<![CDATA[Prometheus Research: The Observatory]]>https://www.prometheus-macro.com/s/the-observatoryhttps://substackcdn.com/image/fetch/$s_!qmcQ!,w_256,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa02f9e91-4feb-4772-bfdd-6748b9519fa0_400x400.pngPrometheus Research: The Observatoryhttps://www.prometheus-macro.com/s/the-observatorySubstackWed, 19 Aug 2026 06:08:56 GMT<![CDATA[The Bond Bear Market Isn't Over]]>https://www.prometheus-macro.com/p/the-bond-bear-market-isnt-overhttps://www.prometheus-macro.com/p/the-bond-bear-market-isnt-overWed, 29 Jul 2026 23:48:45 GMTWhile the FOMC did not bring any surprises for markets, pressures on monetary policy persist. With economic activity stable, labor markets tight, and inflation materially removed from the Fed’s objectives— our monetary policy gauge continues to show pressure on policymakers to hike policy rates. Yields remain under pressure to drift higher.

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We scan through the data driving these views. We begin with nominal GDP, which remains stable and elevated:

We show our CPI Nowcast, which has rebounded to show higher inflation readings:

Next, we show our Labor Market Gauge, which has offered a timely reading of labor market conditions. Labor markets look to be inflecting higher:

As a result, our monetary policy pressures gauge continues to suggest hiking cycle pressures:

Thus, while the Fed may not have tightened policy today, there remains considerable pressure on the Fed to hike policy rates over the coming months. A hiking cycle offers the worst risk-adjusted-return periods for Treasuries across all macroeconomic environments. Barring a significant growth shock from either i) an equity sell-off causing a reverse wealth effect or ii) demand destruction driven by excessively high oil prices, US fixed income likely continues to offer negative returns, or poor returns relative to the risks of owning them for most investors.

Until next time.

]]><![CDATA[The Observatory: Motor Vehicle Monitor]]>https://www.prometheus-macro.com/p/the-observatory-motor-vehicle-monitorhttps://www.prometheus-macro.com/p/the-observatory-motor-vehicle-monitorTue, 28 Jul 2026 23:52:02 GMTWe’re offering 30% off to all new subscribers for a limited time.

30% OFF: SUMMER SALE

For those unfamiliar, here’s an overview of what we offer at Prometheus:

To today’s note.

The Observatory is our real-time monitoring of the US economy. It offers a regular, systematic dissection of virtually every major fundamental macro data set released in the US. We scan the time-series characteristics, sectoral decompositions, macro-cycle implications, and the effects on GDP and inflation of each release, with an understanding of the nuances and specific manipulations required for each data series. The Observatory seeks to paint a moving picture of the economic cycle, print by print.

We share our latest note from The Observatory: Motor Vehicle Monitor.

Synthesis: Motor vehicle sales continue to expand, albeit with significant volatility. Domestic production and capacity utilization of the motor vehicle industry continue to look limited. However, nominal sales and employment continue to show an expanding industry. Motor vehicle activity continues to be modestly positive for GDP conditions, though volatility persists.

Read all the data driving this assessment below:

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]]><![CDATA[Housing Continues To Contract]]>https://www.prometheus-macro.com/p/housing-continues-to-contracthttps://www.prometheus-macro.com/p/housing-continues-to-contractTue, 21 Jul 2026 21:31:15 GMTWe scan through the latest data driving the housing sector and its implications for homebuilder equities.

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We begin with the most recent data: permits, starts, and completions:

The latest data continue to show a housing sector that is meandering within a contraction. Historically, this type of weakness has largely been consistent with recessionary pressure:

However, the recomposition of the economy towards a greater contribution of technology and services consumption to growth has continued to mute the effect of housing weakness on the broader economy. Below, we show the estimated impact of the latest data on residential investment:

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]]><![CDATA[The Expansion Continues ]]>https://www.prometheus-macro.com/p/the-expansion-continueshttps://www.prometheus-macro.com/p/the-expansion-continuesThu, 16 Jul 2026 20:50:27 GMT
The Observatory is our real-time monitoring of the US economy. It offers a regular, systematic dissection of virtually every major fundamental macro data set released in the US. We scan the time-series characteristics, sectoral decompositions, macro-cycle implications, and the effects on GDP and inflation of each release, with an understanding of the nuances and specific manipulations required for each data series. The Observatory seeks to paint a moving picture of the economic cycle, print by print.

