Systematic Credit and Equity G-255 Trading Indicators for January 29, 2026
G-255 Specific Credit Sector Indicators January 29 – Long Only Indicators on Page 8
G-255 Overview: What It Is
G-255 tracks the world's 255 largest corporate issuers, each with â¥$15 billion in liquid tradable debt. It covers ~6,000 USD bonds (avg. $1.16B per bond) and 242 publicly listed equities (combined market cap ~$47 trillion—60% larger per issuer than S&P 500 average), with 80 equities non-U.S. domiciled.
Long Opportunities
Credit: Focus on de-leveraging issuers — Single A/BB TMT, Single A Healthcare, UK/US/Canadian Banks, Floating Rate Notes (166 undervalued bonds worth $303.4 Bil in value; 99 long indicators).
Equity: Focus YoY operating cash flow growth — TMT, Healthcare, Consumer (47 undervalued equities worth $13.84T).
Short Opportunities
· Credit: 1,571 overvalued bonds ($2.67T market value; 1,307 short indicators) Big 6 banks remain the largest overvalued sector (265 overvalued bonds. $740 billion of market value, 265 short indicators.
· Equity: 18 overvalued issuers ($1.72T; 14 short indicators).
This quantitative, rule-based framework provides unified, objective signals for global corporate capital structure
extremes.
Systematic Portfolio Daily Credit Trading Model Indicators
· Long Indicators: Target deleveraging new issues with attractive valuations, focusing on 7-year maturities.
· Short Indicators: Target releveraging issuers trading at the deepest discount from their model avoid point; avoid 7-year maturities due to low attractiveness and focus on 2031 maturities for best short opportunities.
· Replace Longs: Swap long positions that have reached their avoid trading level.
· Portfolio Trading Hurdle: Maintain a 1:1 long-to-short ratio once the 50% long position threshold is reached.
· Current Status: Add new supply trades where the issuer is deleveraging; add new issue bonds where spreads have widened by +2 basis points.
· Current Status of Trading Indicators: Last week, one short trade was added, and three long trades reached their avoid trading level. The trading model did not add any long indicators Monday.
Monitor Trade Position Composition
· Track the percentage of long positions relative to the total portfolio.
· If replacing long positions that have reached their avoid trading level pushes the portfolio above the 50% long hurdle, initiate short positions in releveraging issuers (focusing on 5-year maturities) at a 1:1 ratio for additional long positions.
· Review: Reassess portfolio balance after weekly fund flow data to ensure alignment with the systematic strategy.
· Look for individual bond indicators to change overnight: Historic trading levels are leading to overnight adjustments to long, short, and avoid indicator levels.
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G-255 Specific Bond Trading Indicators January 29
· Closed Positions: Deutsche Bank NY (Baa1/BBB) DB 4.95 08/04/31 reached its avoid trading level on Tuesday 1/13/26. On Friday 1/16/26 McDonald's (Baa1/BBB+) MCD 5 02/13/36 reached its avoid trading level. On Tuesday 1/20/26 Royal Bank of Canada (A1/A) RY 4.305 11/03/31 reached its avoid trading level. On Wednesday 1/21/26 Mitsubishi Finance (A1/A-) MUFG Float 09/12/31 and ATT (Baa2/BBB) T 4.55 11/01/32 both reached their avoid trading levels.
· Enter New Longs: ATT (Baa2/BBB) T 4.9 11/01/35 Friday 12/19/25, RBC (A1/A) RY 4.305 11/03/31 and Amazon (A1/AA) AMZN 5.55 11/20/65 were added as a G – 255 de-levering new issue trading more than +2bp to NIP. On Wednesday 1/14/26 Bank of New York (Aa3/A+) BK 4.026 01/22/30 was added as a G – 255 new issue long indicator
· Enter New Short Trades: On Friday 1/16/26 the G-255 trading model added Morgan Stanley (Baa1/BBB+) MS 5.948 01/19/38 as a secondary short trade indicator.
