(Sample 2) INSTAT Master Market Pulse Report: Global Macro, US Sectors, and Americas, Tuesday, February 17, 2026
Defensive Rotation & Commodity Divergence
Processing Note: While three of us work to migrate my four Substacks to a single private platform, which I was hoping to finish today, we realized it will take more time, and some additional software. In addition to Power Query, I am adding TypingMind, which is an interface for interacting seamlessly with multiple Large Language Models (LLMs) from Gemini, Claude, Perplexity and so forth. I’ll know more tomorrow how long this process will take, but I' already know it will be a resounding success when complete.
The following report was generated with a modified prompt and a different AI platform. Basically I am testing different models. The final product will be quite advanced.
Executive Summary:
Global capital flows are exhibiting a defensive repair-phase posture, characterized by a distinct “Flight-to-Safety” bid in sovereign bonds and a rotation into US defensive sectors, occurring concurrently with selective strength in international commodity plays.
1. Quality Credit Bid, Sovereign Safety: Capital is rotating into credit markets, favoring investment-grade corporate bonds and CLOs, while high-yield credit lags. Simultaneously, sovereign debt (R-01) is seeing a yield decline, but with deeply negative internal scores, suggesting this is a temporary haven flow rather than a structural bond bull market.
2. US Sector Rotation: Defensives In, Growth Out: There is a clear rotation of capital out of US mega-cap Technology and Communication Services and into Defensive sectors (Utilities, Real Estate, Staples). This indicates money is hiding in non-cyclical areas, reinforcing a risk-off tone within the US equity tape.
3. International Flows: Commodity Strength vs. Consumer Weakness: A sharp divergence exists in ADRs. Energy, industrial, and mining names (Canada, Brazil, Europe) are seeing strong accumulation on the commodity bid. Conversely, international consumer discretionary and software names are experiencing significant distribution, lagging their US counterparts.
4. Dispersion Rules: Across all slices, high dispersion confirms this is a market of stocks and themes, not a uniform rally. Success is stock-specific (Energy, Commodities) or theme-specific (Defensives, Quality Credit), while broad indices like the S&P 500 show internal weakness.
Section 1: Global Macro & Cross-Asset (R-01 to R-10)
R-01 – 10Y Treasury Yields
The Sovereign Debt complex remains entrenched in a “Flight-to-Safety” posture, characterized by a broad decline in yields (prices rising) but with extremely poor internal scores. The group’s mean INSTAT score is a deeply negative -45, indicating heavy institutional distribution despite the recent price strength. This suggests the market is viewing the drop in yields as a temporary haven rather than a structural bull market. The “Repair Phase” narrative applies here; while the aggressive selling (distribution) is stabilizing, capital is not yet confident enough to commit to a new trend.
Leaders & Laggards: The only true outliers are Taiwan 10-Year (INSTAT 69) and Australia 10-Year (INSTAT 38), which are seeing capital inflows as yields rise, diverging from the global safety trade. Conversely, Hong Kong 10-Year (INSTAT -100) and Singapore 10-Year (INSTAT -100) are Deep Laggards, experiencing severe capital flight and a complete lack of institutional support.
R-02 & R-03 – Corporate Bonds & Credit Spreads
Credit markets are painting a starkly different picture than sovereign debt. The Corporate & Govt Bonds (R-02) group shows strong, broad-based accumulation with a mean INSTAT of +68, led by funds tracking convertible and investment-grade bonds. This indicates liquidity is rotating into credit risk. However, the Credit Spread Factors (R-03) group reveals dispersion. While investment-grade and CLO ETFs are leaders, high-yield ETFs like JNK (INSTAT -26) and USHY (INSTAT -55) are lagging, signaling that the market is favoring quality over speculative credit risk. The VIX (INSTAT 27) remains elevated, confirming a persistent, though not panicked, bid for volatility protection.
R-04 – Global Forex
The US Dollar is showing broad-based weakness, driving strength in most major and emerging market currencies. The group’s mean INSTAT is a strong +57, reflecting aggressive accumulation of foreign currencies. The Australian Dollar (AUD/USD, INSTAT 100) is an Extended Leader, benefiting from commodity price support. Conversely, the Turkish Lira (TRY/USD, INSTAT -84) and Indonesian Rupiah (IDR/USD, INSTAT -82) are Deep Laggards, highlighting capital flight from structurally weak or commodity-dependent economies.
