it is 5:00 a.m. at cnbc. after the first five-day win streak in months, stocks may slide today. the rally could be at risk because of bond yields surging to multi-year highs. yesterday was the biggest move in government debt since donald trump took office. fears of the fed are creeping up. sanctions on iran taking hold in one month. that's why some are saying $100 a barrel oil could be around the corner. battleground florida the sunshine state kicking off its senate contest. and a big book sale, barnes

& noble, could they be putting themselves on the shelf? it's october 4th "worldwide exchange" begins right now. ♪ good morning welcome from wherever in the world you may be watching or listening, by the way. we don't mind you radio listeners out there. i'm brian sullivan thank you very much for joining us it's shaping up to be a busy thursday why do we say that futures and bond yields are moving in different direction. stock futures are indicated down the market is on a five-day win streak everything has been good but yesterday we saw a big shift. treasuries had their biggest one-day move since june of 2011. that's the highest yield the biggest move since donald trump took office. as yields rise, and we're at 3.21% on the ten-year yield, as

yields rise there's a fear out there that maybe inflation is creeping in. the fed will have to become more aggressive, and that could put stocks at risk bonds, as we say, you know at the end of the show we do the rbi, random but interesting, bonds are bbi, boring but important. let's bring in david nelson. amazing, david, for months we have been talking about the possibility of trade wars and tariffs. all of a sudden yesterday the bond vigilantes, the bond market reared its head and now a lot of people are starting to get nervous. are you? >> not that nervous. we're going up for the right reasons. it's because we have a strong economy. you saw an ism nonmanufacturing number yesterday, the highest level since it came out in 2008. the fact that you had a $230,000 adp number. that's good for the economy. looking at earnings, 20% growth this year, i'm still looking at 8% and 9% for the next couple of

years. stock markets don't go su sustainably when earnings are headed north is it an issue? yeah, liquidity is being sucked out of the market, as long as inflation is anchored at 2%, i'm not too concerned. >> bond yields are moving up because things are good. i guess the risk is are they too good are prices going go up enough that jerome powell and the fed will have to change those crazy dot plots and get more aggressive on rates? >> it's possible, but the bigger risk is for asset allocators you can't have all your money in stocks you have to have an asset class that has equity risk in the past that's been bonds. but it's hard to make an argument for bonds over the next couple of years what will investors do they have to turn to other asset classes. it could be long short, tactical, but they have to did something. >> let's talk about that

again, here's why bonds are important, folks not only are they a signal for many things, but they compete with stocks. there's 74 million baby boomers approximately. they made a lot of money in the stock market they look at the s&p with the dividend yield, whatever it is, they say it was better to be in stocks than bonds. now they're getting older and looking at a yield on the ten-year of 3.21%. many of those folks may be saying guaranteed 3 in the bond market at my age rather than risk it in the stock market >> they can go long equities, sell covered calls, there's a lot of funs out there yielding 5% doing just that and getting growth to boot is it a risk i don't see them going that high, especially given conditions around the world. the bigger problem and likely problem is overseas. if there's a black swan out there, it's in the emerging

markets overseas rates going higher is bad for dollar denominated debt. >> how do you say black swan in italian? >> i don't know. >> you saw what i did there? >> when you see credit default swaps blow out in a sovereign debt like italy, that's a concern. that's why we're the magnet for capital right now. causes problems for them but the biggest problem for me is these are our customers. if the emerging markets continue to do poorly at some point it hits the top and bottom line here >> we'll find out when that is stocks have been spectacular all year >> 8% last quarter in the face of a trade war >> higher for many other indexes. 8%, i agree, it's been doing well now 3.21%, market a little spooked. >> we're all jumping off cliff here, i'm not. >> just look over. >> thank you let's stay more on the big bond story yesterday the single biggest move in government debt since

