Markets today

VIX has collapsed -17% over the month and -4% today, Fear & Greed has climbed out of fear into neutral (45 vs 38 last cycle), and breadth above the 200-day (88%) remains robust even though the 50-day reading (38%) is still choppy — that's a risk-on regime reasserting itself after last cycle's defensive shift. Financial stress/conditions ticked up but remain below long-run average levels, not a stress regime. Cutting cash and treasuries (TLT still bleeding -3.08% 1M as yields stay elevated) to fund a decisive move into equities and a modest commodities add, rather than straddling the fence.

Equities remain the clear 1M momentum leader (+2.90%, with Nasdaq +4.92%) while treasuries are the worst performer (-3.08%) as yields stay elevated post-FOMC hike (fed funds +0.25pp, TNX +6.07% 1M). Commodities are mildly negative 1M (-1.96%) but still beat treasuries, so they keep a reduced but meaningful allocation rather than being cut to the bottom. Trimming treasuries further and adding to equities follows the trend-persistence discipline, accepting reversal risk if yields roll over post-CPI.

VIX dropping sharply (-4.15% 1D, -17.21% 1M) and TQQQ's +1.31% 1D/+17.67% 1M print suggest the momentum crack from last cycle is stabilizing, with Fear&Greed recovering to 45 from 38. But breadth remains weak (only 38% of indices above their 50-day average) even as 88% sit above the 200-day, so this looks like a partial recovery, not a confirmed trend — warranting a measured re-entry into equities rather than a full reversal back to overweight. Commodities stay overweight given persistent diesel/gasoline spikes (+37%/+74% 30d) and tariff-driven inflation pressure, while treasuries hold flat given still-rising financial stress (+0.324 over 4w) and tightening conditions despite today's yield pullback.

Commodities dominate at 65% because DBC's 15.78% trailing return against a moderate 1.01% stdev produces the top risk-adjusted score (15.575), the strongest trend-to-risk ratio of the three sleeves. Equities get a proportionally smaller 25% as ^GSPC's 3.69% return over a lower 0.61% stdev still scores positive (6.034) but is far weaker than commodities' momentum. Treasuries remain at 0% since TLT's -7.03% trailing return produces a deeply negative score (-10.262) despite low volatility — the long-only formula zeroes out any negative-score sleeve regardless of how calm its price action looks. The 10% cash is simply the residual left after scaling the two positive-score sleeves by their relative strength, not a discretionary defensive move.

The rate-advantage and risk-off setup from last cycle is still intact and has strengthened: Fed funds up again to 3.88%, financial conditions tightening (+0.055/4w) and financial stress up sharply (+0.324/4w), with DXY +3.16% 1M and UUP +3.53% 1M confirming a genuine dollar bid rather than noise. Treasury yields pulling back slightly doesn't change the broader rate-advantage picture, and TLT's -3.08% 1M shows duration still getting hurt by the back-up in long rates, so I'm trimming treasuries further into equities (UUP). Commodities trimmed modestly on soft industrial metals (copper -12.8%) and mixed agri signals despite energy complex strength (gasoline/diesel up sharply), netting to a small reduction; cash trimmed slightly to fund the dollar overweight.

First rebalance under a capital-preservation mandate: financial stress is up sharply (+0.38 over 4 weeks) and financial conditions have tightened, unemployment ticked up to 4.2%, and the 10y-2y curve is re-steepening post-inversion — historically the phase that coincides with downturns, not the inversion itself. Equity breadth is weak (only 38% above 50d MA) and sentiment is fearful (38/100), so I'm cutting equities and commodities to fund a 70% combined cash/treasuries buffer. Splitting the safety allocation between cash and treasuries rather than loading fully into duration, since TLT is down 4.3% on the month as yields rise.