Weekly Market Roundup
Markets staged a broad-based recovery last week, with major U.S. indices posting gains well above typical weekly ranges. The S&P 500 advanced 3.58%, the Nasdaq led domestic benchmarks with a 4.68% gain, and the Russell 2000 rose 3.99%. International equities outperformed meaningfully, with the MSCI ACWI Ex-USA climbing 5.52%, consistent with the Quad 3 global backdrop that has favored commodity-exporting economies and non-dollar assets. Fixed income was largely unchanged, with the Bloomberg U.S. Aggregate returning just 0.12% as the rate structure held firm.
The macro regime remains bifurcated. Monthly data sits in Quad 2, a growth-and-inflation-positive environment, while both quarterly and global readings remain in Quad 3 stagflation territory. This split demands a portfolio that can do two things at once: participate in growth where it exists while maintaining inflation protection through hard assets. The yield curve reinforced this picture, with the 10-year holding between 4.23% and 4.45% and the 2-year establishing a higher-low at 3.72%, a configuration consistent with a higher-for-longer rate environment rather than any meaningful pivot.
One of the more consequential developments last week was the shift in dealer gamma positioning. Dealer gamma turned positive, a structural change that historically acts as a damper on realized volatility as market makers absorb directional pressure rather than amplify it. This dynamic was reflected in the VIX, which settled at 19.23, down materially from recent stress levels. The U.S. Dollar declined 1.3% on the week and breached the 100 level, a notable move that supported commodity prices and reinforced the inverse relationship between the dollar and risk assets. Despite the weekly softness, the dollar's intermediate trend remains constructively bullish and continues to anchor the positioning framework.
The primary focus this week will be whether the macro data continues to support the monthly Quad 2 reading or begins to converge toward the stagflationary Quad 3 signal that dominates the quarterly and global picture. Any inflation prints or growth data that come in above expectations would strengthen the case for holding simultaneous pro-growth and commodity-long exposure. Commodity markets, particularly crude oil, oil services, and gold, remain central expressions of the Quad 3 framework and should be watched closely for follow-through after last week's dollar weakness.
After two consecutive weeks of equity gains, several of the bearish trend signals we have been tracking in U.S. equities are showing signs of breaking down. This is a development we are watching carefully, and if the market offers a favorable entry point, we would be open to increasing growth exposure from current levels. We are not moving ahead of the signal, as discipline around process matters precisely in moments like this, but the improving technical backdrop, combined with supportive volatility conditions, makes the case for incrementally leaning in rather than remaining defensively positioned. We will continue to monitor the data and communicate any meaningful changes to positioning as they develop.
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