杰克逊霍尔年会前瞻：美债收益率飙升与政策分歧

All right. Jackson Hole is next week. And as we get there, it's getting increasingly important. Of course, it was already important given the fact that Kevin Orosz didn't have exactly rave reviews after his first formal meeting. And now there is a question of Treasury Secretary Scott, this isn't really turning up. Will he be attending right about that? I do not know. Do we know the word she's attending? Well, I don't know, actually.

I don't even know if he's giving a speech. Right. And there's a good chance that if he does give a speech, it's not going to be a sort of forward policy speech. It's going to be something about fed communication style similar to what he delivered, uh, at that July presser. So I don't know. But it is just a really weird time, as you say, because like already look, we have inflation going warmer than expected. We have rates rising at the long and generally then we have this meeting.

Right. Everybody say very much. And then we had the Treasury intervention that lasted about five minutes I think Scott. But it just misses trader. Well well clearly he is running the world's biggest hedge fund, except without the same kind of leverage that he might have otherwise run. There is a question, though, about Fed Chair Kevin. What do you think is going to be giving a speech? He did say he was going to be there and giving a speech, but said right now it's a blank sheet of paper, so unclear whether it's actually going to deliver something.

My key question is how much will he lean against what Besson has said and try to say, look, that actually might make conditions more accommodative should they come to a level? Right. So this is the crazy thing that's emerging now. There's this weird implicit tension between what the Fed's doing under Warsh and Scott Besson. So Warsh gave the whole speech where he wants markets to be more independent of the central bank.

He wants markets to be the ball. Don't just focus on what the fed is doing. He also said that part of the reason he didn't have to raise rates that month was because long bond yields were rising, and that had an impact on financial conditions. And now here we have the Treasury operating at essentially crosscurrents to what the fed seems to be trying to achieve. Meanwhile, you also have the Trump administration, which is also sort of muddying the mix with the Iran war.

Boosting inflation, everything. Everyone seems to be going off doing their own thing. I think they'll be obviously overcome by events. It's a long ways away from the speech. You know, five, six, seven, eight, nine days. And it's an international meeting. It's as you eight is supposed to speak. What will the Bank of Japan say? How will Europe respond to the comedy we've seen the last two days? I mean, it's a great point, given the fact that ultimately, the idea that long and yields have been rising is not just to us problems, to the degree that people are saying, okay, this is a credibility issue.

This is the fed that has lost the plot. This is a global issue. And to me, that is one of the biggest questions going into this meeting. What is established as the main driver of yields going higher? Is it inflation expectations the break even rates. Not so much. Is it I related debt issuance maybe. Is it just this question that we've moved from a regime where everybody was saving and putting money in markets rather than investing in things, has shifted and been turned on its head.

These are the questions to me. Or you could see it really simply in the term premium, right. Which Joe doesn't believe in. So he can't be a part of this particular discussion. But term premium, it's the extra compensation that investors demand to hold US debt. And it's been going up. And if you look at the rise in real rates recently, it's mostly been coming from that term premium. You can debate what exactly is driving that.

But at a simple level, I think it's, you know, more debt and more reluctant buyers for that debt. And then I think the other thing, to your point, like, you know, there's global nature. It's like what we have some major structural inflationary drivers that are fairly new in recent history, this drive towards resource nationalism that no one was talking about ten years ago, where, like every random country wants to have in some tungsten mine, that's a new thing.

The I build out, it's really taken off for the two years before that. But now these are like over the last two years. But that's fairly new. the, uh, decreasing train. Uh, freedom obviously started maybe roughly in the 2016 after the first Trump administration. There are all these new drivers that when you stack them together, then out in the war, you would just expect, if you knew nothing else, that these are all sources of upward pressure on prices.

The backdrop of this is an outrageous nominal GDP. We're basically a boom economy almost. Yeah. You know, like 4%, 5%, some model up parts of our economy at 6% nominal. And the what if to me is that must pullback at some point to a more normal nominal GDP. And I don't think that's infrastructure of yield of finance of foreign exchange can handle that pullback and nominal GDP. To me that's just them. That's not what people are going to talk about visibly at Jackson Hole.

But that's going to be the back story. Are you feeling that GDP with an extra cowboy hat purchase. Yeah. You know I you know I'm we're going to go to the million dollar. You already have a good thing going. Yeah, exactly. Yeah, I'm doing the rugged thing here, but the backdrop is gorgeous. This photo of you don't know this, but this photo of our backdrop. Brahmo took that when she was canoeing out in the big pond there.

You know, actually, I had to go canoeing and found. Have you guys ever done that before? I never saw them that way. It's really good for a hike, but actually. Okay, I have a question for both of you. Yes, you've been going for years now. What do you think the vibes are going to be like? Because we have a new fed chair who kind of seems like he doesn't really like it when central bankers talk that much. And here we have a whole conference about policymakers talking essentially.

I think that's an excellent question. And I think that one notable feature is that you're not going to see as many fed officials doing as many public speaking engagements. I also am curious about the vibes, about how many people are actually getting drinks together versus, you know, kind of coalescing. Where are you on this? And I brought it up with John Melby today of JP Morgan, who his thesis it, uh, in school years ago, it was, um, uh, basically the independence of the British financial system, the level of implied dissent against worship.

This meeting is unprecedented. It really is precedent. It really has a precedent. I, I read a book, I forget which one. Uh, my term at the Fed by Larry Myers. Lawrence Myers Myers. And he talked in there about like, the rarity of dissent in history and how it was a norm where it's like if you have, like, more than two dissents, have you lost the board, which was like a thing that people like that was like, oh, I mean, this is just old enough to remember when we judge the central banker by, did they have ham and cheese or tuna fish in their lunch?

And now we're into this hyper. And the other thing is used to be says, look, I'm like very interested in these questions of like, why are rates going up? I'm very interested in the meadow question. Like, are we sort of like post the peak of like central bank being independent, being this key pillar of what a successful economy looks like. But the other thing that's true is that the only thing that matters is the memory trade right now.

Like everything around the world, you know, the rates go up by 25 basis points. Rails are up at the highest level since November 2008. No one is listed or someone going on the top down and sideways. And the answer? Tracy, I always fall back to