donald trump took office, which means that you have to pay attention to the big financial and big bank stocks, they make their living in interest rates joining us on the cnbc news line is gerard cassidy from rbc capital markets what do you believe this new interest rate scheme is going to mean for the stocks that you cover? >> thank you, brian. i would suggest the steepening of the curve which we saw yesterday, is a positive for the banks. as you know, the flattening of the curve for the last three months has weighed on the bank stocks, that's why they were so strong >> you know, is it just as simple as -- again, it's 5:06 if you're on the east coast it's wonky, we talk about net interest margin, nim, basically the spread you can make when you borrow and how much you borrow at or how much you lend from is it just as simple as rates go

up, net interest margins go up and banks are a good buy it can't be that easy, can it? >> it's certainly part of the equation i think you summed it up well. but i would also add to it as you saw from the economic indicators yesterday, if this economy is accelerating in growth -- we deon't know how muh of it was influenced by the hurricane in september, if the economy is accelerating in growth, that's positive for the banks, in addition to the steepening of the curve, loan demand will accelerate one challenge this year has been loan demand, though it picked up from the beginning of the year, many investors have been disappointed that it hasn't picked up fair enough. we're a stronger economy with a steeper curve, that's positive for the bank, you saw that yesterday. >> we talk about big names like jpmorgan and goldman sachs, is it the mid-sized names, the m &

ts, the bb & ts that have a lot of checking accounts that will benefit the most from this new interest rate paradigm >> you're absolutely right the banks with the highest concentration of those checking accounts, also known as the demand deposit accounts are not interest paying accounts, to they're interest-free accounts as the fed funds rate goes up, they're able to lend at a higher rate but the cost of funding remains zero so those banks do better. >> all right we'll watch the m & ts, the bb & ts of the world. rates are at 3.21% that would have seemed low ten years ago, somehow now it seems high. gerard cassidy, thank you very much for joining us. >> you're welcome, brian. top corporate story is one of america's most iconic book stores is evaluating its future. frank holland has more >> good morning. shares of barnes & noble are surging 20% in premarket

trading. it's important to note this company's market cap is below 500 million. the chain says it is exploring all of its strategic options after several parties expressed interest in buying the company that includes leonard riggio, the company's largest shareholder with about a 19% stake. barnes & noble said riggio is in favor of any transaction recommended bay special committee created by the board barnes and noble is the last publicly traded book chain but has been struggling with competition from amazon. sales in the last fiscal year fell 6%, and online sales remain weak falling 14% in the last quarter. management turmoil made the issues worse barnes & noble had five ceos since 2013 the latest fired in july in addition to reviewing options, barnes & noble is adopting a poison pill plan to prevent anyone from getting more

than 20% of its shares >> thank you very much we'll see you in a few minutes. now to your other top three top stories today. clo cloudera and hortonworks are surging. toyota and softbank are teams up to develop services for self-driving technology, things like hospital shuttles and food deliveries softbank will own over half of the new venture it will be called monet shares of hp are higher. the pc maker giving an upbeat forecast for 2019. the commepany also hiking its quarterly dividend by 15%. another stock to watch today is tilray. that is the giant canadian cannabis company shares dropped sharply at the close yesterday because tilray announced plans to offer 400 million in convertible notes in

a private offering to institutional investors in canada that stock was up, down big. one of the traders favorites, watch tilray again today. we are just getting started. we'll drill down on oil and the countdown to the iran sanctions which kick in in november. is $100 a barrel oil on the horizon? we'll talk about it. battleground florida the sunshine state playing a big role in next month's midterm elections. we're live on the ground in orlando when "worldwide exchange" returns. does it make the short list? yeah, i'm afraid so. it's okay. this is what we've been planning for. knowing what's important to you is why 7 million investors work with edward jones.

you mighyour joints...ng for your heart... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life.

