treasuries reap -- two year treasury yield big.e down six basis points from the week so far, 125 through the curve, 40 am a -- on the 10 year. coming up the final spread. the u.k. set to trigger brexit and opec oil ministers meet in kuwait. this is bloomberg the real yield. ♪ ♪ jonathan: from new york city for our viewers worldwide, i am jonathan ferro. this is bloomberg, the real yield. it is time for the final spread, a full agenda coming up over the next week including an opec meeting this weekend. and the u.k. set to trigger two years of brexit negotiations. speaking of opec look at this chart. even though crude has not recovered to its 2014 levels, the bloomberg barclays high yield energy index pricing crude is still at $80 a barrel. i want to talk brexit and energy. i want to bring in our guests. michael beginning with you. looking at the energy sector, have these companies underlie that index enough to warrant -- done enough to warrant what the spreads are? >> they have done a lot. they have done a great job generally speaki

do you look at the technicals and treasury?e talk a lot about the fundamentals, the economic fundamentals that are going to drive yields, hopefully. but there is something else going on in the technicals of that market space. we do know there is $600 billion of maturities coming off of the fed balance sheet the next couple years. the fed has indicated they are looking to reduce the size of their balance sheet. once the rate goes above 1%, which is not so unbelievable. that is something to keep in mind. when you look at the largest holders of treasuries, the fed being the largest, the next to being china and japan, both of them have reduced their holdings due to the economic picture in their countries. but they are reducing the holdings of treasuries. finally, when you look at what the banks have done because of regulatory requirements, they have doubled their high quality assets. because they are required to. if the current administration starts to reduce some of the regulatory pressure and change some of the regulatory guideli

the treasury argument on this is that it the treasury argument on this is thatitis the treasury argumentr of fairness that it isn't fair that those who are self—employed don't pay as much in tax as those who are employed, so that will be the argument, but it will be a pretty tough sell to some conservative mps. will be a pretty tough sell to some conservative mp5. i don't will be a pretty tough sell to some conservative mps. i don't think we should go out of our way to tax effort, enterprise and success. i know you need to do some in order to pay for public services, but i think the tax on those things is quite high and. it is important to make sure we don't disadvantage self—employed people. on this side, this has been and always has been the party that supports white van man. and on this particular day, also white van woman. i'm not sure that making a minor change at the edges is the right way to go about changing the relationship of taxation between the self—employed and the ordinarily employed. let's discuss the budget a little more. i amjoint by discuss the budget a little more. i a

steve mnuchin, the secretary treasury, they have little portraits of the treasury secretary.begs the question down the road get a broadway show in his honor? you never know. you never ever know. i think when they first hung hamilton's portrait the odds of that seem very small indeed. politico senior washington correspondent and i were chatting briefly this notion that the markets are convinced now that all this will happen. and i'm not one to rain on a parade. but everything has to fall in place just exactly to make it happen. and there are a couple of big speed bumps along the way, not the least of which is everyone on the same page with repealing and replacing obamacare; right? >> yeah. i think i get it; right? everyone's been watching the last 40 days, trump's been veering left, a little right, no one kind of knows what he's doing. made everybody feel a little bit better about things. but he didn't really put a lot of meat on the bones in terms of what does repealing obamacare mean? what does replacing it mean? . neil: would you do that in a joint session? or that it shoul

is the bund market anchoring treasuries? >> treasuries are the anchor for the world.on't believe that the ecb would want to raise rates while doing qe by any means. they have learned their lesson over recent years. they have tightened too soon in the past. there are still a lot of output gaps there. i think things are in control in europe and the states, in that the power of an individual rate increase a quarter-point relative to where 10 year yields are now is very significant, so i have a concern that the supply element, labor and whatnot, keeps up and keeps inflation -- a true goldilocks scenario would be wages continue to move slly. jonathan: what is the potential for nd >> mario draghi and the bankers are under no obligation to telegraph what they would do. their job is to analyze the situation and do what they are supposed to. they don't have to tell us. jonathan: if you are a bond investor, you are at the mercy of the ecb. you see the chart. you completely rolled over. the average maturities come all the way looking at the chart. if you are an investor, how do

thebund market anchoring treasuries? treasuries are the anchor for the world. i certainly do not believe the ecb would want to raise rates, you know, while doing qe by any means. they have learned their lesson. they have tightened too soon in the past. there are output gaps still there. i think things are out of control in europe and in the state in that the power of an individual rate increase, a quarter-point relative to our 10-year yields now, is really very significant. i have a concern -- just that the supply element of labor, or not, keeps up, and keeps inflation -- the true goldilocks scenario would be wages that continue to move very slowly. jonathan: what is the potential for a tantrum in germany? gershon: it will happen at some point. it is a question of when. we have to remember driving in central bankers are under an obligation to telegraph exactly what they are going to do. their job is to minimize the economic situation and what they are supposed to do. driving's comments -- draghi's comments were appropriate. here's what we intend to do, and we c

