US SECURITIES RESEARCH ◆ JUNE 7, 2026 ◆ DATA THROUGH JUN 5 CLOSE
The Regime in One Line
A resilient-but-decelerating economy hit by an oil supply shock from the U.S.–Iran war, with reaccelerating inflation forcing the Fed to hold rates hawkishly higher-for-longer. Equities trend up but stretched; Treasuries face a structural headwind as the curve steepens on inflation and term premium.
PART I — THE ENVIRONMENT
Macroeconomic Conditions
CPI (Apr, YoY)
3.8%
▲ highest since May ’23
Core CPI YoY
2.8%
▲ from 2.6%
Fed Funds
3.50–3.75%
● on hold (8–4)
Unemployment
4.3%
● 3rd month flat
NFP (May)
+172k
▲ vs 80k consensus
Q1 GDP (annl.)
2.0%
▲ from 0.5%
Everything in the current tape traces to one variable: the U.S.–Iran war that broke out February 28, 2026, which disrupted the Strait of Hormuz and pushed Brent crude from roughly $70/barrel pre-conflict past $120 at the peak of the disruption.
Inflation — reaccelerating and hot
Annual CPI accelerated to 3.8% in April, the highest since May 2023, up from 3.3% in March and above forecasts, as the oil shock continued to push prices higher. Energy jumped 17.9% year-over-year — the steepest since September 2022 — led by gasoline (+28.4%) and fuel oil (+54.3%). Core CPI rose 0.4% monthly and 2.8% annually. The forward picture is worse: the Survey of Professional Forecasters projects consumer inflation hitting 6% for Q2, while PPI already printed a 6% annual rate. The next CPI release (for May) lands June 10.
Monetary policy — on hold, hawkish
The April 28–29 FOMC held rates at 3.50–3.75% on a divided 8–4 vote, Powell’s final meeting as Chair. Kevin Warsh took over as Fed Chair on May 15, 2026, inheriting a deeply divided committee. Warsh has sounded dovish, but high fuel costs keep the Fed pinned: markets price roughly a 65% chance of a hold at his first meeting, June 16–17, and less than ~10% odds of any cut this year.
Growth & labor — solid enough to remove the cut
Q1 GDP registered 2.0% annualized, up sharply from Q4’s 0.5%, with core GDP at 2.5%. The war is a drag — EY-Parthenon projects it could cut full-year GDP by 0.3 points to 1.8%. May payrolls jumped +172k vs an 80k consensus with unemployment steady at 4.3%; the three-month average (188k) sits well above the six- and twelve-month trends. Wage growth cooled to 3.4% — the one line arguing for a cut — but the print broadly deters the Fed from easing.
CPI vs. Core CPI — the oil-driven reacceleration
YEAR-OVER-YEAR %, JAN–APR 2026 · Q2 = FORECAST
Headline CPICore CPIFed target (2%)
Broad Market Index — S&P 500
S&P 500 (Jun 5)
7,384
● above all MAs
50-day MA
7,156
support
200-day MA
6,858
line in sand
RSI (14)
69.0
near overbought
Breadth >50d
54.6%
mediocre
Fear & Greed
42
Fear
As of the June 5 close, the S&P 500 traded at 7,383.74, comfortably above both its 50-day (7,156) and 200-day (6,858) moving averages. The recovery has been dramatic: the index fell from the low-6,800s into a trough near 6,344 at end-March, then rebounded vigorously past 7,600 in early June before pulling back into the mid-7,300s. For scale on the March scare — on March 20 the index broke below its 200-day MA, ending a 214-session streak above it.
Momentum is robust but stretched (RSI 69), breadth is middling (just over half of constituents above their 50-day), and — tellingly — sentiment has cooled to Fear (42) from Greed (69) just a month earlier. A market at highs while sentiment slips into Fear is a less crowded, less complacent setup than a typical top.
Key technical levels (cash index)
Resistance: ~7,600 (early-June high), then the round 7,500 zone.
Support: 50-day MA ~7,156 → 200-day MA ~6,858 → March trough ~6,344.
U.S. Treasury Yield Curve — upward-sloping, steepening
CONSTANT-MATURITY YIELDS, JUN 5 2026 CLOSE
Yield Curve & Sentiment
The whole curve is under pressure. As of June 5 the 3-month bill yields 3.72%, rising to 4.17% (2Y), 4.55% (10Y) and 5.01% (30Y). The 10Y–3M spread is +83bp and 10Y–2Y is +38bp — the curve has dis-inverted and is steepening with an elevated term premium, the textbook signature of a market repricing higher-for-longer inflation at the long end while the front end stays pinned by a Fed on hold. The 10-year has been the pressure point, nearing 4.5% after strong jobs data and rising oil; on June 2 the Dow closed 600 points lower as yields and oil pressured stocks.
