美债收益率飙升，市场重定价通胀与加息预期

WE START RIGHT NOW. COMING UP, A PERFECT STORM HITTING THE U.S. BOND MARKET. A WEEK THAT AUCTION AT HAWKISH FED SPEAK I TREASURY YIELDS TO MULTI-DECADE HIGHS. AS FED OFFICIALS SOUND THE ALARM ON INFLATION. WARNING THERE IS SO MORE TO DO. SOFTBANK PAYS UP AS IT PUSHES THROUGH THE LARGEST CORPORATE JUNK BOND OFFERING ON RECORD. WITH WARNINGS OF AI RISKS. WE BEGIN WITH THE BIG ISSUE. A BOND ROUT SENDING YIELDS TO MULTI-DECADE HIGHS.

THE INFLATION STORY IS ONE YOU HAVE TO PREPARE FOR.

INFLATION REMAINS INCREDIBLY STICKY.

THE ECONOMY IS IN A STRONG PLACE TO START.

I LOOK AT THE GROWTH BACKDROP AND IT LOOKED VERY SOLID TO ME.

WE SEE STRONG ECONOMIC OF THE HEAD.

THERE IS PLENTY OF ROOM.

WE STILL LOVE YIELDS. SO MUCH AS BEEN PRICED IN ALREADY.

WE THINK THESE PRICES ARE GOOD.

WE LOOK AT THE POTENTIAL FOR YIELDS. AND WE SEE IT HIGHER, NOT LOWER.

THE FIVE-YEAR NOTE STOLE THE SPOTLIGHT THIS WEEK AFTER AN AUCTION HAD WEAK DEMAND. THIS LED TO SET UP 5% COUPONS. THOSE ARE NOMINAL YIELDS. LET'S LOOK AT THE YIELD WHEN YOU ADJUST FOR INFLATION. IT HAS NOW CLIMBS TO 2.8%. THAT IS THE HIGHEST SINCE OCTOBER OF THOUSAND EIGHT AND WE KNOW WHAT HAPPENED THEN. THE INFLATION FIGHT IS NOT OVER. THE COST OF WINNING IT MIGHT BE GROWTH. AUSTAN GOOLSBEE SAID THE PAST CITIES PRESENT INFLATION MAY NOT BE EASY.

OUR POLICY RESPONSE TO PERSISTENT SUPPLY SHOCKS MAY NOT BE AS LARGE AS WE SAID. BUT IT IS UNLIKELY TO BE PAINLESS. THE ONLY WAY BACK IS THE HARD ONE. SCARLET: JOINING US NOW IS BLOOMBERG'S CHIEF U.S. ECONOMIST. WE THINK ABOUT WHAT WE SAW YESTERDAY. WITH YIELDS SPIKING. I CANNOT REMEMBER THIS.

THAT IS REMARKABLE. THAT A SECOND-TIER INDICATOR CAN MOVE THE MARKET LIKE THAT. IT IS DRIVEN BY BENIGN EXPECTATIONS. GROWTH IS BOOMING. THAT IS THE REASON WHY EVEN IF THE FED WERE TO GO ON A HIKING CYCLE, THAT WOULD NOT HAVE A GROWTH AT ALL.

IT SOUNDS LIKE YOU BELIEVE THERE SHOULD BE MORE EXAMINATION OF THIS.

CORRECT. TO INCREASE THE TERM PREMIUM. THERE IS A MODEL THAT SUGGESTS THIS IS LIKELY DUE TO STRONGER EXPECTATIONS. THE OTHER MODEL IS DRIVEN MORE BY TERM PREMIUM. THAT STORY WILL BE MORE ABOUT CONCERNS ABOUT FISCAL SUSTAINABILITY. IT WOULD LIKELY BE DAMPENING GROWTH NATURALLY. EVEN WITHOUT THE FED HIKING RATES. SCARLET: THANK YOU SO MUCH. WE ARE GOING TO DIG INTO ALL OF THIS WITH OUR MACRO ROUNDTABLE. IT FEELS LIKE WE ARE GETTING A REPRICING.

WHAT ARE INVESTORS REPRICING FOR?

I THINK THERE ARE A FEW THINGS HERE. IT IS BECOMING CLEAR THAT THE FED IS CONCERNED ABOUT INFLATION BUT ALSO THE SPEED OF HOW INFLATION IS COMING DOWN. THERE WILL BE MORE RATE HIKES. I THINK THIS IS RAISING THE STAKES OF INFLATION. THERE IS STILL A LOT OF UNCERTAINTY IN THE MARKET. SCARLET: WHAT DO YOU THINK? HOW MUCH MORE DOES THE SELLOFF HAVE TO GO?

