SVC-Update
Weekly Market Update
Overview
Markets have absorbed recent geopolitical tensions related to Venezuela relatively well, with oil prices remaining broadly flat on a weekly basis. From a news flow perspective, it was a data-heavy week, providing further insight into the current macro regime:
Manufacturing PMI (Previous: 48.2, Forecast: 48.3, Actual: 47.9):
The ISM Manufacturing PMI remained below the expansion threshold, confirming a continued contraction in the US industrial sector. Weakness persists across new orders, production, and employment, pointing to subdued demand and cautious capital allocation by firms. A meaningful near-term recovery in manufacturing remains unlikely.
Services PMI (Previous: 52.6, Forecast: 52.2, Actual: 54.4):
The ISM Services PMI surprised to the upside, clearly above 50, signaling robust expansion in the services sector. Strength was driven by solid business activity, healthy order flows, and stable employment, reinforcing services as the primary growth engine of the US economy.
Non-Farm-Payrolls (Previous: 56K, Forecast: 66K, Actual: 50K):
The latest labor market report showed a clearly below-trend employment gain, confirming a gradual cooling of the US labor market. Despite a slightly lower unemployment rate (4.4%), job creation remains too weak to support a narrative of labor market strength. Downward revisions to prior months further validate the loss of momentum.
SVC Breakdown
USD
The US dollar managed to establish a short-term base this week. While the initial reaction from our previous update played out well, the area could not be sustained, signaling that a medium-term bottom may now be forming.
Although our SVC framework has shifted bullish, underlying fundamentals do not support a strong USD trend, leaving this move fragile and highly data-dependent.
Gold
Readers who followed last week’s analysis should now be positioned long gold, congratulations. The key resistance area has been broken to the upside.
Ongoing geopolitical tensions, including developments around Venezuela and Greenland, continue to provide fundamental support for gold appreciation. Within our SVC framework, gold remains classified as Strong.
US500
It has become increasingly evident that the US equity market is heavily driven by the AI narrative, with valuations reaching levels that appear structurally stretched. The term “AI bubble” is now widely discussed.
That said, markets do not correct without catalysts, and at present, no clear systemic trigger is visible. As a result, our SVC framework continues to classify US equities as Strong, with minor pullbacks still offering tactical entry opportunities.
Upcoming News
CPI
PPI
Retail Sales
Wishing you a successful trading week ahead,
David Gauch
Founder, Gauch Research
“Good framing. When services stay strong and manufacturing stays weak, it keeps the soft-landing narrative alive even as jobs cool. Congrats on the gold breakout call, geopolitics plus real rates is a supportive mix. On US equities, I agree: AI is the dominant narrative and valuations are stretched, but without a catalyst dips get bought. CPI, PPI, and retail are the right tests.
Quick question: how does your SVC lens look on silver and copper here, and what would flip the view?