sonali: with the fed and u.s. jobs report this week we saw the 2-year yield slide to the lowest level in nearly a month. we were flying past that 5% level, and then you had that fed meeting, perceived as dovish, and then jobs and ism data that showed a weakening of the economy. all in all that 2-year has swung by 30 basis points this week alone. traders are looking to price in a rate cut of 25 basis points by september, expecting rates to be lower by half a percent by the january meeting next year. these expectations have been whipsawing. there is -- there are still certain members of the fed who are urging caution. governor michelle bowman, for example, saying today there are still a number of upside inflation risks. earlier this week i sat down with kkr's henry mcveigh. >> our businesses are saying, yes, there is inflation coming down, but probably hitting the 2% target is going to be quite hard. the fed has done a great job where they are, getting rates up quickly, moving aggressively, and starting to do the ta

investors bracing for the fed. we are just two hours away from an expected hawkish hold for the central bank, leaving rates unchanged. let's get a check on the markets. we have a second day of declines on the s&p 500. in the less of a decline than a day ago, down 0.4 -- a little less of a neckline than -- a little less of a decline than a day ago, down 0.4%. two year yield still firmly above the 5% level on the week. you have a two basis point move lower on the day. however, again, we have the big meeting just two hours from now. 10 year yield has been above 4.60 all week and now today even with a two basis point move lower, 4.65. banks soaring after posting better than execute results and exec it is outlining a goal of being better in 2025 following expected losses this year. it is surging now more than 31%. on the other hand, you have starbucks. sales fell for the first time since 2020. the chain cut annual guidance for a third straight quarter, lowering its full-year year revenue growth forecast to a low single-

the cleveland fed president and the minneapolis fed president speaking.dnesday, the beige bump. jobless claims on thursday and bpce number friday as well as eurozone cpi. we want to show you the expectations before we let you go. the expectations are essentially flat. it shows you how hard the last mile has been to get the fed on course to the preferred set of inflation measures. of course, there is still growth expected and silly while to go to the 2% exactly -- still a wild to go to the 2% exactly. from new york, that does it for "bloomberg real yield." this is bloomberg. ♪ hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. i don't want you to move. the answer i

and the fed interest rate decision.hen you think about brought emerging markets, there are segments in e.m. like latin america that are not very sensitive to the fed rates, or currencies in india and korea that are sensitive to the u.s. federate. but china is slowly emerging back as a significant support for e.m. as we have talked about in the past, the middle east and domestic growth in the middle east and others is positive for e.m. we continue to see broad divergence within the e.m. space, between rate sensitive assets and more domestically oriented assets. annabelle: rate differentials of course one of the key assets being impacted by that is the japanese yen, with a big gap between the boj and what the fed does, which of course has played out in what we see for trading around the japanese currency. how long do you see that weakness persisting, or how effective do you think intervention could be if indeed we have seen it a couple times over the course of this week? pooja: the issue in japan is that inflation is not

neither the fed nor the fed futures market have been particularly good about predicting what's going to happen. the fed was talking about transient inflation for a long time before they took the word transient out of the conversation. now the fed basically saying well, going to be ready to cut rates but now maybe not so soon, maybe not so fast. the market similarly last fall thought there would be a lot more rate cuts coming this year than the market says today. so who is the good predictor here of either what the fed is going to do, what inflation is going to do, but the economy is going to do? >> however, if i tell you that the chicago cubs are going to have three pitchers that are going to win 30 games this year, you'd probably raise the chances of them going farther down the season and doing better potentially and making playoffs. what if the pictures don't win 30 games? here's the issue with those predictions, is that the market is listening to the fed. the whole premise of fed guidance is to guide the market by the nose, okay? and when you still have a huge balance sheet, when

get ready for the countdown to the fed decision. my simple world, there are only three things that matter in human beings. first, they have to be kind. kind. second, they have to be honest. and third, they have to be hard-working. it's very simple. wherever you are in the world, when you come to a different culture, you meet people of very different backgrounds, but you find out that they have the same ambitions and the same fears just like yourself. i'm so sure that travel is good for the world. it's really the best to engage with the locals and the destination. and i think travel helps broaden the human mind and makes us kinder. and that's fantastically valuable. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire >>> welcome to power lunch on a fed day, everybody. i'm tyler matheson. we are just four minutes away now until the fed's decision on interest rates.

