Weekly Market Review — W/C 29th June 2026: Risk-On, Awaiting Technical Confirmation

Rating: Risk-On | Bias: Selectively Constructive · Awaiting Technical Confirmation

The Big Picture

Risk-on is the dominant trend. Several cross-asset signals are confirming that read, though a handful of questions remain open. No new positions until technical setups confirm.

Russell 2000 — Outperforming Despite Hawkish Fed

The Russell 2000 is rallying and outperforming the S&P 500 despite hawkish signals from Warsh. Small caps are the most rate-sensitive part of the US equity market — they should be underperforming in a higher-for-longer environment, not leading. Two possible explanations:

• Markets are not pricing a rate hike as a realistic near-term outcome and are discounting the rhetoric.

• This is a short squeeze driven by positioning, with a potential sharp reversal ahead

No conclusion yet. Watching for volume and follow-through to clarify which it is.

Gold — Pullback, Not a Reversal

Capital is rotating out of gold short term. The 10-year note is gaining relative to gold and the DXY is seeing a short-term bid. The multi-decade downtrend in the 10-year versus gold ratio remains intact. The DXY read is the same. Both moves look corrective rather than structural. Medium-term gold thesis unchanged.

Capital Flows — Into EM and Nikkei

Capital is rotating into emerging markets and the Nikkei relative to the S&P 500. USD is gaining on advanced economy currencies but not on EM. This is consistent with yield-chasing rather than broad haven demand — the same theme identified last week. Money is moving toward higher-yielding, higher-beta opportunities.

Rates — Bond Market Signalling Lower Rates Ahead

The 10-year is gaining on the 2-year. The bond market is pricing lower interest rates in the medium to long term — either reduced inflation concern over that horizon or a view that the current energy-driven overshoot is temporary. The market is not fully pricing a sustained rate hike cycle, regardless of Warsh's tone.

Credit — HYG/LQD and MOVE

HYG/LQD ratio remains in an uptrend but is pulling back. Credit risk appetite is intact at the structural level. Pullback worth monitoring.

MOVE index is in a downtrend on the weekly chart, currently at 68.14. Declining bond volatility removes a key headwind for risk assets and supports the broader risk-on read.

Summary

Capital flowing into EM, Nikkei, and small caps. Credit constructive. Bond volatility declining. 10-year signalling lower rates ahead. Dollar strength isolated to advanced economies. Gold in a short-term pullback within a longer structural trend.

Risk-on confirmed at the macro level. Waiting for technical setups to trigger entries.

What to Watch

Russell 2000 — volume and follow-through will determine if this is conviction or a short squeeze

Gold — watching for pullback support to hold before reassessing re-entry

HYG/LQD — uptrend must hold on the weekly. A break lower signals credit stress

MOVE at 68.14 — continued decline is constructive. A reversal higher is an early warning signal

EM and Nikkei vs S&P 500 — continued rotation confirms the yield-chasing theme and supports EM currency trades

These are my views based on my own analysis at the time of writing. Nothing here is financial advice. Always do your own research and manage your risk.