New Credit Trade Indicators Wednesday :
Current Sample Systematic Basket Credit/Equity trades based on trading strategy January 28
Systematic Long/Short Basket Trade Performance Report (January 4, 2025 – January 29, 2026)
· Total Trades: 195 (full year 2025); 25 (2026 YTD)
· Long Indicators (2025): 136 out of 150 tightened by an average of -9.2 bp. In 2026: 8 out of 15 tightened by an average of -6.53 bp.
· Short Indicators (2025): 36 out of 45 widened by an average of +5.85 bp.
· Remaining Longs (2025): 14 positions tightened by -1.53 bp. (2026): 7 positions tightened by -1.75 bp.
· Remaining Shorts (2025): 9 positions tightened by -19.23 bp. (2026): 10 positions tightened by -2.34 bp.
· Average Spread Movement (2025): ±6.73 bp in the recommended direction. (2026): ±1.64 bp.
· Success Rate (2025): 88.2% of indicators reached avoid-trading levels (slightly below historical norms).
· Average Trade Holding Period (2025): 23.9 days (above average).
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Systematic Portfolio Daily Equity Trading Model
· Long Indicators: Target G-255 issuers with positive year-on-year cash flow, trading more than 5% below their historic price moving averages. Focus on issuers with the largest returns to shareholders.
· Short Indicators: Target G-255 issuers with negative year-on-year cash flow and returns to shareholders, trading more than 7.5% above their historic price moving averages. Focus on issuers with the largest declines in operating cash flow.
· Allow trading levels for all 242 equities to determine the number of positions: G-255 is not a "stock picking" tool—it is a stochastic measurement system based on current operating metrics and returns to shareholders.
· Current Status of Trading Indicators: Last week, one short trade was added, and 2 issuers dropped off the "most attractive long" indicators list.
· Monitor Trade Position Composition: replace positions reaching their avoid-trading level pushes the portfolio above the 65%/35% long hurdle, shrink position size to remain at model indicator trade position levels.
· When short positions reach their avoid point, rely on the overall position indicator for trade size. Only position short equity positions that meet G-255 model criteria.
G-255 Specific Equity Trading Indicators January 29
· Closed Long Positions: Home Depot reached its avoid trading level on Tuesday 1/20/26. Altria reached its avoid trading level on Monday 1/26/26
· Open Long Positions: since January 5, the G-255 has added and (subtracted) 16 issuers from the most attractive long indicator list DELL, 6-Jan ATT, 8-Jan, Kraft Heinz, American Tower, Crown Castle, Kroger, 14-Jan Softbank, AIG, 15-Jan Paramount Skydance, Meta Platforms, 16-Jan, Sanofi, Microsoft, Fidelity National Serv, HPE and Qualcomm, Jan 28, Mastercard.
· Open Short Positions: G-255 has added UAL US equity short on 1/20/26 and adds GM US equity and UPS US equity as additional short trade indicators on 1/27/26 and Starbucks (SBUX) on 1/28/26
Definitions:
· A G-255 "Highest rated" equity long must be trading -7.5% relative to its historic moving average.
· A G-255 "Highest rated" equity short must be trading +7.5% relative to its historic moving average.
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Overall, the 30 highest-rated G-255 long positions have returned +0.47% in January.
Overall, the 7 highest-rated G-255 short positions have returned -0.29% in January.
G-255 Trade Sizes and Systematic Trade Process for Debt and Equities
· G-255 represents the world's 255 largest issuers of corporate securities and have a minimum equivalent of $15 billion of tradable liquid debt market capital in all global currencies.
· At present there are 6,022 G-255 USD bonds in circulation.
· There are 242 publicly listed equities for the G-255 debt issuers that trade in 8 currencies.
· The total equity market capital of the 242 stocks is just over $47 trillion or $182 billion per issuer. That is 60% larger equity capital per constituent than the S&P 500.