the fed confidence to cut with messy economic data. >> the fed is looking closely at the data. >> its looking at the totality of the data. >> wage growth is sticky. >> the fed is likely going to take a to the economy. i think later this year, we will get our first cut. >> if they don't cut in september, likely to cut in december. the first in september, another in december. >> we are looking at an inflection point. i think he's looking for a reason. >> it is rare the fed would intervene before november. will he remain patient through the election? >> there's a question of will inflation be enough by then? >> coming in hopefully moving in the direction we want to see both on inflation, in terms of restoring balance to the economy. sonali: we are looking at a double-edged sword. u.s. consumer sentiment declined in early may to a six-month low. short-term inflation expectations and concerns about the job market have picked up. what this means is the economy is softening. with inflation still high, there is a question on how quickly the fed can cut. the current expectation is at least on

we've got a ton of fed speak and the challenge here is that the fed is really a taker on policy right now. if you think about what's happened from a fiscal perspective, if you think about the better than expected growth, the stronger and more resilient consumer of last year, it's really put the fed into a bit of a bind in terms of moving from data point to data point and that type of volatility is not going to necessarily show up immediately in the equity market, but it's going to show up in the bond market and yields as you were talking about earlier. i think in the absence of, you know, micro are result, we're entering a macro vacuum and, frankly, unless pce comes in lighter than anticipated, which it could, based on asset management fees being a little bit lighter after april's market activity, i think we're entering into a period of some difficulty now, the good thing is, there are places to go you know, we've seen strength in financials we, as you know, have been very optimistic on utilities even before everybody started buying them for ai, and i think that the broadening out of

that should be enough for the fed to cut. perhaps they will find an opportunity to negotiate a rate cut. >> maybe one rate cut this year and look forward to 2025. vonnie: optimism that this is dovish data. some investors and strategies are talking about personals ending easing off but that could be considered a good thing for the federal reserve if wages began to decelerate and it hits the labor market. taking a look month over month, year over you are as expected and not wildly out of control. i will leave the adjectives to our guests. let's see how the two year yield reacted. there was plenty of supply and those auctions and we saw precipitous drops we are at 4.88 and the two-year. nobel laureate paul romer spoke about inflation in the direction of the fed. >> if we stipulate we want inflation to go down lower. should we be happy with the process that this happens gradually over time or is it right away? my argument is we have seen steady decreases so there is no reason to be more aggressive and risk causing a recession. wh

the fed leaves one sentence in. it's a very key sentence, saying it needs to gain greater confidence that inflation will move sustainably to 2%. again a very key phrase in the statement. one big announcement of the fed statement is going to make, the fed is reducing runoff of the balance sheet. starting in june the fed will go from $60 billion of runoff in treasurys, rolling off $25 billion. going down to 25 billion in treasurys, rolling off starting in june, amount of mortgage-backed securities will remain the same for the roleoff at 35 billion for the time-being. any principle payments above that would be rolled into and reinvested into treasurys. again this is a unanimous decision. so the fed saying that they're going to remain, pause on the rates for the sixth time in a row but they want greater confidence still that inflation is moving sustainably to their 2% target. charles? charles: there is a lot there. edward, thanks so much my friend. in 1956, a new gameday beaud on television. it was called to tell the tr

>> it depends on what the fed does. i differing every thing back to the fed but it is important.fed were to start cutting, i think the dollar eventually, maybe next six month, will start to fall. a decline in the dollar versus the yen and the boj will not have to do what it is doing. but that is conditional on seeing some slowdown in the u.s. and some just punishment of what we've seen. jonathan: how bad is this nobody to be today? how bad does it need to be today to talk about rate because the summer? >> interesting because i think jay powell was trying to tell us not to look at nonfarm payrolls. he talked about immigration at the outset of his talk and he seemed to be making the point the reason we are having strong payroll is because we have strong immigration. if that is the case, you can't see strong payrolls as inflationary. instead, looking at other ancillary measures of job market like turnover in the job market, and keep in mind, wage growth in the u.s. if measured by the average hourly earnings, has not been very strong. it has been on a downtrend for the last six month

in a op-ed for bloomberg, former new york fed president bill dudley he suggested that the fed needs tomarket wants to see, charles. charles: not at all, kelly. thank you very much. great stuff. my next guest laid out reasons why consumers are so negative. bring in discipline funds founder cio, cullen roche cullen, your work focused on necessities. this is what is really hurting folks because the price of necessities soared recently? >> right. the last few years speaks to the difference the way a lot of economists and even analysts like myself view inflation versus the way real people see inflation. i think that the fed likes to look at things like core inflation but real consumers, they focus on core necessities. i'm referring when i say core necessities, i'm referring to things like shelter, used cars, gasoline, food basically. these are the, sort of the forward modern items i would say are the most problematic for the consumer. they have all lagged wage gains. that is really important because, the way that i like to view living standards, improvements in living standards over long pe