welcome back it's 5:13 in the east. you can see oil prices are down a tick but well up from where they were a couple days ago. so don't worry about the red on the screen wti crude above $76, above 86 yoef overseas hadley gamble joins us now as we countdown to the iran sanctions taking effect next month hadley what can we expect? >> brian, it seems as if even though there's a lot of speculation over whether or not this donald trump doctrine is working when it comes to sanctions on iran, folks i'm speaking to have said it's effective so far we're month out from this implementation of sanctions on iran oil trading at four-year highs as we inch closer to the higher dollar marks, some traders are already speculating we could see $100 a barrel by 2019. this comes off the back of a

variety of factors you have bottlenecks in u.s. crude. you have the questions over whether or not when the sanctions come to the fore whether they will be iran, china, the relationship with india as well, whether or not india and china will step back and not buy iranian crude. that's what we're seeing at this point. and big questions over whether or not the saudi/russia agreement on output will have any effect there you already heard over the last 24 hours comments from president putin, he was saying to mr. trump if you're wondering who is to blame for oil prices, you have no one to blame by yourself so it's interesting to note when we're coming just a couple weeks away from these sanctions being implemented in the middle east, people seem positive about these developments so far. >> effectively vladimir putin is telling the american people if gas prices go up, don't blame me, don't blame saudi arabia, blame donald trump because of the iran sanctions

>> exactly right it's interesting we heard those aggressive comments from president putin given that saudi arabia and russia have developed a relationship where they can secretly make an agreement like this and call the president to tell him about it. >> hadley gamble, always a pleasure we'll see you soon let's talk more about this joining us is alan gelder from wood-mckenzie. you heard hadley's report. it's surprising. i understand that iran is coming offline, but you have russia and saudi arabia increasing production or saying they will are you surprised we're at 86 on brent? >> no, we're not surprised what we're seeing is saudi sort of at record levels, high levels achieved before. russia production is up about 300,000, 400,000 barrels a day, they're trying to accommodate

the current loss in iranian volumes. the issue is how aggressive the u.s. is being on sanctions on iran, the lack of waivers, whether all iranian crude exports will cease if that's the case, then $100 is perfectly plausible. that's not our best case we're not expecting iranian exports to drop to levels much lower than what they are now we will need to see how this evolves in the coming weeks. >> there's been talk about these so-called ghost ships, basically iranian crude going around the world in unmarked or untracked ships because they don't want anyone to know who is buying it. the point is they'll still try to sell oil. will there be buyers >> we suspect there will be. there are lots of challenges to buying iranian crude it's how you pay for it. the sanctions are not only only the crude but throughout the financial system we're hearing similar reports of ghost ships.

the difference between this time and the last time we had sanctions on iran was lasttime there were waivers, countries such as india, china were able to reduce the take, but able to do it and being compliant with u.s. legislation the u.s. is being very aggressive in asserting there will be no waivers, so people really need to think about the risks of buying iranian crude. >> the thing i like about the oil market is that it's sort of math in many ways. if we get $2 million barrels a day coming off in iran, we have to find 2 million more barrels the u.s. is still pumping out more than 11 million barrels a day. russia says they will help, saudi arabia says they will help, will we make up that gap or is $100 a barrel oil overseas and maybe even here just around the corner >> we think that the gap --

well, if iranian volumes are lost entirely, it will be difficult for the gap to be made up that's not what we're expecting. we think there's some spare capacity within opec but it is very small if all iranian volume departs the market, price may be the only way in which demand is suppressed that's not best case but a risk at the moment around how iranian export volumes go forward. >> it's possible not probable, possible >> absolutely, yes >> alan gelder, thank you very much we'll see you again. up next, a key moment in the brett kavanaugh nomination set this morning we'll get a live report from d.c. and watch out housing. with interest rates soaring, just how expensive is that mo t mortgage you want going to get we'll find out about that. that's nt. ex

welcome back at end of every show we do the rbi. this will be called bbi, boring but important. the bond market is big it seems weird, but it's massively important to every facet of your life, whether it's credit card rates, mortgage rates, a loan on a car a student loan rate, also competition for stocks the bond yield at 3.21%, over 50

