"bloomberg real yield" starts right now.

vonnie: january payroll is showing a slowdown in job growth, an increase in average daily earnings. as u.s. consumer sentiment unfolds on inflation concerns. give the fed plenty to chew ahead of his testimony on capitol hill. and moderating healthy labor market. >> when you put it all together, it's like boy, it's hard to rid the bait that you've got a solid employment report. >> another sign that the economy dons really resilient. >> we've been seeing that the labor market have been holding up pretty well. >> the labor market has been more resilient than i think most people anticipated. >> is this the best linebacker that we've ever had? probably not, it's slowing but it's pretty good.

>> the fed's on hold. they may not move at all this year. >> the market's in a wait and see move. >> we're on hold for the fed for an extended period of time. >> let's see what happens. vonnie: so let's recap some of this morning's data. non-farm payrolls below estimates, not too shabby, the unemployment rate down to 4%. and then we got university of michigan sentiment data and that showed sentiment decrease. and it was mainly thanks to inflation expectations. a big wow number in that one year inflation expectations. one full percentage point higher than last month and also than the expected number. so coming in at 4.3%. that's where the respondents feel the inflation will be in one year's time in. five to 10 years time, that's a tick higher than expectations. so let's have a look at the

10-year yield. and this is what you had today you had after the jobs data, putting on five, six basis points. not the craziest of moves but at the same time, a very significant move in terms of symbolism. and then after the michigan data, we talk that 4.5 mark. not too far past it. we come back down a little bit. the fed though is not in a very forgiving mood giving them potentially a reason to keep calm and carry on. >> one of the things that i wanted to emphasize is that we are not focused on whether the fed is going to cut, not cut. we're focusing on is lowering rates. i mentioned that the 10 year is the important price to focus on. it's mortgages, it's long-term

capital formation. so -- and look, i think with the president's policies of energy dominance, deregulation and non-inflationary growth, i think that the 10 year is going to naturally come down. vonnie: joining us now, head of fixed income and trading at dws group and cio for global fixed income. george, thanks for joining. this move today while it's not the largest move you've ever seen, it was pretty significant symbolically, right? >> absolutely. unemployment coming down and inflation expectations going up. that's the fed kryptonite. that's the long end of the kryptonite it and comes down to uncertainty the market is uncertain about tariffs and that's going to be the story throughout the year and where rates go in the short and long term. vonnie: this move, five, six basis points in the 10 year, it's not what everyone wants to

see but at the same time, the data rule, right? >> yeah, for sure. there's no question that the jobs numbers were stronger than expected and the economy's holding up really well. so that's really what the market is reacting to and i think we're expecting more or less of a range from a ten year for the rest of the year, four and a half plus-minus 25 basis points. maybe where we can see a lowering movement will be more on the front end, the two year where we're expecting still potentially some cut from the fed during the year, depending on economic data, definitely around trump policies going forward. so if we do see that, we could see the two year moving lower. but the 10 year, we're expected to be anchored around current levels.

vonnie: isn't the threat of tariffs always going to be there? >> yeah. i mean, i would say today's data or even this week's data and informational over was a pretty wild week in general. it han changed our views perhaps all that much. it's reinforce overed view that the economy is holding up quite well. and on the tariff's side specifically, i think we have been expecting firm on discussions for maybe not a lot of details. and i think that's where we're ending up seeing right now. there's a delay now with china -- sorry, mexico and canada. probably a bit lower, focus on china and then expect originally. so i think the market's going to

have to be a little bit patient to see really what the details are. so, yeah, i think it's going to be some time before we have true clarity between the economic data and ultimately with the term policies will be. vonnie: george, dust thursday this labor market reserve irk the federal reserve? there are things that could be potentially inflationary. >> and they're completely in wait-and-see mode. we're not going to hear from them again until after st. patrick's day, in fact. and i think they're going to want to see a cpi turn into reality for inflation. but for the moment, maybe two cuts or maybe one. it keeps them on pause for the moment. vonnie: that's march 17 for anyone who doesn't know out there. so what do you do in a situation like this? last year, there's so much volatility on fixed income when in the end of the year, there was nothing to show for it?

