- YX Insights
- Posts
- China Truce Helps Stocks Party On
Hi YXI friends,
I did not live through the Cuban Missile Crisis. Nor are tariffs nuclear warheads. However, the dramatic escalation of the US-China trade talks followed by the weekend’s swift agreement has reminded me of that chapter in the history book.
“The combined 145% US levies on most Chinese imports will be reduced to 30% including the rate tied to fentanyl by May 14, while the 125% Chinese duties on US goods will drop to 10%, according to a joint statement and from officials in a briefing Monday in Geneva.”
Investors should be thankful that Scott Bessent, an ex-macro hedge fund manager, is in the seat of the Treasury Secretary. Having signed up to speak for Trump’s tariff agenda, Bessent has spent much effort trying to calm the markets through deescalation talks.
Today is therefore another risk-on day (investors buy risk assets and sell bonds). I have seen a lot of headlines of banks saying “there will be a new low” or the “crash will come”. Maybe. But not today.
Our systematic signals have been risk on for the past entire month. This has helped us capture substantial gains across Bitcoin and Mag-7 stocks without sweating the prospects of a recession, while many others remain bearish for too long.
For those looking for our machine learning Model Signals directly, you can find them in our dedicated morning note on SPY, QQQ, BTC, TSLA (free), PLTR (free), AAPL, AMZN, MSFT, and TLT. We also show them in the main content below.
Let’s dive in!
Table of Contents
DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
1. YXI Daily Dashboard
Observations from today
Equities and bonds were flat on Friday, ahead of the China agreements. The weekend agreement should help markets continue the regime of “buy stocks and sell bonds”.
Gold may have topped, as its upward momentum slows.
US Dollar (DXY) has been strengthening in the past 2 weeks, signalling a return of capital flow into the US markets.
SPY and QQQ Charts
SPY and QQQ systematic signals are now both available.
The primary expectations are inked in black. The alternative expectations are inked in red where applicable.
On Thursday, I wrote that “It is risk-on across board for risk assets. I am optimistic SPY can make it over the 200 EMA soon.”
SPY will finally cross the 200 EMA today, as the market pushes towards our wave (iii) target of $610. Our wave (iii) target is only inches away from the all-time-high, and may even push past it before the wave (iv) retrace).
QQQ will also get past the 200 EMA today. Our wave (iii) target is $526+, but it may actually recapture the ATH before the next retrace.
FOMC Projections
We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.
FOMC Date | Before Meeting | Post Meeting | Hike/ Cut in % |
|---|---|---|---|
06/11/25 | 4.33 | 4.3 | -0.03 |
07/30/25 | 4.3 | 4.15 | -0.15 |
09/17/25 | 4.15 | 4.05 | -0.1 |
11/05/25 | 4.05 | 3.9 | -0.15 |
12/17/25 | 3.9 | 3.75 | -0.15 |
01/28/26 | 3.75 | 3.7 | -0.05 |
03/18/26 | 3.7 | 3.6 | -0.1 |
05/06/26 | 3.6 | 3.55 | -0.05 |
06/17/26 | 3.55 | 3.45 | -0.1 |
After the weekend, as the US and China reach a new agreement, the recession could potentially be reverted, reducing the need for Fed cuts.
The market has repriced to suggest just 3 cuts by May next year.
Perhaps, Powell was right after all for sitting around and chilling.
3-month SOFR Futures Yields
Yields are up 15bp for 2026-2027 tenors, but around 10bp further out. This is a “flattening” move, as the front end yields price away Fed cuts.
YXI SPY Model Signal
For greater explanations on how the model strategies work, please see my separate morning note dedicated to the Daily Model Signals (TSLA and PLTR signals are free).
My technical analysis is written independently of the quant signal. This is firstly because the signal only tries to predict the daily movements and not the big picture. Secondly, by combining different analytical toolkit, we get multiple shots at the goal.
Unlock Premium Now
Access valuable subscriber-only content, look through the noise, and gain in-depth understanding of real market drivers.
Already a paying subscriber? Sign In.
A subscription gets you:
- • In-depth Macro Driven and Quantitative Analysis on Bonds (TLT), Bitcoin (BTC), and Magnificent 7 Stocks (AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA).
- • Our proprietary macro-driven quantitative model has outperformed Buy & Hold significantly—delivering higher returns, lower drawdowns, and improved risk-adjusted performance
- • Advanced Elliott Wave chart analysis, liquidity indicators, seasonality patterns, and cross-asset correlations to sharpen your market timing
Reply