Macro Insights Weekly - Rising yields the last hurrah of this cycle

Markets' nerves are being tested by large supply of US bonds in the pipeline, chronic dysfunctionality at US Congress, and a further entrenchment of the Fed's "high for long" narrative.
In the interim, data on wage growth and inflation have been moderating.
But the rise in long-term yields marks a tightening of monetary conditions not seen since 2008.
The saving grace is that tightening so far has not caused any financial stability concerns yet.
2.5% real rate is not sustainable, in our view.
A major asset market correction could be coming, or rebounding inflation will push down real rates.