Financial glossary

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Narrative analysis: Examining the explanations investors use, the evidence behind them and their relationship to market expectations.
Basis trade: A position in related cash and derivative instruments intended to capture a pricing difference. Financing, leverage and convergence risk affect the result.
Term premium: The estimated compensation for holding a longer-term bond instead of rolling shorter-term investments. It is model-dependent and is not directly observable.
COT report: CFTC reports of futures and options positions by trader category. Weekly reports generally describe Tuesday’s positions and are published on Friday.
Carry trade: A strategy that seeks income from a yield or financing-cost difference. Currency moves, funding changes and price losses can exceed the income earned.
Risk-on / risk-off: Shorthand for shifts towards or away from risk-taking across markets. The assets that move together can differ between episodes.
Liquidity: Market liquidity is the ability to transact without a large price impact. Funding liquidity is the ability to meet cash and collateral obligations.
Treasury General Account (TGA): The US Treasury’s operating account at the Federal Reserve. Changes in its balance can affect bank reserves, alongside other monetary and financing flows.
Net issuance: New debt issued less debt repaid over a stated period. It measures the change in outstanding debt from issuance and redemptions.
Positioning: The positions held by a defined group of market participants. A crowded position can persist and does not, by itself, predict a reversal.
Short covering / short squeeze: Short covering closes an existing short position through buying. A squeeze occurs when rising prices or constraints force covering and can amplify the rise.
Real interest rates: Interest rates adjusted for inflation. Forward-looking estimates depend on expected inflation; yields on inflation-linked bonds also reflect market conditions.
Breakeven inflation: The yield difference between comparable nominal and inflation-linked bonds. It reflects inflation expectations as well as inflation-risk and liquidity premiums.
Curve steepening / flattening: An increase or decrease in the yield gap between longer and shorter maturities. Interpretation depends on which yields changed and why.
Contango / backwardation: Contango describes a futures curve with higher prices at later maturities; backwardation describes the reverse. Storage, financing and immediate availability can affect its shape.
Open interest: The number of outstanding futures or options contracts. Each contract has both a long and a short side, so the total alone does not show market direction.
Changes in speculative positioning: Changes in reported positions for a specified trader category. A change in net positions can reflect changes in longs, shorts or both.
Duration: A measure related to the timing of bond cash flows. Modified or effective duration estimates price sensitivity to a change in yield under stated assumptions.
Credit spread: The yield difference between a debt instrument and a specified benchmark. It can reflect credit risk, liquidity and other pricing factors.
Quantitative tightening (QT): A reduction in central-bank securities holdings through maturities or sales. Its effect on reserves depends on other balance-sheet changes.
Dot plot: The Federal Reserve’s chart of participants’ individual projections for the policy rate. These are conditional assessments, not a committee commitment.
Policy statements and market pricing: A comparison in the Central Bank Monitor between interpreted policy statements and the path implied by rate futures. The two readings use different information and horizons.
Hawk–dove scale: The Monitor’s interpretation of a statement, from 1 (more accommodative) to 5 (more restrictive). It describes the statement and does not predict the next decision.
Falsification condition: An observable condition specified in advance that would challenge or invalidate a thesis within its stated scope.
House view: A research publisher’s current interpretation of market conditions. Its date, assumptions and scope determine how it should be read.
Narrative Ledger: Hawk Thorne’s public record of research theses and later assessments. Forecasts and descriptive observations are tracked separately; it is not a record of portfolio returns.
Weights-only: A portfolio described by instrument identifiers and percentage weights. This supports relative-exposure analysis without account values; some liquidity and financing questions require additional information.