[COMPLIMENTARY] Top 3 Things | USD/10yr/VIX

#DebtDeal passes and all of the debt-default-hedges got squeezed one more time (Treasuries and SPY straight back up)…

1. USD – USD had its 1^st real down day in a month on the #DebtDeal SPY squeeze day, so… since I was waiting, patiently, for that… I bought it (UUP). And I will rebuild this as a Core Asset Allocation as #Quad4 was a clear as the #slowing data has been (see yesterday’s 46.7 ISM print for details). My best Risk Range™ Signal Strength Short vs. USD remains the Yen (and our biggest Asset Allocation in Equities remains Japan which is +8.1% in the last month, crushing SPY)
2. 10YR – while I was surprised to see a RECORD NET SHORT position in the 10yr UST Note heading into the #DebtDeal, life has surprised me plenty of times! Those shorts coming undone has equated to a -35bps drop in the 10yr Yield this week alone (that’s a LOT). If this morning’s jobs report isn’t dovish, we could easily see a +26bps bounce towards 3.86% (i.e. the top-end of my Risk Range™) and I’d expect Gold to correct to another Bull Market higher-low on that too. Stay tuned…
3. VIX – VIX, #NazVol, and #RussVol (Russell 2000 Volatility = RVX) are right back down to where you’ve been paid to A) Book gains on Equity Longs and/or B) re-load on #Quad4 Shorts. This suppression in very short-term Equity Vol was aided and abetted by an outright mania in #0DTE SPY Call buying at the 421, 422 strikes yesterday. I have no SPY position, but my fav index short in terms of Risk Range™ Signal Strength (Russell, IWM) has a Vol of Vol Risk Range™ of 21.07-27.03 and RVX just closed at 21.60!

Immediate-term @Hedgeye Risk Ranges: SP500 = 4094-4245; UST 10yr Yield = 3.56-3.86%

KM