Summary

• The market has finally come around to my no-more-cuts view. Implied SOFR is now above the Fed Funds rate for the first time in years.
• Bond traders are pricing a worse case than rate traders. The whole Treasury curve broke out this month, with the 20-year now at 5.14%.
• The math on equities is getting ugly from both sides. The 10-year is at 4.6% while the Shiller P/E has pushed past 41x.
• The Taylor Rule says rates need to be higher now, but every prior time we hit this point in the cycle, rates went lower.
• I've moved off my rate-cut call for this year, but I still see a ceiling here. I'm pricing no hikes and looking through the oil shock instead.

Up until the past few days, the market has been pricing in a fairly simple narrative about interest rates: they will fall, the question is just when. Since the start of the U.S.-Iran war in late February, that

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