Friday Signal — 2026-04-02
Phase Clock Q4_easing at 313.6°, easing regime.
Situation
The credit cycle sits at 313.6°, 46 degrees from the 0° trough, with a composite signal of -0.035. This reflects a defensive posture due to negative momentum and rate-of-change components offsetting positive cycle positioning. The 2-year cycle envelope amplitude of 0.0681 confirms moderate cycle strength, consistent with easing phases approaching the trough. Phase progression aligns with a trajectory toward late-cycle stabilization.
Key Dynamics
Assets Aligning with Cycle Completion
Equities and credit instruments show tight phase alignment. The S&P 500’s 2-year component at 0.0469 (313.6°) matches the composite cycle phase, while HYG (0.0416 at 329.6°) and LQD (0.0275 at 330.7°) exhibit incremental improvement in line with late-easing dynamics. Oil (CL=F) prints at 0.3593 (349.1°), near its 2-year envelope ceiling of 0.3659, suggesting energy markets are anticipating the next cycle upturn.
Volatility Divergence
The VIX’s 2-year component at -0.145 (222.0°) contradicts the easing cycle, reflecting a phase opposition to credit conditions. The -0.130 gap between FOMC narrative (-0.150) and the cycle composite (-0.035) underscores a central bank lag in acknowledging improved credit conditions.
Rates Prepositioned for Transition
Short- and long-dates rates align with late-cycle expectations. The 3-month Treasury (^IRX) at 0.0575 (343.3°) and 10-year (^TNX) at 0.1574 (358.9°) show advanced phase positioning, with the latter hitting its 2-year envelope ceiling. This implies rates markets anticipate a near-term shift to early expansion.
Implications
We’re approaching the transition from easing back to early expansion. The alignment of credit instruments, strong positioning in oil, and late-cycle phases across rate instruments point toward completion of the current easing cycle. The next phase is likely characterized by returning risk appetite and declining volatility, though the VIX divergence suggests volatility expectations haven’t fully recognized the easing environment.
Where we’d put a dollar
Positions aligned with cycle completion: long credit (HYG) and long S&P 500, with hedges for volatility exposure. This expresses regime preference, not individualized advice.