Weekly Market Report — W/C 11th May 2026 -

John Nwatu MSTA CFTe
1 day ago
3 min read

Macro Regime: Risk-On

The Big Picture

Evidence for a risk-on sentiment has developed. VIX futures have been in decline over the last four to five weeks, whilst US equities and emerging markets have been trending up. This indicates genuine risk appetite, although it must be said that this is predominantly being driven by tech stocks, with the Nasdaq leading the broader market by a meaningful margin.

The commodity complex tells the same story. Silver, copper and platinum are all trending up while gold stays in a corrective phase and is not making any meaningful advances. This pattern of industrial metals outperforming precious metals further corroborates the demand outlook tied to growth expectations.

Credit confirms the move. High-yield (HYG) has continued to outperform investment-grade (LQD) while government duration has sold off across regions — Bund, Gilt and JGB prices all lower over the quarter (yields rising), with longer-dated US Treasuries following. Rising yields alongside firm credit spreads is the cross-asset configuration that distinguishes a real risk-on regime from a defensive rally.

Crude oil has been flat since the beginning of April. As uncertainty over the Strait of Hormuz remains, there is still a risk of prices increasing again. Although still in an uptrend, we may be in a corrective phase for some time, or until certainty on supply is established.

Setups for the Week

With the macro regime indicating risk-on, the technical work is about picking the cleanest expressions of the theme. Four setups stand out: two equity/commodity longs, one carry pair on the JPY crosses, and one G10 FX short.

Nasdaq — Long

The high-beta US tech complex is the cleanest expression of risk-on equity leadership, and the Nasdaq has done the work to confirm it — over 17% higher across the quarter, leading the broader S&P 500 by a meaningful margin. The caveat is wave maturity. Price looks to be in the late stages of the current impulse, and chasing strength here carries asymmetric risk to a pullback. The disciplined approach is to wait for a corrective leg before entering on continuation, rather than buying the breakout extension.

Copper — Long

Copper is the macro indicator of the reflation trade and has rallied alongside silver and platinum over the quarter. The technical picture is less clean than the macro picture, however. The current advance could plausibly be a B-wave rather than the start of a fresh impulse, which makes the entry trigger more important than usual. A close above the 6.58 prior high is the confirmation level — until then, the rally is unconfirmed and worth standing aside on. Patience over conviction here.

NOK/JPY — Long

NOK/JPY captures more independent macro vectors than any other pair on the board: a hawkish Norges Bank, the strongest G10 currency on the month, a dovish BoJ holding rates, and the broader impact of potential oil price increases. A break above the 17.23 swing high is the confirmation level for the next leg of the rally. Waiting for that close keeps the entry disciplined.

EUR/NOK — Short

The cleanest single expression of the reflation theme in FX. The Eurozone remains the structural underperformer. The EU's structural reliance on Norwegian energy supply, the potential for oil price increases, and a Norges Bank rate hike all play into this trade. A break below 10.80 indicates further downside. Stop loss placement at 10.96 sits above the most recent swing structure and keeps risk defined.

What to Watch

The risk to the entire setup list is a change in sentiment: VIX reasserting above 20, the dollar index reclaiming 99, copper failing to confirm at 6.58, and credit spreads (HYG vs LQD) reversing. Until those signals fire, the regime supports the bias on each of the four setups above.

This is not financial advice. All setups carry risk and require individual risk management and position sizing. Always confirm setups with your own analysis before entering.