DC Lite #369

In partnership with

1. FFR vs. neutral. "The Fed Funds rate is now where the market-implied neutral rate is."

2. Reserve status. "This is the historical pattern: one country steals reserve status from another, with those transitions happening, on average, once a century."

3. US yield curve. Here's how today's yield curve (white) compares to where it was on Feb 5 (red) when Treasury Bessent noted that the administration's focus was on bringing yields down.

4. JGBs. "Japanese yields have been rising sharply and the curve bear steepening, with 30 and 40-year issues making new highs this week. This potentially an issue for the rest of the world. Japan is the world's largest net creditor and has huge stock foreign assets."

5. Narrative volatility. "I now count 8 narrative rotations in bond markets since late 2022. Recession… no landing … soft landing … no landing … recession … no landing … recession … etc. Flips every 4-5 months or so. Narrative volatility is here to stay in today’s Bifurcation Nation."

ICYMI