About Macro Economics

The Macro Economics Dashboard is OCM's unified lens on the global macro landscape that ultimately drives crypto pricing. It now consolidates fourteen analytical views spanning **money supply, liquidity momentum, net liquidity, dollar strength, inflation, real yields, the yield curve, credit and financial conditions, the labour market, the manufacturing business cycle, central bank policy, the volatility regime, economic growth**, and a proprietary **composite risk index**, all viewable against BTC, S&P 500, or Gold as a background reference asset. The **M2 Money Supply** view plots the broadest measure of dollar liquidity with a green gradient intensity mapped to absolute level, overlaid against a chosen risk asset on a log-scale secondary axis, and can be toggled between **US M2** and a **Global M2** aggregate (sourced from CoinGlass) for the wider international liquidity picture. **M2 Momentum** derives the rate-of-change of M2 over 30D, 60D, or 90D windows with a multi-layer blue gradient area, isolating *acceleration* of money-printing rather than absolute level, historically a more responsive crypto leading indicator. **Net Liquidity** goes a step further and computes the liquidity that actually reaches markets - the Fed balance sheet minus the Treasury General Account and minus overnight reverse repo (WALCL - TGA - RRP) - plotted against BTC, since drains and refills of this measure have tracked risk-asset turning points more tightly than the headline balance sheet alone. **Inverse DXY** plots BTC against an inverted Dollar Index (high dollar = low on chart), highlighting the inverse relationship that has characterised most of the 2020-2026 cycle. **VIX Fear Gauge** renders the CBOE volatility index with a smooth multi-stop colour gradient from emerald (complacency, VIX sub-15) through yellow and orange to crimson (panic, VIX above 60), with configurable EMA smoothing. **Fed Policy** overlays the Fed Funds Rate (step-plotted with a rate-level colour gradient) against the Fed balance sheet (spline-plotted purple gradient), exposing the full tightening/easing regime at a glance. **Inflation** tracks headline CPI and Core PCE on a year-on-year basis, the two prints the Fed watches most closely when setting that policy. **Real Yields** plots the 10Y inflation-adjusted (TIPS) yield, inverted, against risk assets, since the real cost of money rather than the nominal rate is what ultimately competes with Bitcoin and equities for capital. **Yield Curve** charts the 10Y-2Y spread with shaded inversion zones, the single most-watched recession lead indicator. **Credit & Conditions** combines high-yield credit spreads (the market's real-time price of corporate default risk) with the Chicago Fed's National Financial Conditions Index, exposing stress in the system's plumbing before it reaches equities. **Labor Market** overlays initial jobless claims against the unemployment rate to read the cyclical health of the economy. **GDP Growth** shows absolute GDP with recession bands auto-generated from YoY-negative quarters plus a bar-chart YoY growth rate on the secondary axis. **PMI Business Cycle** plots the ISM Manufacturing PMI, the classic monthly diffusion index of US factory activity and one of the earliest business-cycle tells there is: a reading above 50 marks expansion and below 50 contraction, and turns in the PMI have historically led both the S&P 500 and Bitcoin. The view renders it as a continuous colour ramp from crimson (deep contraction) through amber at the pivotal 50 line to emerald (strong expansion) with shaded sub-50 contraction bands, carries the full series back to 1948, and reports a live correlation of the PMI to the selected asset's twelve-month change. The flagship view is the **Economic Risk Index**, a proprietary composite rebuilt to blend eleven *level* signals (equity volatility, credit spreads, financial conditions, the yield curve, real yields, the dollar, the Fed Funds rate, money supply, the Fed balance sheet, growth, and the manufacturing PMI) with seven *momentum* signals that measure how fast stress is accelerating (rising VIX, widening spreads, a flattening curve, a surging dollar, jumping real yields, draining net liquidity, and a rolling-over PMI). Every input is percentile-normalised against its own full history so components on wildly different scales become directly comparable. Levels and momentum are blended roughly 62/38, and a breadth amplifier adds up to around 11 extra points whenever many signals are elevated together, capturing the systemic, correlated nature of genuine risk-off regimes. The output is an EMA-smoothed 0-100 score with five regime zones (Low, Moderate, Elevated, High, Extreme). Every view includes a draggable data table with full regime classification, percentile rankings, and component breakdowns.