is the fed going to cut? is the fed going to hike? what is inflation doing?re narratives that move stocks quickly. earnings is based on fundamentals so that has some importance. if you see the story stocks go through the roof, meme stocks another example, there is word out there something could happen or there is big short interest. what is moving markets for the most part are narratives. a.i. narrative started last year. that moved markets. now we've got the fed, will it cut? no it is not going to cut. maybe one, maybe one, absolutely no more than two. i agree with brian it is political if they did cut but what they did do at the wednesday meeting, the statement at the q&a, when what we found the federal reserve cut its qt. in other words instead of letting $60 billion to run off the balance sheet, they will reduce to let tag billion run off. if they have 60 billion going to mature, they will be in the bond market buying bills, notes, and bonds. that is very supportive. charles: so your bullish in part because of that. what is the kryptonite here? what is th

no more fed speak.wing wednesday? michael: in no way, shape or form does it change anything. it shows there is progress. the economy is slowing but not falling off a cliff, which is what is supposed to happen with the fed raises rates. they will say we are on track. this is what we expected. kit tells us inflation is going down but we need to continue to see more progress. we are only at 2.8%. we need to get to 2% or maybe 2.4% or 2.5%. you can ask our guests what they think the starting point will be. jay powell has said we will not wait until we get to 2%. lisa: i like what jon says, a meat is the new beat. there is this miss in terms of personal spending. people want to see cooling and spending. what do you make that revisions are so frequently downward these days that we get these data points that are revised sometimes significantly, sometimes not, but usually in a downward fashion? michael: there was a rule proposed by larry meyer. if you get a surprising number, the revision will surprise the same

next fed meeting?iewing one of the fed officials interviewing in the next couple of days. >> tough spot. >> i think -- i think that -- i think at the end of the day, it is a committee position and in the end it really matters. i do think this is going to be a difficult period where they have to make some pretty contentious choices, in those moments, how much they can get everybody on board is really, really relevant. so the range of opinions starts to matter quite a bit. >> okay. we're going to be listening to those fed speakers and reads your article. great to see you both. have a great day. jay powell press conference, of course, coming up at 2:00 p.m. eastern. >>> coming up on "worldwide exchange," more of your big money moves and a pair of chips player, taking a look at the back of the earnings. "worldwide exchange" has much more coming up. (♪) join the millions who're feeling the power of osteo bi-flex®, the #1 pharmacist recommended joint care supplement. (♪) find our coupons in sunday's paper. [

for a long time we had a lot of mail from people at the fed -- to the fed saying you should raise interest rates because we are not getting anything on our checking accounts. we solved that problem. senator warnock: i don't think we are asking for that. given the reality -- let me pivot, the monetary policy report states that while demand for housing has fallen, the strong labor market has kept prices high, that matches what i have been seeing in georgia. too many folks can't afford a home. according to the monetary policy report, mortgage rates were averaging around 7% last month. that's tough for lower income home buyers. increases of just a percentage point or two can be the difference between owning a home or not. are you concerned about this interplay between lower demand yet stubbornly high prices and what it means for folks trying to buy a home? what do you think is driving these high prices? chair powell: the housing market is in a very challenging situation right now. you have this longer run housing shortage, but at the same time you've got a bunch of things that have to do with

johnson did directly pressure the fed.ordinate those meetings to the analysis i find increasing pressure through personal interactions is inflationary. it raises inflation expectations strongly and persistently. it does not do much to economic activity. nixon leaned heavily on the fed because he wanted to be reelected in 1972 and in the run-up to that he told the fed chair you have to ease monetary conditions. but when they used that pressure they get a very gradual increase in inflation and they don't get stimulus because the economy adjust its expectations and reacts to the loss of credibility. david: you talk about personal interactions. i am not sure merb president trump wants to meet with him i think he wants to fire him. the president publicly saying i want a different head? thomas: political pressure can take many forms. it can be exerted in public, through personal interactions. either way, the implicit threat that the president makes is that there are consequences for the fed chair such as being fired. that is a t

