credit-spreads
4 articles
- AI Capex Has Rewritten the Fed's Reaction Function
AI investment is large enough to rewrite the Fed's reaction function through the neutral rate and inflation classification, but the funds rate barely touches AI capex. The real transmission runs through spreads and term premia.
- The 5% Hurdle-Rate Economy: How Higher Long-Term Yields Sort Capital
Long-term Treasury yields above 5% are raising corporate hurdle rates across the economy. The main sorting variables are asset duration, financing structure, and pricing power. Long-lived assets with weak pricing power face the most pressure; capital-light businesses and assets that can pass through replacement costs are more resilient.
- Interest Rate Transmission in High-Debt Regimes
The traditional interest rate transmission mechanism has structurally inverted in a high-debt regime. Rate hikes redistribute demand rather than compress it — sovereign interest expense flows to private Treasury holders, private legacy debt remains insulated by duration lock-ins, and the strain relocates to the term premium and the refinancing wall rather than disappearing. Fiscal-monetary interaction, collateral repricing, and state capacity now override private credit cycles.
- The Yield Curve Is Not Broken: What the Term Premium Is Actually Pricing
The yield curve decomposition holds mechanically — but the term premium has returned as the dominant driver. What it is pricing, why fiscal dominance is a live concern but not yet the operative regime, and what it means for duration positioning.