We share our latest note from The Observatory: Retail Sales Monitor.

Synthesis: The latest retail sales data continue to suggest

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]]><![CDATA[We're Not Out Of The Woods Yet]]>https://www.prometheus-macro.com/p/were-not-out-of-the-woods-yethttps://www.prometheus-macro.com/p/were-not-out-of-the-woods-yetTue, 14 Jul 2026 20:04:05 GMTThis is a note from Prometheus Institutional.

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The latest CPI data came in materially colder than expected. Markets have taken this as confirmation that the disinflationary trend will continue, reducing the pressure on the Fed to hike policy rates. This may be premature. We scan through the data and offer our assessment.

The softness in the headline data was largely in line with our CPI Nowcast, with oil prices materially weighing on the headline CPI. We show our estimates headed into today’s release below:

Headline inflation came in even more negative than our estimates, however. This was driven, in large part, by a slowdown in shelter inflation, coupled with price declines in transportation services:

This weak data implies weaker PCE inflation. We estimate the next PCE reading using the latest CPI data:

The latest CPI data suggests a -0.14% headline PCE print in June, bringing the 6-month trend in headline PCE to 4.4%. This is a much more timid disinflationary effect than CPI itself suggests.

Furthermore, reconciling the components of this CPI print that drive their respective PCE counterparts, we continue to see inflation breadth as pervasively elevated:

Accounting for the latest CPI data, our estimate of PCE breadth (% of areas with 6M annualized inflation >2%) remains unchanged, with 80% of sectors showing inflation above the target.

Thus, while this print is indeed a step in the right direction for the Federal Reserve, we think it’s important to recognize that one print is not indicative of the underlying pressures. Even if we extrapolate the current trend forward, we are still unlikely to see annual inflation rates consistent with the Fed’s 2% target. At the current trend, we would still be looking at an annual trailing inflation around 3% this year:

Therefore, as we review the data, we continue to see significant challenges ahead for the Fed, which we expect to be reflected in fixed income markets. Treasury markets remain secularly rich relative to nominal GDP conditions and, without a material repricing, will continue to whipsaw.

Read all the data driving our CPI assessment below:

The Observatory, CPI Monitor
615KB ∙ PDF file
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Until next time.

]]><![CDATA[Is Liquidity Flowing? ]]>https://www.prometheus-macro.com/p/is-liquidity-flowinghttps://www.prometheus-macro.com/p/is-liquidity-flowingTue, 07 Jul 2026 23:39:58 GMTThis is a note from Prometheus Institutional.

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As US equities continue to push higher on the back of earnings expectations for technology firms, we think it will become increasingly important to monitor financial stability measures that underpin these expectations. Put differently, financial system liquidity conditions will be an important input in determining whether the equity market rally can continue or will stall out. We share our tracking of US liquidity conditions:

We begin tracking liquidity conditions by presenting the weighted growth rate of the major sources of liquidity: reserves, commercial paper, & repurchase agreements. In the modern era, the primary sources of financial system liquidity have collapsed to two sources: private sector repo and banks’ reserve balances. We zoom in on these sources below:

As the Federal Reserve has rolled off its quantitative easing programs, reserve balances have become a much less meaningful driver of financial system conditions. We show how the factors contributing to reserves have been flat/modestly negative since 2024:

Given these dynamics, rep activity has been the dominant source of new liquidity for the financial system. We show the evolution of private repo growth by type below:

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]]><![CDATA[Labor Markets: Cyclical Strength, Secular Weakness]]>https://www.prometheus-macro.com/p/labor-markets-cyclical-strength-secularhttps://www.prometheus-macro.com/p/labor-markets-cyclical-strength-secularFri, 03 Jul 2026 02:47:04 GMTA scan through the latest labor market data.

