# Block 007 — W26 verification + W26 weekly note — Synthesis

**Date:** 2026-06-26 (Fri evening, Session 7)
**Phase:** Phase 1 (Rates)
**Block status:** Closing

## What landed at Strong

- **Rates — term structure** (L-S framework). PC1/PC2/PC3 decomposition applied cleanly to Taper Tantrum and current curve. Trader insight (10y captures most curve risk premium) internalized.
- **Rates — curve dynamics** (duration-vs-curve distinction, butterfly mechanics, slope-vs-level framing). Anti-pattern (PC3 vs PC2 confusion) resolved over 3 drill iterations.
- **Rates — term premium** (Bernanke framework + ACM methodology). TP compression as dominant driver of post-GFC rate environment; mechanism of savings glut vs TP compression distinction clear. Direction framing (TP high → cheap, not rich) verified at this gate.

## What landed at Working

- **Rates — real vs nominal decomposition.** Three-component decomposition clean; arithmetic on the −50/−20 trap clean. Mechanism less crisp than the math (Fisher vs market decomposition distinction learned but not deeply internalized).
- **Rates — PCA level/slope/curvature.** PC3 mechanism landed (wings opposite belly); Taper Tantrum decomposition clean (PC1-dominant, PC2-secondary, PC3 zero). Working, not Strong — could surface a kink under live application.
- **Rates — CFTC positioning interpretation.** Dealer-short-cover squeeze mechanism; speculator length as marginal buyer (fragile); asset-manager length as structural signal. Working. Asymmetry articulated (leveraged fund short = fuel for squeeze, not confirmation).
- **Rates — Taper Tantrum case study.** L-S decomposition clean; trade structure (10s30s flattener, DV01-neutral) landed; butterfly reflex cleared; catalyst direction (dovish surprise invalidates flattener) verified. PC3-emergence scenario partially articulated (observable pattern yes, causal mechanism partial) — flagged for re-drill if it surfaces.

## Queued for next-block drill prefix

- **Taper Tantrum PC3-emergence mechanism** — full causal trace (flight-to-quality compressing 30y TP + hawkish Fed repricing expanding belly TP = anti-curvature pattern). Block 008 opens with 5-min re-probe on this if the case study comes up; otherwise stays as carry-forward Weak item.

## What I'd do differently next block

- **Block 008 (carry & roll-down mechanics) is the first block after this gate.** Two structural risks: (a) carry-forward items not being probed at block open (must run the 00-05 pre-block probes per `adjustments.md` block architecture); (b) drill-first template reverting to content-first if no Weak items surface in pre-probes (drill prefix is mandatory per rule 14, even if just for retention check on Taper Tantrum).
- **Probe format**: pass criteria should NOT be included in the question prompt. The user flagged this during Session 7 — the pass criterion revealed the answer for Re-probe 1. Going forward: probe prompt = question only; pass criterion = mentor's evaluation rubric, not in the prompt.
- **Pre-read for Block 008**: Litterman-Scheinkman 1991 carry & roll-down sections + Ilmanen Expected Returns carry chapter (thematic, ~20 min). Pre-read goes into the active block file at session close.

## Block 007 close

- Verification gate: 2 re-probes, both passed (Bernanke direction kink Strong; Taper Tantrum catalyst + regime-shift Working+).
- Block card count this block: 23 (within tolerance per retention > new content doctrine).
- Block closes clean. Block 008 (carry & roll-down mechanics) opens next session.