Big crash in swap spreads last week and to start this week. Contrary to what's being said about rising yields (but consistent with bull steepening) record negative spreads across the curve. Why? Rates are going down and then are going to stay there a long time. Again. 1. **Monetary System Shifts**: Interest rate swap spreads have consistently moved lower and more negative over the past year and a half. Commentary, data, the Fed, all swing wildly back and forth, swap spreads have been nearly constant going lower since last summer. 2. **Importance of Interest Rate Swaps**: Interest rate swaps are critical signals, even more important than the yield curve given their role in the global financial system. They reflect market expectations from the inside about a whole range of factors and how those are anticipated to impact future interest rates and therefore providing insights into broader economic conditions. 3. **Market Sentiment and FED Policy**: The Fed has oscillating between "higher for longer" and needing to cut rates but is now right where the swap market said it would be the entire time. 4. **Macroeconomic Indicators**: A range of macroeconomic factors, including consumer prices and labor market data, while also at times wildly back and forth are more and more coming down on the side of a weakening economy, becoming more in line with the trend in swap spreads. 5. **Future Outlook**: All swaps tell us is that the market is strongly forecasting rates to go down and stay there. We have to fill in the blanks for what that might mean, and there is no one scenario which would fit. This could be a recession, but even that can lead to multiple different near-term outcomes which eventually converge in the future the swap market has projected. The global economy has already moved in the way swaps were pricing despite so many doubts - including many who said inflation would force rates forever higher. https://t.co/CuLCx2X7K5 https://t.co/0uWzTqlJml https://t.co/kB3P2q5WY5.