  • The latest jobs data continued to show mixed readings. Payrolls showed weakness relative to expectations but continued to expand, while unemployment rates continue to show tight labor markets and surprised to the upside.

  • Demographic shifts, in the form of lower participation rates, continue to weigh on labor market growth, as reflected in the household survey. Meanwhile, the establishment survey continues to reflect strong business cycle conditions.

  • Our synthesis remains that these divergences in labor market data continue to come from deviations between the secular and cyclical drivers. We continue to see the labor market as one challenged by falling participation, but supported by a strong economic cycle.

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We work through the data driving this synthesis. We start with the latest payroll numbers, which showed a minimal increase, which also disappointed consensus expectations:

While the latest print did not show strong job gains, it also did not stop the recent momentum:

As shown, recent nonfarm payrolls have shown signs of acceleration. These signs of acceleration have come alongside improving labor market breadth:

Importantly, this improving breadth has come with a nascent recovery in business services, a large segment of the labor market which has been under pressure. This sector’s employment has been inversely correlated with tech capex, i.e., companies have invested more and hired less. However, we are seeing the initial signs of hiring resuming:

Additionally, we see another integral driver of the business cycle experiencing rising employment: manufacturing.

Thus, while the latest month-on-month data was slow, broad-based indications from the payrolls survey continue to suggest improving conditions.

Meanwhile, the household survey continues to paint a weaker picture:

As we have noted for more than a year now, the weakness in the household survey continues to emanate from participation rates falling. We show our decomposition of labor markets into participation, changes in population, and labor market tightening:

We isolate the effect of labor force weakness on employment growth, which we can see is a material downward pressure on employment:

It is crucial to recognize that while this labor force dynamic is a weight on employment growth, it is not indicative of underlying business cycle conditions. We show how over time, employment rates are the driver of cyclical variation in the labor market:

When we zoom in on unemployment conditions, we continue to see a tight labor market. Given the secular tightness, there is little room for further acceleration, but we see no signs of deterioration:

Mirroring these unemployment dynamics, we see the latest claims data continuing to suggest a tight labor market:

These readings remain well-removed from recessionary conditions:

Scanning across the broad range of labor data, we see a labor market limited by demographic shifts driving down participation rates. However, from a business cycle perspective, we continue to see a strong labor market, consistent with business activity.

]]><![CDATA[The Industrial Expansion Continues ]]>https://www.prometheus-macro.com/p/the-industrial-expansion-continueshttps://www.prometheus-macro.com/p/the-industrial-expansion-continuesWed, 01 Jul 2026 17:54:44 GMTThe Observatory is our real-time monitoring of the US economy. It offers a regular systematic dissection of virtually every major fundamental macro data set released in the US. We scan the time-series characteristics, sectoral decompositions, macro-cycle implications, and the effects on GDP and inflation of each release, with an understanding of the nuances and specific manipulations required for each data series. The Observatory seeks to paint a moving picture of the economic cycle, print by print.

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We share our latest note from The Observatory: ISM Manufacturing Monitor.

Synthesis: The latest ISM manufacturing data continue to show expansionary readings. While the latest print showed a deceleration in the recent trend, PMI internals continue to signal potential for accelerating future prints. This dynamic modestly supports GDP but continues to provide material support to industrial equity earnings.

Read all the data driving this assessment below:

The Observatory, Ism Manufacturing Monitor
597KB ∙ PDF file
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Until next time.

