what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com sonali: from new york to viewers worldwide i am sonali basak and bloomberg real yield starts now.

sonali: coming up u.s. payroll shows upside surprise. treasuries hire across the curve. our december fed rate cut. the big issue is november payrolls showing a rebound. >> it is somewhat strong report but not consistently strong. >> moderate softening in a pretty solid labor report. >> there are some cracks in the labor backdrop at the floor isn't falling out for me this year. >> reiterating a gradual slowing. >> the fact the unemployment rate went up means the fed will be comfortable cutting by 25 basis points. >> this is the kind of number that will support the fed cutting rates in december. >> with the unemployment rate up a little bit the fed can go in december. >> we will prove it to this pause, skip debate and what kind of message that means.

>> they will continue to wait and see how the data unfold from here. sonali: though payrolls came in hotter than expected i want to look at the chart showing the unemployment rate climbing .1% in november to 4.2%. that indicates cooling demand for workers with long-term joblessness at the highest in almost three years. historically low but still trending higher. look at the wirp screen with one fed decision remaining in 2024. a roughly 90% chance baked in in markets of another cut in december with roughly a 30% cut of another -- chance of another cut in january as well. there is a lot of uncertainty. so you see pricing leading to more and more rate cuts, a lot of uncertainty left in the rest of 2025 particularly with economic policies still being weighed among the

president-elect economic team. fed chairman jerome powell said earlier this week in the new york time deal book summit that the strength of the economy allows a more cautious approach. >> we are on path to bring rates to our neutral level over time but the economy is strong, stronger than we thought it would be in september. the labor market is better and the downside risks appear to be less. growth is stronger than we thought and inflation is higher. the good news is, we can afford to be more cautious as we try to find neutral. sonali: joining us now, two people you want to hear from on all the messy data. this morning there was good news and bad news in the jobs data. what does this mean for how much room the fed has to cut? >> i love listening to powell

trying to justify the unjustifiable, trying to justify keeping cutting at a time when we keep seeing strong data across the board. there is no muffled data. there is no uncertainty. we have a more normal labor market today but it is by no means week. we just went from extraordinarily tight labor market conditions, unprecedented, to a more labor market, where the fed's target rate is 5% we had we are far from it. 4.3% is a dream in any cycle. every piece of data pretty much since the fed started cutting in september has been positive. the initial reaction to their cut was a monster move up at the long end of the curve. that is important to remember. the fed does not control what the long and it does, what the 10 year does. the fed has a pretty terrible

track record of predicting where the fed funds rate will be. we can see that from the dot plots never being accurate. in the market has a terrible track record of knowing where the 10 year will be. we know that from the bloomberg consensus each year versus where the actual actually fall. but if we take the markets word and the market is pricing in a fed funds rate of 3.5% this time next year and we know the spread between fed funds and the 10 year historically is about 4% word is it that place the 10 year? above or below where it is today. sonali: do you feel the same way oksana does? that this is a strong, perhaps too strong to keep cutting? >> good afternoon. it's great to be here. a couple points. number one, this was absolutely a normalizing labor market and as you pointed out in your

opening comments, the rising unemployment rate is something chair powell did pay attention to at the deal book summit and the partisan -- participation rate did drop. had the participation rate not dropped over the last two months the unemployment rate would be quite a bit higher than today. that is something to keep in mind. i think that if you listen back or remember back to chair powell's comments from the new york times deal summit he did speak about how they went 50 basis points in september because of data they had gotten right before that, presumably the labor market data and the rise in the unemployment rate. so i think it is a good print in terms of a normalizing labor market. to oksana's term earlier we are seeing several signs especially with initial jobless claims, all of that showing a very solid labor market, but nowhere near where we were in 2023 where the

average jobs created per month was about 100 k more or even 22. all of this points to a fed that should continue to normalize policy from the restricted -- restrictive levels they are at but at the same time we will sit at a level of funds rate higher than we previously thought. sonali: i love that the spread makes a market. we will get to the 10 year because that's a favorite part of my conversation. oksana: even the restrictive. what is restrictive about the rates? we have not seen that reflected in the economy, not housing, not unemployment. the rates have not been restrictive. the fed is reducing an already not restrictive level of policy rate, loosening financial conditions further. sonali: do you worry about inflation? oksana: i think they will have to take some of this back next

