Yesterday, U.S. Treasury yields exhibited a mixed performance, with the 2-year yield declining by 4 bp to 3.44%, while the 3-year yield increased by 3 bp to 3.56%. This resulted in a slight flattening of the yield curve, reflecting a cautious sentiment among investors regarding future rate hikes amidst signs of economic resilience. The option-adjusted spreads for high-yield bonds tightened by 5 bp to 2.83%, indicating a risk-on tone in credit markets despite a slight uptick in corporate yields. The market's overall atmosphere leaned towards risk-taking, as equities advanced with the S&P 500 and Nasdaq gaining 0.57% and 0.64%, respectively, supported by positive sentiment in mega-cap tech stocks. Internationally, bond yields saw substantial movements, particularly in Japan, where the 10-year government yield surged by 14.5 bp to 1.80% following recent comments signaling potential policy adjustments. In contrast, the UK 10-year yield fell by 7.4 bp to 4.50%. The U.S. dollar index (DXY) weakened by 0.17%, reflecting a broader pullback in the dollar, with notable declines against the NOK, TRY, and CNY. This shift in FX dynamics suggests a potential unwinding of safe-haven positions, further confirming the day’s risk-on sentiment. Equities showed resilience, with the Nasdaq and S&P 500 leading the charge, driven by gains in technology and real estate sectors—both of which outperformed with increases of 1.00% and 1.23%, respectively. Commodities reflected mixed signals, as energy prices rebounded slightly with WTI crude oil rising by 1.07%, while precious metals like platinum and palladium saw notable advances of 6.81% and 4.81%. Conversely, gold remained roughly flat, highlighting a divergence in investor appetite for inflation hedges amid fluctuating bond yields. Looking ahead, market participants should remain vigilant regarding upcoming economic data releases, particularly the CPI and PCE inflation figures, which could impact the Fed's policy trajectory. With the recent drop in overnight reverse repo usage and a significant increase in real GDP growth at 4.3% (up 13.16% quarter-on-quarter), there may be opportunities for tactical positioning in duration longs as inflation expectations stabilize. Additionally, with corporate spreads tightening, consider exploring equities in the cyclical space as the market appetite for risk appears to be gaining traction. Overall, the tone remains cautiously optimistic as investors navigate tightening liquidity and mixed macro signals.