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

M3Monetary easing (rate cut)

Trigger: policy_rate: 3.8 → 3.7 (-0.1)

The central bank cuts its policy ratepolicy 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..
Why: The policy rate anchors the entire rate structure, so a cut lowers the risk-free baseline against which every asset is valued.
Discount rates fall across asset classes and liquidity expectations rise.
Why: A lower risk-free rate raises the present value of future cash flows everywhere, and a cut signals the bank will keep conditions loose.
Risk assets re-rate up; the currency softens.
Why: Cheaper money flows toward higher-returning assets, and a lower local rate narrows the yield advantage of holding the currency, so it weakens.
The weaker currency lifts exporters, commodities, gold, and EM.
Why: Commodities priced in the easing currency rise in that currency; exporters gain competitiveness; and EM borrowers with dollar debt benefit as the dollar softens.

Helps
equities (broadly)goldEM assetslong-duration bondscommodities

Hurts
the easing currencycash/money-market real yield

Caveat: If the cut is an emergency response to a fast-deteriorating outlook ('cutting into a recession'), equities can fall even as bonds rally — the growth signal outweighs the liquidity boost.

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

M11China credit impulse (easing proxy)

Trigger: policy_rate: 3.8 → 3.7 (-0.1)

China cuts its benchmark lending rate (LPR).
Why: A lower LPR reduces borrowing costs and is the most visible signal that policymakers want credit to flow — a proxy for a turn-up in the credit impulsecredit 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..
The flow of new credit into the economy turns up.
Why: Cheaper credit pulls forward borrowing by firms and local governments, raising the change in outstanding credit — the impulse — which leads activity by one to three quarters.
Industrial commodities, China/HK cyclicalscyclicals — Sectors whose earnings rise and fall with the economic cycle — industrials, materials, energy, consumer discretionary., and the EM/commodity-exporter complex benefit.
Why: China is the marginal buyer of many industrial commodities, so a credit-driven activity pickup lifts their prices and the equities and exporter currencies geared to that demand.

Helps
industrial commoditiesChina/HK cyclicalsEM equitycommodity exporters (AUD, BRL)

Hurts
CNY (on the rate cut)China government bond yields (fall)

Caveat: LPR is only a proxy; the true impulse needs total-social-financing / new-loan data (a Rung-2 addition). A cut without a pickup in actual credit demand ('pushing on a string') doesn't deliver the transmission.

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

Euro area

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 0.534543 → 0.944138 (+0.409595)

The 10-year yield jumps.
Why: The long yield sets the cost of long-term money for the whole economy and the discount rate 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 yield 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

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

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)	7.94	7.00	+0.94 ▲	2022-02-01
Core CPI	0.53	0.60	-0.07 ▬	2022-02-01
Core PCE	5.60	4.90	+0.70 ▲	2022-02-01
Policy rate	0.25	0.25	+0.00 ▬	2022-02-06
GDP	6.90	-1.00	+7.90 ▲	2022-01-27
PMI (mfg)	57.60	58.70	-1.10 ▼	2022-02-01
PMI (svc)	59.90	62.00	-2.10 ▼	2022-02-03
Unemployment	4.00	3.90	+0.10 ▲	2022-02-04
10Y yield	1.93	1.82	+0.11 ▲	2022-02-04
2Y yield	1.31	1.19	+0.12 ▲	2022-02-04
2s10s slope	0.62	0.63	-0.01 ▬	2022-02-04
FX vs USD	95.48	95.38	+0.10 ▬	2022-02-04

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.50	2.30	-0.80 ▼	2022-01-12
Policy rate	3.70	3.80	-0.10 ▼	2022-01-20
GDP	4.00	4.90	-0.90 ▼	2022-01-17
PMI (mfg)	50.20	50.10	+0.10 ▬	2022-02-01
PMI (svc)	51.10	52.70	-1.60 ▼	2022-01-30
Unemployment	5.50	5.30	+0.20 ▲	2022-02-01
10Y yield	2.70	2.70	-0.00 ▬	2022-01-30
2Y yield	2.13	2.13	+0.00 ▬	2022-01-30
2s10s slope	0.57	0.57	-0.01 ▬	2022-01-30
FX vs USD	6.36	6.36	+0.00 ▬	2022-02-04

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	5.10	5.00	+0.10 ▬	2022-02-02
Policy rate	0.00	0.00	+0.00 ▬	2022-02-03
GDP	0.30	0.40	-0.10 ▬	2022-02-02
PMI (mfg)	58.70	59.00	-0.30 ▬	2022-02-01
PMI (svc)	51.10	51.20	-0.10 ▬	2022-02-03
Unemployment	7.00	7.20	-0.20 ▼	2022-02-01
10Y yield	0.94	0.53	+0.41 ▲	2022-02-01
FX vs USD	1.14	1.13	+0.01 ▬	2022-02-04

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.80	0.60	+0.20 ▲	2022-01-21
Core CPI	-1.30	-1.20	-0.10 ▼	2022-01-21
Policy rate	-0.10	-0.10	+0.00 ▬	2022-01-18
GDP	n/a
PMI (mfg)	n/a
Unemployment	2.70	2.80	-0.10 ▬	2022-02-01
10Y yield	0.18	0.17	+0.01 ▬	2022-02-01
FX vs USD	114.96	114.38	+0.57 ▲	2022-02-04

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.