you look at the technicals and treasury?ave talked about the fundamentals, the economic fundamentals that are going to drive yields, hopefully. somethingut there is else going on. we do know there is 600 billion dollars of material coming off of the fed balance sheet. fed has indicated they are going to be looking to reduce the size of their balance sheet. when you look at the largest holders of treasuries, both of them have reduced their holdings due to the economic picture in their countries. finally when you look at what the banks have done because of regulatory requirements, they have doubled their high quality assets. if the current administration stars to reduce the regulatory pressure and change some of the regulatory guidelines, what does that mean for technical support? it is really hard to argue there are any markets there. we can look at the balance sheet and the federal reserve. 2017, 100 64 billion. that is 425 next year. speaks a little bit later, we all will be looking to comments on rates. when did they get s

treasury secretary steve mnuchin speak.s we wait for that to begin, let's check first word news with mark crumpton. crumpton: david, take it. the way has been paid for theresa may to formally start the process of leaving the european union. canthe prime minister choose when she wants to invoke article 50 of the lisbon treaty, which would begin the two-year exit process. authorities say one person was injured by a letter bomb at the international monetary fund's offices in paris. another, there was a report a package containing explosives have been mailed to germany's finance minister. officials in southern france say an arm 16 year old high school student has been arrested after a shooting in a school that left at least three will get. police are -- wounded. police are looking for a possible second shooter. police shootings are -- school shootings are rare in france. israeli prime minister benjamin netanyahu is promising to keep his world -- word to build the new west bank settlement in two decades, even as the prime minist

we talked about treasuries.

jonathon: booms are treasuries? -- or treasuries? >> treasuries. >> treasuries. >> bonds. jonathon: retail credit, long or short? >> i am short, so short. >> short. >> short. jonathon: guilt, buy or sell? >> sell. >> sell. >> sell. jonathon: there you go. you agree on something. a privilege. thank you for joining me. a programming know, next friday, we will be back at our regular scheduled time, 12:30 new on-time time and 5:00 in london. from new york, that is it for us. you have been watching bloomberg, the real yield. mark: it is 12:00 in new york, 4:00 and monday, midnight in hong kong. from monday, i am mark barton. in new york, i'm julie. this is the european close on bloomberg markets. ♪ mark: we will take you from new next hour,don in the plus covering stories out of washington, rome, and greece. here are the top stories we are following from around the world. it is crunch time for the house as the vote repealing obamacare looms today. house speaker paul ryan meeting with the leader of the conservative freedom caucus as the outcome of the bill is in doubt. as the eu

one of the richest treasury secretaries that we've had. the number includes a lot of goldman sachs representatives, yourself included. walking down the hall, a picture of hang paulson. do you feel given that background when you hear the likes of elizabeth warren criticize the role of bankers and goldman sachs types in this administration to be extra careful about that association? how do you feel about that? >> let me first say there's no greater honor for me than being in this job. being the 77th treasury secretary. in my office, i have a picture of alexander hamilton. he looks down on me every day. there's a lot of history. when you walk down the halls and you see the portraits of all of these people, you realize thef d you realize that the treasury has such an important function. many of which is nonpolitical. many of inch is operating the u.s. government and focusing on the economy and the growth and opportunities. and i'm honored to follow a great tradition not of only goldman sachs people. i work very closely with secretary paulson.

looking across the treasury curve at various other treasuries, we now have the 10 year yield and 30 yearghest price all year. as for the two-year yield at 1.37%, it is at its highest, going back to 2009. also moving forward is oil, falling below $50 a barrel, at $49.25.nt at a lot of people weighing the supply against the cuts opec has been doing. exxon mobil, interestingly, has turned higher in the last little bit, but energy still a drag on the averages. finally, we are looking ahead to tomorrow's jobs report, especially after the edp number we got earlier in the week. we have seen -- there did not used to be much of a correlation. adp was not much of a predictor. there has been a tighter co-relation across the past few reports, so we will see indeed if adp predicted the strengths that we might see in that report tomorrow. oliver: julie, thank you for the update. scarlet: let's get your check of the headlines. mark crumpton has more. mark: british prime minister theresa may says "it is time to get on with leaving the european union." she was speaking with reporters at a summit in bruss

did what about the department of the treasury? but there are three components of the treasury of the international finance in the investigative work around that. the first to i know lot the third it is virtually nothing so the one thing about the treasury into be even more pleasantly surprised in to be at the edge treasury to be 20 or 25 years so the resources are huge. so i didn't have a lot of experience in that area with those sanctions to learn about what we do to combat terrorism with that first day in office and announced the vice president would be labeled and these other important tools of government to combat terrorism. >> feel to met question your family has a long-term interest so what piece of currency would you like to spruce up? [laughter] >> we should look at putting president trump on the $1,000 bill. we don't have one. i'm kidding. [laughter] >> so what can you imagine for those that are in the room? >> there is of plan there is a very large investment but i am much more focused to be honest is at the secret servi