years that's still relatively low, but that's the highest yield since june of 2011 yesterday was the biggest one-day move in the bond market since donald trump took office it's a big deal and it may impact stocks. futures down 100 points. a pivotal moment in washington senators are set to read the findings of the fbi probe into supreme court nominee brett kavanaugh. tracie potts is joining us with more on that >> so they'll roll it out starting in about two and a half hours to different groups of senators by lunch time everyone will have had a chance to look at what they're called expanded background check on the sexual misconducted allegations it's expected to be a summary of the interviews that the fbi did with the second accuser, debra ramirez and some classmates of judge kavanaugh. judge kavanaugh was not interviewed, neither was dr. christine blasey ford. her attorney saying they're profoundly disappointed the

woman whose accusations started this was not interviewed by the fbi. they said her testimony -- they believed her testimony was enough also the white house has already had a look at this the white house spokesman tweeting that they are fully confident after this report that judge kavanaugh will be confirmed and that a vote to begin that process is set for tomorrow >> tracie potts in washington, d.c., thank you very much. now let's check the other top headlines including a terrible situation in south carolina phillip mena has more on this. good morning tragedy in south carolina after a law enforcement officer is pronounced dead. six more are wounded after a tense standoff outside the city of florence. it started on wednesday evening when deputies arrived at this house to serve a search warrant for alleged sexual assault of the foster child the alleged gunman was the

father of that suspect he was holed up in the house for two hours while taking shots at officers he eventually surrendered. an arrest has been made in suspected letters sent to the white house. investigators believe the envelopes contained ricin, but it turned out to be crushed beans from the castor plant. a federal judge in san francisco blocked the trump administration from ending temporary protections for some immigrants fleeing war and natural disaster the administration was sued after homeland security announced it would end the protections allowing hundreds of thousands of people from sudan, nicaragua, haiti and el salvador to live and work in the united states the judge issued a preliminary injunction saying the protections must remain in place as that lawsuit continues. a doj spokesman has blasted that

ruling >> sending thoughts to those families affected in south carolina. coming up, we'll talk about tilray, the high-flying pot stock feeling heat. and holy peugeot, what paris just did drivers wl veilha a lot of people seeing red we'll explain next valerie: but we worry if we have enough to last. ♪ cal: ellen, our certified financial planner™ professional, helps us manage our cash flow and plan for the unexpected. valerie: her experience and training gave us the courage to go for it. it's our "confident forever plan"... cal: ...and it's all possible with a cfp® professional. find your certified financial planner™ professional at letsmakeaplan.org. onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order?

ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.

bond yields surging to multi-year highs, yesterday the biggest one-day move since

president trump took office. should consumers be concerned? the race for florida the sunshine state taking center stage in the battle for the senate we're live on the ground next. and sign, sealed, delivered, and sold bill gross's stamp collection selling for a record amount of cash last night, we'll tell you how much as the second half of "worldwide exchange" rolls on. ♪ thank you for being with us on this cnbc thursday. as i call it friday since i'm off tomorrow let's kick off the second half of the show with your executive rec recap. frank holland has the stories you need to know about >> here's what's leading cnbc.com right now a development in brexit negotiations british prime minister theresa may is reportedly working on an all uk customs union with the eu and the ft says ireland is back in the deal. this is important because the border between ireland and

northern ireland has been one of the biggest stumbling blocks in brexit talks shares of tilray company dropping the pot plant offering 4$400 million of convertible notes to institutional investors in canada. and amazon workers are getting a raise but it's not all positive the e-commerce giant is getting rid of pay incentive for fulfillment center workers the change means employee also no longer be able to earn bonuses and stock awards if they meet certain goals back over to you >> frank, we'll see you in a few minutes with trending. we are just halfway through the 5:00 a.m. hour in new york stock futures are down as bond yields go up futures are off less than they were earlier today down just 76 points. the dow is in the middle of a five-day winning streak. bonds are quickly becoming the story. yesterday the biggest one-day move in ten-year bond moves since donald trump took office now the highest yield since june

