♪ >> i think the three opening the long way to go -- this reopening has a long way to go. >> we think the market treads water for a bit. >> it is likely we won't have certain tl around -- won't have certainty around the underlying inflation process until well into next year. >> we think inflation will abate, but we are in a pretty unique period of monetary policy. >> we have a real recovery and process. i don't think the roaring 20's are the right analogy. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a simulcast on radio and television. we welcome all of you, with markets nicely on the move. romaine bostick doing it again for jon ferro today. we will get to the meme of the moment with bostick. we've got to look today and to

washington, and the pageantry of the president and dr. biden moving across the atlantic to the united kingdom and the g7 meetings. lisa: the importance here is the idea that president biden has been trying to shore up the alliances that traditionally have been the mainstay of the u.s. international policy at a time that that role has been highly diminished as far as the global leader after president trump. we are looking for any kind of inclination as to what concrete steps allies will take to counter china. tom: the backdrop here is the market. we will do the meme thing with romaine in a moment. we may get a 1.49% handle on the 10 year yield, unimaginable. lisa: unimaginable because we are seeing inflation expectations and inflation surprises come in at the hottest paste in 13 years -- the hottest pace in 13 years. we got china production input prices rising to the highest since 2008, the fastest pace.

all of these inflationary pressures are coming and getting shrug off by investors looking at central banks around the world who are not going to move rates, but it really raises the tension, who is going to blink first? who is getting it wrong? or is this the way it is going to be for a long period of time? tom: the s&p 500 out near new record highs, all of that pushed higher by the next dow component, close their health -- component, clover health investments. romaine, how do these companies get selected to be the next moonshot? romaine: i wouldn't overthink it. there's a lot going on here behind closed doors, or at least in social be you with the door open -- social media with the door open. they decide something maybe seems fun, something seems shorted heavily, something maybe seems like it might actually have a good fundamental case to be made. no one really knows. yesterday we saw clover health was up 109% at one point, on the

day up by 85%. wendy's, also in a clickable he higher for reasons that -- also unexpectedly higher for reasons no one seems to know. if you are looking for fundamental reasons or even just a practical reason, you are probably not going to find it. tom: great. that's not the answer i wanted. you are our expert on this. do you say where's the regulation, or do you just say let's go? romaine: we posed this question yesterday on "the close" to a couple of people. how do you regulate something that is so disparate? you go back into a previous time before social media, it was maybe a little easier to target market manipulation. but here you just have basically crowd sourced decision-making, and who is the ringleader here? who do you .2? -- who do you point to? i'm sure there's magic behind the throne here, but no one has been able to identify it.

tom: there's fundamental research done at the upper, what'-- at the abramowicz household on wendy's pop in higher -- wendy's pop in higher. romaine: i think it is the strawberry salad. tom: how about dave's double? let's go to the markets right now. we've got a wonderful guest ahead. lisa, help me out here. dxy under 90 is a big deal. it does indicate once again weaker dollar. lisa: one thing i find notable is green across the board. the reason why this is interesting is because increasingly, you are seeing yields higher -- yields lower, excuse me, price higher for bonds, while also seeing stocks climb. this paradigm is continuing, the idea that everything can continue to rally in tandem, even icc commodities reach the highest level since 2018.

that is certainly what you're seeing from crude as well. right now what i am looking at in the day had come at 10:00 a.m., april wholesale inventories. interesting to see the drawdowns. each data point feeds into the supply and demand dynamic. how much are we starting to resolve some of the supply chain disruptions that have become an issue for somebody consumers, retailers, and manufacturers? at 10:30 a.m., eia crude inventory. tom: pie i/o -- eieio inventory. lisa: are we going to see a similar surprise to we -- to what we saw last week? this has been incredible discipline at a time when oil prices are the highest since 2018. at what point will they start to be lured back into producing as a result of higher prices? at 1:00 p.m., the u.s. planning

