Financial conditions are becoming more constrained.

The surge in 10-year Treasuries and real 10s, as well as the evolving narrative surrounding Treasury supply, foreign demand, and economic growth, has led to a disorderly disinversion. The increase in Treasury yields and weakening exchange rates of the yen and yuan have had a significant impact on the real rate bear yield curve, creating a bear steepening effect. Retail sales, housing market indicators, and manufacturing surveys have varied in their performance, providing mixed data for the overall growth outlook. However, the macro and micro data have not significantly changed our long-standing view. The upcoming events, such as the Kansas City Fed’s economic policy symposium and employment reports, may have the potential to alter the current risk-off situation. It is important to note that the Treasury market move is appearing overextended, while equities lag behind.