摩根大通固收主管：美联储加息是既定事实，关注点在于分歧与点阵图

NEWSMAKERS AND MARKET MOVERS. THIS IS "THE PULSE" WITH FRANCINE LACQUA. FRANCINE: GOOD MORNING. WELCOME TO "THE PULSE." I AM FRANCINE LACQUA IN LONDON. WE WILL DISCUSS THE FED IN A MOMENT. FIRST THE EUROPEAN UNION AND CANADA ARE PLANNING TO FORM A NEW TYPE OF ALLIANCE BASED ON TRADE AND SECURITY WITH CANADA BECOMING THE EU'S FIRST-EVER ASSOCIATE MEMBER. IN HER ANNUAL STATE OF THE UNION ADDRESS, EUROPEAN COMMISSION PRESIDENT URSULA VON DER LEYEN SAYS THE EU PLANS TO USE ALL TOOLS TO REBALANCE THE RELATIONSHIP WITH CHINA AND THAT EUROPE IS BECOMING MORE SELF-RELIANT.

AND A STRONGER, MORE INDEPENDENT EUROPE IS NOW EMERGING. THAT IS A EUROPE THAT IS SECURING ITS PROSPERITY, ONE THAT IS BREAKING FREE FROM THE TOXIC DEPENDENCY ON RUSSIAN FOSSIL FUELS. THAT IS A EUROPE THAT HAS BECOME THE GREATEST TRADING POWER ON THE PLANETS. THAT IS TRANSFORMING ITS INDUSTRIAL POLICY WHILE UPHOLDING ITS SOCIAL MODEL. THAT IS A EUROPE BETTER ABLE TO DEFEND ITSELF THAN EVER BEFORE. FRANCINE: LET'S GET MORE WITH OLIVER CROOK, BLOOMBERG'S CHIEF EUROPE CORRESPONDENT.

WHAT DO WE KNOW ABOUT THIS NEW THING, THE EU PLANNED PARTNERSHIP WITH CANADA? OLIVER: THIS IS SOMETHING WE WERE EXPECTING BROADLY SPEAKING ABOUT A TIGHTER RELATIONSHIP WITH THE CANADIANS AND EUROPEAN UNION. THIS IS IN LARGE PART A RESPONSE TO DONALD TRUMP AND THE ST SORT OF DISTANCING BETWEEN THE U.S. AND EUROPE AND THE U.S. AND CANADA. WHAT WE DO NOT EXPECT AS AN EXPLICIT REFERENCE BY THE PRESIDENT OF THE EUROPEAN COMMISSION IN THAT SPEECH ASSOCIATE MEMBERSHIP TO THE EUROPEAN UNION FOR CANDID.

THAT IS CERTAINLY GOING TO BE THE MAIN TAKE AWAY FROM THIS SPEECH. IT IS SOMETHING WE DO NOT SEE EVEN IN THE DRAFT OF THIS SPEECH SO SOMETHING THAT HAS COME AS SOMEWHAT OF A SURPRISE IN TERMS OF THAT NOMENCLATURE. IN AND OF ITSELF, IT IS NOT REALLY MEAN ANYTHING YET. WE DON'T REALLY HAVE ASSOCIATE MEMBERS TO EUROPEAN UNION. . IT IS NOT A CONCEPT THAT HAS BEEN FULLY FLESHED OUT AND FOR THE EUROPEAN UNION THAT SOMETIMES LACKS EXECUTIVE AND POLITICAL POWER TO BRING THINGS INTO BEING, NOW COMING UP WITH A NEW SORT OF NOMENCLATURE MAY GIVE THEM THE OPPORTUNITY TO TRY TO ESTABLISH NOT JUST IN RELATIONSHIP WITH CANADA BUT A NEW KIND OF PARTNERSHIP THAT THE EUROPEANS CAN HAVE WITH.

OTHER NATIONS AS WE ARE SAYING, THIS IS SOMETHING THAT IS NOT VERY FULLY FLESHED OUT. IT IS NOT FULLY DEFINED. THE CANADIANS AND EUROPEANS ALREADY HAVE A CLOSE ECONOMIC RELATIONSHIP. THERE IS A FREE-TRADE AGREEMENT THAT GOVERNS MOST OF THE GOODS THAT GO BACK AND FORTH. FROM THAT PERSPECTIVE, THERE ARE A LOT OF THINGS THAT ALREADY HAVE THE ECONOMIC BENEFITS. I ALSO DON'T THINK IT'S AS EASY AS SAYING WE ARE GOING TO HAVE ASSOCIATE MEMBERS AND EVERYBODY IS GOING TO BE HAPPY WITH THAT.