· 80 of the 242 publicly traded equities for the G-255 are domiciled outside of the United States.
G-255 Credit Indicators USD Trading Process and Size – Overall Strategy Is Designed To Trade $3 Trillion of Assets
· The G-255 trading process is designed for systematic trading on electronic platforms for equities and bonds.
· The system accommodates the largest institutional trade sizes, dependent on user resources and trading relationships (all G-255 USD corporate bonds trade OTC via over 80 dealers and all 5 major U.S. electronic bond trading firms).
G-255 Credit Indicators and USD Liquidity - 80% of All Daily TRACE Trades
The G-255 credit trading indicators cover 80% of daily NASD TRACE trades (95% of USD investment-grade and 48% of USD non-investment-grade).
G-255 Trade Indicators are created daily for all 6,250 debt and equity securities.
· Indicator Calibration: The stochastic credit trading model uses earnings data to recalibrate balance sheet leverage and valuation indicators, then evaluates spread-to-curve positioning, earnings momentum, and debt ratios against each issuer's historical trading patterns.
· Bond-Level Granularity: G-255 USD issuers hold an average of 27 USD bonds outstanding (~$27.5 billion USD debt cap per issuer). The model analyzes historical relative value across the capital structure, generating indicators for over/undervalued bonds.
· Equity-Credit Linkage: For issuers with both equity and bonds, equity signals (driven by cash flow and shareholder returns) directly influence credit spreads. The framework integrates these to produce synchronized long/short signals based on liquidity thresholds.
Equity and Credit Trading and Sector Indicators and Wednesday Trading
Wednesday, January 28, 2026, seven additional G-255 issuers reported results yesterday, and five more released results overnight and this morning outside the U.S. Yesterday we highlighted how geopolitical headlines involving the U.S. dollar and trade sanctions or tariffs appear increasingly interconnected. Our process is fully quantitative and does not rely on human interpretation, yet measurable shifts in risk markets can, at certain moments, trigger capital flows that move asset prices. One of the simplest ways for global investors to reduce exposure to the shifting policy environment in Washington is to withdraw capital from U.S. assets—particularly U.S. Treasuries, of which roughly 32% of outstanding debt, along with USD-listed equities and corporate bonds, is held by non-U.S. entities. Those non-U.S. investors are indeed selling Treasuries as part of that risk-reduction effort.
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G-255 Systematic Model Update: January 29 Trading and Earnings Reports
The US $dollar, earnings, Geopolitical headlines and US fund flow.
Since the US markets are still the largest collection of capital in the world, moving assets out of the US into other markets is far more transparent and far more difficult to simulate return characteristics for corporate bonds and US equities. So, to "hedge" the investment, the wisest move would be to sell the US $ dollar non – US entities are doing that as well. Because U.S. markets still represent the largest concentration of global capital, reallocating assets from the U.S. into other regions is more transparent yet significantly harder when attempting to replicate the return characteristics of U.S. corporate bonds and equities. As a result, the most practical way to "hedge" U.S. exposure has increasingly become selling the U.S. dollar — a strategy that many non-U.S. entities are also pursuing.
That said, large-scale capital movement out of USD-denominated risk has not yet fully materialized.
US Equities and Credit Remain Overvalued according to our trading model
Reported earnings are painting a clear picture.
(1) Global Banks with capital markets capability and access to capital are still generating strong results based on securities return.
(2) Markets don't trade on earnings any longer. Quantitatively speaking valuations for Texas Instruments (TXN) are double that of META or Microsoft. Why? "They raised guidance" Texas Instrument will be lucky if the reach 2022 peak sales levels by 2027. Reaching 2022 earnings levels is current out of the picture to TXN. The company's gross and operating margins are less than half of margins generated by Meta and Microsoft. Which of the 3 has the highest valuation? Texas Instruments. Reported earnings continue to reinforce this view.
The Model's Top Long Equity and Credit Indicators? Meta and Microsoft.
