>> bloomberg real guilt is brought to you by pimco, a global leader in fixed income. bloomberg real yield starts right now. >> coming up, treasury rally for a third street read -- we. we began with the, a bond market. >> the question is, what is driving lower schumer >> there

is a lot of supply. as low for a reason said controlling >> we're going to head back to 2%. but it does not want to be linear. -- it will not be linear. >> this whole idea -- she was a bit too early. >> we are setting the stage for june. >> the bond market rental, i want your take from each everyone of you. over last three c had a rally. many cases some better than. what is your read on that?

>> ivanka market -- you know we've got very strong print, i think mac was zero religion minds what we expect. you saw this informative variety of investors which caught the market/rise. had to in a rush. stashing nonsense you on markets, bond markets are still skittish. carol: what is your shake, just? jeff: i think there --

>> what is your take, just? eff? >> yields got to a level where if we look through this temporary search to what the fed is talking about where we settled in, will .8% gdp. yield levels back curve -- the expression to her should be, or to. i think that -- position argument. >> is innocent and with you? this is just about positioning.

what technical side she should wait sellers choose five is a strong technical argument there the fact that there is significant back cap and more support in the ashi reopening, obviously also the initial -- reopening, they're going to keep the front end rates accurate, i think that is more combination of these two factors. publishing that's 24 hours, the u.s. economy -- the room for

yields to rise. is that what you are anticipating the weeks to come? >> yeah, i think a lot of pollution assessment priced into the bond market. we might very will be in a good spot. very seo, look at the treasury spread with us for like evaluation treasury on march or -- as conditions improved, you should see the bond yields as well as treasury notes going higher?

>> what we have seen is that the big realization or reopening trade has began to down policy. a slow entering some kind of suck -- entering some kind of consolidation phase start. jerry 8 -- 30 degrees. in a high-fashion environment and a lot of upset on inflation price, so we do want to be a bit more cautious as how we are -- approaching high-yield market. i think investing a little bit broader perspective than that. what you're seeing are extremely tight valuations. income markets are more directly

impacted by liquidity, but when you think about the fundamental factory structure or economic exposure, it is too early to take those chips off the table. and it's just how and what insurance on best russian. find better expressions that economic risk and have much better valuations sees have some news role -- no -- bigger value if you have a bigger two. to play with this cycle is going to harder, -- if they are not always in the you. >> multiple legs this, one

inflation dynamic that is teaching us's terms of permit come from a valuation standpoint there has been a lot of upside. sinking around valuations having the father ahead, and also the different, which does me that the policy response eventually will have to catch up. final point would be that about

the exodus in the previous cycle, we live seen it wash out and that is what we have about this cycle. >> this framework for morgan, does that rent name you in the scene -- resonate with you and the team? >> it is hard to have a clear idea of what they should is going to the at that time. ultimately, they have their own rate at two half percent. they are not expecting inflation to remain above teaching percent. under the circumstances, i am not events to send ration think

you can run hotter beyond what is it that morgan stanley -- that fueled the debate? >> two things. the sustainability. the single element's if the objective is at is to have a broader and higher all the ladies, with respect the unemployment trade will probably sure. i think those are chewing bait -- think these are the two legs of the debate. >> i will add a third part, which is i agree that the combination monitoring is certainly the big story on the engine for a more inflationary

outcome. i think the challenge is, what the fed be able to wrap up have willingness to chant down that inflation. i call this the larry summers critique, to understand flat phillips curve benefiting from, whose -- this -- it is a double-edged sword. if you do see that inflation, the amount required to bring about -- and maybe more tolerable given its inches is on broader base measure of climate for -- keep referencing of employment over -- this is going to be an overhanging

conversation that we are going to strategy with sue slane monetary -- works great. very -- very -- this is bloomberg.

>> i am jonathan o.a.t. pharaoh -- i am jonathan ferro. this is bloomberg real yield. morgan stanley pricing seven eight $5 billion that. junk rated u.s. company casting a 12 month, the sheer volume already close to 100 19 billion, 40 4% of 2020. jeff, i talk about a little bit. you're not have gone back and forth on that and helpings of change, i think what has happened with yields over the last six months, many people have thought about bringing in

-- you made the point that people have reduced their rate's closure, but increase their effective equity dashed equity exposure. >> a simple way of thinking about it is that high-yield bonds are not bonds, they are stocks in bond loathing. another way of saying that high-yield bonds are -- higher risk. because of that higher risk component, you have a higher we. that you recognize that the blonde portfolios not behaving way lies should have to. more nuisance of i deals that

high-yield. we went up with is a portfolio that increases the income and yield, but it just so why shake more exposure and wish closer you lost some of that what role you if you are going to rain from, most meeting sources your again hiring richie so true. that is really the conversation. treasuries from ralph that -- -- >> is this more of a pricing issue or structural issue for

this cycle? >> i think they will rise gradually for the remainder of the year. underperformance equities news sort of omarosa will. people are grabbing as much yield in the fed truly purchasing assets. al capone diversification, what does it look like? can you walk me through where the next step goes? what is your suggestion schumer -- suggestion? >>? recognize the loss of balance does not mean that you will for you is reached year.

if you're going to accept more risk, you have to know what your rumors tolerance is. it is not acceptable on its word and the whole conversation around alternative forms and diversification comes other ways which i can mitigate some of the risks i am taking on areas in my portfolio i am looking for upside participation, but trump gave the downside. looking across those seeps, that is how i really solve the problem. >> perhaps being defensive,

would that be an example of what you are suggesting? >> is exactly right. there are ways to formulate defensive equity exposure. lastly, -- how you formulate those matters, because sometimes there can be -- that can undermine the performance of those definitions. -- of definition. d -- human will get a strategy for defensive equity. witnesses sound like, was sources moment. we think it offers a decent balance. we are framing it as a carrying

well. credit you have bought -- the pockets of the market. that you are saying. also some multi-of the high-yield market. as dawkins well and shame. shifting it to morton. , machine on the current spreads. >> the week ahead, featuring a fed decision and news conference from jay powell. this is bloomberg. ♪

>> i am jonathan ferro.

this is bloomberg real yield. coming up next week, i monday, on wednesday, the big day, a fed decision at the news conferences sharing jay powell. you need gdp figures and thursday is this is the ahead for you? just -- is this just a pause ahead for you? >> yes. that's what we are looking to see, if it change wording also looking to see there's housing

crisis is being dominating the outcome. for liking effectiveness and substitution nation. no militancy see. dashed to a changing balance of risks. -- to see if there is any change in the valve of risks. >> there is more risk for how they are framing the evolution of the virus. the base case still remains, middle of the year for some kind of announcement. >> a 32nd final word -- 30

seconds final word. >> jonathan what you miss for next week is the announcement of the american families at. that may end up being the bigger story. >> we appreciate that, i need your help sometimes. thank you. thanks very much guys, from new york city, that does breast. 6:00 p.m. in london. as always, this was number real yield. this is bloomberg. ♪

>> i am mark crumpton with bloomberg first word news. some surprising news from researchers from johnson &

johnson with the coronavirus vaccine have identified 15 people with rare blood clots linked to the j&j shot. that is more than double be cases that led to the cause of the vaccine. they meet with ecdc today to discuss what do not. that underscores how much she pandemic has changed even the most firmly established traditions washington. there were only be about 200 people in the chamber, the departure of the usual cramped room filled -- with and guests. mr. biden spoke on day two of the virtual climate summit. pres. biden: i very heartened by president putin'll