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Quiver Quantitative
Nancy Pelosi made $3.5M in the stock market today, per our estimates.
We estimate that she is now worth $278M. https://t.co/lSrmqK69Qt
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Nancy Pelosi made $3.5M in the stock market today, per our estimates.
We estimate that she is now worth $278M. https://t.co/lSrmqK69Qt
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EndGame Macro
White House Launches the Genesis Mission: America’s New National AI Backbone
If you strip away the branding, Genesis is the U.S. government building a national AI backbone inside the Department of Energy and then inviting the biggest private sector AI players to plug into it. The executive order makes the DOE responsible for building a unified platform that connects national lab supercomputers, cloud AI environments, decades of federal datasets, and automated AI directed laboratories. The purpose is spelled out directly in Section 1: scientific acceleration, national security strength, energy dominance, and technological leadership.
The order goes further than earlier AI initiatives. It doesn’t just talk about safety or innovation, it directs DOE to inventory every compute resource available, including those through industry partners, within 90 days, and stand up an operational capability within 270 days. It also requires top tier data access frameworks, model sharing agreements, intellectual property rules, and strict vetting systems for anyone allowed onto the platform.
DOE’s 17 national labs will open their massive scientific datasets and instruments to approved researchers; AI will be used to accelerate simulations by orders of magnitude; and the platform will run across both government supercomputers and private hyperscalers. Companies like Nvidia, Oracle, Dell, AMD, and Hewlett Packard Enterprise are already named as likely infrastructure partners.
Layer in the earlier White House AI commitments where Amazon, Google, Microsoft, Meta, OpenAI, Anthropic, Inflection, Adobe, IBM, Nvidia, Palantir, Salesforce, Cohere, Scale AI, Stability all agreed to safety testing, watermarking, and security protocols and you see the roster of firms whose models and tools are expected to align with Genesis by design.
Put together, you have a tight, government aligned AI ecosystem spanning chips, compute, cloud, models, data, and safety rules.
What This Will Actually Do
My read is that Genesis serves two goals at once. On the surface, it’s about scientific speed, letting AI search vast design spaces, automate experiments, and explore energy, biotech, materials, and semiconductor breakthroughs faster than human run labs ever could. The executive order explicitly compares it to the Manhattan Project and promises “dramatic acceleration” in discovery.
But underneath, it centralizes the AI stack. Instead of letting the highest end compute and model capabilities drift entirely into the private sector, Genesis pulls them back into a structured federal environment. Access becomes conditional: follow the safety rules, share the data, integrate into the platform and you get to operate at the frontier. Don’t, and you’re on the outside looking in.
It also creates a controlled pipeline for national security use cases in public research data, proprietary data for things like semiconductor R&D, and a classified bucket for defense relevant datasets. That segmentation is deliberate.
And at a geopolitical level, it’s a response to China. The EO makes it explicit: this is about maintaining global technological dominance.
My View
Genesis is the beginning of a nationalized AI infrastructure strategy. It will function as the bridge between government compute and private sector models, letting Washington influence which companies sit closest to the frontier and which capabilities get priority. It will speed up real scientific breakthroughs, but it will also quietly define the rules of the AI race on who participates, who gets access, and how the most powerful systems are directed.
It’s not just an acceleration plan. It’s the architecture of AI power in the U.S. for the next decade.
tweet
White House Launches the Genesis Mission: America’s New National AI Backbone
If you strip away the branding, Genesis is the U.S. government building a national AI backbone inside the Department of Energy and then inviting the biggest private sector AI players to plug into it. The executive order makes the DOE responsible for building a unified platform that connects national lab supercomputers, cloud AI environments, decades of federal datasets, and automated AI directed laboratories. The purpose is spelled out directly in Section 1: scientific acceleration, national security strength, energy dominance, and technological leadership.
The order goes further than earlier AI initiatives. It doesn’t just talk about safety or innovation, it directs DOE to inventory every compute resource available, including those through industry partners, within 90 days, and stand up an operational capability within 270 days. It also requires top tier data access frameworks, model sharing agreements, intellectual property rules, and strict vetting systems for anyone allowed onto the platform.
DOE’s 17 national labs will open their massive scientific datasets and instruments to approved researchers; AI will be used to accelerate simulations by orders of magnitude; and the platform will run across both government supercomputers and private hyperscalers. Companies like Nvidia, Oracle, Dell, AMD, and Hewlett Packard Enterprise are already named as likely infrastructure partners.