R-05 to R-07 – Commodities & World Equity
Commodities (R-05) are highly dispersed, acting as a pure “stock-picker’s” market. There is no uniform thematic bid. Soybean Oil (INSTAT 100) and Feeder Cattle (INSTAT 100) are leaders on supply-side dynamics, while Sugar (INSTAT -100) and Cocoa (INSTAT -97) are deep laggards on demand destruction. Precious metals (R-06) are lagging, with a mean INSTAT of -24, contradicting the “risk-off” bid in sovereign bonds, suggesting the safe-haven bid is flowing into government paper rather than metals. World equity indices (R-07) are broadly strong, with a mean INSTAT of +62, driven by the SET Index (INSTAT 100) and DAX (INSTAT 100). However, the S&P 500 (INSTAT 5) is a notable laggard, suggesting capital is rotating out of the US large-cap benchmark into international and smaller markets.
Section 2: US Sector Analysis (R-14 to R-25)
R-14 – GICS Sector Overview
Capital flows are currently favoring a “Defensive Tilt.” Utilities (XLU, INSTAT 88) and Real Estate (XLRE, INSTAT 100) are showing the strongest institutional accumulation, signaling a capital-hiding dynamic. In contrast, the Technology (XLK, INSTAT -56) and Communication Services (XLC, INSTAT -45) sectors are experiencing capital outflows, reflecting a rotation away from growth and into safety. This confirms a repair-phase environment for cyclical/growth areas and a strength-phase for defensives.
R-15 to R-25 – Sector Deep Dives
Energy (R-15) – High Dispersion: Despite a positive group mean, the dispersion is extreme. Kinder Morgan (INSTAT 100) and TechnipFMC (INSTAT 100) are leaders on pipeline and international activity, while Venture Global (INSTAT -75) and Centrus Energy (INSTAT -32) lag. This is not a sector-wide rally; it is stock-specific.
Technology (R-24) – Distribution Phase: This group is in a clear distribution phase with a mean INSTAT of -16. The weakness is broad, with Cadence Design (INSTAT -98) and Microsoft (INSTAT -95) as Deep Laggards. The sector is seeing capital rotation out of US mega-cap tech.
Financials (R-23) – Mixed Signals: The group is mixed. Regional banks like Fifth Third (INSTAT 63) are showing relative strength, while mega-cap money centers like JPMorgan (INSTAT 3) and Bank of America (INSTAT -62) are flat to weak. This suggests capital is favoring domestically-focused financials over globally-exposed ones.
Consumer Staples (R-21) – Defensive Accumulation: Staples are showing strong accumulation, with Coca-Cola (INSTAT 100) and Costco (INSTAT 53) confirming the defensive capital rotation. This supports the thesis that money is hiding in non-cyclical cash flows.
Section 3: Americas & International (R-44 to R-47)
R-44 to R-47 – ADRs & Cross-Border Flows
US-traded international equities (ADRs) are displaying a distinct “Commodity vs. Consumer” split. European energy and industrial ADRs like Shell (INSTAT 58) and BHP (INSTAT 100) are leaders, while consumer-facing names like SAP (INSTAT -85) and Unilever (INSTAT 100) are mixed.
Canada (R-45) is demonstrating relative strength compared to the US, with a group mean INSTAT of +52. Energy and pipeline names like Cenovus (INSTAT 97) and Enbridge (INSTAT 67) are driving the accumulation, capitalizing on the commodity bid. This contrasts sharply with the weakness in US mega-cap tech.
Mexico (R-46) is exhibiting robust accumulation (mean INSTAT +62), led by consumer giants Femsa (INSTAT 100) and airport operators ASR (INSTAT 100). Capital is flowing into Mexico as a proxy for resilient domestic consumption and nearshoring beneficiaries, distinct from the broader emerging market volatility seen in South America.
South America (R-47) is more volatile. Brazil’s Petrobras (PBR, INSTAT 51) shows strength, while Chilean banks (BSAC, INSTAT 2) lag, indicating capital is highly selective, favoring state-owned commodity giants over financials in the region.
Mandatory Narrative Definition:
Repair Phase: A technical stabilization period where aggressive distribution has ceased, marked by price flattening and rising internal (IN/INSTAT) scores.