Markets- Treasuries yields and equities alike drifted up this week volatility continued to decline from the mid-February run-up. Yields across the curve are up modestly (2Yr 2.36%, 10Yr 2.82%) and the 10s-2s spread remains tight around 50bps. This is the tightest spread this cycle, and to place in historical context- 50bps occurred only a few months away from the beginnings of the Great Recession in 2007. Given the current levels of rates, two more hikes of Fed Funds would invert the yield curve, which typically portends a recession. Of course, correlation does not imply causation but since 1950 given the Fed’s 13 hiking cycles, 10 landed ended in recession. June’s Fed meeting holds an 87% likelihood we’ll see a hike of 25 basis points and prospects for a third hike in 2018 (perhaps September) are hovering around 67%. On top of the two, more likely three rate hikes, the Fed also needs to unwind their balance sheet to the tune of about $600 billion a year. Analysts have indicated that this volume would translate to approximately 100bps tightening in short term rates.