Layer in the earlier White House AI commitments where Amazon, Google, Microsoft, Meta, OpenAI, Anthropic, Inflection, Adobe, IBM, Nvidia, Palantir, Salesforce, Cohere, Scale AI, Stability all agreed to safety testing, watermarking, and security protocols and you see the roster of firms whose models and tools are expected to align with Genesis by design.
Put together, you have a tight, government aligned AI ecosystem spanning chips, compute, cloud, models, data, and safety rules.
What This Will Actually Do
My read is that Genesis serves two goals at once. On the surface, it’s about scientific speed, letting AI search vast design spaces, automate experiments, and explore energy, biotech, materials, and semiconductor breakthroughs faster than human run labs ever could. The executive order explicitly compares it to the Manhattan Project and promises “dramatic acceleration” in discovery.
But underneath, it centralizes the AI stack. Instead of letting the highest end compute and model capabilities drift entirely into the private sector, Genesis pulls them back into a structured federal environment. Access becomes conditional: follow the safety rules, share the data, integrate into the platform and you get to operate at the frontier. Don’t, and you’re on the outside looking in.
It also creates a controlled pipeline for national security use cases in public research data, proprietary data for things like semiconductor R&D, and a classified bucket for defense relevant datasets. That segmentation is deliberate.
And at a geopolitical level, it’s a response to China. The EO makes it explicit: this is about maintaining global technological dominance.
My View
Genesis is the beginning of a nationalized AI infrastructure strategy. It will function as the bridge between government compute and private sector models, letting Washington influence which companies sit closest to the frontier and which capabilities get priority. It will speed up real scientific breakthroughs, but it will also quietly define the rules of the AI race on who participates, who gets access, and how the most powerful systems are directed.
It’s not just an acceleration plan. It’s the architecture of AI power in the U.S. for the next decade.
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EndGame Macro
This drawdown chart is essentially Bitcoin’s psychological record. Every cycle carves the same kind of canyon: long periods where price sits forty to eighty percent below the highs, followed by violent recoveries that overshoot in the other direction. Where we are now, down roughly 30% from this cycle’s peak is the kind of mid cycle turbulence that shows up when the broader environment shifts from easy to tightening. The shape of the drop doesn’t tell you everything, but when you set it against what’s happening in the liquidity backdrop, the timing starts to make sense.
The Liquidity Picture Under the Surface
When I talk about liquidity here, I’m not talking about a single metric, it’s the blend of funding conditions across the dollar system. Right now that blend is no longer climbing; it’s flattening and, in some pockets, cracking. You can see it in several places at once. Dealer balance sheets are tightening, which shows up as rising stress in repo markets and unusually large gaps between the overnight risk free rate and the rate at which collateral is actually changing hands. That kind of spread typically widens only when the system starts to run short of high quality collateral or when balance sheet capacity at the major banks is under pressure.
You can see it in short term liquidity nowcasts, which fell sharply in early October and never bounced back. That kind of step down happens when flows from central banks, money funds, and Treasury operations hit the brakes simultaneously. And you can see it in the long arc liquidity cycle itself: the big multi year surge that fueled the 2023–2025 boom has already turned over. Liquidity is still high in absolute terms, but it’s no longer accelerating and markets trade the change, not the level.
At the policy layer, the Fed is in that awkward early easing zone. They’ve cut rates twice, and they’re about to end QT and shift back to reinvesting into T-bills, which helps the front end of the system. But that doesn’t reverse the structural tightening caused by rising refinancing needs, collateral stress, and a global debt load that’s now sitting at levels where rollover risk itself starts to drain liquidity. When liquidity slows while debt continues climbing, financial conditions feel heavier even if headline policy looks supportive.
The Next Six Months
Once you put the Bitcoin chart and the liquidity backdrop together, the next six months split into two clear phases. The first phase is the near term relief window. Ending QT gives markets some breathing space, and the possibility of another small rate cut adds a bit more cushion. In that kind of environment, Bitcoin can absolutely bounce. It wouldn’t be surprising to see it crawl back toward a 100k, maybe even take a quick shot at new highs if traders decide policy is turning faster than conditions are deteriorating.