]]><![CDATA[The Earnings Are Justified]]>https://www.prometheus-macro.com/p/the-earnings-are-justifiedhttps://www.prometheus-macro.com/p/the-earnings-are-justifiedTue, 23 Jun 2026 17:29:59 GMTThis note aims to share our research team’s internal checkpoint process in evaluating the current state of the economy as it pertains to markets. The pages that follow will have familiar content for those who follow our work, but with the added benefit of connecting the dots across all the economic and financial data our systems use to make portfolio decisions.

This material is typically reserved for clients of Prometheus Institutional. We make these notes available to the broader public when we believe they offer value to a wide audience. Given the centrality of technology companies to equity indices, we think understanding their drivers, risks, and guideposts can benefit most investors.

Synthesis: Strong consumer spending and business investment continue to push the economy forward. These forces are also driving a strong profit impulse to the technology sector. While we find technology profit expectations to largely be justified, we see some potential for re-rating. Much of the risk of this re-rating can be mitigated through a careful watch of earnings momentum, which we demonstrate systematically.

Read all the data driving this assessment below:

Month In Macro: June 2026
2.08MB ∙ PDF file
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Until next time.

]]><![CDATA[A Hawkish Fed? ]]>https://www.prometheus-macro.com/p/a-hawkish-fedhttps://www.prometheus-macro.com/p/a-hawkish-fedWed, 17 Jun 2026 20:59:15 GMTThe Observatory is our real-time monitoring of the US economy. It offers a regular systematic dissection of virtually every major fundamental macro data set released in the US. We scan the time-series characteristics, sectoral decompositions, macro-cycle implications, and the effects on GDP and inflation of each release, with an understanding of the nuances and specific manipulations required for each data series. The Observatory seeks to paint a moving picture of the economic cycle, print by print.

We share our latest note from The Observatory: Treasury Monitor.

Read more

]]><![CDATA[CPI Nowcast Update]]>https://www.prometheus-macro.com/p/cpi-nowcast-updatehttps://www.prometheus-macro.com/p/cpi-nowcast-updateTue, 16 Jun 2026 15:56:12 GMTOur CPI Nowcast just broke the 2% threshold. If you are unfamiliar with why this threshold matters, read the note below:

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We show the latest readings from our CPI Nowcast below:

Now, while these conditions improve the near-term outlook for fixed income, we think it is essential to recognize that this disinflationary regime is likely to be transient without continued downside in oil prices, as core inflationary pressures remain in place. Thus, these shifting dynamics bring us from a negative stance on fixed income to a neutral one, rather than a positive one. For us to become materially positive on fixed income, we will require significant further weakness in the oil complex, along with signs of deteriorating economic activity. Nonetheless, the dynamics will likely provide near-term relief and support to fixed income.

Until next time.

]]><![CDATA[The Observatory]]>https://www.prometheus-macro.com/p/the-observatory-516https://www.prometheus-macro.com/p/the-observatory-516Wed, 10 Jun 2026 20:41:38 GMTThe Observatory is our real-time monitoring of the US economy. It offers a regular systematic dissection of virtually every major fundamental macro data set released in the US. We scan the time-series characteristics, sectoral decompositions, macro-cycle implications, and the effects on GDP and inflation of each release, with an understanding of the nuances and specific manipulations required for each data series. The Observatory seeks to paint a moving picture of the economic cycle, print by print.

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We share our latest note from The Observatory: CPI Inflation Monitor.

Synthesis: The latest CPI data offered little new information, simply confirming that inflationary pressures remain persistent. While core CPI offered some reprieve, with used vehicles weighing on the measure. With nominal motor vehicle sales running steady and the US remaining in a secular automobile shortage, we don’t expect transportation to be a consistent downward pressure on inflation. Finally, regardless of the marginal changes here, inflation remains very far from the Fed’s objectives, keeping us on the path to a hiking cycle.

Read all the data driving this assessment below:

The Observatory, Cpi Monitor
608KB ∙ PDF file
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Until next time.

