# Block 007 — Batch 1 verification (rates) + batch synthesis note

**Status:** ✓ done (2026-06-26 Session 7 close)
**Phase:** Phase 1 (Rates)

## Topic scope

Verification gate for Batch 1 rates items (blocks 001-006). Re-probe any flagged items from prior blocks. Write batch synthesis note. Update competence-map, coverage-tracker. Regenerate plan for next block.

## Plan

### ⚠️ PRE-READ — flagged at session close (per 2026-06-23 convention)

**Re-read Fri 2026-06-26 session-log entry** (the load-bearing block — drill results + the two flagged items).
- ~5 min
- What to look for:
  - The two drill items that landed at Working+ (Bernanke dominant driver, Taper Tantrum instrument selection)
  - The two flagged re-probes for this verification gate:
    - **Bernanke direction kink** — TP at high end → long-end richly valued framing was inverted (correct: TP high → long-end cheap → long-duration bias; flattener only if 10y TP > 30y TP)
    - **Taper Tantrum catalyst direction** (which kind of "fed uncertainty" invalidates the flattener) + **regime-shift invalidation** (PC3-emergence scenario)

### Verification gate (first 20 min)

Per `adjustments.md` rule 11: re-probe any Weak items that didn't close Friday. Friday drill closed at Working+ with two flags.

**Re-probe 1 (Bernanke direction kink):**
"When ACM 10y term premium is at +50bp (high end of post-2010 range) and 30y ACM TP is at +30bp, what's the DV01-neutral trade? Walk through the TP-hierarchy logic — when is the flattener right vs when is the steepener right?"

Pass criterion: identifies 10y TP > 30y TP as the trigger for the flattener. If 30y TP > 10y TP (typical hierarchy), the DV01-neutral trade is a steepener (long 30y / short 10y). Articulates that TP at high end → long-end is CHEAP (high yields), not rich.
- If pass: log Strong on term premium.
- If fail: extend drill + schedule next block with rates drill prefix (15 min before main material).

**Re-probe 2 (Taper Tantrum catalyst + regime-shift):**

Two sub-questions:
- "For a 10s30s flattener, what kind of 'fed uncertainty' invalidates the trade? Specify hawkish vs dovish direction."
- "What regime shift makes the Taper Tantrum framework (PC1-dominant + PC2-secondary + PC3 zero) wrong? Articulate the PC3-emergence scenario."

Pass criterion:
- Catalyst direction articulated: dovish surprise (Fed less hawkish than priced) → 10y yields fall more than 30y → 10s30y widens → trade invalidated. Hawkish surprise → 10y yields rise more → trade profits (not invalidated).
- PC3-emergence articulated: long-end rally driven by flight-to-quality compresses 30y TP while belly TP expands on hawkish Fed repricing = wings opposite to belly (anti-curvature pattern) → framework wrong.

If pass: log Strong on Taper Tantrum case study. If fail: extend drill + schedule next block with rates drill prefix.

### Synthesis note + artifacts (40 min)

1. **Write `03-research/blocks/007-synthesis.md`** — block synthesis
   - 5-bullet structure: what landed at Strong (term structure, curve dynamics, term premium); what landed at Working (real vs nominal, PCA, CFTC positioning, Taper Tantrum); what's queued (Bernanke flag, Taper Tantrum flags for next-block drill prefix if needed); 3-bullet "what I'd do differently next block"
   - ~15 min

2. **Generate Anki retention check** — review this block's 23 cards for retention. Flag any with retention < 80%.
   - ~10 min

3. **Update `../coverage-tracker.md`** — increment session counts for term premium + Taper Tantrum + CFTC positioning. Add rows for any items not currently tracked.
   - ~5 min

4. **Append final entry to `../session-log.md`** — verification gate pass/fail per item, batch synthesis note completion status.
   - ~5 min

## Carry-forward to next block

Per `adjustments.md` rule 11: if both re-probes pass, Block 008 opens with main material per block sequence. If either fails, Block 008 opens with 15-min rates drill prefix.

**Pre-read for Block 008** (Carry & roll-down mechanics) — flag at this block's session close:
- Litterman-Scheinkman (1991) "Understanding the Yield Curve" — carry & roll-down sections (~10 min, [thematic])
- Ilmanen "Expected Returns" — carry chapter (~10 min, [thematic])
- Tagged: [thematic, 20 min total] — orientation only, will be taught in session via TEACH+PROBE