The 10-year yield jumps.
Why: The long yield sets the cost of long-term money for the whole economy and the discount ratediscount rate — The rate used to convert a future cash flow into today's value. A higher discount rate makes far-off cash flows worth less now. for the longest cash flows.
The discount rate on all long-dated cash flows rises.
Why: Equity valuations and long-bond prices are present values of distant cash flows; a higher long yield shrinks those present values.
Long-duration growth equities compress, long bonds fall, gold is pressured.
Why: The longest-duration assets are most exposed to the discount-rate move, and a higher real yieldreal yield — The yield after subtracting expected inflation — what a lender actually earns in purchasing power. Real yield ≈ nominal yield − expected inflation. raises the opportunity cost of holding non-yielding gold.

Helps
banks/insurers (reinvestment)cashvalue over growth

Hurts
long-duration growth equitieslong-dated bondsgoldrate-sensitive REITs/utilities

Caveat: Granularity is daily, so a single-session jump can be noise; a sustained multi-session move is the real signal. Distinguish a growth-driven rise (risk-on) from a supply/term-premium rise (risk-off).

House-view hook — empty (textbook default; Stephen's view bakes in here).

What would change the read

Inflation surprise (upside) Core inflation is steady, so the upside-surprise channel is quiet. It would fire on a core reading ≥0.2pp above the prior — watch it because that is what forces a central bank to stay restrictive and pressures the longest-duration assets first.
Inflation surprise (downside / disinflation) Core inflation isn't cooling fast enough to trigger the disinflation channel. A fall of ≥0.2pp would fire it — worth watching because it is the cleanest tailwind for long-duration growth and government bonds.
Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.

China

No active mechanism this week — the standing read above carries the bloc.

What would change the read

Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.
Monetary tightening (rate hike) The policy rate is steady, so the tightening channel is dormant. A hike would fire it — watch it because it hits long-duration growth, long bonds, and gold first.
Growth acceleration (expansionary PMI) Manufacturing isn't both expanding and accelerating, so the growth-acceleration channel is dormant. A rising PMI back above 50 would fire it — it matters because it's the signal to rotate from defensives toward cyclicals.

Euro area

No active mechanism this week — the standing read above carries the bloc.

What would change the read

Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.
Monetary tightening (rate hike) The policy rate is steady, so the tightening channel is dormant. A hike would fire it — watch it because it hits long-duration growth, long bonds, and gold first.
Growth acceleration (expansionary PMI) Manufacturing isn't both expanding and accelerating, so the growth-acceleration channel is dormant. A rising PMI back above 50 would fire it — it matters because it's the signal to rotate from defensives toward cyclicals.

Japan

No active mechanism this week — the standing read above carries the bloc.

What would change the read

Inflation surprise (upside) Core inflation is steady, so the upside-surprise channel is quiet. It would fire on a core reading ≥0.2pp above the prior — watch it because that is what forces a central bank to stay restrictive and pressures the longest-duration assets first.
Inflation surprise (downside / disinflation) Core inflation isn't cooling fast enough to trigger the disinflation channel. A fall of ≥0.2pp would fire it — worth watching because it is the cleanest tailwind for long-duration growth and government bonds.
Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.

The dataL3

United States

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.49	2.20	-0.71 ▼	2019-01-01
Core CPI	0.27	0.20	+0.07 ▬	2019-01-01
Core PCE	1.84	1.90	-0.06 ▬	2019-01-01
Policy rate	2.50	2.50	+0.00 ▬	2019-01-06
GDP	2.50	3.40	-0.90 ▼	2019-01-01
PMI (mfg)	54.30	58.80	-4.50 ▼	2019-01-03
PMI (svc)	60.70	60.30	+0.40 ▲	2018-12-06
Unemployment	3.90	4.00	-0.10 ▼	2019-01-04
10Y yield	2.67	2.56	+0.11 ▲	2019-01-04
2Y yield	2.50	2.39	+0.11 ▲	2019-01-04
2s10s slope	0.17	0.17	+0.00 ▬	2019-01-04
FX vs USD	96.19	96.31	-0.12 ▬	2019-01-04