Signal Zones

Trading Signals by Regime

How It Is Calculated

Frequently asked questions

What does M2 Money Supply tell me about crypto?

M2 is the broadest standard measure of dollar liquidity in the US economy consisting mainly of cash, deposits, money market funds, and retail instruments. Bitcoin and risk assets have historically shown strong directional correlation with M2 growth regimes: M2 expansion phases (like 2020-2021's stimulus flood) coincide with crypto bull markets, whilst M2 contraction phases (like 2022's post-QE tightening) coincide with crypto bear markets. The dashboard's M2 view lets you visually correlate these regimes across your chosen risk asset (S&P, BTC, or Gold).

Why is M2 Momentum more responsive than raw M2?

Raw M2 is a slow-moving absolute stock. It almost always trends upward over time due to natural monetary expansion. The *level* rarely changes dramatically month-to-month. **M2 Momentum** (rate-of-change over 30/60/90 days) isolates whether M2 is *accelerating* or *decelerating*, which is the signal that actually matters for asset prices. Historically, M2 Momentum inflections lead price inflections by 1-3 months, whilst raw M2 level is coincident at best.

How do I read the Inverse DXY view?

The Dollar Index (DXY) measures USD strength against a basket of major currencies. Since BTC is priced in USD, a stronger dollar mechanically reduces BTC's dollar price even if BTC hasn't weakened on any other measure. **Inverse DXY** flips the DXY chart vertically so that its line visually correlates with BTC when the historical relationship holds. When the inverted DXY line tracks BTC closely, the dollar is driving crypto; when they diverge, BTC is responding to idiosyncratic catalysts.

What do the VIX colour thresholds mean?

The **VIX** measures 30-day implied volatility of S&P 500 options. Essentially the traders' expected future volatility. The dashboard's smooth colour gradient maps regime zones: below 15 (emerald) is complacency (historically bullish for risk assets), 15-20 (lime to yellow) is normal, 20-30 (yellow to orange) is elevated fear, 30-45 (orange to red) is high fear, above 45 (crimson) is panic. Sustained VIX above 30 has historically coincided with major market drawdowns; VIX spikes above 60 typically mark capitulation lows that precede recoveries.

Why does the Fed Policy view use step-plotting for rates but spline for the balance sheet?

The **Fed Funds Rate** changes in discrete steps (25bp or 50bp increments at FOMC meetings) with flat levels between meetings. Step-plotting correctly represents this: the rate holds constant then jumps on the meeting date. The **Fed balance sheet** evolves continuously via daily open-market operations, so spline interpolation better represents the underlying smooth trajectory. Both series are colour-graded by their own level (pink/red for high rates, teal/green for low rates; purple gradient for the balance sheet).

What is Net Liquidity and why does it matter more than the Fed balance sheet?

Net Liquidity strips the headline Fed balance sheet (WALCL) down to the cash that actually reaches financial markets by subtracting the Treasury General Account - the government's own current account at the Fed - and the overnight reverse repo facility, where money-market funds park spare cash. When the Treasury rebuilds its account or cash floods into reverse repo, liquidity leaves the system even if the balance sheet looks flat; when those drain, liquidity floods back. Because Bitcoin and risk assets trade on the liquidity that can chase them, Net Liquidity (WALCL - TGA - RRP) has historically tracked their turning points more tightly than the balance sheet on its own.

Why does the Inflation view show both CPI and Core PCE?

They answer different questions. CPI, the Consumer Price Index, is the headline number markets react to and the one most people recognise, while Core PCE - which strips out volatile food and energy - is the gauge the Federal Reserve actually targets when setting policy. Watching them together shows both the inflation the public feels and the inflation the Fed is steering by, and the gap between the two often hints at where rate expectations are heading. Both are plotted year-on-year, the standard way to read an inflation trend.

How should I read the Real Yields view?

