The Yield Curve, Inflation Risk, and Why the Curve Determines Risk Assets Through Earnings

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Today, I walked through the full yield curve framework with Jaymes Rosenthal and how each regime maps to the Fed’s policy error against growth and inflation. The PCE print came in with headline up 70bps MoM while core stayed contained, and that single distinction is the entire question right now. Z7 held the level we mapped yesterday, ES bottomed at that exact level intraday, and the cross-asset linkages are doing exactly what the framework predicted heading into the heaviest two weeks of mega-cap earnings of the year.LIVESTREAM RECORDING FROM TODAY:Today’s Livestream: Main Talking Points1. Every macro story collapses into the curve. Growth, inflation, policy stance, dollar direction, credit appetite, equity rotation. All of it shows up in where the front end and back end sit. The yield curve in itself is not a directional rate signal. The four regimes are bull steepening, bear steepening, bull flattening, and bear flattening, and each represents a specific combination of where the Fed is making a policy error against where growth and inflation are heading. Read the regime, and the macro stops being disconnected data points and becomes a single coherent signal.2. 5s30s sitting above 2s10s right now is the cleanest growth resilience signal in the market. When the longer duration curve is steeper than the shorter duration curve, you are seeing more sensitivity to long-term nominal growth than to Fed policy. If growth were actually breaking, 5s30s would compress against 2s10s as the long end signaled real economy weakness. We are not seeing that. The curve shape is consistent …