The bond market is sitting with a growing stack of chips. Clients are underallocated to fixed income. We are the perfectly priced market. The two-year Treasury near Fed funds looks good. Credit spreads look fair. The pain trade was a bullish flattening of the yield curve; we're starting to see that.

One of the things we've been looking at is CLO equity prices and how those have dropped. For those of us who have been around a long time, it's reminiscent of the 2005-07 period going into 2008. It's looking like the first loss pieces of structured credit are starting to crack.

It tells you things are functioning okay right now for the first movers. As long as the economy continues at trend, a rolling loan gathers no loss. What everyone's worried about is we haven't had a shakeout in private credit yet, and a recession is that ultimate shakeout.