treasury. we should take this opportunity to lighten our duration on u.s. treasury. inflation it is linked to the job market. environmentve an is using fed cautiousness with the u.s. treasury. reporter: you mentioned inflation. where do you see the reflation trade now? is that still in progress even though we have weakness in oil prices? >> we believe oil will go higher. we are or casting oil price between 55-60 at the end of 2017. it will put inflation pressure. the reflation trade -- they are that.sting it higher than it will be linked to the job market and the strength of the u.s. economy. have a connection between growth in europe. u.s. gross is very strong. even in an energy market, there is a strong implement in russia. reporter: emerging markets have states a stunning rally over the past week. do you think they have further to go? >> yes. we believe that is the place to be. a lot of the markets have been affected by politics. in terms of investment, one of the main categories when you are investing in energy -- emerging markets is selection. clearly there is a

or also treasuries?ency and circulation and other fed obligations, your treasury holdings are equal to what you would need as an asset to hold against your liabilities. william: that's for the committee to decide' we haven't made those decisions. michael: does it make sense to focus on mortgages? is there a problem doing that because of payment? william: i don't think there is a strong need to differentiate between mortgages and treasuries. speaking for myself. it's up to the committee to decide. michael: how do you envision conducting monetary policy in the two ture -- future? do you go back to a fed funds rate? do you continue with the current system of interest on excess reserves and repose and the feds fund rate trade somewhere in the middle of it? when do you make a decision on that? william: we don't have to make that decision for quite some time. current system is working very well. there are some questions would the fed be able to raise the federal funds rate in a reliable and predict able manner

another consensus position, short treasuries. this much, bid on treasuries. at 236 on the 10 year. that gives you a sense of the unwind. the other consensus position, long dollar. this morning the dollar is very much on offer. the euro pushing higher, flattened by strong data out of germany, up .6%. let's get you some headlines and say good morning to emma chandra. emma: good morning. in the u.s., president trump will reverse many of president obama's acts to reverse climate change. he will sign a sweeping executive order to promote domestic oil and natural gas. some of the changes would take place immediately. others would take years. in russia, they appear to be the largest anti-government demonstrations in 2012. millions gathered to protest official corruption. an opposition leader called for the demonstration. he was detained by police and appeared in court today. in asia, south korean prosecutors are seeking to arrest the former president of graft allegations. that she allegations colluded with a longtime friend and former aide to get bribes to south kor

department of treasury. and in 2008 he was confirmed as assistant secretary of the treasury and oversaw the troubled assets relief program, or t.a.r.p., during the financial crisis. and he received the alexander hamilton award, which is the treasure xwri department's highest honor, for distinguished service. following his tenure in washington he returned to california in 2009 and joined pimco as managing director and a member of the executive office. he left the firm in twthd to explore returning to public service, and he found that outlet as a gubernatorial candidate in his state of california. president kashkari earned his bachelor and is master's degrees in mechanical engineering at the university of illinois at urbana champaign and an mba from the wharton school at the university of pennsylvania. so again, i want to extend a warm nabe welcome to neel kashkari. [ applause [ applause ] >> thank you, emily, for the kind introduction and thank you to nabe for inviting me to be here today. i want to talk abou

treasury is still there. it is still the agency that sells debt and pays off debt and taxes and all that. treasury hasn't gone anywhere. is hybrid fed system. he board of governors supposed to be seven members, only five sitting right now, that may be is on theur soon, one way out, this will give a chance for president trump to make new and when he if chooses. they do sit in washington. they are the most powerful within that system. they are appointed by the president and confirmed by the there is a process similar to that for say supreme there.udges in place then there are 12 regional banks, sort of artifact of discussions long, long ago about regional wer versus power and federal interest versus interest of farmers in kansas or something like that. are in fact anks privately held, you are right. there has been debate over of her too much influence bankers on the boards of that oversee those institutions. keep in mind, only five of those 12 regional bankers any given time are sitting on the committee that se

if you are looking at treasuries, treasuries declining 12 straight days, yields climbing, climbing much we are up by 4 basis points. on the 10-year, we are up by 2.57% on the00 -- u.s. 10-year. i want to bring back in the team. danny blanchflower of dartmouth. and barry bannister. --ny on it is a tear up up theit is a tear script moment. you are the labor market expert. it is not a very high correlation, but that is a pretty high number. 2.27%, last time we got the adp number was pretty high. last month was actually a drop. there are obviously two parts to the data. there is the household part and the establishment survey. the establishment survey was strong with nonfarm payrolls, but there was a rise in the unemployment rate. we will see if there is a simple read. the one read i would take, look at the wage growth series, look at it for non-products and -- nonproduction and supervisory. that is the take home, that is the pay packet people get to take home. that is rising at 2.1%. i think we are kind of trundling along. we will see if there is big positive news, that is absolutely going