of 2011. just over a seven-year high. this puts the fed in play. speaking of the fed, fed chair jerome powell says the economy is experiencing a remarkable set of circumstances he spoke with pbs's judy woodruff yesterday and suggests there's little risk that the current expansion will be knocked off course >> there's no reason to think that it can't continue for quite some time. eventually external events happen and not every business cycle lasts forever, but there's no reason to think this cycle can't continue for quite some time effectively indefinitely. >> let's bring in peter boockvar from bleakly advisory group, a cnbc contributor i know bonds are wonky, they are boring but in a credit society we have credit card debt, car loans, student loans, mortgages, mortgages we want, all these things tied to rates

how important is that story? >> in that context interest rates is the most important input. as you said -- >> in the economy right now. >> yes >> more than trade >> yes >> more than tariffs more than trump. >> by far the most important thing. we are a credit dependent and debt dependent economy the cost of money is the driver in terms of consumer spending decisions but also corporate spending decisions in the mid 2000s a lot of the credit bubble was manifest in ho housing. this time it is at the corporate level and the consumer will be impacted done sewe consumer and autos are already beginning to soften. >> there are two sides to the interest rate story. there's the consumer side, as you noted. we have all these rates, some are variable if you want to buy a mortgage it's going to be more expensive. we will talk about housing in a few minutes. you also have a few trillion

with a "t" in corporate debt outstanding, which at some point is going to have to be paid off or refinanced. >> right corporate debt as a percent of gdp, actually total business debt is at a record high >> much of that is junk. >> yes >> i think the technical term is not good >> in the investment grade category, it's the largest percentage of triple b credits we've seen >> which is low. >> right above junk. >> b minus that's the lowest grade you can get before junk. >> with junk category, there's a high percentage of triple cs we have a large category of leverage loans, which benefits from a lender standpoint with rising rates but is a threat to junkier credit >> why is the stock market seemingly ignoring this? >> i think the stock market is seeing what's in front of them, an economy still growing 3% and earnings that will probably be good for another quarter

>> the stock market is the driver who looks just in front of the car >> exactly >> not down the road at the deer slowly walking out behind the tree, but straight ahead >> the stock market is much less effective discounting mechanism and is much more reactive. >> i'll challenge that a bit and suggest maybe the rest of the world's issues, not problems, because things are pretty good most places, the italian thing coming out, trade talk, minute that just makes us more attractive >> that's been the case all year but the accidents that we've seen thus far this year, the blow up in the vix trade, turkey, argentina, italy now -- to me italy is the canary in the european bond market to see italian yields back to where they were many years ago before the ecb instituted negative interest rates and this qe tells you this is the beginning of the effect of central banks pulling back from extreme accommodation. >> the market commentary last night was that the move in bonds, especially late day

yesterday was unexpected rates have been getting back up. they have been getting more expensive for a while. going up is no surprise. reading some trader commentary and talking to people last night, the velocity of the move in bonds caught people flat footed >> no question on january 1st you got 2.4% in a u.s. ten-year. today you can get that in a six month t bill >> yeah. all the things -- mortgage rates, we'll talk about housing in a few minutes, they're not directly tied to the ten-year. it's not like that goes up this much, rates go up this much, but it's taking a couple hundred dollars a month out of the consum consumer >> right >> gasoline prices are going up. any variable rate debt, that means maybe the effects of the tax cut might be muted >> absolutely. because of just small changes in interest rates on a large pile of debt ends up equalling a lot of money >> let's hope wages continue to

go up. >> that's the key. if wages go up, it can offset that extra stuff we have to pay for. peter boockvar, thank you very much boring but important you are not boring, but you are important. let's find out what else you will be talking about today besides going out saying frank, did you see those bond yields at 3.2% frank holland is back. >> i don't know if bond talk is water cooler talk. that's late day after a couple of drinks. we'll start off in france. in a move intended to reduce air pollution and free up space for pedestrians, paris is making a drastic move the city will ban cars in most of the city center on the first sunday of each month paris also has a free car day once per year. it hopes the new restriction will curb air pollution. paris is the most polluted city in western tchit let's do it in new york. >> it's already a walkable city. >> no cars in manhattan, first sunday of every month try it out. >> i think people would enjoy