I THINK THERE IS ROOM FOR TO GO FURTHER. THERE IS A REPRICING OF FUNDAMENTALS. THAT IS HARDER TO PREDICT. IN AN ERA WHERE THEY DON'T WANT TO SHARE INFORMATION. THERE IS ALSO A REACTION IN MARKET DYNAMICS. WE HAVE SEEN QUESTIONS AROUND FLOWS GOING THROUGH. THERE IS SET MARKET DYNAMICS THAT CAN AT TIMES EXACERBATE THAT. SCARLET: THIS IS A GLOBAL SELLOFF. THE U.S. IS NOT IN ISOLATION. WE ARE CLEARLY AT THE END OF THE LOW RATE ERA.

ARE WE IN TRANSITION OR HAS THE TRANSITION ALREADY HAPPENED?

I THINK A LOT OF IT HAS ALREADY HAPPENED. I WOULD LIKE TO THINK WE WILL BE IN AN ENVIRONMENT WHERE SOME OF THAT UNCERTAINTY COULD BE TAKEN OUT. REGARDLESS OF THE OUTCOME OF MIDTERM ELECTIONS, THIS COULD BE SOMETHING THAT COULD BE BEHIND INVESTORS. A LITTLE BIT MORE CLARITY. WE WILL HAVE HAD ONE MORE FED MEETING BEHIND US. PERHAPS MORE CLARITY AND CREDIBILITY THAT THE FED CAN LOOK TO EARN TO EARN MARKET TRUST. PERHAPS THERE IS MORE CONFIDENCE.

THEY ARE WILLING TO DO WHATEVER IT TAKES. I DO FEEL LIKE WE ARE ALL IN DETAIL AND. IT HAS BEEN A CONFLUENCE OF EVENTS THAT HAVE TAKEN US THERE.

IS A RATE HIKE IN OCTOBER A KNOWN?

I THINK IT IS VERY CLOSE CALL. WE WILL GET SOME MORE DATA BEFORE THE MEETING. IT IS CERTAINLY NOT A GIVEN. IT IS SOMETHING THE MARKET WILL BE WATCHING VERY CLOSELY. SCARLET: YESTERDAY'S AUCTION WAS THE SECOND WORST EVER BY SOME MEASURE.

I THINK THE RISING RATES OVERALL ARE CLEARLY A FOCUS. I WOULD LOOK MUCH MORE IN AGGREGATE. HIGHER YIELDS ARE IN FOCUS. IT IS NOT REALLY NEW ISSUE. IT REALLY WAS A KNOWN THING. SCARLET: THAT MAY BE THE CASE BUT INCREASINGLY FEELS LIKE THESE AUCTIONS BECOME AN EVENT OF THEIR OWN. DO YOU THINK THEY WILL BECOME AN EVENTUAL RISK?

IT IS POSSIBLE IT WILL BECOME AN EVENT RISK. YOU WILL HAVE THE DEMAND FOR THESE AUCTIONS. VERY DIFFERENTLY FROM WHAT WE JUST SAW. I THINK THE BIGGEST TAKE AWAY IN THIS MARKET IS FOR CLIENTS WHO HAVE BEEN SITTING IN CASH, IT IS VERY HARD TO CALL THESE. BUT THE BIGGEST TAKE AWAY IS THE INFLECTION POINT. ARE YOU GETTING COMPENSATED FOR IT? I THINK WE ARE STARTING TO SEE THAT. THERE IS THIS INCOME COMPONENT THAT IS BECOMING VERY ATTRACTIVE FOR LOWER TERM INVESTORS.

ANYWHERE ACROSS THE CURVE . IT IS MORE THINKING OF THIS. IF YOU ARE FIXED INCOME AND YOU'RE SITTING ON A LOT OF CASH.

I WOULD AGREE. I THINK WE ARE STARTING TO SEE SOME GOOD INTEREST FROM OUR CLIENTS ACROSS THE BOARD. IN TERMS OF INTEREST IN THE BOND MARKET. THE MARKET FUNCTIONING LIQUIDITY AND SPEED OF THE MOVES RIGHT NOW IS ADDING A BIT OF A LIQUIDITY RISK PREMIUM ON TOP OF CURRENT MARKET LEVELS. OF COURSE WE HAVE TO STAY FOCUSED ON WHAT THE BROADER ECONOMIC SORRY. THERE ARE MANY OTHER THINGS IN EVOLUTION RIGHT NOW. LOOKING AT AI OR THE PERFORMANCE OF RISK ASSETS.