>> stay where you're at. everyone's saying did i miss it? that foama will present itself but the premium is being expressed in the short term. so i would say stay invested. vonnie: where though? >> on fixed and bonds because of the yields you're getting. >> we prefer to express our views more into account than securitized base. it really makes us more excited about the opportunities like leverage loans, clo's still offering attractive value.

i think also, to george's point, the use of full opportunities that within fixed income, securitized credits where we're still finding opportunities. we're starting to see a little bit of a turnaround from our real estate backdrop. and marley playing some of the infrastructure opportunities. we talk a lot about a.i., a lot of need for data. that can be expressed in a lot of different space. so taking full advantage of the opportunities and we really like the yield opportunity there at this point. vonnie: that's a lot of areas that you're positive on. i'm curious if there's anything that could knock you to the sidelines in any of those areas, any concern that things might go

haywire in some sense? we have a lot to come. we don't know what's going to happen with immigration, with extending tax cuts. we know what's going to happen with tariffs for that matter. >> yeah. i think as you probably could tell, my theme is more floating rates. we're less excited about more rates driven opportunities. so treasuries and rates in general, less excited about that like high yield and i.g. where spreads are pretty tight at this point. so we could see some spread pressure if we have these concerns. so diversification very key in my mind. but if i go back to what we talked about a second ago, economy's holding up really well. so it's going down low investment grade by staying more floating rate. vonnie: i know you agree, george. you want to say invested and you particularly like service

sectors. >> i do like industrials and i love financials and banks. deregulation if it comes to fruition, this is a great time for financials. even super regionals. so i like that sector a lot. vonnie: thanks to both of you. that is george and anders. up next, the auction block. ibm this week with debt sales on both sides of the atlantic. this is "real yield" on bloomberg. bloomberg. ♪ve you got there, larry? -time machine. you gonna go back and see how the pyramids were built or something? nope. ellen and i want to go on vacation, so i'm going to go back to last week and buy a winning lottery ticket. -can i come? -only room for one. how am i getting home? sittin' on my lap like last time, ronald. fine, but i'm bringing this. [ whirring ] alright. or...you could try one of these savings options. the right money moves aren't as far-fetched as you think. there it is. see?

told you it was going to all work out. thanks, future me.

vonnie: i'm vonnie quinn. this is "bloomberg real yield." time now for the auction block where after a slow start the week, credit issuance picked up. we start in europe where we saw

a few so-called reverse yankee sales. ibm, t-mobile and parker-hanifin all with deals. spread tightening suggested that investors bids were strong. ibm was also part of this week's u.s. high grade issuance. weekly volume was around $40 billion topping estimates. and over in high yield, issuance was higher more than $8 billion worth sold. new deals with the likes of directv, jane street and cleveland cliffs. elevated rates have opened up major opportunities. >> today, given where we are in the interest rate, a cycle, it's an incredibly attractive time for credit. so elevated rates are a tailwind

for credit investing. vonnie: joining us now is head of u.s. credit strategy and blackrock. i'm just curious. we've been watching the nymex over the last two weeks. did today change anything for you? just five or six basis points that really hasn't gone away in the 10 year. >> thank you so much for having me. i think from our perspective, we still have a really constructive outlook on corporate credit but as we've been emphasizing the past couple of weeks, you need to be really clear about why you're buying credit. i agree with what danielle said. the credit is really attractive here. spreads are pretty tight. we wrote this week that we expect modest widening in spreads but it's very, very moderate compared to the broader context and that's supported by a range of factors, strong

growth, favorable technicals the data this morning still pretty solid. so i think the fed is really in a position where they're not going to be cutting at least until the second half of the year. we may have some volatility around headline risk but we still like credit. >> global credit spread haven't really changed all that much since the election. >> exactly. thank you for having me. if you go back the election, looking at i.g. spreads, they've been trading in a very narrow band, just seven basis points. so there are some expectations that the change in the presidency, things like tariffs could cause volatility in credit and they have in other asset classes but we expect and have been quite stable. so we expect sort of this environment of shallow dips, low but positive returns for credit to continue. and as amd pointed out, things are in very good balance. so yes we have seen a lot of

suppliers but yield buyers come in. most of our trades are centered around that theme. vonnie: this that volatility though. is it tempting to lean into it? >> i think most investors would welcome that sort of backup as an opportunity to avoid capital. what we've seen in the past year and a half and the the august volatility those dips are bought very quickly. so heat advisory -- there was spying on the other side of that. many of them are having dry powder to deploy but what's important is to capitalize on those tunnels to materialize quickly because they do tend to be short-lived. what's really important in this market too is creating portfolios that can weather a change of scenarios. different points of duration.