10Y Treasury
4.55%
▲ pressure point
2Y Treasury
4.17%
Fed-anchored
30Y Treasury
5.01%
▲ term premium
10Y–2Y Spread
+38bp
▲ steepening
PART II — SYNTHESIS
Two Assets, Diverging
Equities: Trending up and above all key MAs, but momentum is stretched (RSI 69), breadth is mediocre, and sentiment has cooled to Fear. Bullish trend intact, but the easy gains are behind — and a hot June 10 CPI / hawkish June 17 FOMC are obvious catalysts for a pullback. Buy dips, don’t chase
Treasuries: The whole curve is under pressure from rising inflation and term premium. The catalysts that normally help bonds — rate cuts, slowing growth — are off the table while oil burns. Structural headwind
PART III — STRATEGY A
Broad Market Index
TICKER · SPY (S&P 500 ETF)
Buy-the-Dip Trend Following
Outlook
Cautiously Bullish Primary uptrend intact but extended — favor buying pullbacks to support, not chasing strength.
Strategy Type
Trend-following with a pullback / mean-reversion entry filter (buy dips within an established uptrend).
Entry
Long bias only. Trend filter: SPY closing above its 200-day and 50-day MA. Enter on a pullback when daily RSI(14) resets to 40–50 while price holds at/above the 50-day MA (~7,156 cash equiv.). Confirm with a higher daily close. Stand aside the 1–2 sessions before CPI (Jun 10) and FOMC (Jun 16–17).
Profit-Taking
Trim ⅓ at the ~7,600 prior high / RSI back >70.
Trim ⅓ on a +5% gain from entry.
Trail the rest below the 20-day MA.
Stop-Loss
Hard technical: daily close below the 50-day MA. Hard percentage backstop: −2.5% from entry, whichever first. Regime kill-switch: any daily close below the 200-day MA exits all index longs.
Position Size
Risk ≤ 1% of capital per trade. Shares = (0.01 × Capital) ÷ stop distance. On $100k: risk $1,000; entry $738, stop $720 → $1,000 ÷ $18 ≈ 55 shares (~$40.6k notional). Stop distance — not fixed notional — sets size.
Horizon
Short-to-medium swing — days to a few weeks, framed around the event calendar.
Rationale
The trend is your friend (price > both MAs), but RSI 69 + mediocre breadth + a Fear reading + binary macro catalysts argue against chasing. Buying a sentiment/RSI reset to support aligns with the dominant uptrend while cooled sentiment provides a cushion. The 200-day MA is the non-negotiable line.
PART IV — STRATEGY B
U.S. Treasury Market
TICKER · TLT (long-end) · IEF (intermediate)
Higher-for-Longer Steepener
Outlook
Bearish on Bonds Inflation reaccelerating toward a 6% Q2 print, Fed on hold, elevated term premium, oil shock unresolved — path of least resistance for yields is sideways-to-up, pressuring bond prices.
Strategy Type
Interest-rate-anticipation / duration-aware tactical short with a curve-steepener lean (long front-end IEF vs. short long-end TLT).
Entry
Bearish-bond: 10Y yield closing above 4.60%, especially on a hot CPI or hawkish FOMC → short TLT or buy a TLT put.
Steepener: long IEF / short TLT when 10Y–2Y breaks above ~45bp (from +38bp) on rising long-end yields.
Profit-Taking
Cover bearish-bond if 10Y falls to ~4.25%, or on +3% gain in the inverse position. Steepener target: 10Y–2Y at ~60bp. Reassess fully on any credible Hormuz de-escalation headline.
Stop-Loss
Exit bearish-bond if 10Y closes back below 4.40% (yields rolling over), or on a −1.5% adverse move (tighter than equities given lower bond vol). Steepener stop: 10Y–2Y back below ~30bp.
Position Size
Same 1%-at-risk rule, vol-adjusted. TLT units = (0.01 × Capital) ÷ stop distance. Lower per-unit vol allows larger notional — but cap at ~2–3× the equity sleeve; bonds still gap on CPI surprises.
Horizon
Medium-term position — several weeks to a couple of months, governed by the inflation path and the war.
Rationale
Every macro vector points away from a bond rally: inflation reaccelerating, Fed can’t cut while oil burns, growth solid enough to remove the recession-bid, term premium structurally elevated by issuance. The dis-inverted, steepening curve is the signature of repricing higher-for-longer at the long end. The biggest risk is a sudden Hormuz de-escalation — which is exactly why the stop is tight and tied to the 10Y level.
Key Risks & Catalysts (both strategies)
The two trades are linked through the same oil/inflation axis, so a shock hits both:
Hormuz de-escalation → bullish equities and bullish bonds (yields fall). Helps Strategy A, stops out Strategy B.
Hormuz escalation (oil spikes further) → bearish equities, bearish bonds. Bad for A, good for B.
Binary near-term catalysts: CPI Jun 10 · FOMC + dot plot Jun 16–17 (Warsh’s first meeting) · any Strait of Hormuz headline.
Size accordingly and respect the event calendar.
DISCLAIMER — This is an analytical framework based on current public data, not investment advice. I am not a licensed financial advisor. The rule-sets above are illustrative and would require backtesting and adaptation to your own capital, costs, and risk tolerance before any real use. Markets carry risk of loss.