to sell $2 billion of 10 bill notes -- of 10 year notes. i think this is fascinating. tom: let's stop the show now. stuart kaiser wants to know why this is fascinating. lisa: because these options are going really well at a time when expectations are the highest we have seen in years and when actual input costs grow up -- costs go up dramatically. it looks like there's inflation. it smells like there's inflation. the data shows there is inflation. if you look at the bond market, they are shrugging it off and saying, forget about it. tom: what you don't see on radio is lisa gets wound up on bonds. she looks like elsa in "frozen." [laughter] lisa: ok, let's move on. tom: stuart kaiser joins us, ubs head of equity and derivatives strategy. is your world linked to the shock we see with low yields? stuart: good morning. it definitely is. what you have seen recently is

probably pretty positive for equities in the sense that inflation breakevens and inflation expectations have started to get to the level at which we thought it was going to become disruptive for markets, but now with the 10 year breakeven back below to 40 -- below 240, that has relieved the pressure a bit. we had a fast and high volatility rise. the fact that those have come off a bit has reduced a little pressure on markets, but there's definitely a link between the two, no doubt. lisa: where's the source of potential volatility here? stuart: for markets, i think fed policy is going to be the number one source of potential volatility over the next couple of weeks. obviously we get a big inflation print thursday. ubs is well above consensus. i think that will test the recent moves in markets. you've got tenure breakevens up to 260-ish. i think it will be interesting to see how that plays out. how does that impact fed thinking?

do the dots move? do they start to speak more positively about the growth outlook? and then 2q earnings upon us at that point. romaine: but why am i not to believe that what the market is pricing in right now is effectively what the market foresees here? if we do get a higher than projected read on inflation, what would take us anywhere away from 1.5% on the 10 year yield? stuart: it's a great question. what most people are saying is a lot of the inflation is coming from things like used car prices, which they expect to be transitory. it hurts me to say that term, but that's the one that is out there. what would get it to move would be do you see things like wage inflation, rent, goods prices inflation that might be a little more sustainable. so i think it is going to be what are the drivers, and is

that start to dislodge things. if you are going to say what could be most disruptive for markets, it is going to be longer-term inflation expectations. the fed looks at survey based inflation, so things like university of michigan long-term inflation start to move, if the inflation term structure starts being inverted from five year to 30 year. it is a high inflation print, and to components of that print that looked less transitory than maybe the fed and the markets are currently expecting. lisa: are we overplaying the inflation story, which we are not going to have an answer to until the end of the year, and perhaps underplaying some of these factors like earnings disappointments, especially given how high expectations are? stuart: it is hard to ignore the inflation -- the cadence of the inflation data. an investor can't ignore that stuff as it is happening.

i think people are responding rationally to the data they are seeing. in terms of earnings, expectations i think are high at the single stock level, but if you look collectively, s&p 500 eps for next quarter i think still shows sequential decline versus last quarter. we do think there is the potential, post fomc, as people start to look at earnings and sharpen their pencils, i think earnings could turn out to be a positive catalyst over the course of the rest of the month. tom: we've heard that now, this is the second time. sharpen our pencils as we go to earnings. of us, we will do that here on "surveillance." we look forward to you sharpen your pencil with us in a couple of weeks as well. romaine, we've heard that now twice. earnings will be interesting. romaine: it's one of the reasons why i think you are seeing the market trade a little bit of water here. a lot of what is happening in the macro environment feeds into earnings. they are still sort of on edge

to see what happens with the q2 number. tom: the pendulum of drawdown is tangible. [laughter] it is just amazing to me how the equity markets are on the edge of correction. lisa: let's not get carried away. mike wilson of morgan stanley yesterday was talking about how he does expect potentially a correction in the near term on the s&p. he talked about the earnings disappointments, the potential for that evan how expectations are, but also talked about how higher taxes would make -- would take a material bite out of earnings. goes to policy uncertainty, this question of visibility in markets. romaine: did we basically have a mini correction at the start of may? tom: "the close" has mini corrections. lisa: we've got pendula. tom: i mean, come on. [laughter] a mini correction?