relative to other treasury u.s.t the levels they are, 10 year, 2.4%, relatively high compared to 10 years.ets' so you say you are buying u.s. treasuries, what else are you buying at the moment? christophe: we in fact buy -- we have balanced for four years either way. we -- balanced portfolios either way. we are ready to take some risks. invest inortfolio, we european equities. for u.s. portfolios, we invest in u.s. equities. on the other hand, we are trained to balance the portfolios. we have an investment in bonds, but what i mean by bonds, i mean two things. any protection from bonds like u.s. treasuries or german bunds, and the second thing is high-yield to get attractive yield because the difference from today compared to the past decades is that when you invest in u.s. treasuries, you get the protection but you do not get anymore the yield, and to get the yield, you have to take some risk in the bond market by investing in high-yield. anna: high-yield relative to germany, but not enough. matt. matt: i want to p

and this week at the treasury? concern was that the wasn't fulfilling its mandate and there were moves to there to governance, that was spending control increased, the reassurances that are ,ypically given to investors the immediate concern is going to be how much can anyone trust that that continues? following that, there are questions around the validity of the ministerial experiences, their track records with their previous portfolios, what that suggests in terms of being able to put up any kind of resistance to the idea of state capture. i guess those concerns and questions that you highlighted there will be at the forefront for rating agencies when trying to work out what rating to attach to south african debt. what are your expectations about the rating? john: we know this issue is significant to the rating agencies. over the last year, rating agencies have mentioned without fail the politics and the impact that that has on the appetite and the operational aspects of structural reform. do we see growth enhanc

treasuries. upping your stakes in treasuries? david: we are not. a review on treasuries is yes, they are a reliable source of protection, especially if there is a price equality with events. increasingly because of the low interest rate environment, treasuries look more like a bet on that downside event because you are not getting much return in the meantime while waiting for the markets to decline. vonnie: what do you do with the rest of your funds? options and so forth are not expensive.you can have a lot in cash still . other things you can do? david: we like to stay fully invested. we stay fully written with call options in our strategy at all times even though call premiums are low. you are still getting double-digit cash flow yields for one month at the money call option. that is low cash flow relative to the historical opportunities in the option market, but it is high relative to other cash flow producing investments, so we are patient to collect those premiums were volatility is low, knowing they will increase should volatility spike up. v

treasury secretary steve mnuchin has a problem.et his management team approved by the white house. according to people familiar with the matter, trump's aides say steve mnuchin's picks are too liberal or to wall street. is --g us now with more who covers the treasury department. why can't steve mnuchin stack up his department? ,s it a more difficult problem staffing treasury, then staffing other departments? sayingproblem that he is is something we see across agencies in this administration. he specifically is having trouble getting his top list through the white house. plenty ofes he have candidates to choose from? do we know if there are people applying for jobs at the treasury? >> he had been conducting a lot of the meetings. he has jim donovan from goldman sachs to view -- goldman sachs who he had would like. he has his choice for international affairs and possibly just a music from whoan stanley, years ago, may be undersecretary of domestic finance so he does have people in mind but he is struggling to get the approval from th

five-year, 30 year treasuries.urve was absolutely collect -- collapsing and the worry was a hawkish height. thinking inugh your the shift in the curve. we were talking a nudge in support level. does that hold? peter: i think so -- at best, for those who have flatters, they lose some of the kerry. have a -- having a curve flattening position in treasuries is a negative carry position. we think the steeper is better. five, 30's.rring to that is the most important curve at the moment. we see steepening potential here. as the fed raises interest rates, they are also getting closer to stopping reinvestments. at worse, we think you get a parallel shift higher in yields. at best, we feel there could be a decent amount of steepening, maybe close to 20 basis points. year,zooming in on the 10 i've got the. go function here, talking about expectations. expectation as to how that gets translated into u.s. 10 years for examples by the end of the year? peter: it is all a function of when the signal this move. i think they could

at the treasury.ave people came with me to europe who had been there 20, 25 years working at the treasury, they have been studying these things forever. the resources are huge. is an area i didn't have a lot of experience in. i spend a lot learning about the sanctions and what we do to combat terrorism and illicit financing. i don't know if you remember, but my first day in office, i went to a press conference at the white house and announced that the vice president of venezuela was to be labeled under the king connect. these are some of the most important tools we have been ,overnments to combat terrorism and we are to continue to use them very aggressively. mike: we will finish with a reader first question. your family has a longtime interest in art. piece of currency would you most like to spruce up? [laughter] sec. mnuchin: i think we should look at putting president trump on the $1000 bill. [laughter] mike: who's that no? sec. mnuchin: we don't have a $1000 bill. [laughter] mike: of the ones that