But the second phase is where the underlying liquidity trend reasserts itself. Slowing liquidity, especially when you can see it in repo stress, tightening collateral, and weakening high frequency liquidity gauges usually creates a drag that builds quietly, then shows up abruptly. When the financial system moves from ample to strained, speculative assets rarely float higher; they get repriced. That’s why the more probable 6 month outcome is not a fresh leg up, but a broader, deeper correction as the cycle grinds forward. It doesn’t have to be a crash. It can unfold as a slow, uneven slide into a 50% drawdown from the peak, the kind of move Bitcoin has produced in every past cycle once liquidity stops expanding and the dollar system shifts into defensive mode.
Bitcoin has room to rally over the next couple of months, but unless liquidity starts expanding again and right now it’s doing the opposite the cycle still leans toward a larger retracement before the next major advance. That’s the rhythm Bitcoin has followed every time liquidity peaks and begins to roll, and today’s setup fits that pattern almost perfectly.
Bitco[...]
This drawdown chart is essentially Bitcoin’s psychological record. Every cycle carves the same kind of canyon: long periods where price sits forty to eighty percent below the highs, followed by violent recoveries that overshoot in the other direction. Where we are now, down roughly 30% from this cycle’s peak is the kind of mid cycle turbulence that shows up when the broader environment shifts from easy to tightening. The shape of the drop doesn’t tell you everything, but when you set it against what’s happening in the liquidity backdrop, the timing starts to make sense.
The Liquidity Picture Under the Surface
When I talk about liquidity here, I’m not talking about a single metric, it’s the blend of funding conditions across the dollar system. Right now that blend is no longer climbing; it’s flattening and, in some pockets, cracking. You can see it in several places at once. Dealer balance sheets are tightening, which shows up as rising stress in repo markets and unusually large gaps between the overnight risk free rate and the rate at which collateral is actually changing hands. That kind of spread typically widens only when the system starts to run short of high quality collateral or when balance sheet capacity at the major banks is under pressure.
You can see it in short term liquidity nowcasts, which fell sharply in early October and never bounced back. That kind of step down happens when flows from central banks, money funds, and Treasury operations hit the brakes simultaneously. And you can see it in the long arc liquidity cycle itself: the big multi year surge that fueled the 2023–2025 boom has already turned over. Liquidity is still high in absolute terms, but it’s no longer accelerating and markets trade the change, not the level.
At the policy layer, the Fed is in that awkward early easing zone. They’ve cut rates twice, and they’re about to end QT and shift back to reinvesting into T-bills, which helps the front end of the system. But that doesn’t reverse the structural tightening caused by rising refinancing needs, collateral stress, and a global debt load that’s now sitting at levels where rollover risk itself starts to drain liquidity. When liquidity slows while debt continues climbing, financial conditions feel heavier even if headline policy looks supportive.
The Next Six Months
Once you put the Bitcoin chart and the liquidity backdrop together, the next six months split into two clear phases. The first phase is the near term relief window. Ending QT gives markets some breathing space, and the possibility of another small rate cut adds a bit more cushion. In that kind of environment, Bitcoin can absolutely bounce. It wouldn’t be surprising to see it crawl back toward a 100k, maybe even take a quick shot at new highs if traders decide policy is turning faster than conditions are deteriorating.
But the second phase is where the underlying liquidity trend reasserts itself. Slowing liquidity, especially when you can see it in repo stress, tightening collateral, and weakening high frequency liquidity gauges usually creates a drag that builds quietly, then shows up abruptly. When the financial system moves from ample to strained, speculative assets rarely float higher; they get repriced. That’s why the more probable 6 month outcome is not a fresh leg up, but a broader, deeper correction as the cycle grinds forward. It doesn’t have to be a crash. It can unfold as a slow, uneven slide into a 50% drawdown from the peak, the kind of move Bitcoin has produced in every past cycle once liquidity stops expanding and the dollar system shifts into defensive mode.
Bitcoin has room to rally over the next couple of months, but unless liquidity starts expanding again and right now it’s doing the opposite the cycle still leans toward a larger retracement before the next major advance. That’s the rhythm Bitcoin has followed every time liquidity peaks and begins to roll, and today’s setup fits that pattern almost perfectly.
Bitco[...]
Offshore
EndGame Macro This drawdown chart is essentially Bitcoin’s psychological record. Every cycle carves the same kind of canyon: long periods where price sits forty to eighty percent below the highs, followed by violent recoveries that overshoot in the other direction.…
in drawdowns https://t.co/qMjDbnuud5 - zerohedge tweet
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EndGame Macro
A Quiet Warning from the 2 Year Treasury
When you look at the 2 year Treasury, you’re basically looking at the market’s best guess about where the Fed will need to take policy over the next couple of years. It isn’t a sentiment indicator, and it isn’t reacting to headlines the way equities do. It reflects deeper expectations about growth, inflation, and stress inside the financial system.