the fed strategy at the moment is biased toward easing. the fact we are starting to see churn in the labor market come down. the liver market on the margin is showing us some flags of weakness. these are great precursors to moving duration further out. sonali: how do you feel about duration? you think there is to much risk to get in the further you get out? >> our central message around duration is diversified duration. dear dexter are attractive spots around the curve. we look at pure value where we are trying to establish long core or long duration positions. there are different types of duration. long and corporate credit particularly on the high-quality side has been a great spot to allocate money or in the intermediate part of the curve, mortgages have had a lumpy ride in the first half of the year. sticking with that trade as comes down can be attractive. our main message is don't get too wed to one point on the curve. picture the duration is a line with a type of risk you want to be aligned with your portfolio. the curve is fairly f

gaining ground against the greenback, bracing for a hawkish fed.he currency that did not benefit others goal is the japanese yen. this hit 1575 and was brought back to 153 and this smelled like intervention. we've seen three sharp moves, yen bears are back. they have the fundamentals on their side, it's about the yield after the fomc today. tom: thank you very much indeed. jerome powell keeping hopes alive for a rate cut this year indeed, but inflation has reduced confidence that price pressures are ebbing. >> it would not be appropriate to reduce the target range until we have gained weight or confidence that inflation is moving toward 2%. so far the data have not given us greater confidence, in particular readings on inflation have come in above expectations. gaining confidence will take longer than expected. tom: let's bring in mark cranfield. if this was a pivot it was at the dovish end of the spectrum. is this the fed with an easing bias? mark: mr. powell would like to lower interest rates. in december he kicked off the idea of rate cuts, he w

look at what has happened to the fed. the fed pivoted on the basis of data.e pivot that they did in december when they pivoted. now they have to do a u-turn. as they are doing the u-turn and stay higher for longer, the market is going the other way. you saw what happened to the two-year, the 10-year. there are two problematic issues. how sensitive are the stubborn components of inflation and interest rates? they are not very sensitive. that is problem number one. problem number two, what implications are we getting from the economy? it is slowly weakening. once again, the fed is going to have to pivot. not on the basis of inflation numbers but the basis of the real economy numbers will pivot yet again. the big issue that i know that no one wants to discuss that i insist to understand fully is the inflation target the right target? we talk about wanting to go back to 2%. every quote you had this morning assumes the 2% is right. 2% is completely arbitrary but i understand why no one wants to talk about this. we should realize that if we are pursuing the wrong i

what really matters is what the fed thinks of this data. that's what we got clarity on at this fomc meeting. powell was very clear that they see the data still as being comfortable and collaborating with their view. it is just taking a little bit longer. at j.p. morgan still have the first cut coming in july and we have cuts thereafter into 2025. so from a bond yield perspective, yes, we do think it will drift higher depending on the fed view a little bit. if you look into 2024 and into 2025, we do see room for bond yields to decline as well. bringing us to the equity market . the way we try to figure this out is try to understand from market pricing what sort of scenarios the market is entertaining and pricing in. and since the pivot in november, we have seen significant goldilocks pricing from november all the way until march. and since then we have seen two scenarios emerge simultaneously. those are firstly, a higher for longer -- a reemergence of higher for longer. and secondly is the increasing probability of some sort of an ai bubble.

charles: you think the fed will hike this powell fed?omeone backing off this may hike. that was a joke. that was a joke. on the unemployment rate, to your point about the rate, goes up to 4.1, 4.2, charles, to that point it probably keeps going up. even if you look back in the '50s, when unemployment rate was under three, it still went up to six. go from 3, 4, ultimately up to five 1/2, six, not hard to do. we're not there yet. but it could turn quick. charles: >> going back to the '50s for just a second, not that any of us were around then, going back to the '50s, national bureau of economic research dated a recession before they even saw a rise off the low in the unemployment rate. so we, the market may be disregarding revisions. the national bureau of economic research is not. charles: is not, although it will be after the fact. >> it was 366 days before they dated the last one. >> we also had two recessions in the '50s where the equity market and economy peaked at the same time. this notion you can't have a recession because stokes a