romaine: well, dow futures on the day -- lisa: you are going to quote dow? wow. tom: i think it screams sell to all cash. [laughter] ritika: with the first word news, i'm ritika gupta. they call themselves the problem solvers caucus. the group of house democrats and republicans has come up with a plan to break the logjam over infrastructure spending. last night they agreed on a total spending package of one point $2 trillion. president biden has called for a $1.7 trillion plan, but yesterday ended talks with republican senator shelley moore capito after they failed to reach an agreement. the senate has overwhelmingly passed a bill to help the u.s. compete with china. it calls for almost $250 billion

for manufacturing and technology. still, the bill's fate in the house is uncertain. the u.s. has loosens the travel warnings for dozens of countries, including canada, france and germany. it is a move that could ease airline restrictions for people one to go overseas. the state department changed its warning for dozens of countries -- of countries from do not travel. in the u.k., chancellor of the exchequer rishi sunak is expected to make the case that financial services should not be included in the plan to make multinationals pay a minimum corporate tax of 15%. that includes global banks with

head offices in london. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ oomberg. ♪

>> with negotiations on going with the white house on infrastructure, i think a

significant roadblock. republicans are committed to working on infrastructure the way that most americans think about and for structure. roads, bridges, waterways, at braun bad -- and broadband. the administration's including lots of things that are not what the traditional infrastructure ideas would include. tom: the gentleman from wyoming, senator barrasso. michael mckee beginning his preparation for the trek to wyoming for the jackson hole meetings at the kansas city fed. mike and i headache talk about -- mike and i had a quick talk about that yesterday. certainly on infrastructure, the spirit is there as well. where there is agreement is on china. as the president leaves for a g7 meeting, china is in focus. wendy benjaminson will join us now, bloomberg's politics editor. wendy, it is such an interesting thing, i bipartisan view on

china, and then the president goes to a europe that is not in tight agreement. explain that dynamic for the president as he travels to the united kingdom. wendy: the president leaves today for the g7 summit in cornwall, and then he will go on for lots and lots of meetings that include everyone from queen elizabeth to vladimir putin, so it is a big trip for him. it is his first big foreign trip as president, and as the eu councile president said yesterday or the other day, americans are welcoming back the united states. tom: but is china back? we heard this from dr. bremmer earlier, there's some real nuances here, some nuances in the atlantic china debate. wendy: president biden and the senate have set up an

infra-structure to begin to -- and the administration have set up an infrastructure, if you will, to compete with china on scientific innovation, and europe isn't quite ready to compete with china as much, so it is an interesting dynamic. lisa: listening to that plan that was passed yesterday in the senate, how much does rearranging the deck chairs in terms of shuffling money from one pocket to another and then putting it under a headline that looks politically attract versus a meaningful initiative that could actually shore up u.s. competitiveness? wendy: you really hit the nail on the head there. obviously this is a big political success for both republicans and democrats if it passes the house which has a whole different idea for approaching this. but it does shuffle the money around a little bit and emphasizes the national science foundation as the one agency that will corral all of this

innovation and technology and push the money out to places where it will go. it is not clear exactly how much of this is new money, or it is just saying let's go eat with china. it shows biden as being tough on china and gives the republicans the tough on china thing, the messaging for the 2022 election. i know the republicans are trying to make biden seem soft on china, and this will in oculus the democrats a little on this. lisa: perhaps, although you have to wonder at a time when tech is changing dramatically, do we have a sense of the ways in which the united states wants to compete, seize the most competitive frontiers? it is not necessarily going to the moon. what is it? wendy: it is competing with china in a more robust way, i

think mostly on semiconductors, on solar manufacturing, where china is really cleaning our clock right now. and other innovations where the u.s. could do more if there were sort of a concerted effort, but it is getting progressives to agree with republicans on where that money should go, whether it is clean energy or fossil fuels, that is a tough nut to crack. romaine: the china bill is sort of an easy dunk here. you have the majority leader in the senate already half the -- already talking about the reconciliation process to get the bill through in the senate. that requires all of the democrats to be on board in the senate. any indication that they will be able to move manchin and other folks into the fold deeper into the summer? wendy: i predict maybe manchin

and send them a -- and sinema, i think they could get them on board for some of this budget reconciliation bill, which would be some of the spending you heard john barrasso saying he didn't consider infrastructure. the white house is trying to get people to think of roads and bridges, and the republicans are insisting absolutely not, infrastructure means roads, bridges, nothing more. that is where the impasse is. i think they are still trying to come to a deal on this, but the budget reconciliation process requires only 51 democratic votes, which might be a way to get some of these other things through. romaine: let's look ahead to next year here. with the clock and a lot of people's minds sticking to biden. the idea is once you get past 2021, it will get hearted to corral not just the republicans, but his own party as they head

