Today's read
The July 13 session produced a contradictory picture: equity losses without a corresponding jump in fear gauges. The Nasdaq fell 1.55% (z=−1.5 vs. one year), the S&P 500 dropped 0.79% (z=−1.1), and the Dow Jones held up better at −0.26% (z=−0.4). In parallel, the Nikkei slid 1.92% (z=−1.3) and European indices followed suit, with the Euro Stoxx 50 (fez) down 0.90%, Spain (ewp) down 0.86%, and Germany (ewg) down 0.63%. Yet the VIX fell 5.1% to 15.0 points, and the high-yield spread stayed compressed at 2.69pp (z=−1.3), suggesting an orderly pullback rather than a shift into risk aversion. The net effect is a session that doesn't fit neatly into either a risk-on or risk-off box: equities stumbled, but the volatility and credit gauges didn't confirm stress.
What moved
The day's biggest move came from oil: WTI rose 3.57% (z=1.1) and Brent gained 3.81% (z=1.1), widening the Brent-WTI spread to $5.54, above the historical median of $3.50 and up $5.52 over the past 20 sessions. Gold advanced a modest 0.40% (z=0.3), while crypto retreated: bitcoin fell 2.33% (z=−0.9) and ether dropped 1.71% (z=−0.4). In currencies, the euro gained 0.16% against the dollar, the yen was nearly flat (−0.06%), and the broad dollar index eased 0.21% on the session, though it still trades 0.74% above its 50-day moving average, at 120.50.
Context
The yield curve shows no signs of inversion: the 10-year/2-year spread sits at 0.36pp, 675 days since the last cross, while the 10-year/3-month spread is at 0.73pp, 269 days since its last inversion. Corporate credit shows no strain, with the high-yield spread near relative lows (2.69pp, z=−1.3). The VIX term structure remains in contango, with a VIX/VIX3M ratio of 0.81 (versus 0.83 the prior session), indicating options markets aren't pricing in immediate stress. Rolling 30-day correlations have broadly weakened: the S&P 500's relationship with the 10-year Treasury moved from −0.81 to −0.48, with the broad dollar from −0.71 to −0.29, and with oil from −0.66 to −0.12. Market breadth is moderate: only 47% of the 15 tracked assets trade above their 50-day moving average, though 67% remain above their 200-day average.
What to watch
The Nasdaq's pullback, at a z-score of −1.5 versus the past year, is edging toward territory that would warrant closer attention if it repeats in coming sessions. The Brent-WTI spread, at $5.54 against a historical median of $3.50, is worth tracking if the gap keeps widening. It's also worth watching the erosion of historical correlations between the S&P 500 and assets like the 10-year Treasury, the dollar, and oil, whose recent weakening could alter typical hedging dynamics if the trend continues.