." >>> the fed give and the fed take away. still digesting the latest from jay powell and what he had to say about the policy path forward. >>> futures are trying to build momentum with wall street still on track for its fourth down week in the last five. >>> the focus for the market today is earnings as apple is set to report after the close today. the one big number of need to watch. >>> weight-loss drugs power the bottom line at novo nordisk and shares moving in an interesting direction overseas. >>> and looking at the u.s. and what jay powell said could give emerging markets a boost today it is thursday, may 2nd, 2024. you are watching "worldwide exchange" here on cnbc ♪ >>> good morning and welcome to "worldwide exchange. we're coming to you live from cnbc london. let's get you ready for the trading day ahead. wall street is waking up with whiplash after the rally that saw the dow surge 500 points higher and ending the day with marginal gains u.s. stock futures are trying to build on the gains you see they are gleareen ac

a fed speak. -- a host of fed speak.nt biden and former president trump agreeing to two debates, the first match of on cnn and september 10th on abc and will not be sponsored by the nonpartisan commission that has organize these events for decades. annmarie: 37 years. this was a long time coming. remember the rnc said they are leaving the commission and now the biden camp is saying we are not happy with the way the commission has worked. it has become obsolete and the commission put out a statement saying we will prepare for the dates if you say you want to show up and they are usually held at universities with a live audience. that will not happen in june. jonathan: can we talk about the importance of why it is in june and my team biden wants to make this happen. annmarie: they see how dismal the poll numbers have been for the biden camp. and the idea is to get a boost potentially. remember the biden polls got a boost after the state of the union. he had a strong performance in got a boost in the polls. potentially you

policies below the fed. even though you can make an argument countries like china, movie thailand, even korea, arguably, given that inflation is at the target or below the target where korea will approach the target fairly soon, they should be a little bit more comfortable about having more independent monetary policy relative to the fed and focus more on their domestic conditions. therefore, they could be for cutting and we think china could cut, thailand could cut and they are not delivering. in the case of korea, even though conditions suggest they could cut, i think this whole dollar environment in the volatility of fx will constrain policies of what be ok will do. we still see room for cutting but part of that his condition is sitting as a house, we are probably the only few expecting the fed could cut as early as july. but i certainly think that gets pushed back given some of the hawkish we are getting out of the fed and the mixed data we will get out of the u.s., that complicates easing outlooks at a

real fed funds rate. and to me the level of that is as high as it has been in some time, so i feel like we're in a -- >> so let me respond to my agood milliken conference, major comment was that they are not tight. we think monday tar policy works through financial conditions pan if the business community feels like we're not as tight, maybe we are not as estrictive >> so do you want to go higher then >> i'm in a wait and see mode. let's get more data. >> but not reeling it out. >> nobody can real it out. >> nothing is never not on the table. and the job of the central banker is to be paranoid in everything >> i don't like tying our hands even partially getting a lot of data and more information before the next meeting much less for the rest of the year i think that -- i don't want to speculate about the conditions what we need that the data dogs need to do some sniffing and figure out are we kind of beat on the path like what we saw last year where inflation fell almost as much as it has fallen without a

the fed, keeping rates unchanged.owell sang the next move is not likely to be a hike, but avoided offering a timeline for rate hikes. andrew gives us a base case for cuts in 2024, more than priced by interest rate markets. andrew, hello, let's go straight to it. forecast into 2024, not consensus. andrew: the fed cutting this year, it was clear from chair powell yesterday that the next move is a cut and the way that they get there is the inflation data gives them the opportunity. i don't think it will go to 2%, but it will be slow enough to let them cut and the label market will begin a weaker. we heard that from chair powell, saying that the trend is towards a weaker labor market. jonathan: this is your signature call, the weakness of the labor market. do you see it now? andrew: what we heard from chair powell is that with the dual mandates in the better balance, in their words, inflation has come down. not 2%, but it has come down. when they look at employment, he highlighted these things, look at the climate board.

housing is a incredible dilemma for the fed.monetary policy alone can solve this and a large part of the reason because this is not just an asset or an investment class, this is shelter. this is with people live and it seems like right now outside of building a lot more of supply the tradeoffs are we have to sort of booed people out of their homes to get open availability for younger people on, you know, it is like, sort of like a no-win scenario. that's why i think this has been such a hot topic and sew frustrating for so many people. charles: ironically a lot of people thought maybe the fed could come to the rescue. as lot as everything has been though, we're seeing bifurcation. this is something you tweet about, write about all the time. i want to understand, how do you explain in huge surge in seriously underwater homes in many states? >> yeah. the data just came in and it is an alarming headline but the actual reality the number is 2.%, which is still below pre-pandemic let alone anywhere near where we were at in 2007 but i

the fed thinks is finding inflation, think again.re than 5.52% the target might not be high enough to call the economy. kathy: i think what the fed is doing is not far from what bill dudley is talking about. higher for longer is show us where inflation will end up. the upper band of 5.5 and inflation at 2.5. we are seeing inflation come down. when we look at the next few quarters we will see up and flow in terms of the economic outlook flows. we see big chains cutting prices on a widespread number of items. the economy is not as interest rate sensitive as in previous cycle. but i am not sure the fed is doing anything wrong by taking it slowly. they are doing a wait and see. see where inflation goes and follow the trend. that's a rational approach. lisa: received tenure yields rise in the past two weeks. the pace of the increase is what is getting the attention of equity investors. does this mean by and the conviction to buy long-term treasury has gone up in the past few weeks? kathy: we save look beyond treasuries. when we talk about