That’s why, historically, when the 2 year starts drifting lower after a period of tightening, it almost always means the same thing: the economy is weakening under the surface, and the Fed is going to have to ease more aggressively than it’s admitting. You saw this in 2000, in 2006–07, in 2018–19. The rollover tends to show up months before the data confirms anything.
What This Chart Is Telling You Now
If you trace the past year on this chart, the downtrend is obvious. Early 2025 had yields hovering in the low 4s, bouncing around as the Fed was still talking tough. But from spring onward, the direction is mostly one way with softer highs, softer lows, and a clear slide that takes us to roughly 3.5% today.
That matters because the Fed funds rate is still sitting above that, around 3.75–4.0%. When the 2 year drops below the actual policy rate, it’s a quiet acknowledgment by the bond market that the Fed is behind the curve. Add to that the fact that QT ends next week, rate cuts have already begun, and stress is showing up in dollar funding markets and you can feel why the 2 year isn’t buying the soft landing forever narrative.
This isn’t the kind of decline you get when everything is suddenly wonderful. It’s the kind you get when the system starts to tighten on its own and when balance sheets get heavy, collateral dries up, and markets sense that the Fed will need to respond sooner or later.
My View Going Forward
The 2 year is speaking clearly that the tightening cycle is over in reality, even if not in tone. Unless something changes dramatically on the growth side and there’s not much evidence of that, the most likely path is more easing over the next year, not less.
That doesn’t mean yields crash in a straight line. They can easily bounce on a strong data print or a hawkish comment. But the broader rhythm looks like a market preparing for slower growth, softer labor numbers, and a Fed that eventually has to address it. And when that’s the setup, the 2 year tends to grind lower, not higher.
So when you read this chart, don’t just see a number. See the shift underneath it: the market quietly positioning for an economy that’s losing altitude and a Fed that will have to catch it.
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A Quiet Warning from the 2 Year Treasury
When you look at the 2 year Treasury, you’re basically looking at the market’s best guess about where the Fed will need to take policy over the next couple of years. It isn’t a sentiment indicator, and it isn’t reacting to headlines the way equities do. It reflects deeper expectations about growth, inflation, and stress inside the financial system.
That’s why, historically, when the 2 year starts drifting lower after a period of tightening, it almost always means the same thing: the economy is weakening under the surface, and the Fed is going to have to ease more aggressively than it’s admitting. You saw this in 2000, in 2006–07, in 2018–19. The rollover tends to show up months before the data confirms anything.
What This Chart Is Telling You Now
If you trace the past year on this chart, the downtrend is obvious. Early 2025 had yields hovering in the low 4s, bouncing around as the Fed was still talking tough. But from spring onward, the direction is mostly one way with softer highs, softer lows, and a clear slide that takes us to roughly 3.5% today.
That matters because the Fed funds rate is still sitting above that, around 3.75–4.0%. When the 2 year drops below the actual policy rate, it’s a quiet acknowledgment by the bond market that the Fed is behind the curve. Add to that the fact that QT ends next week, rate cuts have already begun, and stress is showing up in dollar funding markets and you can feel why the 2 year isn’t buying the soft landing forever narrative.
This isn’t the kind of decline you get when everything is suddenly wonderful. It’s the kind you get when the system starts to tighten on its own and when balance sheets get heavy, collateral dries up, and markets sense that the Fed will need to respond sooner or later.
My View Going Forward
The 2 year is speaking clearly that the tightening cycle is over in reality, even if not in tone. Unless something changes dramatically on the growth side and there’s not much evidence of that, the most likely path is more easing over the next year, not less.
That doesn’t mean yields crash in a straight line. They can easily bounce on a strong data print or a hawkish comment. But the broader rhythm looks like a market preparing for slower growth, softer labor numbers, and a Fed that eventually has to address it. And when that’s the setup, the 2 year tends to grind lower, not higher.