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	2.20	2.50	-0.30 ▼	2018-12-09
Policy rate	4.31	4.31	+0.00 ▬	2019-01-04
GDP	6.50	6.70	-0.20 ▼	2018-10-19
PMI (mfg)	49.50	49.40	+0.10 ▬	2019-01-01
PMI (svc)	53.80	53.40	+0.40 ▲	2018-12-31
Unemployment	5.10	4.90	+0.20 ▲	2019-01-01
10Y yield	3.15	3.14	+0.01 ▬	2019-01-04
2Y yield	2.61	2.62	-0.02 ▬	2019-01-04
2s10s slope	0.54	0.52	+0.03 ▬	2019-01-04
FX vs USD	6.87	6.86	+0.01 ▬	2019-01-04

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.60	1.90	-0.30 ▼	2019-01-04
Policy rate	0.00	0.00	+0.00 ▬	2018-12-13
GDP	-0.20	0.20	-0.40 ▼	2018-12-17
PMI (mfg)	51.40	51.40	+0.00 ▬	2019-01-02
PMI (svc)	51.20	51.40	-0.20 ▬	2019-01-04
Unemployment	8.10	8.10	+0.00 ▬	2018-11-30
10Y yield	1.20	1.21	-0.01 ▬	2019-01-01
FX vs USD	1.14	1.13	+0.01 ▬	2019-01-04

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.80	1.40	-0.60 ▼	2018-12-21
Core CPI	0.10	0.20	-0.10 ▬	2018-12-21
Policy rate	-0.10	-0.10	+0.00 ▬	2018-12-20
GDP	n/a
PMI (mfg)	n/a
Unemployment	2.50	2.40	+0.10 ▲	2018-12-28
10Y yield	0.00	-0.01	+0.01 ▬	2019-01-01
FX vs USD	107.81	107.44	+0.37 ▬	2019-01-04

Concept libraryL3

Terms marked ✓ are linked inline above — click any dotted term in the text to expand it in place.

2s10s: The gap between the 10-year and 2-year government bond yields. Positive = normal upward-sloping curve; negative ('inverted') = a classic late-cycle/recession warning.
PMI: Purchasing Managers' Index. Above 50 = the sector is expanding vs last month; below 50 = contracting. A timely read on activity.
carry trade: Borrowing in a low-rate currency (long the yen's case) to buy higher-yielding assets elsewhere. It unwinds violently when the funding rate rises or the funding currency strengthens.
credit impulse: The change in the flow of new credit into an economy. A rising impulse front-runs stronger demand for commodities and cyclical goods, with a lag.
cyclicals: Sectors whose earnings rise and fall with the economic cycle — industrials, materials, energy, consumer discretionary.
defensives: Sectors whose demand is steady through the cycle — consumer staples, utilities, healthcare. They outperform when growth slows.
discount rate ✓: The rate used to convert a future cash flow into today's value. A higher discount rate makes far-off cash flows worth less now.
disinflation: Inflation that is still positive but falling (prices rising more slowly) — distinct from deflation, where prices actually fall.
duration: How sensitive an asset's price is to interest rates. 'Long-duration' assets (long bonds, fast-growing stocks whose profits are years away) move most when rates change.
net interest margin: The spread a bank earns between what it charges on loans and pays on deposits. Higher short rates / steeper curves tend to widen it.
nominal yield: The headline interest rate on a bond, before subtracting inflation.
policy rate: The interest rate a central bank sets directly (e.g. the Fed funds rate, the ECB deposit rate, China's LPR). It anchors all other rates.
rate path: The market's expectation of where the policy rate goes over the next year or two — not just today's level, but the whole expected trajectory.
real yield ✓: The yield after subtracting expected inflation — what a lender actually earns in purchasing power. Real yield ≈ nominal yield − expected inflation.
term premium: The extra yield investors demand to hold a long bond instead of rolling short ones — compensation for tying money up and for issuance/inflation risk.