Week 39 confirms a surface-level risk-on regime, yet rising US yields and weak breadth reveal an index resilience increasingly dependent on a narrowing leadership.
W39 confirms a still risk-on regime on the surface, but the dominant driver is renewed pressure on yields in the US, now more visible across the intermediate and long end of the curve. Equity and credit remain orderly, while breadth and WPI signal that index resilience continues to depend on a narrow leadership.
Intermarket thesis. Pressure on interest rates is the primary driver of W39. Following the predominantly front-end repricing of W38, the subsequent week shows a more pronounced steepening along the curve: the equity market does not enter risk-off, but transmission occurs through greater selectivity, fixed income duration weakness, and still-insufficient equity participation. Risk Appetite rises to 70 — Greed and the VIX remains contained at 14,9, but only 46,1% of S&P 500 constituents are above the 200DMA and 29,8% above the 50DMA. The WPI Multi-asset falls to 66% LT and 51% ST. The divergence is therefore clear-cut: index price resilient, internal structure fragile, cost of capital rising.
Above the 50DMA and 200DMA; leadership still favouring large-cap growth.
Below the 50DMA and 200DMA: duration remains the primary pressure point.
Structural trend still positive, but tactical pause.
Dollar above key moving averages, consistent with tighter financial conditions.
| Indicator | W38 | W39 | Change | Reading |
|---|---|---|---|---|
| Risk Appetite | 68 | 70 | +2 | Sentiment still favourable. |
| VIX | 14,8 | 14,9 | +0,1 | Volatility broadly stable. |
| S&P 500 > 200DMA | 48,5% | 46,1% | −2.4 pp | Structural deterioration in participation. |
| S&P 500 > 50DMA | 29,2% | 29,8% | +0.6 pp | Marginal rebound, still weak. |
| Advance/Decline S&P 500 | 0,44 | 1,82 | strong recovery | Daily participation improves, but does not reverse the breadth picture. |
| New 52W Highs − Lows | −39 | −33 | +6 | Improves, remains negative. |
| WPI LT | 67% | 66% | −1 pp | Moderate, structure still positive but less robust. |
| WPI ST | 53% | 51% | −2 pp | Moderate, further tactical deterioration. |
The comparison clarifies the central point: the improvement in the weekly tape does not coincide with an equivalent improvement in internal structure. Yield pressure therefore remains the dominant filter for interpreting the divergence between indices and participation.
The Fed raised the Fed Funds target range to 3.75–4.00% on 16 September. During W39, Treasury yields continued to climb, with the long end in the 5.5% area: the shift from W38 bear-flattening to broader curve pressure represents the week's primary intermarket development.
Leadership remains sharply asymmetric. Nasdaq 100 and Korea lead, while US small caps and China stay weak. The combination is consistent with a market that rewards growth and quality but is not generating a uniform expansion of risk.
The return of RSP and SOX to the monitor makes the concentration legible: semiconductors and technology are the primary support for the index, while the equal-weight measure does not confirm the same strength. This is the most direct link between rate pressure and weak breadth.
Breadth remains the primary objection to a purely bullish reading of price. The A/D recovery is positive, but it does not offset the deterioration above the 200DMA nor the negative balance of new highs/lows. The WPI confirms: the long term remains moderately constructive, while the short term is close to neutral.
The relative strength of equities versus bonds is partly mechanically amplified by duration weakness. A strong dollar adds a second channel of financial conditions tightening and makes a broadly risk-on reading less convincing.
DBC remains structurally bullish but retreats in the near term. The internal composition does not point to a single uniform inflationary shock: energy, agricultural commodities and industrial metals display different leadership dynamics. The cleanest macro signal therefore continues to come from rates, not from the commodity complex as a whole.
TLT loses 2.38% over the week and 9.20% over three months; it remains below both the 50DMA and 200DMA. Conversely, the credit indicators within the Risk Model remain classified as risk-on. This is an essential distinction: the observed issue is the repricing of the risk-free rate/duration, not yet systemic credit stress.
Primary risk: further rise in real and nominal yields, particularly at the long end, transmitting from bond duration to equity multiples. Secondary risk: failure to rebuild breadth: with fewer than half of S&P 500 constituents above the 200DMA, index resilience depends on a narrow group of leaders. Stabilising factor: VIX and credit remain orderly, so no systemic deleveraging dynamic has yet emerged.
The first checkpoint is the curve: it is not enough to observe whether SPY holds — one must verify whether pressure on the 10Y/30Y continues or stabilises. The second is breadth: a bullish confirmation requires a broader recovery above the 50DMA and 200DMA. The third is the SOX/XLK-to-RSP ratio: if leadership remains concentrated while yields rise, internal fragility increases. Finally, credit and the VIX remain the key sensors for distinguishing a straightforward rate repricing from a regime deterioration.
Content (text and/or images) produced with the assistance of artificial intelligence, under the editorial responsibility of the newsroom.
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