High Yield is ~95% of my business so I watch it very closely. When it trends, it trends very well (11/1/23 - 12/31/23) but when it doesn't, it's better to fade the range (all of 2024). One important factor to look at is option adjusted spreads. The best HY trend following trades happen as OAS compresses which shouldn't happen if the economy weakens. (and I think your take on the economy  is correct) Take a look at this chart of HY OAS. I see very little room for spreads to compress and a lot of room for them to blow out.

Rate cuts now even less likely.

Odds for a May cut now now nearly halved from 66% last week to 38% now. (Reading the inverse of the chart)

Goldman on Put/Call skew:   "We are now seeing extremely bullish options activity in the collective Mag 6 names (META, AAPL, AMZN, GOOG/L, NVDA, MSFT), something we’ve witnessed 5 other times in the post-covid era (we’re looking back 3 years for this). It is interesting to have a look at forward returns when we’ve seen this type of activity; the 2-4 week forward window skews towards negative returns. (From MenthorQ on Twitter yesterday)

Treasury 30 year bond auction. It went well

When I was listening to Steve last night on the newsletter I was wondering the exact same thing.  The a-b-c seemed to come a little quicker than your mapping. Given the "suddenly" poor bond behavior, an a-b-c within an A-B-C  might fit

Normally I'd say multiple job holders is the only way to explain it, but that's not what happened last month. Multiple job holders actually ticked down in Jan. So that ain't it. Something doesn't add up.

Non Farm Payroll Blowout

+353k jobs vs +157k expectations

I think you just happened to look when there was a bad data print. Currently showing just a 0.7% chance of 75bps in May.  13.9% chance of a hold, 51.9% chance of a 25bp cut and 85.4% chance of either 25 or 50.

Similarly:

Probability of a March Rate cut  now down to 40%

Opex flows update. It'll be interesting to see if this plays out.

Afternoon ramp color

Here you go:

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

tldr: 63.9% chance of a cut in March

From Tommy Thornton today: 

This is what I get. I'm showing since 82. I ran it back to 1927 (full data set) but I'm not sure that's terribly helpful. Also only included through last friday, so this week most likely will make the list.

Don't forget the declining interest rate tailwind that's over.

tyvm

Would you please post the CCI div. trading summary when you have a chance?

It's been a while since that signal has triggered.

tyia

I use elements of both.

I only trade ES (for the tax advantage) and allocate 1 contract for every $16k in the account for each signal. (So a $32k account would go long 3 contracts, a $64k account 4, etc.) Last year I noticed a max of 8 entries in 1 direction at any one given time, which would give me leverage of 8x in the account. A lot to be sure, but that's what I feel I can withstand if/when things move against me. If we got to more than 8 entries, I just wouldn't take them.

I may decrease the allocation to 1 contract for every $20k in the account just to give me a little more breathing room.

It's not what I'd call a real capitulation. It was a "this is what I got wrong earlier this year" note. I PM'd you the whole note in case you want to see for yourself.