there aremnuchin: three components of the treasury . domestic, finance, international and all of our i investigative work around that. the first two i knew a lot about, the third i knew virtually nothing about. it's like i received literally a phd over the last 90 days. the one thing i heard about the treasury, i'm even more pleasantly surprised, the career staff is unbelievable. i have people who came with me to europe who were working at the treasury 25 years. they have been studying these things forever. tf i is an area i didn't have a lot of experience in. i learned about the sanctions, learning what we had to do to combat terrorism and illicit financing. in office i went to a press conference at the white house and enhanced the vice president of when his way to was -- these are some of the most important tools we have in government to combat terrorism and we are going to continue to use them. and thenimate question a reader first question. your family has longtime interests in art for you piece of current he would you most likely s

the treasury route, 261.ger for the seventh straight week versus the yen, up by 4/10 of 1%. the commodities market getting a little relief after they got hammered for the whole week. crude up by seven tens of 1%. gold a little weaker. since longest streak december 2016. one stock we are paying attention to is bp, up over 3%. exxon mobil is said to have sounded up bp's major shareholders seceder insurance and a potential takeover. -- isa potentially potentially worried about the offer of 120 billion pounds total. chevron also looking into that as well. david: there have been rumors around this for some time. alix: ever since my condo. -- macando. who is going to want to take that on? jon: still with a 92,000,000,010 market cap. ause the word -- still with 92 billion pounds market cap. bought xto right with they should not have. i can't fathom why they would want to make another huge acquisition that still has clouds around it. jon: no confirmation of any this is bloomberg. the big one for us about 28 minutes a

the blue line is treasury futures. we have seen people net short treasuries this year.s short now than they were just about a month ago. this is something we will continue to watch is the debate goes on if the market is over in treasuries. grantedthe eu additional pairs to a doubt takeover of dupont. one of three major mergers currently pending. reinforcing the extent of changes that have been sweeping the industry. split off of dupont in 2015. great to see you. started at dupont in 1980 and have been at the front of all the changes we have seen in the industry. in 2015,nt spun off there was quite a bit of bearishness. more selvin buy rating on the company. what did investors and get wrong? >> it's interesting. we had a 200 year history with the dupont and we like to think of ourselves with a 200 year head start. number one, the company or with lower products, we had liabilities that we had to deal with. that now has gone behind us. we delivered the company. legal liabilities are behind us and people are starting to see the businesses we have turn up. liabilities, that

treasury secretary. will disagreements over trade and currencies play out tomorrow in washington? all of that is coming up. the market is open 10 minutes. ♪ .> marine le pen is concerned she is the extreme right. that is a party i consider dangerous for our region. i am not the only one that feels that way. the mayor of paris speaking yesterday to bloomberg about upcoming french elections. today, we are pricing out political risk. tomorrow, we will see exactly what happens. matt: absolutely. it will be interesting to see what happens when we go to the meeting of the g-20 at baden-baden. what we heard from the fed overnight and what we heard from the dutch voters overnight as well, i want to bring in the chief economist at societe generale. start with theo fed. did janet yellen pull off the perfect dovish hike, or did she leave something on the table? >> we can say it was a perfect type. prepared the market. it sent a message, rather dovish . the markets were wondering whether they would accelerate the pa

marketwatch reports treasury secretary steve nguyen may have violated federal ethics laws by permitting people to watch a movie he produced. secretary nguyen was asked about movies, given his background as a producer said now as treasury secretary is not allowed to promote anything he's involved in. toward the end of his response he added you should send all your kids to lego batman. a movie reduce produced. here's his conversation with mike allen.>>. >>. >> thank you so much for being here. >> we were saying you were born and raised in newark. >> now in my home country of los angeles, this is your first time as a full-time washington. >> thank you. >> what you like about bc. >> it's very livable city >> . >> that's what i think.>> i like the art galleries, valleys, the restaurant. >> it's not quite as spread out as los angeles. >> and how are the people you're different? >> i'm hanging out with all the politicians so i don't know anybody else other than that. other than the press. >> your back from london and berlin, what did you learn from your world counterparts on that tour? >> they

treasuries are sliding for an eighth consecutive day. will the federal a trigger on a rate hike next week? we look at how far they could tumble. bracing for the french elections. a ceo calls 2017 the year of transition. mark: we will have a look at where european equities are trading 30 minutes until the end of the wednesday session. stocks rebounding from earlier losses when they were down for the six and second day, worst stretch since november. the sterling was lower ahead of the budget from chancellor philip hammond. still down for the third day. look at the yields creeping up across europe. let's talk about adidas. shares of to a new high today. 8.9% higher.biggest gain since november 2008. raising is sales and earnings forecast through 2020. 2017 forecast ahead of analyst estimates. business should rise between 20% to 22% through 2020. raised their outlooks four times in the last year providing a springboard for the new chief executive who did the rain from herbert. plans to over invest in the u.s. to catch up with nike. we were ta

