Weekly Macro Dashboard

Against this broadly stable structural backdrop, Treasury yields declined in a largely parallel fashion, reflecting a modest repricing of the expected policy path while leaving longer-term macro expectations broadly intact. The limited change in curve geometry suggests investors primarily repriced the overall level of interest rates rather than materially altering expectations for growth or inflation.

Inflation expectations remain well anchored despite modest differences between near- and longer-term pricing. Treasury volatility is moderately elevated (98.47), implying a 6.2 bps daily yield swing. This reflects healthy, non-disruptive repricing of incoming macroeconomic data across the belly of the curve without causing structural durationBond Duration: Estimates the percentage change in a bond’s price for every 1% shift in interest rates. For example, a bond with a 3-year duration will gain or lose roughly ±3% of its value if rates fall or rise by 1%. More stress. On a longer-term horizon, fixed-income volatility remains trapped in a mean-reverting holding pattern. The index sits squarely in the middle of its 52-week channel (76.6% above its annual low, but down 14.4% from its peak), indicating a temporary equilibrium as the market digests recent macro data. The absence of material curve inversions reinforces the view that markets continue to price ongoing economic expansion rather than an imminent recession.

Fed Funds Futures broadly confirm the Treasury market’s modest upward repricing of the expected policy path, reinforcing the view that investors continue to anticipate a gradually restrictive policy stance rather than a material shift in the macroeconomic outlook.

Taken together, Treasury markets continue to signal a resilient macroeconomic backdrop in which financial conditions remain moderately restrictive, inflation expectations remain well anchored, and investors continue to anticipate steady rather than disruptive adjustments to the policy outlook.

The 5-Year Treasury closed at 5.02%, while High Yield Option-Adjusted Spreads finished at 311bp, leaving speculative-grade borrowers facing an estimated average borrowing cost of approximately 8.13%.

Credit differentiation within investment-grade markets remains limited, indicating investors continue to view higher-quality corporate balance sheetsA financial "snapshot" that reveals exactly what a company owns and owes at a specific moment in time. It follows the fundamental formula: Assets = Liabilities + Equity. By subtracting what is owed (liabilities) from what is owned (assets), the balance sheet shows the "book value" or the net worth belonging to the owners. More as fundamentally healthy. Refinancing conditions for lower investment-grade issuers remain broadly normal, with little evidence that markets are aggressively pricing downgrade risk. At the same time, distressed issuers continue to face materially higher financing costs, indicating investor caution remains concentrated in the weakest segments of the speculative-grade market rather than reflecting systemic deterioration.

Taken together, credit markets continue to distinguish sharply between stronger and weaker borrowers, suggesting investors remain comfortable assuming credit risk while avoiding the most financially fragile issuers.

• Our Custom Model (4.18% Nominal r*): Because the actual policy rate of 3.88% is lower than our growth-derived target of 4.18%, monetary policy sits in a loose/expansionary posture, providing net stimulus to the economy.
• The FOMC Projections (3.20% Nominal r*): The Federal Reserve’s official Summary of Economic Projections benchmarks the longer-run neutral rateThe long-term theoretical level at which interest rates neither stimulate nor restrict economic growth. More at 3.20%. Against this official yardstick, the current 3.88% policy rate is restrictive. This confirms that the central bank is actively cooling down economic momentum by maintaining high borrowing costs.