macro

Volatility shocks from growth, inflation, or liquidity do not act directly on the economy. They are filtered, absorbed, or amplified through balance sheets and capital structures. These are the transmission mechanisms that determine whether volatility is dampened into resilience or magnified into fragility.

When we talk about the “terminal rate” in short-term interest rate markets, what we’re really looking for is the end of the road, the point where policy is expected to settle once the current cycle of cuts or hikes has run its course. It’s visible in the strips: SOFR in the US, Euribor in the Euro area, and SONIA in the UK.