year. we are in a year of fiscal dominance. there is tremendous fiscal step -- spending. we knew that would be the case irrespective of who would occupy the white house and now we know we have an administration coming in with probably more of an inflationary a pulse. we don't know what they will do but that seems to be the rhetoric. we have all this tremendous fiscal spending that will continue to spur demand. i think inflation, not back to 9%, but an acceleration to the inflation figure is not a low probability then at all. the fed might find they are still stuck in transitory now a little bit and they will have to catch up with the reality of the data. sonali: you have cleveland fed president speaking in prepared remarks saying something like what you said, that the data out between now and the meeting will shape the outlook. but we should keep policy modestly restrictive for some

time. she sees currently one interest rate cut by the end of january and that this is the operative statement. that they are at or near the point where the fed should slow rate cuts. gargi thinking about the trajectory of inflation you have to factor in not only next year, but the underlying data we are already seeing. use wage growth in today's data. what does that tell you about inflation concerns heading forward? gargi: you think about the wage data today -- today and not jus. cpi data over the past couple months as well as pca data. some of that is showing strong resiliency. a level of sticky inflation that will be important for the fed in 2025. that is why the comment i made earlier, rates will remain higher than i originally thought

like if we had the same conversation last year at this point. obviously there are risks. many are associated with tariffs edi and supply. but you look at the goods inflation within cpi actually coming out of negative territory , going into positive territory. look at the shelter inflation, particularly oer remaining a little stickier. those are all great reasons for investors to consider some inflation linked bond protection especially at the short end a part of their portfolio and i think we have seen a lot of investors doing exactly that. sonali: i want to go back to the 10 year part of the conversation, to your point, the most important. next year is it higher or lower? oksana: this is the question everybody always asks. and as i mentioned earlier,

neither the market nor the fed no. the fed does not even know where it's neutral rate is. when they are asked, jay powell sort of demurs. at the chicago fed president was like, we don't know. they need to figure that -- out. when we look at the math, the spread between fed funds and the 10 year historically has fluctuated. it has included very negatively sloping periods for the curve over the last 10 years but the average is around 1.4%. if you take market futures at their word and take 3.5 on the fed fund that the market is pricing in next year i think it will end up being higher. but let's assume it is there. add 1.4 -- 1.2% to that and it is a fair value if you wanted one. sonali: gargi how much at risk was there for you? we spoke to j.p. morgan, pimco, blackrock about this and your

colleague rick rieder singh this morning he is comfortable with the belly of the curve staying shorter further out. looking further out, when can you even start to touch it? gargi: i think that as of this moment, the fact that you are earning so much income in the belly, in the front end of the curve and all of the risks that lie out there for increasing deficits that aren't going away anytime soon, but are, in fact, increasing. you don't necessarily have a reason to hold anything longer than the 5-7 year part of the curve given the amount of income you are able to generate. it is not necessarily about the exact level of the 10 year. i do not think that is as important as the fact you can build a perfectly resilient portfolio right now with income generation in the belly of the curve. you can fund that in the front end, in the belly. you don't need to go out. having said that, i want to turn

for a second to the fact that as of today we have had about a trillion dollars in etf inflows in the u.s.. it's a huge day for us. a tremendous amount of that has come in fixed income etf's. a lot of that has gone into our usb, -- iusb focusing on the long end. a certain type of investor always needs to ration. you have to respect that. we are telling investors to focus more on the belly at income generation. gargi chaudhuri we have to leave --. caroline: we have to leave it there. next the option block. we check on credit and u.s. high-grade issuance for november is expected to be the busiest since 2021. this is bloomberg.

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sonali: i'm set and this is bloomberg real yield. to auction block issuance picked up after the holiday week in the u.s.. we will start with u.s. leveraged loans because the market has been busier than ever this week. borrowers launching $100 billion of deals in a year end rush. topping the prior week to a high of $17 billion set in 2020. there was a record 75 deals launched this week. in u.s. high-grade cvs, tapestry and lockheed martin among notable sales with the weeks total passing $23 billion just a short of estimates. new issuance anticipated to slow as the month progresses until the flood gates open back up in high yields hurts among the companies hoping to jumpstart

december sales after december had the slowest month since july of 2023 and it was the slowest november since 2018. speaking of high-yield this week at the bloomberg intelligence credit conference kathy jones warned "there is a sense of real complacency priced into the market as if nothing will ever go wrong." despite spreads at historically tight levels leslie for coney of ubs is more optimistic. >> if the opportunity arises that high yields wide and we would be opportunistic because we don't think we will be recessionary. sonali: still with us is oksana aronov of jp morgan. when you look at the animal spirits in the equity market you could say the same for debt and it feels a little like silly season.