So when you read this chart, don’t just see a number. See the shift underneath it: the market quietly positioning for an economy that’s losing altitude and a Fed that will have to catch it.
https://t.co/dwQEH7Nirv tweet
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Video
Dimitry Nakhla | Babylon Capital®
Jensen Huang with some admirable praise for $GOOG foresight around TPUs
“The advantage that Google had is foresight…”
The @BG2Pod episode with Brad Gerstner & Clark Tang from a couple months ago is excellent — thoughtful questions & great insights
https://t.co/9EHpWupZpK https://t.co/yz7K3OfVg3
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Jensen Huang with some admirable praise for $GOOG foresight around TPUs
“The advantage that Google had is foresight…”
The @BG2Pod episode with Brad Gerstner & Clark Tang from a couple months ago is excellent — thoughtful questions & great insights
https://t.co/9EHpWupZpK https://t.co/yz7K3OfVg3
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EndGame Macro
The Dollar’s Most Crowded Bet Is the Wrong One
The top half is the broad dollar index. The bottom half is hedge fund positioning in the dollar, a simple read on whether the fast money is leaning long or short. When that lower line sinks deep into negative territory, it means funds are heavily short the dollar. And historically, whenever positioning gets this one sided, the dollar is either sitting near a local bottom or about to turn higher. You can see the rhythm across the past twenty years: every cycle of heavy shorting eventually gives way to a dollar rebound.
What stands out today is that hedge funds are back in that sell everything USD zone while the dollar itself is sitting toward the lower end of its range. That mix is usually a warning sign. It means people aren’t shorting a strong dollar, they’re shorting a weak one. And that combination rarely holds for long because it leaves the market vulnerable to any shift in sentiment or liquidity.
The Bigger Story Behind the Positioning
These extreme shorts don’t appear in a vacuum. When funds pile into anti dollar trades, they’re effectively betting that global conditions will stay calm and liquidity will stay easy. But the broader macro tone doesn’t match that optimism. Growth is slowing, the front end of the Treasury curve is already pricing future Fed cuts, and dollar funding markets have started to tighten around the edges. In that kind of backdrop, you don’t need a crisis for the dollar to move, you just need the world to feel slightly less certain.
This is why positioning matters so much here. When hedge funds crowd into one direction, they leave themselves exposed; any wobble in risk appetite or liquidity can force a quick snap back. And the dollar tends to be the first asset people buy when the mood shifts from everything is fine to “
wait, something feels off.
My View From Here
This setup doesn’t guarantee a major dollar bull run, but it does tell you that the downside is probably limited. When positioning is this stretched, the dollar doesn’t need great news to rise, it only needs reality to fall short of perfection. And right now, with the cycle cooling and markets running on thinner liquidity, that’s a very plausible outcome.
So the heart of the chart is simple: hedge funds are leaning aggressively against the dollar at a moment when the macro environment is becoming less forgiving. That’s usually the kind of moment where the dollar stops drifting lower and starts pushing back.
tweet
The Dollar’s Most Crowded Bet Is the Wrong One
The top half is the broad dollar index. The bottom half is hedge fund positioning in the dollar, a simple read on whether the fast money is leaning long or short. When that lower line sinks deep into negative territory, it means funds are heavily short the dollar. And historically, whenever positioning gets this one sided, the dollar is either sitting near a local bottom or about to turn higher. You can see the rhythm across the past twenty years: every cycle of heavy shorting eventually gives way to a dollar rebound.
What stands out today is that hedge funds are back in that sell everything USD zone while the dollar itself is sitting toward the lower end of its range. That mix is usually a warning sign. It means people aren’t shorting a strong dollar, they’re shorting a weak one. And that combination rarely holds for long because it leaves the market vulnerable to any shift in sentiment or liquidity.
The Bigger Story Behind the Positioning
These extreme shorts don’t appear in a vacuum. When funds pile into anti dollar trades, they’re effectively betting that global conditions will stay calm and liquidity will stay easy. But the broader macro tone doesn’t match that optimism. Growth is slowing, the front end of the Treasury curve is already pricing future Fed cuts, and dollar funding markets have started to tighten around the edges. In that kind of backdrop, you don’t need a crisis for the dollar to move, you just need the world to feel slightly less certain.
This is why positioning matters so much here. When hedge funds crowd into one direction, they leave themselves exposed; any wobble in risk appetite or liquidity can force a quick snap back. And the dollar tends to be the first asset people buy when the mood shifts from everything is fine to “
wait, something feels off.
My View From Here
This setup doesn’t guarantee a major dollar bull run, but it does tell you that the downside is probably limited. When positioning is this stretched, the dollar doesn’t need great news to rise, it only needs reality to fall short of perfection. And right now, with the cycle cooling and markets running on thinner liquidity, that’s a very plausible outcome.
