2026-05-30

Overview Macro Regime

The macro regime remains Neutral, with a slight positive drift in the score driven by supportive liquidity and risk appetite factors. The conviction level is high despite the neutral classification, indicating a clear but balanced market stance. Liquidity conditions are the primary positive driver, supported by a strong risk appetite factor and elevated volatility readings. Systemic risk remains elevated in Australia, Brazil, Canada, and France according to BIS quarterly data. Key Risks Geopolitical tensions are elevated following reports that Iran shot down a U.S. drone, raising risks of further escalation in the Middle East. Additional conflict risk stems from a Russian drone strike in Romania triggering new EU sanctions. Market Context Treasury yields show a steepening curve with the 10-year at 4.45% and the 2-year at 3.99%, creating a 46bps slope. Investment-grade credit spreads stand at 73bps. Financial conditions remain loose as indicated by the negative NFCI reading of -0.5100. Crypto markets show modest declines with Bitcoin at $73,466 and Ethereum at $2,014. Consumer sentiment remains weak at 49.80. Watch The NBS Manufacturing PMI from China due at 01:30 UTC tomorrow carries high importance, with forecast at 50.0 versus prior reading of 50.3. This release will provide critical insight into the health of the global manufacturing sector and potential impacts on risk sentiment.