Real yields are the 10Y Treasury yield adjusted for expected inflation, the TIPS yield - in other words, the true inflation-proof return on holding cash-like government debt. They are the real hurdle rate every other asset has to beat. When real yields rise, holding safe paper becomes genuinely rewarding and capital tends to drain out of long-duration, non-yielding assets like Bitcoin and growth equities; when they fall or turn negative, that capital is pushed back out along the risk curve. The view plots the real yield inverted so its line moves in the same direction as the risk assets it influences, making the relationship easy to see at a glance.

What do the inversion zones on the Yield Curve view mean?

The view plots the 10Y-2Y Treasury spread, long-term minus short-term interest rates. Normally long rates sit above short rates and the spread is positive; when the spread falls below zero the curve is **inverted**, which has preceded every modern US recession by a meaningful lead. The shaded inversion zones flag those sub-zero periods automatically. Counter-intuitively, the riskiest moment historically is not the inversion itself but the **re-steepening** that follows, as the curve un-inverts on the way into the downturn, so the view is most useful read alongside the credit and labour-market panels.

What does the Credit & Conditions view tell me that the VIX does not?

The VIX reads fear in the equity options market; this view reads stress in the credit and funding markets, which often move first. High-yield credit spreads measure the extra yield investors demand to hold riskier corporate debt - they widen quickly when default risk is being repriced, frequently ahead of equity drawdowns. The Chicago Fed's National Financial Conditions Index bundles over a hundred measures of money, debt, and leverage into a single read of how loose or tight overall conditions are. Together they expose strain in the system's plumbing before it shows up in headline stock-market volatility.

How is the ISM PMI used, and where does its data come from?

The ISM Manufacturing PMI is the classic monthly business-cycle survey: a diffusion index where above 50 means the factory sector is expanding and below 50 means it is contracting. It appears two ways in the dashboard. As its own **PMI Business Cycle** view it is charted against your chosen risk asset with a full history back to 1948, and it is also a component of the **Economic Risk Index**, entering both as a level signal (a low, sub-50 reading is inverted to register as high risk, weighted alongside the yield curve) and as a momentum signal (a rolling-over PMI is one of the earliest cycle-turn warnings). Because ISM PMI was removed from FRED years ago on licensing grounds, the data is assembled from several free sources - an archived long-history series for the deep past, transcribed ISM Reports on Business for the middle years, and a live keyless feed for recent months - merged so that the most recent verified print always wins and newly released months appear automatically.

How does the Economic Risk Index handle different scales?

The composite blends eighteen signals - eleven level signals plus seven momentum signals - that live on wildly different scales: VIX runs 10-80, the Fed Funds rate 0-6, the Fed balance sheet 2-9 trillion USD, M2 growth from -5% to +25%, credit spreads 3-20%, the 10Y-2Y curve from -1% to +3%, the ISM PMI oscillating around its 50 boom-bust line, and so on. Directly blending these would let the largest-number series dominate. The dashboard therefore percentile-maps each signal to 0-100 against its own full history first, so every component contributes on equal footing regardless of raw units. A VIX at its 80th percentile and a credit spread at its 80th percentile carry the same weight-adjusted influence on the score.

Why are some series inverted inside the Risk composite?

Several inputs are protective rather than threatening - a higher reading means lower risk, not higher. A steeper, more positive yield curve, faster M2 growth, an expanding Fed balance sheet, stronger GDP growth, rising net liquidity, and an expanding manufacturing PMI are all signs of a healthier backdrop. For these the percentile is flipped before blending, so that across every single component a high percentile consistently means more risk. Without this inversion, expanding liquidity, accelerating growth, or a booming factory sector would perversely push the risk score up, which is the opposite of what they signal.

What smoothing does the Economic Risk Index use?

A single EMA applied in trading days, with three selectable strengths - Light, Medium, and Heavy, corresponding to roughly 3, 10, and 30 day spans. This replaces an earlier triple-EMA cascade. Because the composite is already a broad blend of eighteen percentile-mapped signals, one well-chosen EMA removes day-to-day noise while staying far more responsive at genuine turning points than three stacked passes, which tended to lag the regime. Medium is the sensible default - use Light to catch fast regime shifts and Heavy to focus only on the major multi-month swings.