it >> listen up video game fans nintendo is releasing a new version of its switch console next year. the company is hoping to maintain the sales momentum of this twice nintendo is debating what hardware and software features to upupgrade. >> if you live in australia, maybe you might want to invest in a bike helmet some cyclists went out for a ride when they passed a group of kangaroos, and one of those animals just kind of hurled itself at the rider for no reason at all. i don't know why he did that both the cyclist and the kangaroo were unharmed >> i thought -- i've been to australia. you think kangaroos are like a lovable creature no they view it as a giant rat basically. >> really? back in the cartoons, they were always boxing people, aggressive >> i have never seen a kangaroo

with boxing gloves on. >> you have to watch those warner brothers from back in the day. >> did you bring me a taco >> that's good question. today is national taco day. what did you bring me? >> you can get deals on tacos at restaurants all over the country like taco john's, mo's southwest grill and del taco taco bell is bringing back its $5 taco day gift set for the occasion >> i think it's also national whiskey day. i'm not kidding. >> is that a good combination? >> every day is one of these things if it's national whiskey day and national taco day, don't even go to work. take the rest of the day off there's nothing better >> it's your friday, why not >> well, it's 5:00, but the problem is it's 5:00 a.m. somewhere. >> right here. >> frank, thank you very much. >> thanks, brian >> happy national taco day. baseball's playoff field is officially set unfortunately the yankees beat the athletics last night 7-2 in

the bronx. aaron judge hitting a two-run homer in the first inning. the yankees never looked back. the bronx bombers will now head to boston to face the red sox in the american league divisional series. still ahead, the race for florida. the state stands to play an important role in the midterm elections. john harwood is live in orlando, florida with more. john >> brian, we're all focused on the states where democrats are trying to pick up senate seats so that they can take over the senate if they can do so this fall, but don't sleep on the state of florida where they have to defend a seat with a long-time cuenanthinmbt d ey have rick scott with the mantra of jobs, jobs, jobs coming right at him more after the break

my mom washes the dishes... ...before she puts them in the dishwasher. so what does the dishwasher do? cascade platinum does the work for you, prewashing and removing stuck-on foods, the first time. wow, that's clean! cascade platinum.

welcome back 5:41 on the east coast here's how your money is setting up on a thursday stock futures indicating this five-day rally we have had may not make it a sixth day. dow futures are down 80 points the dow in the middle of a five-day win streak, but stocks are not the story. bond yields are the story. a big late-day selloff yesterday. bond yields at 3.38121%.

let's shift gears now to politics the race for florida is heating up the state's senate contest could end up being a major deciding factor in november's midterm elections. john harwood has more. >> this is a classic match-up of a long-time veteran politician, bill nelson, the democratic incumbent and a former ceo governor, rick scott who has spent eight years, strong economy, jobs, jobs, jobs is his mantra that's the match-up in a seat that democrats have got to hold if they're going to take over the senate it's a 51-49 split in the senate democrats are look to pick up seats in states like tennessee, arizona, nevada. but they also have to hold some seats. florida is a swing state rick scott has been an ally of

president trump but distanced himself from trump lately on things like the response to hurricane maria, which affected puerto rico, on gun control, but you have nelson going at him over things he did as a healthcare ceo, the columbia hca, the company he headed, before becoming a politician was hit with one of the largest medicare fraud fines in history. and so it's business practices against a long-time politician classic match-up and an extremely close race >> is there any kind of a reverse psychology effect from the kavanaugh hearings we've been hearing more and more about the theory that if kavanaugh -- first off, the gop is fired up because they feel like he's mistreated if kavanaugh were to lose, were to not make the supreme court, were to be either disqualified or he takes himself out, it

