coming to us from boston is eric stein, codirector of global income and portfolio manager, eaton vanceanagement. great to have you on the program. kevin, let's begin with you. does it make sense for the treasury to be woken up to the world around us? nothing to me has fundamentally changed in the last couple of weeks. this story existed for months, yet suddenly the treasury woke up. why? kevin: we spent most of last year focused on inflation. as far as the bond market was concerned, so treasuries are going to go on a higher yield if we see inflation. that changed after tax reform and a number of new factors came into the market that would create this new wall of worry. the dollar decline. the dollar is stronger today, but the dollar decline is an issue. trade disputes. china is the biggest buyer, and now the deficits. if you are not taxing and you are spending you are going to , build deficit. those things have changed the dynamic of inflation and why yields have jumped up. jonathan: let's get that yield down, how much every repricing that we have seen so far has just been about invest

eric: in our eaton vance global macro strategy, we have had short positions going back to 2005 and 2006ith greece and italy, more recently we had short italy positions. not as optimistic, i am shorting italy right now because it seems to be a one-way trade every day where spreads continue to tighten almost every day. i would agree with the previous guest, it does not make a lot of sense, but i think the tough part with the european peripheral bond markets seem to oscillate which makes more inherent sense for us. right now, they trade more like a rates market. ♪ jonathan: i am jonathan ferro. also, ecb president mario draghi delivering his report to the jonathan: i am jonathan ferro. this is "bloomberg real yield." i want to head to the final spread. coming up over the next week, we get a rate decision from the bank of england with boe governor mark carney delivering that. european parliament, his annual report. we get another round of earnings including tesla, and once again, there is the potential for another u.s. government shutdown, which most investors have become desensitized to at

we are joined by kathleen gaffney of eaton vance. approved -- with 11% return.e us the sense of where the bond market is now now that we have heard from the fed. kathleen: the bond market is clearly in transition and yesterday's fed meeting made that transition a relatively smooth one, but the path of least resistance from now on is for interest rates to move higher. want tohave a chart i share with you that shows what the market is thinking about when it comes to rates moving higher. the white line represents what the market is looking at up to 2019. we are looking at 64 basis point hike this year, but really only leaves us with 30 more next year which is one and change. what is it going to take for the market to rerate? starting the market is to move but you bring up a good point that it is not looking too far out in the future. when you think about what is going on, unemployment is at an all-time low for where we are. we just had a big tax cut. that is going to take some time to work its way into the system and when it does, i think we will get a better chanc

brian bellski, and bella barton at eaton vance management. thank you for being here whatever happened on monday, whatever is happening today and yesterday, yanna, do you agree that what the market fundamentally has come to grips with over the past week or so is that the era of easy money is ending >> absolutely. i think we are reminding volatility is back and that is what we've been waiting for for a very long time i know there has been a lot of mention of the vix and the gage, but just for context, over the past years the s&p 500 has returned 7%. and that has cost volatility about 15%. over the past year the s&p returned 26% and that came at a cost of 5%. so you have 2.6 times the return at lower cost and the volatility was subdued. nothing has fundamentally changed other than readjustment of investor mentality that we do have a steady economic growth recovery with rising interest rates, rising inflation, rising costs and you have to readjust the portfolio at -- adequately to that. >> and brian, generally stocks don't dislike a little inflat