into midterms. how hard will it be to get the legislative agenda out and at least consider it? wendy: absolutely imperative because as soon as the calendar turns to january, we will be in primary season for all of the congressional seats come the house seats, and that is when hand-to-hand combat begins, and no one will want to be bipartisan in 2022. tom: lots of hand-to-hand combat can be dangerous. wendy benjaminson, bloomberg politics editor. i'm stumbling with my words because i'm looking in shock in four basis points, a 1.4958% 10 year. good morning to stephen major at hsbc. he and the lonely crew who predicted this. lisa: and they expect the yield to continue coming in. this is the lowest since march. question is what is driving this. i was speaking with priya misra yesterday of td securities. tom: i want to your other

properties, good. lisa: she says this actually feels like a short squeeze because of the cpi data comes in disappointing, you could see this come in further. but it defies the sense that a lot of people have that inflation is picking up over the longer-term. so how does this cohere with that? romaine: i spoke with ben emmons yesterday. tom: oh, on one of your other properties as well. [laughter] romaine: he also reiterated this idea about the short squeeze. there are a lot of properties other than "surveillance." tom: i don't have another property. romaine: would you like more work? i'm sure we would love to do another show. lisa: on radio, "bloomberg surveillance" continues at 9:00 a.m. with tom and paul sweeney. tom: look for that worldwide. we welcome all of you. coming up, we will see president biden travel i believe on marine one to andrews air force base.

i'm sorry, i've never called it joint andrews. it is always going to be andrews air force base. there, i said it. on his way to england. guy johnson with us later. this is bloomberg. ♪

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♪ tom: "bloomberg surveillance," good morning. interesting market day. we begin our g7 coverage this morning. guy johnson from cornwall here in the next two days as well. the nasdaq 100, like it did yesterday, really with a bid underneath. it will be fascinating to see how this works out, and again, we saw a 1.49% handle once again on the 10 year yield. clearly the statistic of the day, with brent crude near $73.72. dollar weaker this morning. on the stocks, the very memeish romaine bostick. romaine: of course, the meme stocks continue to rise.

the three biggest movers premarket on a volume basis are probably three stocks that most people, at least a few weeks ago, weren't paying much attention to. context logic, the operator of the wish website, up 39%. people started to move into that stock yesterday, now getting a nice pop in the premarket. clover health has been are -- has been on a run for several days, up about 22% premarket. the newest kid on the block appears to be clean energy fuels, up about 31% in the premarket. if you are looking for a catalyst as to why any of these are higher, up by double-digit percentage points, i don't have a reason for you. most people we talk to also don't have much of an explanation either. flip up the board, take a look at some of the movers. there are some fundamental stories out there. look at that, campbell's soup. tom: this has been a train wreck

for 30 years. romaine: it is not getting any better. it's a little bit of a pop every now and then, but with the latest earnings out, those shares down about 8% in the premarket. we are going to get earnings out of gamestop, one of the oji meme stocks -- one of the og meme stocks. people actually do care about the fundamentals here. you're talking about more than one billion hours in sales being projected for the quarter. if they had that target, this is going to be the -- so that is a pretty significant deal. a lot of people started piling into that stock late last year and early this year. finally, keep an eye on ui path. this is an automation software company. this is now being -- this was a big deal when this company went public. it is run by a former microsoft engineer. those shares down 10% in

premarket. tom: thanks for that. paul sweeney will have a lot on that inning on that indiana clock hour. long ago and far away -- on that in the nine a clock hour. long ago and far away, on my first trip for bloomberg, i was advised to meet with bnp paribas. writing heard on global markets out of their shanghai office, their lead office in china. we are thrilled that george son could join us this morning on the markets, on china. we got overnight repos, a lot of cash in america we don't know what to do with. i believe china has the same lull of cash out there. what is china doing with its wall of cash? george: good morning, thank you for having me. the excess liquidity is the story around the world. but in china, we are starting to

