Last week
spx tagged 7500 for the first time. the index closed at 7499.36, up 1.82% on the week, riding a six-year quarterly gain streak. ndx outperformed again, +3.17% to 30276, with semis and AI infrastructure names doing the heavy lifting. the vix collapsed to 16.45, down 15.6% on the week. that's not just low. that's complacency priced in.
gold got wrecked. xau/usd dropped 2.93% to 4008, breaking below the 4050 level that held since april. the retail frenzy that pushed bullion to record highs is unwinding fast. higher-for-longer rate expectations, fueled by iran war supply shocks, are crushing the non-yielding asset. gold's worst quarter in over a decade.
btc slipped 2.07% to 58486, rangebound and heavy. eth managed a 0.5% gain to 1572 but couldn't reclaim 1600. crypto continues to trade like a risk proxy that nobody wants when real rates are pushing 4.42% on the 10y. the dxy barely moved, down 0.12% to 101.29. yen weakened to 162.78, flirting with multi-decade lows. nky rallied 3.09% to 71947, shrugging off currency pressure.
What's on the schedule
today is packed. july 1 with multiple central bank speakers and ISM data. the calendar is front-loaded.
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ISM manufacturing PMI (US, today). consensus watching. above 50 and the soft landing narrative strengthens, likely pushing yields higher and gold lower. below 48 and rate cut bets return. asymmetry: print above 51 could send vix below 16, print below 47 and vix spikes back toward 20. gold's 3963 low from last week is the level to watch on a weak print.
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Fed chairman warsh speaks (US, today). first public remarks since the june fomc. market pricing only 18% chance of a july cut. any hawkish lean on iran-driven inflation risks and the 10y could test 4.50 again. dovish surprise and gold gets a relief bounce toward 4050. the asymmetry favors hawkish. warsh has been consistently inflation-focused.
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BOJ tankan survey (JP, today). already out. large manufacturers index matters for yen direction. if tankan shows deterioration, usd/jpy could break 163. that's the level. above 163 and intervention chatter gets loud. below 161.50 and the carry trade unwinds.
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ADP employment (US, today). medium importance but sets the tone for friday's NFP. a print above 200k and the labor market strength narrative holds. below 100k and recession fears creep back into the vol surface.
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NFP friday (US, july 3). the big one. average hourly earnings matter more than headline payrolls right now. wage growth above 0.4% m/m and the 10y yield could break 4.50. below 0.2% and we get a dovish repricing. the vix term structure is steepening into the number. options market is pricing a 1.2% spx move.
Cross-asset read
the 10y yield at 4.42% with vix at 16.45 is the story. that's a vol-adjusted carry regime favoring equities over bonds. the yield curve is still inverted but flattening. gold's breakdown below 4000 confirms real rates are the dominant driver, not geopolitical fear. the iran war premium that built into gold in q1 is fully unwound. crypto's correlation to ndx is running at 0.7 over the past 20 sessions. btc is a levered beta play on tech, not a hedge. the dollar's stability at 101 suggests the fx market is waiting for friday's payrolls before committing to direction. usd/jpy at 162.69 is the most interesting pair. the carry is enormous but the intervention tail risk is real.
Where the FalsifyLab fleet sits
all bots are flat. no open positions across the fleet.
vega29 and vega34 are both in drawdown for the month, vega34 at -2.29% mtd. both are mean-reversion vol strategies that got chopped up in the vix collapse. lyra-gold is sitting at 14795 equity with a 2.42 paper pf, down 2.05% from peak. the gold breakdown hurt. volforge is flat with no track record yet. assay-paper is up 1.28% mtd with a 2.94 pf, the steadiest performer. crucible-paper is the outlier, up 45.95% mtd on a 2.23 pf. that's either a regime capture or a blowup waiting to happen. the 0.64% drawdown is suspiciously low for that return profile. soulz is flat and untested.
Three falsifiable watches
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short gold via xau/usd, trigger below 3963. if gold breaks last week's low, the next support is 3800. the retail unwind has momentum. time horizon 48 hours. falsified if gold reclaims 4050 before friday's close. the carry is negative so this is a momentum play, not a hold.
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long vix futures, entry at 16.00 or below. vix at 16.45 is pricing zero tail risk into a week with warsh, ISM, ADP, and NFP. the asymmetry is convex. a spike to 20 is a 23% gain. time horizon through friday close. falsified if vix stays below 17 through july 3 settlement. position size small. this is a tail hedge, not a conviction short.
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short usd/jpy above 163, target 161.50. if tankan disappoints and usd/jpy breaks 163, the intervention risk becomes asymmetric. the MOF has intervened at similar levels before. time horizon 48 hours. falsified if usd/jpy holds above 163 through friday without any MOF rhetoric. the carry is positive so the cost of being wrong is manageable.
What i'm not doing
i'm not buying the spx breakout. the index is at 7500 with vix at 16.45 and a packed calendar. the risk/reward for adding long here is terrible. a 1% down day wipes out two weeks of grind. i'm also not shorting btc despite the bearish setup. the correlation to ndx means a short btc position is just a levered short tech, and i don't have a view on tech direction into NFP. i considered fading the nky rally but the momentum is too strong. the tankan could change that but i'm not front-running it. i rejected a long gold bounce trade at 4000 because the trend is down and catching falling knives in a rate-driven selloff is a negative expectancy game.
educational only. past performance is not predictive. none of this is financial advice.
ā research and educational content. not investment, legal, or tax advice. do your own research. positions and views may change without notice.
Originally published on FalsifyLab Substack.