Tuesday belonged to the inflation report. A hotter-than-expected October consumer price index, with energy still elevated and food prices jumping, pushed the two-year Treasury yield up 17 basis points and the ten-year yield up 10. Hawkish remarks from several Fed officials moved rate expectations the same way, and markets now price about 28 basis points of tightening for December 9 and about 60 basis points by mid-March. The S&P 500 slipped 0.38% to 7,521, the Nasdaq Composite lost 0.74%, the Russell 2000 0.68% and the Dow 0.30%, while the equal-weight S&P 500 finished about flat. The dollar index rose 0.57%, and the metals took the brunt of it, with gold futures down 2.05%, silver futures down 2.78% and the gold and silver mining ETFs down between 5.4% and 6.0%.
Monday had pointed the other way. The S&P 500 rose 2.35%, the Nasdaq 100 3.40% and the semiconductor index 6.85%, and the mining ETFs added between 4% and 5%, a rebound that Tuesday’s report cut short. Nvidia was the exception on both days, down 4.3% on Monday and 5.5% on Tuesday to its lowest close since March 30, as worries grew about tighter export rules for AI chips. The listing terms Anthropic filed on Tuesday came in around expectations, with a raise of about $90 billion at a valuation near $1.1 trillion. The calendar ahead holds Applied Materials and Cisco after Thursday’s close and producer prices on Friday, with Nvidia’s results on November 17. Against that tape our cycle model shows its sharpest change in the bond market.
What ties the day together is timing. The long-bond ETF (TLT) had climbed since early October from a floor the cycle model had called, and on Tuesday the model switched to a warning that this rally may be topping out. Its momentum gauge adds that the buying has stalled. In plain terms, the model now treats the rally in long Treasuries as spent, and the price turned lower the same day as yields jumped. For a bond holder this means the fall in long-term yields may have run its course, and a close back above Monday’s 81.96 would be the first sign that the warning is wrong. Stocks point the other way. The model’s floor readings for the Nasdaq 100 and the chip index rose to +93, near its strongest possible floor signal, after both indices closed higher on Friday and again on Monday. That floor still needs the Nasdaq 100 to clear its late-October level before the price can be said to agree.
The record behind the bond warning is dated. The model flagged a floor in the long-bond ETF on September 30 and confirmed it on October 14 with a bear exit, the bears gave up and the downswing appeared to be at its end. From that confirmation the ETF rose 4.6% to Monday’s close of 81.96, its highest since September 8. The same 89-day cycle that carried the September 30 floor now sits at its peak, 42 days later, about half its length. Wheat closed the opposite loop, with a ceiling warning on September 30, a 13% fall since, and today a floor reading on the very cycle that carried the ceiling. Not every call has paid, because Nvidia, on the floor list since October 28, closed Tuesday 22.5% below the close behind its first reading. The model makes no promises, but two loops closing on the same cycles are the kind of evidence the readings are meant to give.
Our daily scan runs some 45 global markets through the cycle engine and condenses each into a Consensus Score, the model’s measure of how strongly the dominant cycles agree on a possible turn. It runs from minus 100 for a possible top to plus 100 for a possible floor. Readings beyond plus or minus 60 form the critical zone, where the model raises the alarm for a possible turn. A positive reading there puts a market in a bottoming window, a time window where the decline could end, and a negative one in a topping window, where the rise could stall or reverse. Let’s take a closer look.
