Commodity Compass (May 18th–May 22nd) Using Macro Filter + Signal
The Trump–Xi summit bought Beijing six months of options. Washington got a promise and a handshake.
Regime: Stagflation/Geopolitical Stress Hybrid — cost-push inflation from a structural supply shock (Hormuz), a frozen Fed in leadership transition, and Japan’s carry architecture under mounting pressure.
Top signals:
(1) The 8-4 FOMC dissent on April 29 — the highest level of dissent since 1992 — signals a committee fracturing in real time under a dual-mandate squeeze.
(2) JGB 10Y surged to 2.73% on May 15, a 29-year high, as the BOJ faces a 6-3 vote with three members dissenting in favor of an immediate hike to 1.0%.
(3) Brent crude at ~$109 with Hormuz effectively closed; the IEA and several major analyses have flagged the risk that the market could stay materially undersupplied through October if disruptions persist.
Core contradiction:
Equities (S&P 500 ~7,408 on May 15, near all-time highs) are priced for base-case resolution
HY OAS at ~2.77% reflects near-trough default risk, but rates (10Y 4.59%, 30Y 5.13%) and energy ($109 Brent) are pricing a sustained stagflationary shock.
One of those legs is wrong; the framework’s bias is that equities and HY credit are misaligned with the macro regime, not the other way around.
Recommended action:
Reduce nominal duration (especially 10–30Y UST).
Add inflation protection (TIPS, commodities, energy exposure).
Hold FX optionality against yen carry disruption (long JPY via options or reduced short-JPY carry).