THEY HAVE WEATHERED THIS RATE RISE DECENTLY WELL. BUT I THINK THAT IS SOMETHING THE BOND MARKET WILL CONTINUE TO BE FOCUSED ON. SCARLET: I LOOK AT VOLATILITY MEASURES. IT IS HIGH. TO WHAT EXTENT DO YOU THINK RISING VOLATILITY IS TURNING OUT INVESTORS WHO WOULD NORMALLY BE DRAWN TO THESE RISING YIELDS?

I THINK IT SHOULD CONTRIBUTE. WITH SOME OF THE BROADER GEOPOLITICAL AND EVOLUTION PHASE THAT WE ARE IN. I THINK IT IS RELATIVELY REASONABLE THAT WE SEE THAT. AS I SAID EARLIER, THE STRESS WE HAVE SEEN IN THE MARKET SCARLET: EVERYONE IS TALKING ABOUT HOW THIS TIME AROUND WE HAVE STARTING YIELDS.

WE TALKED ABOUT THE CORRELATION BETWEEN STOCKS AND BONDS. ONCE YOU HAVE STARTING YIELDS, IT HELPS PROVIDE A CUSHION. RATES WOULD HAVE TO MOVE ANOTHER 75 BASIS POINTS. THAT IS A MASSIVE MOVE. THAT IS THE HIGHER STARTING YIELD. IF YOU HAVE RATES FLAT LINE OR GO SIDEWAYS ARE MARGINALLY MOVE LOWER, THAT STARTING YIELD WILL SEE A LOT OF THE RETURN AS WELL. YOU CAN BENEFIT FROM PRICE APPRECIATION IF RATES MOVE DOWN LARGELY FROM HERE.

MANY INVESTORS WERE BURNED FROM THIS NORMALIZING TO A HIGHER GROWTH ENVIRONMENT. THIS IS BACK IN WHEN THEY WERE AT THAT RATE. NOW IT IS A DIFFERENT STORY. SCARLET: GOOD STATUS. THANK YOU SO MUCH FOR COMING IN. WE HAVE SOME BREAKING NEWS THAT WE WANT TO GET TO RIGHT NOW. CNN AND MS NOW SAY THEY WERE GRANTED ACCESS TO THE WHITE HOUSE AFTER A JUDGE ORDERED THE WHITE HOUSE RESTORE ACCESS TO THEM. THE PRESIDENT HAD BANNED THEIR PRESENCE BECAUSE HE DID NOT LIKE THEIR COVERAGE OF THEM.

LET'S BRING IN OUR NEWS REPORTED LIVE FROM WASHINGTON WITH MORE. WAS THIS A SURPRISE GIVEN THE JUDGE'S WAY OF RESPONDING TO THE INITIAL LAWSUIT?

IT WAS NOT A SURPRISE INSOFAR AS THE JUDGE RULED ALREADY THAT THE WHITE HOUSE NEEDED TO REINSTATE THE CREDENTIALS FOR THOSE ORGANIZATIONS. WHEN WE SHOWED UP THIS MORNING AT THE WHITE HOUSE THEY WERE NOT ALLOWED IN. THEY HAD THEIR PRESS PASSES TAKEN AWAY. THIS IS NOW THE LATEST DEVELOPMENT WHICH IS AFTER SEVERAL HOURS THEY HAVE BEEN ALLOWED BACK ON CAMPUS. THAT IS NOT MEAN THIS IS OVER. WHAT WE WILL BE WATCHING TO SEE IS WHETHER OR NOT THE PRESIDENT IN THE WHITE HOUSE ALLOWS CNA AND IN PARTICULAR BACK INTO THEIR PULLING RESPONSIBILITIES AT THE WHITE HOUSE.

AT LEAST THE BIT ABOUT THEM GETTING BACK ON CAMPUS IS A PLEASANT DEVELOPMENT FOR THOSE NEWS ORGANIZATIONS. SCARLET: THANK YOU SO MUCH. OUR WASHINGTON CORRESPONDENT JOINING US. THIS IS BLOOMBERG REAL YIELD. SCARLET: IT IS TIME FOR TH