A Narrower Path for Growth and Stability

Whether rising yields reflect a higher neutral rate or genuine policy tightness will determine how much growth risk markets must now price in.

• Rate calibration turns urgent: After September's FOMC hike, markets price December as most likely for the next move, but the 10-year yield shift matters more.
• Two competing yield stories: Rising yields could reflect a higher neutral rate from strong productivity/investment, making policy less restrictive—or reflect hot inflation and fiscal strain, making it more restrictive.

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