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THIS WEEK the 1st Risk-OFF week after two MIXED-Risk weeks.
US Stocks DOWN, Foreign Stocks DOWN, Bonds DOWN and Gold DOWN.
#1 ASIA-PACIFIC Triggers Stop-Loss--
AAXJ fell 5.5% this week, after gaining 2.0% last week. That left it bullish and ranked 1 globally and more attractive than cash. The index is up 4.4% for the quarter (13 weeks), and up 34.0% for the year (52 weeks). After triggering a stop-loss this week, it gives way to #2 Small-caps at the top.
#2 US SMALL-CAPs Take a Breather—
IWM fell 0.7% this week, after losing 0.5% last week. That left it very bullish and ranked 2 globally and more attractive than cash. The index is up 9.7% for the quarter (13 weeks), and up 33.7% for the year (52 weeks).
#3 JAPAN Breaks Down Short-term--
: EWJ fell 4.3% this week, after gaining 1.5% last week. That left it very bullish and ranked 3 globally and more attractive than cash. The index is up 1.8% for the quarter (13 weeks), and up 38.8% for the year (52 weeks).
#4 LATIN AMERICA Falls With 50-Day--
ILF fell 1.3% this week, after gaining 2.4% last week. That left it neutral and ranked 4 globally and more attractive than cash. The index is down 9.5% for the quarter (13 weeks), but up 46.1% for the year (52 weeks).
#5 EUROPE’s Advance Slows--
IEV fell 0.1% this week, after losing 1.1% last week. That left it very bullish and ranked 5 globally and more attractive than cash. The index is up 1.8% for the quarter (13 weeks), and up 20.9% for the year (52 weeks).
#6 US LARGE-CAPS Dip After Buy-Stop--
SPY fell 1.5% this week, after gaining 1.4% last week. That left it very bullish and ranked 6 globally and more attractive than cash. The index is up 7.3% for the quarter (13 weeks), and up 19.8% for the year (52 weeks).
#7 US Cash Yield Steady: The three-month T-Bill yield is 3.71%, up a tick from last week. The cash yield is slightly above 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 Tests 10-month Low—
GLD fell 2.3% this week, after losing 0.3% last week. That left it very bearish and ranked 8 globally and less attractive than cash. The index is down 17.2% for the quarter (13 weeks), but up 19.5% for the year (52 weeks).
#9 LONG US TREASURIES Lower Despite Cooler CPI--
EDV slipped -0.1% this week, after losing 2.0% last week. That left it very bearish and ranked 9 globally and less attractive than cash. Long bonds are down 3.0% for the quarter (13 weeks) but up 3.1% for the year (52 weeks) as yields have risen. Cash yielding 3.71% and the 10-year bond yielding 4.54% means the 3m-10y yield curve (83 bps) flattens a bit this week but is still steepening intermediate term.
COMMODITIES Recover As Sorties Resume--
A neutral CRB rose 5.3% this week after gaining 3.6% last week. That left commodity prices up 0.9% for the quarter (13 weeks), and up 29.9% for the year (52 weeks).
Crude Oil Spikes: The broader oil complex (USO) rose 14.0% this week, following last week's gain of 4.5% and currently bullish. That leaves US oil prices down 2.4% for the quarter (13 weeks), but up 64.9% for the year (52 weeks).
US DOLLAR Continues to Fade Off Top--
UUP fell 0.2% this week, after gaining 0.2% last week. It is currently very bullish—up 2.0% for the quarter (13 weeks), and up 3.6% in the last year (52 weeks).
SEE MOOSECALLS PDF FOR CHARTS AND DETAILS
THIS WEEK the 1st Risk-OFF week after two MIXED-Risk weeks.
US Stocks DOWN, Foreign Stocks DOWN, Bonds DOWN and Gold DOWN.
Asia-Pacific ex-Japan leads in regional global momentum since 6/3/2026 but triggered a stop-loss 7/13/2026. US Small-caps replace it at #1. (EEM also triggered a stop-loss in the index model and is replaced by IWM.)
IWM leads in overall confidence among assets still working off a buy-stop. It also leads in positive PMO. Technical strength is very bullish.
(The best alternative working off a buy-stop at the moment is US large-caps (SPY). It leads in TS and is technically very bullish. Its PMO is positive but deteriorating. Another interesting opportunity might be hedged Japan (DXJ). Check out the chart.
(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-- 88% of our sectors are buy or hold (L82%) with BUYS steady at 44% (L44%) and HOLDS up to 44% (L41%). Avoids are down at 12% (L15%). Top performers this week: Oil Exploration, Transports, and Banks. Worst: Gold Miners, Bitcoin.
