• Last week
• What’s on the schedule
• Cross-asset read
• Where the FalsifyLab fleet sits
• Three falsifiable watches
• What I’m not doing

§Last week

spx added 0.88% and hit a new high near 7506 before fading. the move was entirely about geopolitics. us-iran talks made enough progress that the market decided to price out some tail risk. vix collapsed from 19.44 to 16.70, a 9.39% weekly drop. that’s the kind of vol compression that usually precedes a snap, not a continuation.

bonds rallied too. 10y yield down 0.81% to 4.56. the gilt relief rally in the UK spilled over. kevin warsh took the oath as fed chair and the market interpreted his first statements as dovish on intervention but hawkish on rules. the ft had a good line about “regime change in wall street’s plumbing.” we’ll see.

gold gave back 0.99% to $4510. btc lost 2.76% to $75,293. eth lost 3.05% to $2063. crypto had no catalyst of its own and got caught in the risk-on rotation out of haven assets. the moves were orderly. no liquidation cascade. just a slow bleed.

§What’s on the schedule

• Tue May 26 US Consumer Confidence. consensus is soft. if above 103, that’s a risk-on signal into pce. below 97 and we get a bid back into bonds and gold.

• Thu May 28 US PCE deflator. the main event. market is pricing continued disinflation. core m/m above 0.3% and the 10y tests 4.70. below 0.15% and we get a rate-cut repricing that sends spx to 7600.

• Fri May 29 Japan CPI national. boj has been signaling normalization. if core cpi prints above 2.5%, usd/jpy breaks 158 and nky sells off another 2%.

§Cross-asset read

the term structure is telling a clean story. 2y10y spread widened to 22bp from 15bp last week. that’s steepening on a combination of short-end rally (rate cut hopes) and long-end stability (no inflation panic). vix term structure is in contango but the front-month is pricing 16.70 vs realized vol of about 14. that’s a 2-point premium that usually gets crushed post-pce regardless of outcome. gold’s backwardation in the dec25 contract is narrowing. the carry trade in gold is dying.

§Where the FalsifyLab fleet sits

assay-paper eq=126,299 mtd +4.59% dd -0.58% open_pos=0. crucible-paper eq=145,994 mtd 0.0% dd -0.64% open_pos=0. both paper bots flat into the weekend. orthogonus eq=29,988 pf=4.71 open_pos=0. lyra eq=30,443 pf=1.69 open_pos=0. polymarket eq=4,320 mtd -20.32% dd -29.20% still holding 15 open positions. that bot is underwater and digging. aquila_sim eq=10,000 with 6 open positions. the only bot with active risk.

§Three falsifiable watches

• spx 7550 / 7400. if spx closes above 7550 on monday, the us-iran rally has legs and we test 7600 by wednesday. if it fails at 7550 and closes below 7400 by tuesday, the vix compression was a trap and we re-test 7300. falsified if spx sits in the 7400-7500 range all week.

• btc/usd $74,000. if btc loses $74,000 on weekly close, the next support is $70,000. the catalyst would be a strong pce that kills rate-cut hopes. if btc holds $74,000 and reclaims $77,000 by wednesday, the correction is over and we range between $77k-$80k. falsified if btc trades $74k-$77k all week without a break.

• xau/usd $4,460. gold broke its 20-day moving average this week. if it closes below $4,460 on monday, the $4,400 level is in play and the gold carry trade unwinds. if it bounces above $4,550, the geopolitical bid is back. falsified if gold holds $4,460-$4,550.

§What I’m not doing

i considered shorting vix at 16.70. the premium is real and the pce outcome is binary. but vix at 16.70 is already pricing a benign scenario. if pce surprises hot, vix gaps to 22 overnight and i get crushed. the asymmetry is bad. i also looked at the usd/jpy carry. 159 handle with boj potentially hiking in june is a crowded trade. the gilt relief rally already happened. no edge left. sitting flat into pce.

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— research and educational content. not investment, legal, or tax advice. do your own research. positions and views may change without notice.

Originally published on FalsifyLab Substack.