we tend to favor shorter duration at the moment. real assets, alternative assets. that's are really smart move in this current environment because there are a lot of different paths on the probability tree in terms of where things can go. vonnie: on that point with the threat of tariffs on and off the table and even one or the other pans out, that doesn't stop the threat, right? the threat could continue on after that the tariffs might be up or might be taken away. how do you decide what you should avoid in order to avoid all of that uncertainty? >> two things. one is any given policy proposal needs to be considered in the broader context of the policy priorities. so we have certain issues like tariffs which are top of mind but we're also looking for potential tax cuts, deregulation. that needs to be considered in the broader suite of policy priorities. from our perspective, just like we've been focus on companies that can withstand a high rate environment, we're focused on

building portfolios that can weather a range of scenarios. one of our tag line is dispreservation, but not widespread disruption. you may have certain sectors that are more exposed but we're building portfolio with long-lasting potential. vonnie: president trump mentioned to reporters that he will be announcing reciprocal tariffs next week. we've heard he will be announcing more tariffs and that's something he likes to do. we're not quite sure who he's reciprocating at or who this might mean yet but potentially europe, it could be china again. what do you do in a situation like this? >> so i think that in aggregate, tariffs should be manageable for credit. and we look at a few things to

measure that. so direct sales exposure of u.s. credit issuers to abroad is manageable and supply chain. we are integrated globally but issuers have done a good job at doing that. there will be a lot of headwinds at the sector level. and we don't think those are priced in. we track something called a tariff risk premium. this looks like a very tariff-sensitive name. that premium is only 15% of what it was in 2018 or 2019. so there's a lot of room for risk to be priced in. in terms of where that could be, investment grade auto is one place. very integrated supply chain with canada and mexico. high yield building products, we're more cautious on lumber tariff or on steel, that sector could face headwinds. and on the other side they have coins, we like service celtics.

-- sectors. vonnie: if the premium isn't large enough, what should it be? >> we think that the would be a repricing on those individual sectors and we have to wait and see where the tariffs are implemented the auto trade, for example. that premium could grow if they focus more on canada and mexico. on the other hand, if tariffs are more centered around china, other sectors such building products would be more vulnerable. so you really have to be dynamic in terms of how you position based on what type of region is the focus. vonnie: amanda, what will china do next? >> the one i would say area that we're watching is what is the

intersection of all of these policy priorities? right now, we are well above trend according to the tracker. there's a lot of scope even for growth to decelerate but still remain at trend or above trend and that's what matters for corporate credit from our perspective, we from expecting 10-15 basis points of wide income i.g. -- widening in i.g. and i think that's a reflection of the strong growth momentum behind corporate credit. vonnie: thank you both. thank you so much. we could con this conversation but we have more headlines from the president that we want to bring you. our thanks to blackrock and bnp might ba. president trump speaking to reporters saying that he hasn't changed his mind on the u.s.

steel nippon steel deal and i just want to point out that we have the yen weakening as well as we're getting these headlines. so the president habit changed his mind on u.s. deal nippon steel. trump not meet the u.s. in gaza. and autotariffs are always on the table. he will be talking to president putin and he also says he will be meeting with prime minister xi probably very soon. those are the headlines out of the president's meeting with ishbia. this is bloomberg. this is bloomberg. ♪

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off on sunday with super bowl. jon if you're an eagles fan or a chiefs fan, but definitely a kendrick lamar fan. so we'll stick with that. that's probably the safest. we might get headlines that tell us measure about where we are in that cycle. fed chair powell starting his system to lawmakers. and we continual with earnings which we're more than halfway through. but we do get some big ones. coca-cola carrying. wednesday, we get cpi data. powell continues his testimony on that day. and all of those earnings, you have c.v.s., robbenhood, reddit. and friday is valentine's day where we do absolutely nothing just kidding.

retail sales and valentine's day are associated. are they? i don't know if they are anymore. and we also get earnings from hermes. we will be absolutely watch the cpi data next week for more clues as to what the federal reserve should do how strong the economy is and whether we're making any more progress on inflation. r balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management.

♪ >> welcome to "bloomberg markets." i'm vonnie quinn. it's been a topsy-turvy day at the market. we got the michigan data which sends stocks lower. and now we've been getting headlines out of a meeting with president donald trump and the japanese prime minister talking about reciprocating tariffs next week from the president. and also lots more headlines including about nippon steel and president trump's continued opposition to