jonathan: luke hickmore, if the fed will struggle, what does it mean for the ecb? ke: it is difficult for them. i guess they would like to start hiking rates before the fed takes them down again, and the risk is that doesn't happen. by the time we get an ecb rate hike, mario draghi will be gone. growth will be gone in europe. this doesn't feel like an environment where you get a rate hike at all next year. i actually don't think we get anything from the ecb until we are well in to 2020. jonathan: but gershon, you have got to talk about this relative to the market. we have cleaned out a ton of shorts in the treasury market. on the 10-year yield right now, we are just south of 290. core government bonds are going into 2019 looking rich and pricing out a lot of inflation, a lot of rate action. does that mean we are primed for a move the other way? gershon: forecasting rates is very difficult, you know. jonathan: tactically speaking, are we set enough? gershon: i think the volatility will be a cause of what happens in the equity market. for a long time with nominal grow

gershon distenfeld, kathleen, and luke hickmore.igh yield in issuance continues, reaching a level we haven't seen in a decade. this is bloomberg "real yield." ♪ jonathan: i am jonathan ferro and this is bloomberg "real yield." more than $220 billion worth of treasuries were auctioned off this week. i want to focus on the $16 billion, the offering received strong demand and had a primary dealer award of 22%, the second lowest on record. tesla planning to offer more than $800 million of bonds backed by auto leases and found strong demand for the inaugural bond sale in february and the company plans to become a regular issuer. in the u.s. high-yield issuance, there is a drought. december would be the first month of no issuance since november 2008. still with me is gershon distenfeld and caffeine -- kathleen gaffney and luke hickmore. your thoughts on that stack in high-yield. where is the supply? kathleen: there is no supply and high-yield managers are feeling the pain and reaching for yield. there aren't a lot of choices. that makes f

still with me, gershon distenfeld, kathleen gaffney, and luke hickmore.uys, a lot of people talking about liquidity, illiquidity, and making sure you have some liquidity. gershon, talk me through why that is so significant at this state of the cycle? gershon: i think we over emphasize liquidity in the short run in general as it relates to the end investor. we talked in the previous segment about having continuous liquidity in etf. most investors should not have data liquidity. it actually hurts them. it is important in this part of the cycle, professional managers that want to move their portfolio around, if there is not proper liquidity, it will be costly. jonathan: size matters here? kathleen: size definitely definitely matters here. being nimble is a great advantage. when you are large, it is difficult to make meaningful moves. jonathan: luke, your thoughts on this subject? luke: i think it depends what instruments you have got available to you. there are more liquid instruments than physical cash for sure, and size doesn't always cause you a problem w