d. saving you hundreds of dollars a year. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. this is bloomberg real yield. coming up treasuries dropping payrolls beating forecasts. the president readying another round of tariffs on chinese imports. leaving emerging markets on edge and policymakers struggling. issue,n with the big another jobs report. >> i think this is one of the best numbers ever. i am in equity guy, i like good growth.

go to fed will have to more times this year. >> that will be the market reaction that is appropriate reaction to these numbers. >> everyone is expecting for the job growth to expect to margaret -- moderate. >> the reason why it is one of the best numbers ever, is we are so late and to still be averaging 200,000 jobs -- slow down a little that please. is a seniore portfolio manager. fixed income strategist. income or folio manager at jpmorgan. where is the jobs growth coming from? how do we keep doing this every single month? >> business services area has

been pretty strong. finance has done well recently. we are seeing pick up in construction. that has helped the wage numbers because those are still good wage producing jobs. it continues to tick away steadily. >> there is nervousness the wage growth is around the corner. that nervousness is coming from the treasury market. your view on whether you think the trend that can begin or last? , use ofnk it is a trend the wage growth in 2015. if you look at the trend in we havehourly earnings, been trending steadily higher. we are nowhere near the highest which had the7 average earnings closer to 4% there has been a steady pickup. >> it is interesting that we

felt for quite some time phillips curve is not dead. as we get low and unemployment rates and keep creating jobs, it is no surprise if wages are starting to cap. the relationship between inflation and wages has also flight quite a bit. it is not clear that companies will be able to pass through higher wages to higher prices. >> i think most people will come out of this report and believe that the rate hike in september is now on. can you reconcile the trend for the data with market prices going up there next year? >> if you look at the forward rates will level off next year. the thinking is that we are getting a boost from fiscal

stimulus that will give us this growth. we are getting late cycle pickup in inflation. we are looking for inflation numbers to flatten out. the pace of growth is likely to slow once the fiscal stimulus has worked its way through. the global economy is softening and that is a headwind for us going forward. >> the consensus if the yields , everyonewer despite who sits here says that to me. walk me through what you guys are looking for in terms of the direction of treasury yields. ? >> we expect yields to trend higher. answered by the trade concerns and growth elsewhere looking somewhat softer. that is one side of the equation. when you look at the strength of the u.s. economy and factor in the fed is reducing its balance

sheet, that supplied by central banks will start becoming a drag on the market area and you factor in things like increased easyrate issuance, it is to see how we can get the yield to pick up into the end of this year. we think yields will be trading at 3% and we see further upside as 2019 progresses. >> is he to forget the last year this time yields were close to 2% of the u.s. 10 year. we have had a big turn over the last 12 months. >> we have. looking backwards we have been short on duration. we remain moderately short. we think the fed will tighten twice this year. there is a risk of a positive year. we think the macro and monetary

policy factors all point to higher rates from here. it is interesting to see how many of my colleagues and other firms are getting more bullish on rates. i think it might be a little early. that said i am expecting the 10 year -- not expecting it to have four or five anytime soon. >> what is interesting is how comfortable the fed appears to be to invert the yield curve. week thatgested this it would not stop him from rising interest rates in inverted the yield curve. if you have a fed that is saying guess what we are comfortable doing this, don't you have to stay with the trade? >> yes you do. andre also short duration we are looking for a flattening yield curve. apparently, and inverted yield curve. i watch the very short end of the curve. i keep an eye on the one-month

t-bill rate and the forward market and if you look at that, it has been holding in their at 2.6. if that stays flat in the fed raises two more times we are almost at an inverted curve. i don't think it is different this time that is important. we think there is more risk that we see some slight steepening. the key thing is when you look at what is happening with the supply side of things, the issue with the yield curve is in the past and inverted curve has been a good indicator of a recession. when you overlay that with isngs like the i.s. am, it less of a concern for markets at this point because historically when the curve is inverting you

have the indicators looking quite soft. as far as the u.s. yield curve goes, more pressure on the backend because of the supply coming to the market. not and a meaningful sustained matter. >> where does it come from? biggest is the global term premium is low. that is -- it is encouraging that european growth is starting to bottom out and we are starting to see the pickup on growth. expect europe to be above trend allowing the ecb to move in the next year or so. similar to japan, that is quite encouraging. when you start to see other developed ranks adjusting their exiting policy then you get their pricing in global term premiums. the want to point out,

ofve has a track record predicting recessions. it flattened and overwhelmed the positive term premiums. now we have negative term premiums. by anyone's estimation. as a result, it is hard to say that the new york fed president curve and iat the have to stop. i think that might be going little too far. >> if you are looking for a 12 to 18 month indicator on an inverted yield curve curve, on a nominal curve it would have to be deeply negative. >> there was a fed paper that was suggesting if you adjust, but just for term premium it is a better predictor when you adjust for the term premium. >> thank you to our guests. coming up, the auction block.

volatility and uncertainty wreaking havoc on russia's that market. that conversation is around the corner. you're watching bloomberg really yield. ♪

this is bloomberg really yield. i want to have to the auction block where we start of the united states. the most active week of 2018 for investment grade issuance and supply. 50 $3 billion in sales. cigna carried the heavy lifting. it is the second-largest high-grade of the year. russia had second auction and as many weeks.

they offer rule notes that cited heightened market volatility for the cancellation. i've been asking for the week, does anyone want to dip their toes in emerging markets yet? >> it is probably being asked and a lot of committee meetings across the industry. we feel that the contagion risks which are real and are largely being transmitted across em portfolio channels sell what's easier to sell. explain a lot of what is happened so far. there are opportunities being created. it is hard to a certain valuation with a lot of confidence because there are other potential shoes to drop.