see a bit of an action actually. -- a bit of inflation actually. china's ppi numbers surged 9% year on year, way above the estimates, and reached the hass level since 2008, so there's definitely inflation. but a lot of that is imported. the commodity prices are really putting a corkscrew in the recovery here in china. china is the biggest consumer of a lot of the global commodities. that is really causing producer prices to rise. but the main difference between china and the u.s. right now is the cpi has actually not been rising, so the cpi is quite timid in china. only about 1.3% growth. so the consumer demand isn't there. the government is very cautious, so the recovery is very trepidations right now. tom: with the heritage of bnp

paribas in china, how does china from shanghai, from beijing, look at europe and the united states differently? george: i think china wants to be more integrated into the global economy, welcomes global investors. i think it welcomes better relations with both europe and the u.s. obviously there's been some geopolitical tensions between the u.s. and china, but i think that will come and go as the number one and number two countries in the world. europe, however, has been much more neutral towards china, and we see a lot of investments. europe is china's biggest trading partner, so various countries in europe are actively trading with china, both in financial products and also in material products. lisa: as the trade does increase, there's a question as whether china has the same

dominant role in the commodities market that used too. i am thinking about this in particular with what you just mentioned, the fact that input prices increased the most since 2008 in china, and china in response is trying to crack down on higher commodity prices, including coal. how much of an effect can they have on bringing down commodity prices single-handedly when the infrastructure push moves beyond china to the developed world, including the u.s., including europe? george: you are absolutely right. even though as a percentage they consume a huge amount of commodities, it is the marginal demand that is going to drive the price up. what you are seeing now is the rest of the world starting to open up. developed countries opening up. you are going to see the demand for other commodities, for lumber, copper, iron or pickup in developed countries. that is going to drive the overall prices up, and at the same time, the supply of some of these commodities are still struggling to keep up because a lot of these major commodities producers are in e.m. countries

where the vaccination rates are lagging behind. so it is kind of a race right now between the economies opening up and inflation. until the economies can open up and grow faster, including the emerging markets, you're going to seek commodity prices pickup in china as the consumer doesn't really dictate the price as much as they used to. romaine: a lot of folks in the u.s. are keep an eye on what you folks are doing with regards to the commodity side of the region. they also want to know what is going on with the tech side of the equation as well. we remain mired in correction in some of the key indexes there, and a lot of people are wondering whether chinese tech stocks offer a bit of safety, given some of the regulatory concerns that have been raised over the past few months. george: that is a really good question. when we look at tech in china versus the u.s., inflation has hit both recently, but i think china has been hit a lot more because china kind of got hit with a double whammy. there was rising inflation, but

also a lot of anti-monopoly measures against the tech companies and financials, so it is a much bigger decline. the nasdaq, since the peak in february, is down only 2%. it is basically flat. but the hang seng is up 20%. that is a major correction. so there is some value there, and there's been some more recent noise that perhaps the government is leaning back a little bit and allowing these companies to form financial holding companies, be regulated, and therefore be able to get back to business again. tom: i don't want to get you in trouble with your general councils in shanghai, but let's try for it right now. do you by the migration -- do you buy the migration from hong kong to shanghai given the political events of the last few years? george: as china grows and attracts international capital, it is bound to have more than one financial center. hong kong has been the financial center for a long time.

tom: with that shift to shanghai? george: i think they can have two financial centers. i travel back and forth all the time. so i think what will end up happening is they both serve a very useful purpose for china to open up. i think shanghai is obviously on the mainland, very accessible to all of the domestic fundraising, including the star board that has opened up in shanghai, but hong kong still remains very popular among the international corporations, so it is good to have both come on for the foreseeable future you are going to see two currencies. you will see the onshore renminbi, but the offshore hong kong dollar and the offshore renminbi. you can really connect both sides until he gets better and better integrated, i would say. tom: thank you so much, with bnp paribas this morning. i learned a lot there. lisa: i think it is one of the