THERE IS GOING TO BE SOME CRITICISM FROM MEMBER STATES WITHIN THE EUROPEAN UNION THAT THE EUROPEAN UNION POTENTIALLY IN AN ACTIVE KIND OF DESPERATION AND ITS RELATIONSHIP WITH UNITED STATES AND HOW VULNERABLE IT HAS BEEN MIGHT BE WILLING TO GIVE TOO MUCH AWAY IN THE SORT OF À LA CART RELATIONSHIPS WHERE PEOPLE ARE NOT ACTUALLY PART OF THE EUROPEAN UNION BUT STAND TO BENEFIT FROM ANY OF THE FACETS OF PARTNERSHIP SO I THINK WE ARE IN THE VERY BEGINNING OF THAT CONVERSATION.

IT IS NOTABLE THAT MARK CARNEY WAS THERE RECEIVING STANDING OVATION FROM PARLIAMENTARIANS OVER IN STRASSBURG. WE ARE STILL IN THE VERY BEGINNING OF A CONVERSATION, SOMETHING THAT WILL BE VERY INTERESTING TO UNPACK OVER THE NEXT COUPLE OF MONTHS. FRANCINE: THANK YOU SO MUCH. WITH THE VERY LATESTOLI ON BOND OR LIEN AND HER ADDRESS. ONE THING -- ON VON DER LEYEN AND HER DRESS. TRADERS WAITING FOR THE FEDERAL RESERVE'S LATEST INTEREST RATE DECISION AND UPDATED PROJECTIONS AS THEY READY BETS ON WHERE MARKETS WILL GO NEXT.

I AM JOINED BY INTERNATIONAL CHIEF INVESTMENT OFFICER FOR FIXED INCOME AT J.P. MORGAN ASSET MANAGEMENT. BEFORE WE GET TO THE FED, WHAT DO YOU MAKE OF VON DER LEYEN'S SPEECH? DO YOU TAKE IN AS A KIND OF GENERAL DEFENSE SPENDING, WE NEED TO GET OUR HOUSE IN ORDER, OR IS THIS ROLE POLICY?

I THINK THIS IS BASICALLY WHAT EVERY SINGLE COUNTRY IN THE WORLD IS LOOKING AT TODAY. HOW DO THEY SPEND MORE ON DEFENSE, BECOME MORE SELF-SUFFICIENT ON ENERGY AND GET THAT INVESTMENT? SHE IS ALSO INTERESTINGLY WITH WHAT'S GOING ON WITH CANADA, HOW DO YOU TIE UP WITH PARTNERSHIPS THAT YOU THINK AND HAVE SOME LONGEVITY AROUND THEM. GLOBALIZATION IS BECOMING MORE FRAGMENTED. WE'VE SEEN THAT OVER THE LAST FEW YEARS. THIS IS A EUROPEAN THING AT THE MOMENT BUT I THINK THIS IS ALSO A GLOBAL PHENOMENON THAT'S GOING ON WHERE THE INVESTMENT IS LOOKING TO COME BACK ON SHORE AND MAKE SURE THAT YOU CAN CONTINUE TO BUILD YOUR OWN DOMESTIC ECONOMY.

FRANCINE: TO THE FED. I AM LOOKING AT AGAIN, IT JUST NEEDS A LITTLE BIT OF GETTING USED TO, YOU KNOW, 10 YEAR TREASURIES OVER 5%. WHAT ARE YOU EXPECTING IN TERMS OF PROJECTIONS FROM THE FED? THEY HIKE TODAY, DONE DEAL?

DONE DEAL. I THINK IT WOULD OBVIOUSLY BE A BIG SHOCK TO MARKETS IF THEY DIDN'T. I THINK WHAT YOU WANT TO BE KEEPING AN EYE ON, ARE THERE ANY DISSENTERS? A UNITED FRONT WOULD BE MY BASE CASE AND I THINK THAT IS WHAT THE FED SHOULD DO AND WHAT THE MARKET WOULD LIKE THEM TO DO. IF YOU START TO SEE SOME DISSENTERS, MY CALL INTO QUESTION HOW MUCH CREDIBILITY THEY HAVE GOT AROUND THIS FIGHT AGAINST INFLATION. I THINK THE EXPECTATION IS THAT YOU WOULD EXPECT IN THE FUTURE, YOU KNOW, A COUPLE MORE HIKES TO BE PUT INTO THE DOT PLOTS.

