I check the credit number before I check the stock price. A couple of weeks ago I built a small tool that counts how many days in a row high-yield spreads widen, because I kept squinting at the number and talking myself into stories.
The count reached seven. Spreads went from 268bps to 324bps, the longest unbroken run since I started tracking in late July. I’ll admit I watched it with a mix of worry and curiosity.
Then Friday’s reading came in at 310.
My tool reset to zero, and I could feel myself wanting to call it a reversal. It isn’t one yet. One tighter day gave back about a quarter of the move, and spreads are still wider than where this started. I’d want to see another down day before I believed it.
What I find more interesting is why it happened. Friday’s jobs report was weak: 29,000 jobs against roughly 84,000 expected, with unemployment up to 4.2%. A year ago, that kind of miss would have hurt stocks. This time it helped, because it gave the Fed less reason to hike. A week ago the market was pricing a hike in October as more likely than not. Now it’s pricing a hold at around 85%.
So the relief came from rate expectations, and I don’t count that as good news. The rally is also narrow. A handful of tech and chip names are carrying the index, while my breadth reading keeps flipping between “narrow leadership” and “broad decline.” SPY is half a percent from its high. My valuation gauge, total market value against GDP, sits at the 100th percentile of its history. It can’t tell me when, and it has stayed stretched for years before. But I can’t pretend not to see it.
I’ll be honest about my own bias. I’m sitting on cash waiting for an entry, and I’d love a pullback. I’ve spent months testing this framework against thirty years of history, and what I learned is that nothing in it reliably times a bottom. So when I catch myself rooting for a drop, I remind myself that wanting one is not a signal.
Some things are calm. The bank lending survey still shows banks easing, not pulling back. The long end of the bond market is stuck near 5.6% but has stopped climbing every day. My main score hasn’t moved all month. The shadow sensor has shown the same four flags for 21 straight readings.
So the picture is a record-high stock market, a credit market that just blinked after its longest nervous stretch, and a bond market holding its breath. I’m watching Tuesday’s credit number more closely than anything else this week.
October 5, 2026