Fed Rate Path & Yield Curve Scenario Simulator

Macro Assumptions

CNBC Daily Open Grounded

Scenario Presets

Terminal Fed Funds Rate 5.25%

4.00% Policy Pivot vs. Restrictive 7.00%

Additional Rate Hikes (25bps) +1 hike (+0.50%)

0 (Pause) "Not One-and-Done" 4 (+100 bps)

Inflation Persistence Score 7.2 / 10

1.0 (Transitory) Core PCE Sticky Index 10.0 (Entrenched)

QT Runoff Pace (Monthly) $95B / mo

$20B (Tapered) Balance Sheet Runoff $120B (Accelerated)

Treasury Yield Curve & Benchmark Projections

Projected Curve

Baseline Curve

Projected Fed Funds 5.75% Terminal + Increments

2-Year Treasury 4.95% Policy Front-End

10-Year Treasury 4.65% Term Premium / Growth

30-Yr Fixed Mortgage 7.35% Primary Consumer Rate

Curve State: Slightly Inverted / Flat

2Y/10Y Spread: -0.30% (-30 bps)

Sector Sensitivity & Multiple Compression

Duration & Refinancing Exposure

Sector / Asset	Rate Beta	Projected EPS Impact	Valuation Stance

Allocation Stance & Resilience Report

Resilient Sector Leaders Financials & Short-Duration Fixed Income

Most Vulnerable Sectors Real Estate & Small Cap Equities

Macro Transmission Mechanism High terminal policy rates coupled with elevated inflation persistence push front-end yields higher. Elevated QT pace removes market liquidity, widening mortgage spreads and tightening credit conditions for long-duration assets.

Source Context: Grounded in CNBC Daily Open reporting on stubborn services inflation and FOMC communication indicating Fed rate adjustments may not be "one-and-done". Model computes duration matching, term premiums, and conforming 30-year mortgage spreads over 10-year Treasuries.