The next decision matters. The more interesting question is whether the tightening already priced can survive its own consequences.
The US 10-year is at 5.02%, but that isn’t the number I’m spending most of my time on. It’s 4.59%: where my meeting ladder puts the effective Fed rate by late 2027.
With cash at 3.63%, that represents roughly 96 basis points of tightening. Almost four quarter-point hikes, not one defensive adjustment.
I understand why the market has moved here. But pricing a tightening cycle and the economy sustaining it are different things. Higher yields aren’t just a verdict on the outlook; they can change that outlook.
Below, I work through what could break this pricing, where I’d express the opportunity, and what I need to see before committing capital. Subscribe to Global Macro Method to continue.