(3) G-255 systematic trading model continues to identify Meta equity, Meta corporate debt, Microsoft equity, and Microsoft corporate bonds as long signals.
TXN equity, by contrast, screens as the second most overvalued stock among the 242 equities in the G-255 universe.
The Model's Top Short Equity and Credit Indicators? General Motors Anything
GM reported negative unit sales, weaker pricing, declining operating earnings, and negative cash flow and free cash flow in 4Q. Yet despite this, the company managed to convince markets that "all is well" based on yesterday's trading reaction. How? By layering a handful of optimistic phrases between more than a hundred references to "adjusted" revenue, adjusted operating earnings, adjusted EBITDA, adjusted cash flow, and adjusted free cash flow.
The more important point: the strategy worked. GM equity traded higher, and GM credit tightened following the release.
Powell: The Economy Continues to Surprise With Its Strength
Encouraging on the surface — but outside of financials and a select group of technology names, we are seeing declining unit demand and production across healthcare, consumer, auto, and transportation companies. These firms have no pricing power and can only offer future "adjustments to earnings," which, for now, appear sufficient to satisfy U.S. markets.
Meanwhile, U.S. consumer confidence is at an 11-year low, and very few consumer-facing companies can offer any meaningful optimism in their 2026 outlooks
Best Earnings reports thus far:
1. Meta
2. Microsoft
3. RTX
Worst Earnings reports thus far:
1. General Motors
2. Intel
3. United Airlines
Key Trading Indicator Economic Results – Wednesday
· Total carloads for the week ending January 24 were 214,784 carloads, up 13.7 % compared with the same week in 2025, while U.S. weekly intermodal volume was 266,924 containers and trailers, up 0.5% compared to 2025.
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G-255 Credit Market Valuation and New G – 255 Supply January 29, 2026 On a Risk/Reward basis, High Yield bonds have far outperformed Investment Grade in 2025
· US Credit Spreads reached their tightest point of the year on Monday, February 21, 2025, and widest on Tuesday, April 10, 2025.
· YOY change in the UST 5Y: -40.8 bp.
· YOY change in the UST 10Y: -27.9 bp.
We are no longer flat in terms of Credit Spreads YoY.
Bloomberg 10Y credit spreads are derived by taking the Moody's index yield and subtracting the UST 10Y YTM.
ETF Flows and Fixed Income Positioning
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)
• Investors added a net $874.7 million on Wednesday, increasing total assets by 3.1% to $28.8 billion, according to Bloomberg data.
• Over the past week, LQD recorded the largest inflow among U.S. fixed-income ETFs at $1.36 billion.
U.S.-Listed Fixed Income ETF Flows
Weekly Flow Details (Week Ended Jan. 27, 2026)
• Total ETF net inflows: $12.5 billion, down from $13.3 billion the prior week
• Broad bond-market ETFs: +$72.4 million to $6.02 billion
• Government bond ETFs: –$1.47 billion to $1.59 billion
• Year-to-date ETF inflows: $46.9 billion
• Largest outflow: iShares 20+ Year Treasury Bond ETF (TLT) at –$512.9 million
Model Performance & Selectivity
G-255 Systematic Model Characteristics
• Generates long indicators for only ~12% of new issues, despite those issues representing ~67% of total annual USD new-debt capital.
• When bonds are held until they reach their avoid-trading level, the model has been historically successful 97% of the time.
January 2026 New Issue Statistics
· 52 G-255 issuers came to market in USD during January 2025
· Total of 154 bonds issued
· 107 of those bonds have already reached their avoid-trading level according to the G-255 credit model
Broader New Issue Performance (All 2025 G-255 Issues)
· 95% of avoid-trade indicators delivered an average return of just under –8 bp over a 34-day average holding period
· Over the past 12 months, 1,049 of 1,100 G-255 USD bonds issued (totaling $1.147 trillion notional) have reached avoid signals
· All 20 December 2025 G-255 new issue trade indicators were reached in less than 22 trading days
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G-255 Credit and Equity Market Indicators January 29
· Attractive Long Credit Indicators: 99 (+8 from Wednesday) and -1 % below the 200-day moving average of all long indicators.