by the , remarks president and ceo of the federal and ve bank of minneapolis former assistant treasury secretary. he spoke on the health of the inancial issue and the threat of another banking crisis. national on of the association for business economics conference is 45 minutes. >>> welcome to our general session for this afternoon. i'm the chief economist at ford and i'm very pleased to be here today to introduce and moderate a discussion with the president of the federal reserve bank of minneapolis. he took office as the president chief executive officer on of 2016.st he serves on the federal open the t economy bringing feds -- committee bringing -- in washington. however, i want to preface the noting that day by after he accepted our invitation o speak here today, the fed adjusted its blackout period ahead of its monetary policy in facts so that we are within the fed blackout period today. kind to keep his commitment to be with us here today. he will not be able to talk about the monetary policy aspect of his position at the fed. that said there's lots we can talk about and i know

rtment and in 2008 he was confirmed as the tant secretary of treasury and oversaw the troubled assets release program tarp, during the financial crisis. nd he received the alexander hamilton award. following his tenure in he returned to california in 2009 and was managing director and a member executive office of pimco. in 2013 to firm explore returning to public outlet asd found that a gubernatorial candidate in his state of california. his bachelors and masters degrees in mechanical university of the llinois and an mba from the universityool at the pennsylvania. >>> thank you for the kind introduction. i want to talk about too big to fail. as soon as i joined the minneapolis fed, i started and our r economists policy regulatory and supervision experts about the fail.m of too big to i lived it firsthand as the guy ho bailed out the banks during 2008, 2009 running the tarp program. really ion is have we addressed too big to fail, what do sery main, and should we more. so last february we announced tending too big to fail we invited some of the best experts in the world to come to minn

treasuries rally and commodities rollover. and why negative rates and messy politics me no easy rates for banks in europe. ubs has charges extended to more of its customers. good morning and a warm welcome to bloomberg daybreak on this wednesday. i am jonathan ferro alongside alix steel. david westin is away today. let's get straight to the board. futures are softer in the united states. -1/10 of 1% on the s&p. a drop since october. the euro, giving us some of yesterday's gains going south by 1/10 of 1% and europe treasuries, down. dollar-yen, 1.11. down seven days, the longest losing streak in two months. it hase last two days been up by 15%. gold goes nowhere, just $12 in two days. you might have thought that. crude continues to roll over -- one and at 15 half percent. the republican health care plan is running strong opposition ahead of thursday's vote. joining us for more is kevin cirilli, our chief washington correspondent. where do we go in the next 24 hours? do the republicans have the vote? >> know they do not. the sou

treasuries. this time yesterday. this morning, markets are lower. the euro is weaker. the dollar gaining a little bit of strength this morning, up .1% . administrationp has not had much luck with health reform i doubt they are talking about moving onto tax policy but there is the deregulatory portion of the president's agenda that could go ahead without congress. today, you will be signing an executive order to roll back obama era energy orders. here is kevin cirilli. first and foremost, president trump is going to completely reverse the former administration's environmental protection policies. has approved he several pipelines that he says will create job growth. however, he also has upset the environmentalists. al of that said, it has been busy week on capitol hill as the investigation into the potential russia meddling into the u.s. election continues, particularly in the senate. officials are going to testify. david: as much as we would like the president to be focused on tax reform, it seem

alix: what happens in the treasury market? >> given that it's coming so close after they just hiked in december it will be very odd for them to come out hawkish. we do think the market is in the right place here. fair value on the 10 year. we could rally five to 10 basis points if they have a dovish kind of response. alix: what happens in the five-year? we are so short on the five-year. is that going to mean lower yields no matter what they do because they are just positioning taking into effect? >> that has been out there for a while. if they hike today and deliver, they monetize some of those gains. people that are short are running up against carrying. you will see some short covering which will trigger some of the rally we are expecting. alix: when you look at the fed do you expect the fed that is still data dependent or that is responding to a broader economic shift and if so what triggered the shift for them? >> i don't think it's a big change. people talk about them going in march as such a big change in policy. they ne