most important points, and this is one of the most underplayed aspects of global markets right now. actually, china is going in the opposite direction with with expending liquidity. they are taking liquidity out of the markets, which is been a big question behind the bond market. how long can they continue to remain steady? how much are we going to see a decline and yields go higher? tom: one of the themes to the end of the year is do we see a nascent resurge in international equities, specifically pacific rim equities. romaine: there was a pullback in march and february when people started to question whether there was stability over there, but now i think a lot of people have gotten comfortable with the language coming out of chinese regulators. they've gotten comfortable with the positions of these chinese companies and with the geopolitical dynamics here. the idea that the growth still is there, and there are still opportunities for american

companies and american investors. tom: briefing you on the 10 year yield with a 1.49% handle, if you are on radio and television, if you are part of global wall street, coming up, i believe on short notice, we had ira jersey, the head of our fixed income operation. ira jersey is encyclopedic, particularly on short-term fixed income dynamics. if you are part of global wall street, this will be your conversation of the day on fixed income. we follow that up, we stay strong with sam stovall of cfra, their chief investment strategist. for those of you watching comedy president -- for those of you watching for the president, we will be covering that in its entirety at the g7 meeting. chancellor merkel's final meeting and the first meeting for the president of the united states. we will see marine one lift off from the white house. stay with us.

futures up. dow futures go the other way. the vix, 17.26. romaine bostick info tom perez -- in for jon ferro. tom keene and lisa abramowicz. this is bloomberg. ♪ ritika: with your first word news, i'm ritika gupta. president biden's first overseas trip as president will focus on increasing the availability of western coronavirus vaccines abroad. the president leaves this morning for the g7 summit in the u.k. both he and british prime minister boris johnson one to rally the g7 behind the plan to make more shots available to low income countries. that could counter china and calm allies unhappy with the u.s. over its courting of coronavirus shots. amy schumer turn --world

powers are gathering in vienna for a sixth and possibly final round of talks, trying to get iran to accept a cap on its atomic program in exchange for lifting of u.s. sanctions. president biden and european leaders will commit next week to ending outstanding trade battles , according to a draft read by bloomberg news. they will also agree to resolve that dispute involving airbus and boeing that has lasted for almost two decades now. electric vehicle maker lordstown motors may not have enough cash to get its debut pickup truck to market, and the start of that recently went public warned it may not survive the next 12 months if it can't raise more capital. lordstown operates of a shut down general motors plant in ohio. another bad week for bitcoin could be a precursor of more pain. the world's largest

cryptocurrency down about 10% this month to roughly $33,000. in april it had a record high, and analysts say dropping below $30,000 could lead to a dive to $20,000. i'm ritika gupta. this is bloomberg. ♪

>> i think you are in a global craps game where everyone is

talking to each other and having a blast. a lot of it is fun now. at every craps table, 70% to 80% of the people are having fun, they know they are going to lose their money, and accept it. someone is going to lose their mortgage and hitchhike home or lose their college fund. i think a lot of the meme stocks are people having fun. tom: ken moelis there, founder and chairman of moelis & company. romaine bostick, in for jon ferro, i am going to assume that ken moelis doesn't own avolon medical. romaine: it is up in the premarket. this is a small-cap stock. less than $100 million in market value. as of yesterday's close. it is going to be a lot higher. this got touted on reddit. there seems to be a lot of talk about some medical product. i can't even pronounce it. who knows?

tom: a he mope your a fire -- a humo purifier. he probably has 7000 shares. he brought it -- he bought it from ferro. ira jersey to join us in a moment. on fundamentals and not memes, we are meme free with david wilson. what have you got? dave: we are talking about what is going on within the s&p 500 component stocks. the chief market technician over at km partners pointed out. looking at the cumulative decline lines for the s&p 500, what we are talking about his day today, how many stocks in the s&p 500 are up, how many

down. this is a running total of that. we saw that particular indicator that set a record on friday, even as the s&p 500 struggled to file suit. we saw it with the index near a record towards the close of trading, but not able to get above it. tom: is that breadth in the market? dave: that is one indicator of breadth, and it is perhaps a more traditional one. you can talk about other gauges, people wait indexes kind of get you to the same place. by the way, the equal weight s&p 500 also got to a record on friday, so it is about the broad-based strength in markets, which o'hara describes as a technical biller. tom: i've got -- a technical pillar. tom: i've got 30 seconds. don't you love the value line geometric? it is just the coolest index.

