# Block 003 — Curve dynamics

**Status:** ✓ done
**Phase:** Phase 1 (Rates)

## Topic scope

Parallel shifts vs steepeners vs flatteners. Duration vs curve distinction. Butterfly mechanics (long belly, short wings, DV01-flat). Litterman-Scheinkman PCA decomposition of curve moves (PC1 dominant ~85%). PCA level/slope/curvature applied to Taper Tantrum and current curve data.

## Session history

**Block 003 — Curve dynamics**

**2026-06-22 (Session 2, W26 Mon):** Duration-vs-curve distinction articulated cold. Butterfly mechanics (long belly, short wings, DV01-flat) named correctly.

**2026-06-23 (Session 3, W26 Tue) — Taper Tantrum light case study:** Slope-vs-level framing applied to Taper Tantrum data — correctly classified as level-dominated move with secondary slope (anti-curvature pattern, not PC3).

**2026-06-25 (Session 5, W26 Thu) — PCA mechanism:** PC3 mechanism landed (wings opposite to belly). Taper Tantrum decomposition clean (PC1-dominant, PC2-secondary, no PC3). PC3 vs PC2 confusion resolved.

**Anki cards:** 6 cards (Sessions 2, 3, 5) — duration-vs-curve, butterfly mechanics, slope-vs-level, L-S PC1/PC2/PC3 definitions, anti-pattern: PC3 vs PC2 confusion (tagged `weakness`). Status: **Strong** since 2026-06-23 (PCA part at Working).

See `../session-log.md` for detailed session entries.

See `../session-log.md` for detailed session entries.