could be a boost to the gop because it gets the fire lit up under the republicans. anything to that that you can seeing down in florida >> seeing and hearing from strategists. that's their thinking, brian what you have got in this race is bill nelson is not -- the democratic incumbent is not particularly exciting but he's been benefitting from a surge of enthusiasm from african-americans because in the governor's race, an african-american, andrew gillum has been nominated now comes this kavanaugh fight which galvanized republicans, trump voters saying he's unfairly targeted. that's helped to rally the republican base. the concern is if brett kavanaugh is confirmed over the next week or two, that will quiet down, people will forget

it by election day about if he's defeated, if the swing votes go against him, he doesn't make it, that creates an anger surge that will benefit rick scott, benefit republicans in other senate races, especially in red states but also potentially in florida where every little bit of enthusiasm helps >> i have a feeling you'll be racking up the hotel miles the next couple of weeks >> yeah. >> obviously florida is important. can you give us a preview what other one or two key states, key races that our viewers need to be watching? >> well, there are other races where democrats are in big trouble that they need to hold for example, in north dakota, heidi heitkamp is facing a race from kevin cramer. if republicans win that, then the number of seats democrats need to carry inches up.

they may not need to win two, but maybe three or four. if you look at tennessee, that's a democratic pick up opportunity in a red state you look at north dakota, where republicans have a chance in a red state to pick up there's a lot of moving pieces on this chess board, and you got to consider at this point republicans, the favorites to hold the senate. democrats have a shot, but this is a very unpredictable political season the house is more solidly leaning towards the democrats, but the senate is important. and if president trump chooses control of both claim bhambers,s agenda is in big trouble and he could face impeachment next year >> i know it's early, but that may be the understatement of the day for you, the senate is pretty important >> that's right. coming up, a real estate

check, what higher mortgage rates mean for the housing market. and big gross sellg ina stamp collection for an insane amount of money last night we'll show it to you next. 300 miles per hour, that's where i feel normal. i might be crazy but i'm not stupid. having an annuity tells me retirement is protected. annuities can provide protected income for life. learn more at retireyourrisk.org annuities can provide protected income for life. plaque psoriasis tremfya® is for adults with moderate to severe plaque psoriasis. with tremfya®, you can get clearer. and stay clearer.

in fact, most patients who saw 90% clearer skin at 28 weeks stayed clearer through 48 weeks. tremfya® works better than humira® at providing clearer skin, and more patients were symptom free with tremfya®. tremfya® may lower your ability to fight infections and may increase your risk of infections. before treatment, your doctor should check you for infections and tuberculosis. tell your doctor if you have an infection or have symptoms such as: fever, sweats, chills, muscle aches or cough. before starting tremfya® tell your doctor if you plan to or have recently received a vaccine. ask your doctor about tremfya®. tremfya®. because you deserve to stay clearer. janssen wants to help you explore cost support options.

streets of new york shockingly empty at 5:49 maybe they're doing what paris is doing and banning cars. bond yields are quickly becoming the story of the market we talked about trade, tariffs, trump, italy but that is probably the number to focus on more than any other. 3.12%, the highest yield on the ten-year bond since june of 2011 which brings us to this, joe kernen and a preview of "squawk box," because you just happen to have kevin warsh as a guest host of "squawk box." i have a feeling bond yields

will be a part of the discussion this morning >> it's been a long time he's one of the smartest guys around, who he associates himself with, not just at the hoover institution but at the private sector as well he writes a lot of editorials that have been in the "journal" and a lot of those had to do with the possible dislocations in asset values that come from staying at these emergency levels for so long there's kind of a consensus that the fed was justified when you look at what happened in the rest of the world, how much more quickly we recovered that we were justified to stay at zero for so long. maybe the worst case scenario of inflating asset values didn't come to pass because you know, when you stay that low, it does cause -- you might imagine, not just here but in emerging markets and other places, they take risks that they shouldn't be taking maybe it can still happen.

