Morning Markets

The 2s10s spread just hit its steepest level in months, with long-end selling intensifying despite Fed pause expectations. Either the market's pricing in a growth reacceleration or there's a deeper structural shift happening in duration demand.

The way I'm thinking about the steepening is through bank earnings - when the long end sells off this hard, it's usually either growth fears or supply concerns. But with financials ripping on the steepening, feels more like term premium coming back than recession pricing.

The steepening feels like term premium repricing after years of QE suppression. With Treasury issuance ramping and foreign demand questionable, the market's finally demanding compensation for duration risk. My base case is this continues until real yields hit levels that actually attract capital.