]]><![CDATA[Into A Hiking Cycle?]]>https://www.prometheus-macro.com/p/into-a-hiking-cyclehttps://www.prometheus-macro.com/p/into-a-hiking-cycleWed, 20 May 2026 20:19:09 GMTThis note aims to share our research team’s internal checkpoint process in evaluating the current state of the economy as it pertains to markets. The pages that follow will have familiar content for those who follow our work, but with the added benefit of connecting the dots across all the economic and financial data our systems use to make portfolio decisions.

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Synthesis: The surge in global energy prices, coupled with resilient US nominal activity, is likely to put material pressure on the Fed to begin a monetary policy hiking cycle. These pressures will continue to weigh on US Treasuries until we see clear signs of inflation -induced demand destruction.

Read all the data driving this assessment below:

Month In Macro: May 2026
1.96MB ∙ PDF file
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Until next time.

]]><![CDATA[Manufacturing New Orders]]>https://www.prometheus-macro.com/p/manufacturing-new-ordershttps://www.prometheus-macro.com/p/manufacturing-new-ordersThu, 30 Apr 2026 18:04:43 GMTNew orders drive new manufacturing output. This manufacturing output is a principal driver of industrial production, and the primary supply driver for the domestic goods economy. New orders offer a timely barometer of demand conditions in the cyclical goods economy. We share our tracking and decomposition of the latest new orders data.

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This report is one of many only shared only with clients of Prometheus Institutional. If you are a professional investor and would like access to our real-time signals and analysis, email us at info@prometheus-research.com for more information.

Read the full report here:

The Observatory, New Orders
474KB ∙ PDF file
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Until next time

]]><![CDATA[Housing: Permits, Starts & Completions]]>https://www.prometheus-macro.com/p/housing-permits-starts-and-completionshttps://www.prometheus-macro.com/p/housing-permits-starts-and-completionsWed, 29 Apr 2026 15:44:37 GMTHousing is a dominant driver of the business cycle variation of the economy, responsible for most recessions and cyclical accelerations. As such, keeping a careful monitor of housing conditions is essential to understanding the cyclical position of the economy. We closely track the evolution of housing permits, starts, and completions to assess incremental shifts in the economy.

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Read the full systematic update here:

The Observatory, Permits, Starts & Completions
583KB ∙ PDF file
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]]><![CDATA[Jobless Claims]]>https://www.prometheus-macro.com/p/jobless-claimshttps://www.prometheus-macro.com/p/jobless-claimsThu, 23 Apr 2026 17:14:43 GMTJobless claims provide a timely weekly reading of labor market conditions, with direct implications for unemployment rates. As such, monitoring jobless claims is an important part of gaining insight into the direction of unemployment rates. We systematically scan through the latest jobless claims data.

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Read the full systematic update here:

The Observatory, Jobless Claims Monitor
565KB ∙ PDF file
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]]><![CDATA[GDP Nowcast]]>https://www.prometheus-macro.com/p/gdp-nowcasthttps://www.prometheus-macro.com/p/gdp-nowcastWed, 22 Apr 2026 18:19:09 GMTAs part of our systematic macro process, we rigorously track US real GDP conditions. While our Nowcasts can be extended to higher-frequency domains, the highest fidelity readings occur at the monthly level, due to the comprehensive array of data available at this frequency. We systematically scan through our latest monthly GDP Nowcast.

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Read the data here:

The Observatory, Monthly Gdp Monitor
656KB ∙ PDF file
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]]><![CDATA[Inflation Shock To Recession Risk?]]>https://www.prometheus-macro.com/p/inflation-shock-to-recession-riskhttps://www.prometheus-macro.com/p/inflation-shock-to-recession-riskSun, 12 Apr 2026 18:16:50 GMTThe war in Iran is an inflation shock. So far, we have only seen the effects of this inflation shock in cross-asset pricing. As energy prices remain entrenched at these higher levels, we will begin to see the economic effects. The temporal template for an energy shock is as follows:

Stage I- Cross-Asset Price Shifts: Global equity and fixed-income markets respond to the spike in energy prices. These shifts are near-immediate, reflecting correlations and relative-value trading.