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 stay positive (3 of 4) for the global economy.
An international shipping measure and proxy for current global trade, the Baltic Dry Index is at 2752 this week, down from 2499 last week but up 7% 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 up to $82.49 this week, but down (-2%) 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 $6.27, down this week, but up 1% this quarter, a positive signal.
Domestically, the 10Y US bond yield is at 4.54% this week, a 29 basis-point rise over the past 13 weeks, and a positive bet on the largest world economy.
OVERALL: GOOD INFLATION NEWS, REST MIXED
PRODUCTION: PRODUCTION LAGS EXPECTATIONS
(+) WEEKLY EIA Crude Oil Inventories (-1.69) draw develops as oil prices rise.
(-) JUN Industrial Production (+0.1%) in line with prior but below consensus.
(-) JUN Capacity Utilization (76.1) in line with previous but below expectations.
(-) JUN S&P Global U.S. Manufacturing PMI – (53.9) expanding, DOWN from previous.
(+) JUN S&P Global U.S. Services PMI – (51.3) final, expanding, in line.
(-) JUN ISM Manufacturing Index (53.3) BELOW prior and consensus.
(-) JUN ISM Services Index (54.0) expanding, below prior and consensus.
CONSTRUCTION: JUNE HOUSING STARTS BOUNCE
(+) JUN Housing Starts (1427K) above consensus and previous.
(-) JUN Building Permits (1367K) 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%) below prior and consensus.
INFLATION: JUNE CPI, PPI PRICES COOL
(+) JUN CPI (-0.4%) cooler than prior and consensus. (+3.5% y-o-y)
(+) JUN Core CPI (0.0%) cooler than prior and consensus. (+2.6% y-o-y)
(+) JUN PPI:(-0.3%) cooler than prior and consensus. (+5.5% y-o-y)
(+) JUN Core PPI (+0.2%) cooler than prior and consensus. (+4.7% y-o-y)
(-) JUN Import Prices (+0.3%) hot and up but cooler than prior. (+7.1% y-o-y)
(+) JUN Export Prices (-0.6%) down, hot but cooing. (+10.2% 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: JOBLESS CLAIMS DOWN
(+) Weekly initial Claims (208K) below previous and forecasts.
(+) Weekly Continuing Claims (1805K) lower than previous this week.
(-) 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 RETAIL SALES MODEST
(-) 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.
(+) JUL Michigan Consumer Sentiment (54.4) growing, above consensus and prior.
(+) JUN NFIB Small Business Optimism (97.4) strong and above prior (95.3).
(-) MAY Trade Deficit (-$77.6B) greater than previous and consensus.
(-) JUN Federal Budget (-$120.3B) still in deficit but improved from May (-$292.6B).
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.10.2026
RECESSION THREAT: MINIMAL, FALLING
US recession chances one year out: 16.06% (JUNE 2027) per NY Fed. The Fed model’s chance of recession has been below 30% (the threshold signaling a recession one year out) and falling since 2025. It reached a recent low of 15 in MAY 2026. The risk of recession was the highest in 40 years in May 2024, but it was avoided amid three years of massive Federal deficit spending and historic data falsification at the Bureau of Labor Statistics.
ATLANTA FED: US Q2 GDP NOW at 1.3%
Atlanta Fed Current GDP Model (7/8/2026): Q2 Annualized 1.3% (Last week: Q2 Annualized +1.2%)
FED BALANCE SHEET ($6.72T); FFR @ (3.50-3.75%)
Currently, the Fed’s balance sheet is 6.74T, (UP +.02T) in the latest week (7/8/2026). 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 65% that rates will remain unchanged at the next meeting in July. By December, however, a Fed rate HIKE (85%) is the most likely outcome.
The Fed Check at 92% turned hawkish as of 1/30/2026 (tighter monetary policy needed to combat global inflation pressures.) The US 2-Year yield at 4.22%, however, is now 60 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 87 bps this week, as the 10-year US Treasury yield rose to 4.57%, and the 3-month cash yield rose to 3.70%. Intermediate term, the curve was inverted from 11/22 through 12/24 but has been positive since. The 30d-10y median yield (4.14%) is 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 3.53% is lower this week, while the 3-month T-bill at 3.70% is up a tick. That puts the SOFR/T-Bill (SOF-T) spread at -17 basis points, below its 200-day average of +11 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: MILDLY HAWKISH
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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