Weekly Market Roundup
Equity markets posted one of their sharpest weekly recoveries on record, with the S&P 500 gaining 4.55%, the Nasdaq surging 6.84%, and the Russell 2000 rising 5.57%. The Dow added 4.30%, while international developed markets lagged with MSCI ACWI Ex-USA up 2.62%. Fixed income was modestly positive, with the Bloomberg US Aggregate gaining 0.55% against a backdrop of yields that remain elevated, with the 10-year closing at 4.32% and the 30-year at 4.93%.
The dominant cross-asset story last week was the US Dollar Index breaking down to Bearish TRADE and TREND. That single development reverberated across markets with near-perfect inverse correlations, driving strength in equities, Bitcoin, and gold simultaneously. The macro regime sits in a hybrid Quad 2/Quad 3 configuration, with monthly growth and inflation both rising consistent with Quad 2, while the quarterly and global outlook reflects the stagflationary pressure of Quad 3. CPI is nowcasting at 3.64% for April and is projected to re-accelerate toward 4.05% by Q4, keeping the rates regime firmly higher-for-longer across the full Treasury curve.
Adding structural dimension to the equity move, the April options expiration rolled approximately $1.97 trillion in SPX/SPY notional, shifting dealer positioning from short to long gamma. That transition removed a mechanical dampener on price discovery and widened the distribution of near-term equity outcomes. Meanwhile, the K-Shaped Economy remains in sharp relief: the S&P 500 printed new all-time highs in the same week that consumer sentiment fell to its lowest reading in 74 years, underscoring the growing divergence between financial asset performance and the economic reality facing the median American household.
The inflation picture deserves close attention this week as CPI nowcasts continue tracking above 3.6% for April and the trajectory points toward re-acceleration into year-end. Any data prints, whether inflation, labor, or retail, that either confirm or challenge that path will matter for how the rates market prices the Fed's next move. The Treasury curve is holding Bullish TRADE and TREND across the board, meaning the higher-for-longer thesis remains intact until the data says otherwise.
On the positioning side, watch how markets behave in the post-OpEx environment now that the structural gamma support from options expiration has cleared. With dealer positioning shifted long gamma, the mechanical bid that helped fuel last week's move is less potent, and price discovery becomes more two-sided. The dollar remains the key variable, as continued weakness would sustain the tailwind for commodities, gold, and international equities, while any stabilization or reversal would likely pressure those same assets quickly given how correlated the recent moves have been.
Last week's historic retracement speed is a testament to how quickly sentiment and positioning can shift when a single macro variable, in this case the dollar, moves decisively. That said, the pace of the recovery has left us holding certain defensive positions that have underperformed in the rally, a trade-off we are navigating deliberately rather than reactively. With the dollar now firmly in a bearish regime, we are beginning to allocate selectively to emerging market countries where the macro setup is most constructive, rather than taking broad exposure to the asset class. We remain focused on positioning the portfolio for the Quad 3 global reality, favoring inflation-protection assets and selective international opportunities, while continuing to assess where legacy defensive holdings still earn their place in the portfolio.
If you have any questions about the above, please reach out to us to set up a one-to-one meeting so we can review your situation.
Sincerely,
President
SBC Investment Management
P: (602) 641-5996 · M: (319) 520-2033 · E: bandrus@sbcinvestmentmanagement.com
Investment Analyst, Junior Portfolio Manager
SBC Investment Management
P: (435) 775-2950 · M: (435) 590-8317 · E: jrehkop@sbcinvestmentmanagement.com