SURPRISE+50 bps
Hotter / tighter than expected
01 THE ECONOMY, WITH CONSEQUENCES
Mess with
the economy.
Change one thing, or combine a few.
Then watch the consequences negotiate.
ADD A SHOCK · 1/3 ACTIVE
SCROLL TO FOLLOW THE EFFECTS↓
CHANGE THE REASONSame move.
Different world.
Different world.
ACTIVE REGIMESoft landing
Policy can cool demand without breaking the system.
THE SURPRISE MATTERS · SCENARIO LABStack the shocks.
Stack the shocks.
Find the net effect.
OPEN MODEL · ALL 20 CONCEPTSStart anywhere.
Choose a concept, then set what happened and what the market expected.
For market-facing, policy, and expectations channels, the model weights the surprise more heavily than the reported move. Slower economic channels follow the actual change.
TIME HORIZON1 year
Later effects appear only when their modeled lag has elapsed.
ORDER 16effects visibleORDER 24effects visibleORDER 34effects visible
02 MODEL OUTPUT · SOFT LANDING
Fed Funds decision
Money gets expensive.
Overnight rates move first. Growth and risk assets feel it later.
Active pathway Modeled connection
STARTING FORCES
↓
03
WHY?
10Y Treasury
moves up. Usually.
Soft landing changes the balance of forces. Higher expected short rates lift the 10Y while weaker growth pushes back.
04 THE MOVING PARTS
Twenty concepts.
One connected system.
Pick any concept to see what it is, why it matters, what moves it, and where the usual story can break.
Rates · regime-dependent
%10Y Treasury Yield
The yield investors demand to lend to the US government for ten years.
Think of the 10Y as future short rates, expected inflation, and term premium. Each can move differently.
It anchors mortgages, corporate debt, equity discount rates, and real estate.
THINK OF IT ASThe long view: policy path + inflation + term premium.
Growth · Inflation expectations · Term premium
Debt costs · Cap rates · Valuations
The 10Y can fall after a hike when recession or future cuts dominate.
MODEL GOVERNANCE · OFFICIAL DATA
CONNECTING…Calibration registry
Reading the latest versioned calibration snapshot…
SELECT A CONNECTIONInto and out of
Into and out of
10Y Treasury
Fed Funds → 10Y Treasury
Higher expected short rates lift the 10Y while weaker growth pushes back.
STRENGTHregime-dependentTYPICAL LAGDays to monthsSENSITIVITY0.05–0.45percentage point per percentage point
STRESS-TEST THIS PATHModel baseline
This changes the pathway for this scenario only. It does not rewrite the governed baseline.
• The source move is persistent enough to matter
• No unmodeled shock overwhelms the channel
↑ The move is unexpected
↑ The active regime reinforces this channel
↓ Markets already priced the move
↓ A competing force pushes the target the other way
↺ Recession expectations dominate
↺ Inflation expectations fall
EVIDENCE FILE
observed
ObservedCalibratedEditorial
Federal Reserve research finds monetary-policy surprises transmit to medium- and long-term Treasury yields, while later evidence shows long yields can diverge when other components dominate.
The Board noted that the 10-year yield stayed somewhat above 4% even after 175 basis points of policy-rate cuts, illustrating term-premium and far-forward-rate offsets.