After an eventful week in the markets, investors might feel like they’ve earned a breather. Major indexes posted strong gains: the Russell 2000 (RTY) rose by 8.6%, the Nasdaq 100 (NDX) by 5.4%, and the S&P 500 (SPX) by 4.6%. With the election behind us, rate cuts of 25 basis points from the Fed and the Bank of England, a modest drop in the 10-year Treasury yield to 4.30%, and a busy earnings season coming to a close, there’s a palpable sense of investor fatigue. The current environment reflects this — investors seem to be rotating capital down the market-cap spectrum, seeking opportunities in cyclical and reflationary themes.

Flow Trends and Sector Insights

Fund flows remain positive, boosted by robust corporate buybacks and hedge funds recalibrating their leverage as volatility subsides (the VIX settled at 14.94). Long-only (LO) investors were net buyers this past week, purchasing back about $12 billion in assets, reversing last week’s sell-off. Hedge fund flows, meanwhile, balanced out.

Sector-wise, the biggest buying skews were observed in Utilities, Financials, REITs, Macro Products, and Technology. Healthcare was the only sector that showed a slight tilt towards selling. This week’s top performers included Bitcoin, meme stocks, year-to-date winners, software companies, and regional banks, each up over 10%. On the other hand, obesity drug stocks (-2%), renewables (-1%), and Chinese ADRs and bond proxies (flat) lagged behind.

Bond Market Holiday and Upcoming Economic Data

The bond market will be closed on Monday in observance of Veterans Day, which gives investors a pause to process last week’s action. Tuesday brings the NFIB Small Business Sentiment report and the Fed’s Senior Loan Officer Survey. However, all eyes will be on Wednesday, which features the release of October’s Consumer Price Index (CPI). Thursday will continue with the Producer Price Index (PPI), followed by retail sales, the Empire State Manufacturing Survey, and industrial production on Friday. It’s a busy week for economic data and Fed commentary, with Fed Chair Jerome Powell’s remarks on Tuesday, November 14, a highlight.

Derivatives Market Observations

Volatility trends in the derivatives market have been notable as SPX call skew remains at some of its flattest levels in the past year. We’re seeing clients lock in gains from election trades in financials, rolling up calls and spreads in the SPY ETF. Tesla’s recent surge has also generated high trading volume in call options, hitting 4.8 million contracts — the highest level seen since 2021.

Looking ahead, the economic calendar is quieter next week, though CPI data and monthly options expiration (OPEX) are on the radar. With a calmer week, the implied straddle suggests expected market movement at about 1.15% for the upcoming week.

This past week showcased a strong market rally across major indexes, bolstered by investor optimism and sector rotation into cyclical themes. Upcoming economic data and Fed commentary could set the tone for the remainder of the month, especially as investors assess inflation trends and growth signals. With the bond market closed for the holiday and a quieter calendar next week, market participants may have a chance to regroup — but the focus on key data releases will remain sharp as November progresses.