Market Sentiment Tracker: Ceasefire Relief, But No Rally in Reality

Oil dropped 7% overnight to two-week lows amid eased Middle East risk . The dollar slid further—especially versus the yen—while long-dated Treasuries held onto gains as Fed officials pushed back against imminent rate cuts. Global equities are rallying after the Iran-Israel ceasefire took effect. But bond markets remain cautious; Fed officials are tempering rate-cut expectations, and the dollar is sliding—particularly against the yen.

But below the headline rebound, regional data is drawing sharp lines between resilience and fragility. Here's how the macro picture is evolving across the major economies:

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🇺🇸 U.S. Market Sentiment Tracker

The U.S. consumer, if not dead, is limping. Core retail rose, showing resilient baseline spending, yet the headline retail figure collapsed, and discretionary categories are under clear pressure. Housing is a drag again—starts down almost 10% and permits still falling. That’s not just sentiment; it hits supply chains and construction employment. On the institutional side, capital is walking away—TIC flows flipped hard negative, a major reversal. Markets are pricing in risk aversion, not growth. Add to that deeply bearish CFTC positioning on equities—smart money is bracing, not chasing. PMIs remain expansionary, but without job creation (Philly Fed employment plunged), that signal weakens. Energy demand is the one standout—crude draws confirm strong usage. Still, the broader macro tone leans defensive.

🇪🇺 Europe Market Sentiment Tracker

Germany is stabilizing at the top, but the Eurozone’s engine room is running below potential. ZEW and Ifo bounced, and construction surprised to the upside—early-cycle positives. But don’t confuse sentiment with substance. Core inflation is cooling too quickly—this isn’t “soft landing” territory, it’s demand erosion. The ECB’s current account swing—from €50B+ to under €20B—flags capital leaving the region. French PMI weakness confirms it’s not just Germany holding things up. Consumer confidence fell again, reinforcing the view that domestic demand will stay subdued. Bond markets may love this disinflation—but growth investors should remain cautious.

🇨🇳 China Market Sentiment Tracker

China’s domestic numbers look good on the surface—retail up 6.4%, fixed asset investment holding, and exports stabilizing. The PBoC holding rates signals confidence. But none of this is enough to stop the capital bleed. FDI dropped again, sharply. That’s not noise—it’s structural. Global capital continues to rotate away, and while the domestic economy is grinding forward, sentiment externally is still weak. Investors should view this as a market with short-term cyclical support, but long-term trust issues remain unresolved.