Credit Spread (HY OAS) 3.29%

Junk bond yield premium over Treasuries — wider means more credit stress.

Calm: below 4.0%  ·  Stressed: above 6.0%

Yield Curve (10Y-3M) +0.86

10Y minus 3M Treasury yield — the Fed's own preferred recession signal.

Healthy: above 0.10  ·  Inverted: below -0.25

Financial Conditions (NFCI) -0.50

Fed's blended credit/leverage/risk index vs. its historical average of 0.

Loose: below -0.30  ·  Tight: above 0.30

VIX 17.4

Options-market fear gauge for expected S&P 500 volatility.

Calm: below 16  ·  Elevated: above 25

Breadth (RSP/SPY, 20d) +2.0%

Equal- vs. cap-weight S&P 500 — falling means gains are narrowly concentrated.

Broadening: above +0.5%  ·  Narrowing: below -0.5%

Dollar Index (20d) +0.7%

Dollar strength trend — rapid strengthening pressures multinational earnings.

Stable: below +1.5%  ·  Strengthening: above +3.0%

Copper/Gold (20d) +2.2%

Growth demand (copper) vs. fear (gold) — falling signals rising growth worry.

Improving: above +2.0%  ·  Deteriorating: below -2.0%

Real GDP Growth 2.2% — slowing

Quarterly real GDP growth, annualized — the pace the economy is expanding or contracting.

Q3 '25 3.9% → Q4 '25 0.2% → Q1 '26 2.5% → Q2 '26 2.2%

CPI (YoY) 3.7% — accelerating

Consumer-price inflation vs. a year ago — the headline cost-of-living rate.

Jun '26 3.5% → Jul '26 3.3% → Aug '26 3.4% → Sep '26 3.7%

Core PCE (YoY) 3.0% — steady

The Fed's preferred inflation gauge (excludes food & energy), vs. a year ago.

May '26 3.2% → Jun '26 3.0% → Jul '26 3.0% → Aug '26 3.0%

Nonfarm Payrolls +29K — slowing

Net new jobs added across the economy each month (excludes farms) — the timeliest read on hiring.

Jun '26 +31K → Jul '26 -10K → Aug '26 +133K → Sep '26 +29K

Unemployment Rate 4.2% — rising

Share of the labor force without a job and looking — rising is an early recession tell.

Jun '26 4.2% → Jul '26 4.1% → Aug '26 4.1% → Sep '26 4.2%

Avg Hourly Earnings (YoY) 3.0% — steady

Wage growth vs. a year ago — good for workers, but the Fed watches it as an inflation driver.

Jun '26 3.4% → Jul '26 3.2% → Aug '26 3.1% → Sep '26 3.0%

Private Credit Stress Deteriorating

Stress among lenders to leveraged private borrowers — a slow, 1–2 year leading read on credit that tends to bleed into equities.

• ● CCC bond spread: 13.10%
• ● BDC-income ETF drawdown: 11.2% below 6-mo high
• ● Leveraged-loan ETF drawdown: 0.7% below 6-mo high

RRG-style, not the licensed JdK indicator

Your Themes

Energy has held the leading quadrant for four weeks and now has company — healthcare, discretionary and staples all rotated into leading this week — while the long cyclical build in industrials (5w), utilities, materials and real estate keeps improving, with financials joining two weeks ago. The clear break is in tech and communication services, both freshly rotated into lagging this week, alongside your Software & Platforms basket flipping to weakening and Drone & Physical AI sitting in lagging. Risk appetite confirms it: semis are down 12.2% versus the market over 20 days, high beta down 11.2% against low vol, and discretionary, credit and small caps all reading risk-off, with only equal-weight breadth positive at +2.0%. That favours defensives and the broad cyclical improvers over the next few weeks, taking profits in software and high-beta tech rather than adding to them.

The overall posture is mixed: the market-based credit and liquidity readings are outright calm — HY spreads at 3.29%, a healthy +0.86 curve, loose financial conditions at -0.50, a stable dollar and improving copper/gold — while the macro data underneath is the problem. Growth is slowing to 2.2%, CPI is accelerating to 3.7% against steady 3.0% core PCE, and the labor market is softening with payrolls at +29K and unemployment ticking back to 4.2%, so the easy-money read coexists with stagflationary data and a VIX at 17.4 that is no longer calm. Rotation is defensive and risk appetite is broadly risk-off: energy, healthcare, staples and discretionary lead with industrials, utilities, materials, real estate and financials improving, while tech and communications lag outright, and discretionary/staples, semis, high-beta, small caps and credit appetite are all negative over 20 days — breadth is the lone risk-on signal, consistent with money leaving the megacap leadership rather than leaving stocks. Private credit is deteriorating, with CCC spreads at 13.10% and BDC-income ETFs 11.2% below their six-month highs even as leveraged loans hold flat, which flags a 6-24 month credit squeeze building at the lowest-quality end that would eventually pressure equities well before index-level spreads show it. The clearest thing to watch is the gap between calm headline HY spreads and the 13.10% CCC spread — if that lower tier keeps widening while payrolls stay near zero, the current calm top-level credit read breaks first.