it is like logarithms within this series. romaine: -- dave: another example of logarithms that are included in this index. tom: you know there are 1700 stocks in the value line index? i did not know that. are any of the may meme stock? dave: i wouldn't be surprised if you would find gamestop or amc or some of the others there. tom: right now, ira jersey joins us, or cheesed -- our chief interest rate strategist. why are interest rates going lower? [laughter] ira: the economy is not as good as people think, and the bond market is leaning very short, so i think you just have a little bit of fort covering here. we are approaching 1.50 percent, not a particularly important level technically, but 1.47 percent is. we are only a heartbeat away from there at this point. lisa: what is causing the short squeeze at this point, given the

fact that we are probably going to get cpi numbers that show inflation picking up short-term and the u.s.? ira: the market is coming around to the idea that inflation is going to be pretty transitory. one of the move here, you have seen 10 year inflation breakevens, so the market expectation for what inflation is going to average comes down about 10 basis points in the last two weeks, and i think that is endemic of the idea that we don't have the labor market quite as strong as people had hoped. we still have retail sales that are spotty overall, and even if prices in some sectors are going up, there's still a lot of large sectors that are going to see prices actually start to stabilize over the next three or four months. romaine: when everyone thought the data was actually good and would continue to be good, we had seen a little bit of shortening in duration in a lot of folks portfolios. does that duration shorten further, or does it go in the opposite direction? ira: i think everyone was

leaning short, so you had people in curve steepeners, people outright short duration, people selling longer-term stuff read a lot of that is starting to unwind. you look at futures positioning and you see a lot of long-duration positions by speculators starting to be cut pretty significantly over the last couple of weeks. i think that kind of activity is just showing that this is not going to be a one-way street. yields go from 1% up to 2.5% all at once. i think eventually they will come a but you are going to see these long periods of consolidation until there is clear and convincing evidence that the economy is going to be on strong footing, and that the fed is going to do something like paper. the issue you have with the data being as uneven as it has been is that monetary policy is likely to be on hold even longer. i think that's one of the factors driving the short covering rally. lisa: you started your comment

by saying the bond market is saying that the economy isn't as good as it seems, and that this is sort of the confirmation we are seeing in the move today. other people would say baloney, it is because the federal reserve is buying one under $20 million of bonds every month and will likely continue to do so, and that is the entire reason because otherwise, these yields would not make sense given where inflation already is. what is your response to that? is this all the fed action? ira: it is definitely not all the fed action because at that were true, yields would never have sold off in the first place because they haven't stopped buying the same amount of bonds now for almost a year. so it is not that. but it is the idea that maybe they are going to buy more for a longer period of time, that maybe taper will be delayed. the market expectation is sometime in the first quarter of 2022, they will start to lay that out in the second half of the year. i still think that will happen, but i think the risk now is that with the data being so uneven,

maybe that gets driven out even further. so it is not the actual pace they are buying now. it is more how much in aggregate will they buy going into 2022. once we do see the taper, and if taper talks start to pick up significantly, as we do anticipate in the third order of this year, that is when i think you will start to see real yields go up a lot and nominally yields probably break 2% sometime later this year. tom: ira jersey, thanks for the brief. really appreciate it. that's what it is all about, david wilson on equities and ira jersey on the fixed income market. 1.4992%, even ferro would fall off his seat about that. lisa: we emphasize that it could get to 2% at the end of the year. it is a pretty big move. romaine: i think that would shock a lot of folks because when you look at what is being priced in the equity market, it is now either stasis or lower. tom: the associated press out on

twitter. the plane is off the ground, the press plane that followed president biden to the united kingdom, delayed seven hours by cicadas in the engines. who would have thought? this is bloomberg. ♪

>> the market is becoming more concentrated and less contestable. >> we think markets tread water for a bit as we continue to be concerned about inflation and taper talks. >> i think we are in a pretty unique period of monetary policy. >> fed policy is going to be pricing the number one source of potential volatility over the next couple of weeks. >> we have a real recovery in process. i don't think the roaring 20's are the right analogy. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. lisa: a surprise bond rally in a

summer tha