· Attractive Long Credit Market Cap accounts for: 62% of all undervalued Systematic credit capital.
· Attractive Short Credit Indicators 1,307 (-9 from Wednesday and +147% above the 200-day moving average of all model short trade indicators). Short Credit Market Cap comprises 85% of all overvalued Systematic credit capital.
G-255 Equity Trade Indicators and US Equity Correlation to Overall US Credit Spreads
G-255 credit spreads have correlated directionally with US equity index movement for 13 of the first 17 trading days of 2026.
US equities are +.7% over the past month; US credit spreads are now materially tighter MOM
Systematic Equity Trading Indicators January 29
• Attractive Long G-255 Equity Trade Indicators: 47 (includes both undervalued and equities priced at extreme discount) +2 from Wednesday and -19% below the 200-day moving average of all long-trade indicators.
• Short Equity Trade Indicators -14, (-1 from Wednesday) and +30% to the 200-day moving average of all model short trade indicators).
G-255 Key Differentiator
It uses a purely systematic, stochastic absolute value model with zero human input: signals derive solely from each issuer's own 52-week public pricing history (plus earnings and balance sheet/leverage data). No peer comparisons, forecasts, macro factors, or sentiment analysis. This issuer-isolated approach detects extreme trading levels vs. each name's historic norms, covering ~85% of daily TRACE-reported USD corporate bond trades (95% IG, 48% HY). Back-tested tracking accuracy: 97.5%.
Cross-Asset Integration
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The automated model links equity (growth, volatility, momentum) and bond (credit spreads, debt dynamics) data from each issuer's history, spotting divergences (e.g., equity momentum vs. spread moves) to generate objective long/short indicators across both asset classes.
G-255 Credit and Sector Indicators for "Long Only" trading strategies January 29
Starbucks Earnings:
Starbucks reported global comparable store sales up 4% in fiscal Q1 2026 (ended Dec 28, 2025), driven by 3% higher transactions and 1% higher average ticket, while consolidated revenues rose 6% to $9.9 billion. Operating income came in at roughly $999 million with operating margin at 10.1% (down 180 basis points year-over-year mainly from labor investments and inflation/tariffs), and cash provided by operations was $1.60 billion (down from $2.07 billion in the prior-year quarter).
With SBUX both re-levering and generated lower cash from operations year on year, the G – 255 trade indictors are now short credit/equity
Weakness arose mainly from a slowdown in luxury demand since 2023, softer spending in key markets like China (affected by trade tensions and economic uncertainty) and the US (particularly for cognac), a decline in Europe during the second half, and adverse currency fluctuations that impacted tourist purchases and overall performance—
NextEra Energy reported full-year 2025 cash flow from operating activities of $12.48 billion, down from $13.26 billion in 2024, while fourth-quarter operating revenues rose 20.7% year-over-year to $6.5 billion, driven by increases at Florida Power & Light (up 10.8% to nearly $4.27 billion) and NextEra Energy Resources (up to $2.18 billion from $1.45 billion).
The company continues its cash dividend growth at roughly 10% annually through at least 2026 (based on the 2024 base), consistent with prior declarations such as the February 2025 quarterly dividend increase of approximately 10% versus the prior year.
G-255 trade indicators remain short credit (long FPL credit)/long equity,
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Disclaimer - This report is not intended as, and does not constitute an offer, or a solicitation to buy or sell any securities or financial instruments. All data, levels, opinions, and representations herein are provided for informational purposes only and should not be relied upon for making investment decisions. Past performance is not indicative of future results. The authors of this report assume no liability for losses or damages arising from the use of this information. Investors should consult with a qualified financial advisor before making any investment decisions. The information in this report is based on sources believed to be reliable, but no guarantee is made as to its accuracy, completeness, or timeliness.