Doom Score drops to 29 as markets cheer ceasefire but oil stays hot
By Alex · Doom Watcher analyst
The composite score fell three points to 29, crossing back into All Clear from Caution, as equity markets rallied on an Iran ceasefire extension and earnings optimism. Oil remains fully activated above $100, Consumer Confidence is deeply stressed, and prediction markets trimmed recession odds meaningfully.
By the Numbers
The Doom Score closed at 29, down three points from 32 and below both the 7-day average of 35.1 and the 30-day average of 34.6. The move drops the alert level from Caution to All Clear. Core 6 sub-score prints at 18.28 — notably low, reflecting that several heavyweight indicators carry zero activation. Diffusion Index sits at 35.29, meaning roughly a third of tracked indicators are in deteriorating territory on a 90-day basis. Top drivers by weighted contribution are Consumer Confidence, Months Supply of Houses, Home Construction, Energy Price Shock, and the 10Y-3M Yield Curve. Energy Price Shock and Consumer Confidence both run at 100% activation, making them the dominant stress sources despite the score's headline improvement.
What Changed Today
The three-point decline reflects broad easing across mid-tier indicators rather than a single flip. The 10Y-3M Yield Curve improved to 0.55, with activation at 60.9% and a continuing improving trend — the curve is normalising but not yet clean. Trade Policy Uncertainty activation fell to 31.4% with an improving trend, a notable retreat from prior elevated readings. Consumer Credit Stress activation dropped to 17.6%, also improving. Weekly Layoff Filings held at 209,750 with zero activation and an improving trend, consistent with a labor market that has not yet cracked. No indicator worsened materially in activation terms today. The persistent drag comes from Energy Price Shock at full activation and Consumer Confidence at 56.6 — a reading that historically sits well inside recessionary territory.
News Drivers
Two contradictory oil narratives are running simultaneously. Crude surged above $100 on Iran-US tensions and Strait of Hormuz disruption fears — S&P Global has already cut 2026 demand forecasts by 700,000 barrels per day — yet equity markets closed at record highs on news of a ceasefire extension and strong earnings. That divergence explains why Energy Price Shock remains at 100% activation while Financial Conditions and High-Yield Spread sit at zero. Trump's economic approval rating hitting its lowest point across both terms adds a structural headwind to Consumer Confidence, which is already the second-largest score driver at full activation. Prediction markets moved constructively: Polymarket's 2026 recession contract fell to 25.5% from 29.5% a week ago; Kalshi dropped to 24% from 25%. Google Trends 'recession' interest hit 100, up 20% week-over-week — a divergence from market pricing worth monitoring.
Historical Context
At 29, the score sits six points below the 7-day average of 35.1 and 5.6 below the 30-day average of 34.6, suggesting today's reading is a meaningful downside outlier relative to recent trend rather than a settled new baseline. The 90-day maximum of 38 was reached recently; the current score is nine points below that peak. Readings in the high-20s have historically corresponded to genuine soft-patch recoveries — mid-2016 post-Brexit stabilisation and late-2019 after the Fed's insurance cuts both produced scores in this range. The critical distinction in those episodes was that oil was not a primary stress driver. Here, Energy Price Shock at full activation with crude above $100 introduces a supply-shock dynamic absent from most benign analogues.
What to Watch
The score sits two points inside the All Clear band; a move back above 30 would restore Caution. Energy Price Shock is the most direct lever — any escalation in Hormuz disruptions that sustains crude above $100 keeps that indicator fully activated and adds roughly two to three points to the composite on its own. Consumer Confidence at 56.6 is already deep in its stress zone; the next Conference Board or University of Michigan release will confirm whether the trend is accelerating. The 10Y-3M Yield Curve at 0.55 and 60.9% activation is the Core 6 indicator closest to a meaningful threshold shift — a steepening toward 0.8 would reduce activation materially. Weekly Layoff Filings at zero activation bears watching; any sustained move above 230,000 would begin registering. The Google Trends divergence from prediction markets — search interest at a 20% weekly surge while Polymarket falls — is an early-warning tension to track.