bonds
research.

The shorthand: forward guidance was a term-premium suppressant, and the new chair is removing it. The 30-year sits near 4.94%, the front end anchored near 4.21%, the curve steep at +70bp, and the 10-year breakeven still near 2.21%. Firm long yields with flat breakevens is a premium story, not an inflation one. The floor under long rates does not fall when the Fed goes quiet. It gains a new leg. Same floor, higher premium.

The Iran ceasefire is signed and Brent has fallen into the high 70s, yet the 30-year has not followed it down. The financial press is now asking why. The desk answered it before the question was asked: the floor under the long end was never the war. It is the bid, and this week the bid got thinner while the deficit got heavier.

The shorthand: a credible ceasefire framework arrived and the 30-year held 4.97%, higher on the week, not lower. The Bank of Japan lifted its policy rate to 1.00%, a 31-year high, and cut its bond buying. Credit compressed (HY OAS 2.71) rather than widened, so this is not a fear trade. USD/JPY barely moved at 160, so the carry unwind is a slow burn, not yet a shock. The war premium leaving could not lift the long end off the floor, because the floor is the vanishing buyer, not the conflict. Warsh meets that floor tomorrow.