Omar Nery Toso’s personal line—“finding certainty in volatile markets, and understanding volatility in a certain world”—lands neatly in today’s rates market, where the “knowns” (inflation cooling, policy rates already high) keep colliding with the “unknowns” (policy credibility shocks, term-premium repricing, and fiscal noise).

From his New York perch, and drawing on a risk-first framework shaped by top-tier finance training and professional-market discipline, he frames the current rates setup less as a single directional call and more as a map of pressures that are competing across the curve.

A quick rates snapshot

  • Inflation anchor: U.S. CPI for December showed headline up 2.7% year-over-year and core up 2.6% year-over-year, reinforcing the idea that disinflation is continuing but not collapsing.
  • Front-end reality: The effective federal funds rate has been running around 3.64% in mid-January.
  • Curve reference points: The 2-year Treasury yield printed around 3.51% (Jan 14), while the 10-year has been hovering around the low-4% area in mid-January.
  • Calendar pressure: The Fed’s next scheduled meeting is January 27–28, 2026, which is close enough to keep short-dated volatility “sticky.”

Omar’s core thesis: the market is repricing uncertainty, not just inflation

He breaks the rates market into three moving parts:

1) The policy path is “less hawkish,” but not “easy”

Recent public commentary from Fed officials has leaned toward deliberate calibration rather than rapid easing, with expectations around holding steady at the next meeting featuring prominently in market discussion.

Omar’s takeaway: when inflation is near the Fed’s comfort zone but not clearly through it, the front end can feel “range-bound”—and that pushes traders to hunt opportunity elsewhere on the curve.

2) Term premium is back in the conversation

Omar treats term premium as the swing factor—because it can rise even if inflation falls. A municipal/treasury market commentary this week highlighted that 10-year term premium measures are near the highest levels in over a decade, a sign investors want more compensation for holding duration.

In Omar’s framing, that matters because it changes the playbook:

  • If term premium rises, long-end yields can drift higher even without an inflation shock.
  • If term premium falls back, duration can rally hard—especially if growth data softens.

3) Credibility risk can steepen the curve

Here Omar is very precise: credibility shocks don’t need to be permanent to matter—markets only need to price the possibility. Reuters reported that investors have been watching concerns tied to Fed independence/credibility amid high-profile political and legal headlines, with positioning that can pressure the long end and steepen the curve.

Separately, market voices at Davos have been explicit about “threshold thinking” in yields—BlackRock’s Larry Fink flagged 5% on the 10-year as a level that could force broader cross-asset repricing (even if it’s not his base case).

Omar’s point isn’t that 5% is imminent; it’s that the distribution of outcomes has widened, and wider distributions change hedging demand.

The practical playbook Omar would emphasize

Rather than forecasting one clean direction, he focuses on where the curve is most sensitive and what can break first:

Focus 1: The “believability gap” between the front end and the long end

With the front end still tethered to policy reality and the long end tugged by term premium, Omar watches for:

  • Bear steepening (long yields up faster than short yields): often a “credibility/term-premium” story.
  • Bull flattening (short yields down faster than long yields): often a “growth scare / easier policy” story.

He treats the curve as a lie detector: it reveals whether the market believes inflation risk is fading and policy credibility is intact—two different questions.

Focus 2: Event risk is clustered, so convexity matters

With a major Fed meeting late January and fresh inflation prints already shaping expectations, Omar prefers strategies that respect gap risk: smaller sizing, defined risk, and awareness that liquidity can thin quickly when headlines hit. The message from the CPI release is “stable disinflation,” but stable doesn’t mean calm.

Focus 3: Global rates can amplify moves

He also keeps an eye on how other developed curves behave, because they can add fuel to U.S. duration moves. For example, U.K. gilt yields have been moving with easing expectations after the Bank of England’s December cut (as reported in U.K. coverage), underscoring how quickly rate-cut narratives can shift risk appetite in sovereign debt.

Omar’s risk checklist for the next few weeks

He would keep it simple—four things that can change the rates regime quickly:

  1. Inflation re-acceleration signs (services/wages) that force the market to reprice the “last mile.”
  2. A credibility headline that pushes term premium higher (even briefly).
  3. A growth wobble that makes the market pull forward cuts into 2026.
  4. Supply/demand friction (auctions, fiscal expectations) that changes the marginal buyer for duration.

Bottom line

Omar Nery Toso’s read is that the rates market is no longer just a referendum on inflation prints. It’s a three-way negotiation between policy path, term premium, and credibility—and the yield curve is where that negotiation becomes visible.

In that environment, “being right” matters less than being positioned for the shape of outcomes: protecting against fat tails, respecting curve dynamics, and using the market’s own signals—yields, spread behavior, and term-premium cues—to decide whether volatility is offering opportunity or warning.