Stage II- Inflation Shock: Energy prices shift, if sustained, begin to make their way to the consumer, and to measured inflation (CPI, PPI, PCE, etc.). This pass-through occurs relatively quickly, with energy prices passed through to consumers within approximately one month.

Stage III- Demand Response: As consumer prices and measured inflation trends become sustained, real demand responds. This process takes several months as the economy digests higher prices and consumers and businesses adjust their activity based on their current financial conditions and expectations of the future.

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Stages I and II are still ongoing. Stage III is potentially ahead of us. We see some of the first signs of Stage III in our latest estimates for real employee incomes:

Our latest estimates for March showed real employee income decreased by -1.05%. Now, these estimates are subject to a significant margin of error. As such, they may overestimate the extent of weakness. The last time we experienced such a significant move in our estimates was in January 2022, which we find somewhat analogous to today. Regardless of the accuracy on the magnitude, our estimates are consistent with the direction of the pressures. Extrapolating the current rate of weakness, the future path of real incomes may well be recessionary:

For now, a recession is not our expectation. But the risks have risen significantly. We write this so readers can prepare their portfolios for that potential outcome. If you would like to leverage our process for doing so, you can find what we offer linked below.

Until next time.

]]><![CDATA[Energy: Regime Update]]>https://www.prometheus-macro.com/p/energy-regime-updatehttps://www.prometheus-macro.com/p/energy-regime-updateThu, 09 Apr 2026 17:09:09 GMTWe offer an update to our short-term regime signals for crude.

Before we dive into today’s note, we want to flag our latest milestone: 15,000 readers. Prometheus continues to grow and remains committed to bringing institutional-grade systematic investment strategies and research to everyday investors. To welcome you all, we’re offering a discount to new subscribers for the next year:

36% Off For New Annual Subscribers

The offer ends soon. See you on the other side.

This update will be brief. For our longer-form views on managing energy exposure, we recommend our recent note on the topic, linked below. This note will serve as an update to the same.

The case we’ve outlined for a month now has come to pass— we’ve got the speculative unwind of energy positions following a de-escalation announcement from Trump. Energy tanked as expected. We hope you’ve applied our near-constant guidance to use sizing/stops to mitigate this and have come out with strong performance.

Given this exogenous change, we need to pause and assess conditions, as we have undergone a regime shift. Fortunately, this exogenous regime shift aligns with our proprietary short-term regime signals. As a refresher:

The Prometheus Energy Program uses short-term signals to forecast the energy market in the near term. Leveraging the programs’ underlying signals, we can classify periods into Bullish, Bearish, or Neutral regimes. The objective is to identify the highest signal periods for energy markets, not every signal. These signals offer a roadmap for navigating the short-term backdrop for energy markets.

Our latest regime signals place us in a neutral energy regime, which, per the expected return profiles visualized above on the right, suggests a much less positive energy backdrop than the recent past. Of course, these signals may shift quickly, and we will keep you abreast of these changes.

Fundamentally, we remain a regime of significant oil shortage. This shortage is a strong and consistent support for the entire oil complex. However, we are currently still working through a well-telegraphed unwind of speculative positioning. There is still potential for an extremely strong energy backdrop— but we need time for markets and the economy to digest before we look to play this again.

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Until next time.

]]><![CDATA[15K Milestone]]>https://www.prometheus-macro.com/p/15k-milestonehttps://www.prometheus-macro.com/p/15k-milestoneFri, 03 Apr 2026 16:09:32 GMTWelcome to the thousands who have joined us in recent months. Prometheus continues to grow and remains committed to bringing institutional-grade systematic investment strategies and research to everyday investors. This week, we hit another big milestone: 15,000 readers. To welcome you all, we’re offering a discount to new subscribers for the next year:

36% Off For New Annual Subscribers

As a refresher, here’s what we offer:

36% Off For New Annual Subscribers

See you on the other side.

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