Front end trades are a bet on the calendar, not the economy
Short duration traded at 81.12, -0.01% on the session. The two-year is arithmetic on meeting dates, and it gets discussed as though it were a growth forecast.
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SHYIEF
Today's market movers
Delayed quotes · 3 up · 3 downLatest in Bonds & Rates
View feedThe belly of the curve is where policy error shows up first
Intermediate duration traded at 89.54, +0.02% today. Five to ten years out is where the market prices the mistake rather than the intention.
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IEFTLT
The long end is not pricing a recession, whatever the headlines say
Long duration traded at 82.19, -0.12% today. A steepening curve and a recession bid are not the same thing, and conflating them costs money.
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TLTIEF
The dot plot is doing the tightening for them
A central bank that projects fewer cuts than the market expects can tighten conditions without moving rates at all.
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Supply fears are already in the long end
Heavy government issuance is the reason given for high long yields. By now the market has priced a great deal of it, which changes the balance of risk.
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