people are ignoring that anything can go wrong and spreads are ultra-tight. does that make sense? oksana: the s -- equity market and yields have very little in common so you can't rely on strength or weakness for one to the other. the jump market, these are not cash rich companies. they don't have the kinds of business models. the s&p, particularly the main companies pulling the s&p forward have. yet, pricing is all-time tight. and you have high yield yields sitting within a hair's distance of cash yields, essentially. so you continue to see people participate in that trade. i don't know why anybody would want to do that, but it is there. we never know what the future will bring. nobody has a crystal ball but we always know in fixed income when

something is rich or cheap. in equities in you never know whether something has reached a level of richness that cannot be surpassed. 52, 50 four, we have seen highs this year. when your spread gets this close to zero, essentially, you know it is a point of vulnerability. we don't participate in that last mile because it inevitably ends badly. to someone's points earlier they will be opportunistic. how? if you are all in here it means you have to sell something to buy something. and that is just not a smart way to invest. sonali: for investors diving into high-yield what you say to them? are you part of the crowd or do you look elsewhere? >> we are quite constructive on the credit markets quite comfortable going below investment grade given the economic strength we are seeing,

given the low default rates we expect to continue to go into next year. we are at diversifying away from high-yield. the recommendation on the leveraged loans side, the floating loans are a nice complement to high-yield as well. some of the spread numbers we are referring to, we are mindful of that and we don't see spreads going meaningfully higher or meaningfully wider. another thing we are mindful around is the mix today for high-yield was very different that it was in the past. you have a much higher segment of high-yield that is double be rated. so, we want to be mindful of the history of the high-yield market at this point. sonali: not only is there high-yield, there is leveraged loans as well. you are seeing issuance spike and almost insatiable demand for things which are presumably risk year.

so if you are looking for risk, would you go, oksana? oksana: if you are looking to add income and appreciation, potentially, of portfolio you don't need to go into junk. you can click a coupon in the high fives, in the ig floating rate market. high-quality corporate credit. we are constructive on that. high-yield, the conversation around it, having a different makeup today than in the past, i have always heard this throughout history in my 25 years in the industry. it is never different. whenever you have a canary in the coal mine somewhere spreads go somewhere, everything gets sold and it spreads move together wider. let's not forget today you have a tremendous trip will be cloud hanging over high-yield that is some of the larger names there. it is a threat, a downgrade threat with significant ramifications for high-yield. i think when something is priced

for nothing but blue skies that is probably not the best time to be buying it. it is probably time to take chips off the table and go somewhere where you can pick up yields safely and at the front end of the curve definitely investment grade corporate floaters. if something is priced you for play, and high yields certainly are, you can buy insurance very inexpensively and wait for the credit repricing. sonali: anders, you at nuveen's into your fixed income playbook for 2025, securitized credits, clo's. when we start talking in the alphabet a fixed income it gets to be a fun time. how are you talking to investors? does it take convincing at this juncture? anders: i think investors are becoming more interested and sophisticated. looking for all kinds of ways to diversify. away from credit a little bit.

a securitized offering a different return profile, a correlation aspect from it. to your point, we are finding opportunities throughout securitized credit. quite attractive single digit high-yield opportunities, cms being one. it was quite dislocated. it has rallied back a bit but there are still pockets where we are finding good opportunities. digital infrastructure is a space where we are finding a lot of opportunities. and finally clo. the sister asset class to leveraged loans is an area that we are finding attractive risk reward getting effectively much higher rates of leveraged loans and a similarly, better yields and spreads. our theme there, what we are hearing from clients is they are looking to diversify, looking

beyond traditional ig credit or rates exposure. sonali: we are out of time. that is oksana aronov of jp morgan and anders persson of nuveen. from jobs to inflation. u.s. inflation data very much in focus. this is real yield on bloomberg.

sonali: i'm sonali basak and this is bloomberg real yield. time for the week ahead. monday european finance ministers kick off their meeting and tuesday earnings from tsmc and bloomberg's women, money, and power conference the big date for u.s. epi along with earnings and thursday u.s. ppi and a rate decision from the european central bank. friday is china's central

economic conference and we will look forward to the cpi. bloomberg real yield same time same place. from new york, i am sonali basak this is bloomberg. it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag,

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scarlett: welcome to "bloomberg markets." this friday at midday, the s&p 500 is at a record high but that is nothing new, it is headed for its third straight week of gains. you are seeing some gains and treasuries, yields lower on the short end here on a jobs report that has kept hope alive for a december rate cut. stocks and bonds moving higher on that. oil prices down 1.25%. supply concerns over the longer