Kai Lee

10Y−2Y inversion historically precedes recession by 6–24 months.

Tightening = green · Widening = red · Source: ICE BofA via FRED

• Nothing scheduled.

• Yield Curve

  The 10Y–2Y spread has turned marginally positive at +33 bps, consistent with early-stage curve normalization following a period of inversion. Long-end term premium is visible, with the 30Y–10Y spread at +39 bps.

• Rate Levels

  The 10-year Treasury yield at 4.96% reflects a restrictive rate environment, with real yields remaining meaningfully positive across the curve.

• Policy Expectations

  The 2-year yield at 4.63% sits above the 3-month rate at 4.07%, with the forward curve implying limited near-term easing.

• Volatility

  The VIX at 15.8 indicates subdued equity implied volatility, consistent with an absence of near-term stress pricing in options markets.

• FX Markets

  EUR/USD at 1.1592 reflects dollar softness, consistent with a narrowing of US–Eurozone rate differentials or an improvement in global risk appetite. USD/JPY at 154.0 reflects the persistent yield differential between US and Japanese rates.

• Equity Markets

  U.S. equities are declining modestly, with the S&P 500 down 1.17% on the session. Small-caps are lagging large-caps, with the Russell 2000 at -2.17% versus the S&P 500 at -1.17%.

• Credit Conditions

  Investment-grade spreads at 80 bps are within the range consistent with stable credit conditions and moderate risk appetite. High-yield spreads at 270 bps are compressed, reflecting strong risk appetite in below-investment-grade credit.

• Inflation Expectations

  10-year breakeven inflation at 2.36% remains modestly above the Fed's 2% target, consistent with a sticky inflation narrative in long-run market pricing. The 10-year TIPS real yield at 2.55% reflects materially restrictive real interest rate conditions.