next FOMC meeting is July 29. Trump replaced Jerome Powell with Kevin Warsh in the chair on May 22 and he chaired his first FOMC meeting June 17. No near-term rate hikes are expected, but a more hawkish tone suggests supply-side inflation pressures brought on by the war with Iran may eventually force rate hikes by year-end. The odds are 78% that rates will remain unchanged at the next meeting in July. By December, however, a Fed rate HIKE (77%) is the most likely outcome.
The Fed Check at 91% turned hawkish as of 1/30/2026 (tighter monetary policy needed to combat global inflation pressures.) The US 2-Year yield at 4.14%, however, is now 52 bps HIGHER (and rising) than the Fed overnight rate (3.625%), implying near-term US domestic conditions make a Fed rate hike increasingly likely.
The 3m-10y yield curve steepened to a slope of 83 bps this week, as the 10-year US Treasury yield rose to 4.41%, and the 3-month cash yield rose to 3.67%. Intermediate term, the curve was inverted from 11/22 through 12/24 but has been positive since. The 30d-10y median yield (4.09%) is just above its 200-day (3.94%). A rising median yield and a steepening yield curve are both bullish for stocks.
3-month SOFR yield at 3.66% is up this week, while the 3-month T-bill at 3.67% is also up a tick. That puts the SOFR/T-Bill (SOF-T) spread at -3 basis points, below its 200-day average of 12 bps. A falling SOF-T spread signals a safer, more confident financial system.
FED OVERALL THIS WEEK: NEUTRAL
FED CHECK: TIGHTENING INDICATED
RATE POSTURE: STEADY
BALANCE SHEET: STEADY
FED SPEAK: AWAITING NEW CHAIR
Latest FOMC Assessment (2026.6.17)
The Federal Open Market Committee approved the following statement for release by a 12 – 0 vote:
The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve's dual mandate. The Committee reaffirmed its policy of maintaining ample reserves in the banking system. Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability. (Next Meeting: 7/29/2026)
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