The dot plot is doing the tightening for them

A central bank that projects fewer rate cuts than the market expects can tighten financial conditions without moving rates at all. The projections do the work, by pushing expectations and long yields higher.

Guidance as a policy tool

Markets price the path of rates, not just the current level. When officials signal a slower path of cuts than markets had assumed, yields across the curve adjust upward, mortgage and corporate borrowing costs follow, and conditions tighten. The policy rate stays where it was.

For the long end, that means the risk is not only what the central bank does, but what it says it will do.

What I'm watching

• The gap between the central bank's projections and market pricing
• Speeches that push back on market expectations
• Long yields on the days projections are published

Where I stand

Short, on long bonds while projections keep leaning against the market. Guidance is doing tightening that a rate move would otherwise have to do.

What would change my mind

Projections converging on market pricing. Once the central bank stops leaning against expectations, the pressure on the long end eases.