jonathan: a bullish call on treasuries.d ,arket, bloomberg real yield 11:30 a.m., 30 minutes dedicated to fixed income. 11 minutes away from the market open. futures slightly negative on the dow, the s&p 500 going negative -- going nowhere. yields are up by a basis point at 239 on the u.s. 10 year. you are watching bloomberg. ♪ ♪ jonathan: ford motor's offering a little bit of soft guidance. to $.35, the estimate was $.47. stock premarket, that down 2.5%. joining us is dan suzuki. i want to get to this earnings guidance from ford and try to extrapolate what it means for the others. there was so much optimism about earnings in the quarter. what does that tell you? dan: it is another reason to be a little concerned. everybody is focused on the fact that growth's getting better, earnings are accelerating, and that is true but on our numbers earnings will peak out and the first quarter quarter and you will see that rollover. there is a huge divergence between the survey data the confidence data and the actual -- economic surpri

department of treasury and in 2008 he was confirmed as assistant secretary of the treasury. and oversaw the troubled assets relief program or t.a.r.p. during the financial crisis. and he received the alexander hamilton reward, the highest honor for distinguished service. following his tenure in washington, he returned to call and joined pinco and member of the executive office. he left the firm in 2013 to explore returning to public service and found that outlet as a gubernatorial candidate in his state of california. he earned his bachelor and master's degrees in mechanical engineers at the university of illinois and mba from the university of pennsylvania, i want to extend a warm welcome to neil kashkari. [ applause ] thank you for the kind introduction, i want to talk about too big to fail. as soon as i joined the minneapolis fed i started asking our economists and our policy regular tri and supervision experts about the problem of too big to fail. i lived it firsthand as the guy who bailed out the banks during 20082009 running the t.a.r.p. program. have we addressed too

>> there's really three components of the treasury.domestic finance, international finance, and what we call tfi, tariff financing and all of our investigative work around -- terror fist financing and all our investigative work around that. the first two nye a lot about but the third i knew nothing about and i haven't received a ph.d over the last 90 days. one thing about the treasury -- i heard this but i'm even more pleasant live surprised -- the career staff is unbelievable. the treasury. i had people who came with me to -- they have been studying the things forever. i spent a a lot of time learning about the sanks and what the do to combat terrorism and elicit financing. ... .... .... >> i would say of all the things, there is a plan to update the current theme. i was at the secret service were a meeting on this and i don't know if you know but the secret service was started under the treasury to combat counterfeit and going back in the old day the counterfe fittinfeicounterf highest third of the u.s. currency. counterfeiting is no

so, very, very quickly some very difficult questions being asked of the treasury. yes.ighlighted the technical difference there about the different classes of ni, but that's going to lea p classes of ni, but that's going to leap out nonetheless as a headline, isn't it as a break in a manifesto commitment and one wonders whether the numbers have been crunched and whether it is going to bring in enough money to mitigate against those bad headlines? yes, i can say from what my colleagues in the press we re from what my colleagues in the press were saying that clearly that will be the headline, the treasury were getting a tough time on this and the numbers, the other thing they're trying to do, there was a cut in national insurance for the self—employed announced previously, due to come in at the same time as this rise and what really the treasury are doing are putting the figure together and saying it is 1.6 million who will be affected. but that's a lot of people and it is people tory mps would consider to be entrepreneurs, but at this time of brexit, of course, which was

the bond market, u.s. 10-year treasury was up 2.6% on march 14.ay before the fed raised that rate and put out -- the stronger median consensus for three hikes this year. it's down to about 2.4, what's the bond market telling the fed? jim: i think again the yield curve has flattened a little bit. usually when you are raising the policy rate, you would expect longer term rates to move in tandem. it's going the opposite way here. that gives me a little bit of pause about not so much about the march rate hike by itself, but this projection out of 200 basis points, more to come. like i say that would be too much in this -- given the data we have in hand today. kathleen: potential g.d.p. seems to be another theme that is driving some fed officials to be onboard with the series of rate hikes. and over time they set projections. some economic projections. long-term equally funds rate come down. the idea of the growth potential, the potential g.d.p. seems to have lowered from 2.45% in early 2012 to about 1.9. i think john williams said he thinks the potent

let's get you abigail doolittle with a deeper look and treasuries and trends. >> what a day for treasuriesr yield down ever so slightly, represented in green which tells us that haven bonds are rallying. the reason this is a big movement is because bonds have been selling off for nine days. the first time in 10 days, a little bit of a rally in bonds but almost unchanged. interesting to see how this plays out. if the 10 year yield climbs higher on the day, the longest selloff for bonds, the longest climb for the 10 year yield since 1974 and the water gets in the. -- watergate scandal. let's but the move into perspective. this is a six-month chart of the 10 year yield we have been showing. the big back up and rates we saw after the election. after the last rate rise in december, we see that investors bought bonds. we had a range of uncertainty, flirting with a 10 year yield an overall if the 10 year yield does not climb back above 2.65%, is suggest we could see the 10 year yield dropped down into that range and perhaps down to the downside. so much energy investors ahead of the fed, do not k

the career staff is unbelievable at the treasury.ad people who came with me to europe who had been 20, 25 years working at the treasury. they have been studying these things forever. the resources are huge. tfi is an experience i didn't have a lot of experience in. i spent a lot of time learning about the sanctions, learning about what we do to combat terrorism and elicit financing. i don't know if you remember but my first day in office i went to a press conference at the white house and announced that the vice president of venezuela was going to be labeled under the kingpin act. these are some of the most important tools in government to combat terrorism and we are going to continue to use them very aggressively. >> secretary, question, your family has long-time interest in art. what dollar bill, what piece of currency would you most like to spruce up? [laughter] >> i think we should be looking at putting president trump in a thousand dollar bill. >> who is that now? >> we don't have a thousand dollar bill, i'm only kidding. [laugh