So the heart of the chart is simple: hedge funds are leaning aggressively against the dollar at a moment when the macro environment is becoming less forgiving. That’s usually the kind of moment where the dollar stops drifting lower and starts pushing back.
Is it time to turn contrarian on the King Dollar?
Hedge funds are holding significant short positions in the DXY, and historically, similar levels have often preceded solid buying opportunities—at least for a short-term rebound.
When a trade becomes too crowded, it’s usually worth considering the opposite side. tweet
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EndGame Macro
Breakevens Don’t Drop in a Healthy Economy
The 5 year breakeven is one of the cleanest signals the market gives about where inflation is likely to settle over the next few years. It isn’t reacting to this month’s CPI print, it reflects the deeper mix of growth expectations, policy credibility, and how much risk investors feel they need to be compensated for. When it’s rising, the market is essentially saying inflation will stay stubborn. When it starts drifting lower, it’s usually telling you conditions are cooling under the surface.
Right now we’re sitting near 2.30%, close to the lows of the year, after spending the early part of 2025 closer to 2.6–2.7%. That shift isn’t random. It lines up with the broader pattern we’ve seen: the 2 year rolling below Fed funds, two rate cuts already delivered, QT ending next week, and softer tone across growth data. If the economy were truly heating up, breakevens wouldn’t be slipping, investors would be demanding more inflation protection, not less.
What It Means Going Forward
This move down in breakevens is the market quietly acknowledging that the inflation scare has broken and the real tension is drifting back toward growth. When breakevens slide like this, it’s the market quietly saying inflation isn’t the threat anymore, the slowdown is. Investors only let future inflation pricing sink when they’re convinced the economy doesn’t have enough strength left to generate meaningful price pressure on its own. It’s essentially an admission that demand is cooling, momentum is fading, and the Fed won’t need to lean against overheating because the cycle is already losing steam. Lower breakevens are a sign growth is softening beneath the surface.
So the message here is subtle but important…expectations are normalizing because the cycle is slowing, not because we’re entering some booming new phase. A breakeven sitting just above 2% with a bearish tilt usually belongs to a late cycle environment, a place where inflation risk is no longer the main story and the market is starting to price the possibility that the Fed may need to ease more to keep the slowdown from slipping too far.
It’s a calm surface with a familiar undertow, the kind you see before the conversation shifts from inflation to growth.
tweet
Breakevens Don’t Drop in a Healthy Economy
The 5 year breakeven is one of the cleanest signals the market gives about where inflation is likely to settle over the next few years. It isn’t reacting to this month’s CPI print, it reflects the deeper mix of growth expectations, policy credibility, and how much risk investors feel they need to be compensated for. When it’s rising, the market is essentially saying inflation will stay stubborn. When it starts drifting lower, it’s usually telling you conditions are cooling under the surface.
Right now we’re sitting near 2.30%, close to the lows of the year, after spending the early part of 2025 closer to 2.6–2.7%. That shift isn’t random. It lines up with the broader pattern we’ve seen: the 2 year rolling below Fed funds, two rate cuts already delivered, QT ending next week, and softer tone across growth data. If the economy were truly heating up, breakevens wouldn’t be slipping, investors would be demanding more inflation protection, not less.
What It Means Going Forward
This move down in breakevens is the market quietly acknowledging that the inflation scare has broken and the real tension is drifting back toward growth. When breakevens slide like this, it’s the market quietly saying inflation isn’t the threat anymore, the slowdown is. Investors only let future inflation pricing sink when they’re convinced the economy doesn’t have enough strength left to generate meaningful price pressure on its own. It’s essentially an admission that demand is cooling, momentum is fading, and the Fed won’t need to lean against overheating because the cycle is already losing steam. Lower breakevens are a sign growth is softening beneath the surface.
So the message here is subtle but important…expectations are normalizing because the cycle is slowing, not because we’re entering some booming new phase. A breakeven sitting just above 2% with a bearish tilt usually belongs to a late cycle environment, a place where inflation risk is no longer the main story and the market is starting to price the possibility that the Fed may need to ease more to keep the slowdown from slipping too far.
It’s a calm surface with a familiar undertow, the kind you see before the conversation shifts from inflation to growth.
Bond mkt now pricing in 5Y inflation rate at 2.30% - near the lows of the 1yr range - having coming down 11bp MTD despite no additional inflation data since 10/24. https://t.co/u4WiRaYQmG tweet