From Chief Investment Officer Tom Veale,
After the dip in risk in mid-2022 we’ve seen the Signalpoint Market Risk Indicator stay in a relatively tight range compared to the Covid and 2021 times. Currently it’s back to around where it was at the start of this new year. The brief January rally pushed it up a bit but since then the MRI has been drifting slightly lower. While still above its median level it is of some comfort to see a downward trend in risk.
Is the economy better? How about the National Debt? For that matter, personal debt and business debt? Is Mr. Putin still in control of Russia? What about all the other headlines. Are they better than in 2022? In spite of all the news noise we seem to be doing okay, so the MRI’s current risk signature has been drifting lower.
Of note this week is the 13 Week Treasury Coupon rate which is paying 5.46% where the 10 year Treasury is stuck at 3.375%/yr. Long bond portfolios are trading lower, modestly boosting effective yields. Even so, long bond fund are paying significantly lower yields than are very short term income funds.
Our U.S. Domestic Sector ETF portfolio, Signal 10, has all of its components within 20% of their “next sell” targets. Five of them are within 10% of their sell trigger prices. This hasn’t changed much so far during the year but the order has shifted. Currently the Technology ETF is nearest to where it will reduce some share inventory while the Energy and REIT ETFs are nearest their buy trigger prices. We continue to be vigilant watching these target prices for chances to make appropriate inventory adjustments.
Two of the MRI’s components rose and two declined in the previous week. This kept the MRI’s value at 30 again this week. The MRI Oscillator, which gives a feel for the risk trend, shows minus 1, or slight downward risk pressure.