MAYBE YOU WOULD TAKE OUT THOSE CUTS FROM UPCOMING YEARS OR AT LEAST PUSH THEM A LITTLE BIT FURTHER OUT. I THINK THE BIGGER QUESTION IS , IF YOU THINK THERE IS THREE HIKES PRICED INTO THE FED OVER THE NEXT FEW MEETINGS OR SO, I THINK THAT IS THE BIGGER QUESTION, IS, IS THIS JUST A REMOVAL OF THOSE INSURANCE CUTS THAT THE BACK END OF LAST YEAR OR IS THIS MUCH MORE OF A PROLONGED HIKING CYCLE? AS WE HEARD FROM KEVIN WARSH HE IS GOING TO BE LOOKING AT THE DATA TO MAKE THOSE DECISIONS.

FRANCINE: LAST TIME WE SPOKE WE WERE TALKING ABOUT HIS COMING OCCASION. WE DON'T HAVE HISTORY FOR THIS. HE HAS -- COMMUNICATION. WE DON'T HAVE HISTORY FOR THIS. HE'S GONE A LITTLE BIT BETTER.

WE HAVE GONE BACK AND FORTH. WE HAVE HAD HAWKISH WARSH, DOVISH WARSH. I THINK THAT IS A LITTLE BIT MORE UNCERTAINTY. WE GOT USE TO FOR GUIDANCE, WE'VE HAD IT FOR A NUMBER OF YEARS NOW AND SUDDENLY YOU TAKE THAT AWAY AND YOU ARE GOING TO PUT SOME MORE TERM PREMIUM BACK INTO THE MARKET BECAUSE WE JUST DON'T KNOW WHAT TO EXPECT SO IT WILL BE INTERESTING TO SEE WHETHER HE DOES A DOT PLOT BUT MY GUESS WILL BE NO. FRANCINE: IS THIS A FAULT IN COMMUNICATION BECAUSE HE JUST STARTED OR IS IT JUST ENERGY PRICES, YOU DON'T KNOW WHERE BRENT GOES, THERE IS MUCH MORE UNKNOWNS OUT IN THE WORLD?

I THINK IT IS A BIT OF BOTH. IF YOU LOOK AT THE HISTORY OF CHANGES WITHIN CENTRAL-BANK LEADERSHIP, THEY HAVE TAKEN A LITTLE WHILE TO GET SETTLED AND AROUND THE COMMUNICATIONS STRATEGY. YOU ARE ABSOLUTELY RIGHT. BRENT IS NOW WELL AND NORTH OF 100. PEOPLE WERE TALKING JUST THREE MONTHS AGO THAT WE WOULD BE HEADING BACK TOWARDS 60 SO THERE'S A LOT OF UNCERTAINTY AROUND THAT. THAT IS WHAT IS DRIVING THESE INFLATION CONCERNS AND PUSHING HIS BOND YIELDS HIGHER.

THERE'S A HUGE CORRELATION AT THE MOMENT BETWEEN WHAT'S HAPPENING WITH ENERGY PRICES AND WHAT'S HAPPENING WITH BOND YIELDS. YOU ARE DEALING WITH THE AND YOU JUST DON'T KNOW EXACTLY HOW THIS IS GOING TO PLAY OUT. FRANCINE: WHAT DO YOU DO WITH BOND YIELDS RIGHT NOW? COULD YOU SEE THE U.S. 10 YEAR AT 5.5, EVEN 6%?

WE HAVE WASHED YIELDS GO HIGHER, WHICH HAS BEEN THE RIGHT THING TO DO BUT WE ARE AT A LEVEL NOW WHERE I DO THINK THEY'RE STARTING TO LOOK ATTRACTIVE. WE ARE 110 BASIS POINTS FROM WHERE WE WERE ON FEBRUARY. 27 YOU SEE THESE SORTS OF MOVES AND ULTIMATELY THAT TYPICALLY IS A GOOD INVESTMENT OPPORTUNITY. IF YOU LOOK AT THE WAY THE BOND MATHWORKS, YOU LOOK AT THROUGH HISTORY, A 5% LEVEL ON 10 YEAR TREASURIES TO START ADDING INTO FIXED INCOME IS A GOOD POSITION.

IF YOU LOOK AROUND THE WORLD, THERE IS A LOT PRESSED INTO CENTRA