The market is flashing a potential regime shift—and Hedgeye’s model flagged it before the open.
1. What’s Moving: THE MARKET TAKES A BULLISH TURN
While many investors remain fixated on U.S. equities, our global signals suggest the macro tide may be turning. According to the Hedgeye model, global markets are entering Quad 2—a phase marked by accelerating growth and inflation, historically bullish for risk assets.
What about the U.S.?
- The quarterly outlook still shows Quad 3 (slower growth) for Q3
- But the monthly model is now signaling a possible shift to Quad 2 in June—a more bullish setup
A key early signal? The U.S. Dollar.
2. Dollar Strength Is Flashing Growth Expectations
The U.S. Dollar Index (DXY) climbed +0.3% last week—its third straight weekly gain. As of Monday morning, DXY was breaking out above a critical level: $100.83. A move through $103.11 would confirm a longer-term breakout.
Why it matters: A strengthening dollar often reflects rising growth expectations and the potential for higher rates—both consistent with Quad 2.
3. GLOBAL YIELDS BACK THE QUAD 2 VIEW
Bond markets are aligning with the Quad 2 setup:
- U.S. 10yr yield: +5bps today (after +7bps last week)
- Germany’s 10yr Bund: +7bps as of this morning
- Japan’s 10yr JGB: +8bps—an unusually large move for Japan
The takeaway: Markets are increasingly pricing in stronger growth, which puts rate cut expectations on ice.
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5 Hedgeye Analysts. 5 High-Conviction Stock Ideas.
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