i don't know >> here's the weird thing, joe, you and i have been doing this long enough where i guess i'm old enough now to remember where 3.2% would have been low >> my god. >> 3% what a bargain now we have a generation of people, millennials are just starting to buy homes, and 3.2 seems expensive. >> that's the other debate and question we have if it doubles from 1.5% to 3%, that's twice as much of what you were paying, but half of what was thought of as a low interest rate >> jerome powell said yesterday we are nowhere near neutral. so anybody who thinks we were -- >> i can't imagine that we were either people go back 100 years, 2% treasury was normal for a long treasury i thought 77% seemed li-- 7%, 6.

you remember jimmy rogers, he said he would never see anything at near 5% on interest rates >> he may be right 3.2 is a long way from 5 we have to roll. >> on the way down at 8%, 7%, he said we would never see 5% we went to 2%. >> don't cut me off today. i have to do a taxi thing. i have to go the ten-year bond yield at the highest level since 2011 mark fleming is here to talk about this you heard our conversation, 3.2% yelled, will that kill the u.s. housing market >> it's a good conversation, shockingly high, 3.2% bond yield. i don't think it will kill the mortgage market it will reduce

purchasing power for consumers, about $20,000 for a typical home buyer, but we saw when the rates rose last week that the mortgage market had already priced that in they were already expecting it we're seeing demand being pulled forward. people are trying to buy homes now because they expect future rate increases i was thinking as you were mentioning in that conversation now, what would be just right for a mortgage rate? 5 still seems low. maybe 6 is not too hot, not too cold >> you think so? nobody buys a house based on the price. they buy the house based on the monthly payment. as rates go up fsh, if prices d come down, the monthly payment gets more expensive. >> one reason why rates are going up is because the economy is doing well, wages are rising, your income is going up. that's offsetting the increased expensive mortgage rate. it's not necessarily the case that it becomes a priority and

more expensive the reason this is happening, the reason we're normalizing our price of money is because the economy is doing well. >> you nailed it that's the ultimate key trillion dollar question. will wanl wages go up enough t mitigate the raise in interest rates? >> it's a tug of war between the two to see the net effect. >> what's going to be the outcome according to first american and mark fleming? >> i think people will still buy homes. house price appreciation will cool down. people will want to buy homes not because the mortgage rate has gone to 5.5%, they buy homes because they want that lifestyle of bag homeowner >> you combine that with this reduction of the deduction for mortgage interest, it's a double whammy >> yeah. you have to remember, i don't know about you, when i was buying my first home, was

worrying about the tax implication and the decision to buy? not so much. those who are potential first-time home buyers that calculation happens in that two-step process you won't buy because someone is taking away a deduction from a year ago >> mark, have a spectacular day. thanks for joining us on "worldwide exchange. >> thank you >> let's wrap with the morning rbi. today we are going to call it random but expensive the first lot of stamps from bond billionaire bill gross' world renowned collection went to auction last night. the total haul about $10 million, including a four block st stamp that went for 78$787,000

stockfutures down. bond yields up big show on "squawk box. i'm off tomorrow have a spectacular weekend hokies 31, notre dame 28 you heard it here first.

stocks are under pressure as bond yields finally surge to some multi-year highs. shocker to see it above 3.2. amazon's minimum wage hike comes with a few tradeoffs why the retailer is getting rid of bonuses and stock awards. and one day away from the big september jobs data. we'll get an early read from the linkedin employment report at 6:30 a.m. eastern. it's thursday october 4th. 10-4, good buddy "squawk box" begins right now.

♪ >> live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. we did see the markets across the board ending higher yesterday. it was the fifth session in a row that was positive for the dow. closed up by 50 points it was off the highs of the session you saw the s&p 500 and the nasdaq closing up. dow hitting another record high with all of these numbers. this morning you are seeing giveback dow futures down by 84 points. s&p off by 13. the nasdaq down by 50. treasury yields is the story you're talking about the two-year, five-year, seven-year,