we are looking for opportunities. how active have you been? >> we have been cautiously we engaging in markets. surprisingbeen quite how underwhelming the reaction has been. we are long-term investors. we are dipping back to the stories that we like. some areas in the cif we are looking to add risk there. we are selectively buying. >> had you feel about the china proxies by now especially considering the possibility of more tariffs? how do you feel about the stock -- chinese proxies with that in the background? >> i think the chinese proxies will remain under pressure. , wecially in the context

are not seeing at this collation. with the latest headlines, it does seem a safe likelihood of escalation. chinalicy response from will likely be to let the currency depreciate. that will mean that the proxies will also suffer from that slight depreciation to keep their trade attractive. long chinaputting on proxies. we are looking at opportunities. in trade wars, everyone loses but there are relative winners and losers. you have seen companies starting to announce shifting manufacturing out of the u.s. into asia. just to avoid the tariffs. we are watching closely to see how those stories develop and a market like thailand looks like a potential winner in this trade war but it is how you find that

long trade. >> that is true. getting in and getting out of the trade without making too many ways. -- can you walk me through the times you have been active this week, have difficult has it been to execute the trade? >> this week has been better than two weeks ago. wentall of our correlation to one in mid august. liquidity conditions are better as more people come out from holidays. is, ineresting thing liquid if you are trying to buy or sell it is not a one-way market it just seems like a market where the street investors have decided to take a step back. within sectors it varies. you have the local backstop.

a local south african investor is thinking i don't want to be in equities i am going to buy our local bond market. the dollar space has been more challenging but certainly not as bad as it was a few weeks ago. >> is is still too early? >> yes. we are not getting enough yield yet to compensate for the risks. we still have the risks of the tariffs. what china does in reaction to that. we are seeing global trade volumes shrink. that is not a good sign for em which is very trade independent. i have been through too many of these. i remember 97 and 98 very well. event at the is an bottom. it doesn't feel like we have hit that event. >> i want to give our audience a flavor of what you are talking about. this chart comes from you. sovereign spreads

are relative to treasuries and where we have been in previous issues. that is where we are on the bottom right there. your view on where we are and where we need to be to get you back in the game? >> i would prefer to be over 400 basis point on that spread. is the recent history, that does not include the great financial crisis and a few other things that are not analogous now. to 100to see closer basis points from here before i get comfortable. >> that level has been talked about with us as well. when you look at the broad em marketplace you have a variety of stories. idiosyncratic has more in systemic. we are not confident that will remain the state of nature. as china gets worse, i agree.

widening in good markets deserves reviewing those opportunities. the spread still has to go wider. >> the upside is the chinese market is stabilized. be some people watching this who say 100 basis points is greedy. be theretunity might right now. what would you say to that? there's probably some opportunity but broadly speaking, i would rather not try to catch the falling knife. and sit back and be greedy. thank you to our guests. i want to get a market check. yields higher through the curve. the 30 year yield up by eight basis points at 3.1%.

on this program, the final spread and the week ahead. this is bloomberg real yield. ♪

bloomberg yield -- really yield. coming up over the next week, meetings of the leaders from the u.s., japan, and china. coming out onok wednesday. me is cap he jones. -- cap he jones. i want to get the view from london. what are you looking for for the next 12 months? that they have

given themselves very little an a lotom, there is of excitement. exiting qe is world telegraphed on its way out. extent they take into account the periphery and changing the tone of their statements and at the language around growth given we had a pretty soft start to the year. making the end of summer more likely than later down the year. >> i would agree. it is mostly about the balance sheet decisions going forward and forward guidance. next year we will have someone new in charge with the ecb. that is a wildcard as well. ask might not be a german area >> that is surprising because we all thought we were going to get a german and now it is up in the air. it is less predictable.

>> that might be positive for risk. >> a german might be too tight. that is obviously a big event. that ecbis a feeling policy is on autopilot. do you share that feeling? >> they endeavor to be boring for the near term. our taper tantrum was not a lot of fun for the marketplace. it was a change. the ecb is investing in their effort to avoid such an outcome. they don't want to destabilize the market. can they keep it boring? >> >> they can. outside events good for some to be -- to soften their stance going forward. >> that's where i want to leave this conversation. i want some quick final questions with quick answers as well.

do we were around out the year with a fourth rate hike? >> yes. >> yes. >> yes. >> is the path of least resistance for 10 year treasury ?ields higher or lower higher longer-term lower. >> higher. >> final question. dollarntina or turkey, debt for 12 months have to sit and hold selling and 12 months do you by argentina or turkey? >> argentina. >> can i pass? argentina. >> argentina.

>> great to have you with us. it is been great to get your thoughts on a week of fixed income. from new york, that does it for us. we will see you next friday at 6 p.m. in london. thisincome. was bloomberg really yield. this is bloomberg tv. ♪ i'm mark crumpton.

national security concerns, president trump says the justice department should investigate the identity of the anonymous new york times op-ed writer. this week's explosive piece

which was published on wednesday claims there is a resistance working with the trump administration to thwart the president's most dangerous rally inalso during a billings montana yesterday, the president said that unelected operatives are a threat to democracy itself. sad for thehe is mainstream media. barack obama charged back into politics today with the details for trump's style of governing warning dire consequences if american voters stand on the sidelines during the november midterms. he told a mostly student audience at the university of illinois the privileged and powerful exploit the politics of fear and resentment to keep their status. >> you happen to be coming of age during one of those moments.