Week of 9/12/2016 - Market Resilience Index Ratings

US Bonds

With a rating of 1 on the resilience scale, the US 10y Treasury yield is moderately vulnerable to declines. I expect this condition to remain in place for the next few weeks. The Micro Market Resilience Index suggests resilience, while the Macro and Exceptional Macro continue to suggest vulnerability. 

Credit spreads – US corporate BBB less 10y Treasury yields – are currently rated 0, suggesting that spreads will tend to narrow. Credit spreads have moved with these ratings and declined over the last several weeks.
Consistent with the above, US high-yield bonds are rated 3, or highly resilient. All else being equal, high-yield bond prices will tend to rise.

Developed Market Stocks

US industrial stocks, as represented by the Dow Jones Industrial Average, will continue to display moderate resilience in the near term. Stock prices may soften, but I do not expect dramatic declines. Portfolios should maintain a positive exposure to US stocks as declines and subsequent increases may be difficult to capture.

UK stocks are rated 3 and have been resilient for the last several weeks. Qualitatively, they are getting a boost from the weakening UK currency. I do expect resilience to fade over the next few weeks, with UK stocks becoming more vulnerable to price declines.

European stock prices have a rating of 2. At the moment, it appears that this rating will remain in place for a few weeks. 


Overall, commodity prices are moderately resilient.

The S&P Goldman Sachs Commodity Index represents a basket of commodities, with a high weighting in crude oil. The S&P GSCI has a rating of 2. Crude oil (not shown in graphic) has a rating of 3.

Gold has a rating of 2, moderately resilient. There may be near-term price softness, but Macro and Exceptional Macro MRI continue to be positive and prices are likely to be resilient mid to longer term.
Emerging Markets

Emerging market stock and bond prices are rated moderately resilient this week. At the moment, this appears to be a temporary breather because the Macro and Exceptional Macro Market Resilience Indexes are both positive.

Chinese stocks, as represented by the Shanghai Composite, have a rating of 0, which suggests vulnerability to declines.


The Dollar index, DXY, is rated 0 and is vulnerable to declines.

The Euro is rated 3, but may this rating may be short lived; we may see a rating of 2 in the next week or so. Regardless, EURUSD may continue to appreciate because of the positive Macro and Exceptional Macro ratings.

GBP is rated 2, which means it is moderately resilient. This is a new rating and suggests a positive shift – it was rated 0 just a month ago.