-- treasury secretary mnuchin?ert: we did discuss that today, they need to push legislation in a timely manner. there is definitely a push on this part of the white house the that. i know with many members of that committee. they know we support the legislative process moving forward. we are interested in working in a bipartisan, commonsense way to get this done but definitely we did talk about the need to do this sooner versus later in the meeting with the president. kevin: humidity bank regulatory relief coming this year? robert: we hope so and will push rigorously to make it happen. kevin: we appreciate your time is always. vonnie: thanks to bloomberg's chief washington correspondent kevin cirilli with robert nichols, ceo of the american bankers association. more bloomberg markets next. this is bloomberg. ♪ ♪ this is bloomberg markets. aca versus ahca. the market continuing today with committee hearings. house ways and means committee met this morning to approve its portion of the overhaul. speaker writing given

i do care a lot about the five and ten-year treasury.hat's where i take my cue, how it affects americans. but our rates are already higher than sweden, switzerland, japan, germany, england, france. the ones that blow me away is our five and ten-year treasuries are 50 to 100 basis points higher than spain and italy. and it's hard to imagine this world of globalization, i don't think we're a riskier credit. i don't think we're growing less well than them. so how are their rates, you know, 1 1/2% and 2% for their ten-year treasuries and our rates are 2 1/2%, i don't see how our rate is going to go 3%, 3 1/2% with the dollar where it is. it's going to be interesting to watch. i think the fed will go a little more slowly than they talk. that's been traditionally what they've done. one or two times in the fed funds are in the cards because i think, once again, we're doing kind of well. but to tell american voters, i guess, that we're doing so well, we can slow things down which is kind of what fed raises do. they're contractionary. i think the

turning to the treasury market. lot of fed speak this week, which the markets have perceived to be much more hawkish. we have seen expectations of a fed rate hike this month really jump this week. you have seen that in the treasury note throughout the week. treasury market, excuse me, throughout the week. ten-year treasury note, the yield is slightly lower. down to 2.48%. but again, solid moves this week. the biggest story, perhaps, has been the two-year treasury and the fact we have seen yields there highest since 2009. >> exactly. about a seven-year peak. a flattening of the curve, but expectations of a hike have moved significantly. it's the best case expectation for march. we will hear from both stanley fischer and janet yellen today in and around lunchtime. will they stick with the rhetoric of the last two weeks to suggest march is possible or change the tone? let's look at data out of asia overnight. japan's core consumer prices rose for the first time in more than a year. january core cpi at 0.1%. forecasters

we have selling in the treasury market.r is holding steady, a gain of 1% and crude oil resumes its dissent, down another .4% at the moment. seatbelt needed in the global bond market according to the senior portfolio manager for global fixed income strategies. newberger berman says we are in heightened volatility through the rest of the year. he joins us now. we are going to ask you about -- tltro's than that is probably the last time we use that acronym. >> there should be a good uptick, but ultimately i think ecb is on a policy moved to try to steepen the curve and make the banks more profitable. this is one step in making them more profitable and we need them -- that isarnings important to build up capital and equity. mark: we solve the charts and the yield and the periphery and the u.k. thrown in for good measure. what is the outlook for the european dublin bond market given we might be witnessing a change in stocks from the ecb through 2017? jon: we have taken a very negative stance and we think the steeper curve is som

straight afterwards the treasury to agree to —— a briefing, lots of questions from journalists aboutaying there will be no rises in the main taxes such as vat, income tax and national insurance, anyone reading the tory ma nifesto insurance, anyone reading the tory manifesto would not have expected what happened today. the treasury argued that when they did the legislation, locking those taxes on making sure it was written into law, they made it clear which bit of national insurance they were talking about, but that is not the point. the manifesto that people might have voted on seems to be a pretty clear reach. then you have the policy itself, the argument from the treasury is that this is about fairness, why should one set of people who work pay differently to another when their pensions are now the same, most of the benefits are the same, most of the benefits are the same, most of the benefits are the same part, crucially, of course, from maternity and paternity leave, and they will have a review into all of that. but the headlines tomorrow could be pretty brutalfor philip hammond.