# Block 005 — Taper Tantrum case study

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

## Topic scope

2013 Taper Tantrum case study: curve path May-Jun 2013 (2y +24bp / 5y +70bp / 10y +88bp / 30y +60bp). PC1-dominant + PC2-secondary + PC3-zero decomposition. Driver attribution: Fed-policy expectations repricing (front-end pulls belly), not term-premium-led. Trade construction: 10s30s flattener (DV01-neutral), NOT butterfly. Two-trigger rule (positioning + microstructural). Invalidation: secular stagnation narrative break.

## Session history

**Block 005 — Taper Tantrum case study**

**2026-06-25 (Session 5, W26 Thu) — Case study deep dive:** L-S decomposition clean (PC1 dominant, PC2 secondary, PC3 zero). Driver attribution: Fed-policy expectations repricing (front-end pulls belly), NOT term-premium-led. Trade construction: 10s30s flattener (DV01-neutral), NOT butterfly. Two-trigger rule (positioning + microstructural). Invalidation: secular stagnation narrative break.

**2026-06-26 (Session 6, W26 Fri) — Drill-first wrap-up:** Anti-pattern butterfly-reflex cleared. 10s30s flattener chosen correctly. PC1+PC2 decomposition clean. Terminology note: called "steepener" but described a flattener (labeling only).

**Anki cards:** 2 cards — Taper Tantrum L-S decomposition + dominant driver, Taper Tantrum trade construction (10s30s flattener, two-trigger rule, invalidation). Status: **Working** since 2026-06-25.

**Verification flags for Block 007:** Catalyst direction for invalidation muddled + regime-shift scenario missing (PC3-emergence scenario where long-end rally driven by flight-to-quality compresses 30y TP while belly TP expands on hawkish Fed repricing = wings opposite to belly).

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

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