more fed speak later. fed speak just repeat the same line again and again. you'll hear from bowman, logan, kashkari and master. we are restrictive it might take more time to just bring inflation down, more time seems to be the frame -- the phrase. dani: we are pleased with literally any other fed speaker and that's always gotten. we don't know what they will do anymore because they don't know what they will do anymore so we get the same reframe. >> a lot of people have been talking about this over the last couple of weeks just the idea we don't have to be afraid of strong data they won't hike but if we get strong data they will ease. how well we set up for that given the move down we've seen in yields across the curve. dani: the animal spirits have been unleashed so this market is set up as if we are in the cutting cycle. if we get anything contradictory what happens to this market where you see these people flood to the bond market because spreads are so thin. you have these companies announcing and acting like cuts are not only on their way but they are he

fed will do and ecb will do in june.re more people putting more money in the equity market or is the pull too attractive? >> i think the long end is data depe dependent. we don't know what the fed will do you have a significant amount of risk i think as long as high as it is in the u.s., but cash is a clear alternative to the market. you can put your money in the market and get 5% return look, i do believe earnings are still something which makes the case for equities in the fairly tricky environment we do believe earnings are delivering and rate hikes are delivering in the u.s. and maybe we can go back to the top as we enter the tricky time of the year sell in may and go away. i'm pushing clients to be more cautious and not rushing to buy the dip. >> globally, we have seen a shift to the cyclical trade. moving money to industrials and materials and non-cyclical trade in the united states do you expect that trade to continue >> i think it should be more about the data the data is slowing in the u.s we are seeing the tigh

the fed gauge pce.eeping to the central bank 2% target. >>> historic moment for the u.s. as former president donald trump is found guilty on all charges of the hush money trial. that's coming up. it's friday, may 31st. you are watching "worldwide exchange" here on cnbc. ♪ ♪ >>> welcome back to "worldwide exchange." i'm dominic chu in for frank holland on this friday morning. let's pick up a check of the u.s. equity futures which are in a holding pattern. the dow is higher by 15 points. the s&p higher by 6. nasdaq by 7. the dow is on pace for the worst week in more than a year and the nasdaq coming off the worst day in a month. if you look at what is happening overall on the month-to-date basis, dow is up .75%. the s&p is up 4%. the tech heavy nasdaq up nearly 7%. a really good month of may. checking in on the bond market with the personal consumption expendables. pce. the ten-year note yield at 4.56%. two-year treasury yield which investors use as a proxy for future fed policy at 4.59%. the key to the m

very heavy on fed speak. more fed speak later. san francisco president mary daly coming up.arket, looking like this on the two year. yields higher almost a basis point. on the 10 year higher by two. let's take a quick sneak peek at what is happening with sterling in the fx market. the pound against the u.s. dollar, 1.2456. we are softer one third of 1%. under surveillance this morning, the bank of england keeping rates on hold. seven members voting for no change. two voting for it immediate cut. for a lot of people, nudging this decision to june and a lot of people encouraged by this idea that is when we get the 25 basis point cut. dani: the market is starting to go there. gilts little changed. what we are seeing under the surface are prices for futures. for so long this has been trading on when the fed goes maybe the boe will go. it was following that pricing. we are starting to see a change. deutsche bank underlined this. the risks to sterling are not that great if the boe goes before the fed. the move will be a rounding error. the currency effect is not bad enough to hold

>> yeah. >> yeah, no, the fed, that's not the fed's job.cal deficit, in addition to what is already said about the market, i think it's going to have a real problem, because then people are going to anticipate much more dovish policy. already it has a problem with the market in the sense that financial conditions today are about as easy as they were when the fed started raising interest rates, and we are 500 basis points up from then. so, i think the fed wants to focus solely on whether it's done the job on inflation, and if it starts talking about the deficit, i think that would be problematic for its overall message. but you're right, it is a problem. but it's not the fed's problem. >> i guess the way thinking about this, and bank of america had these great numbers, if we did 1 1/2 rate cuts, the treasury would pi out $1.2 trillion this year, if they don't, it's $1.6 trillion. so even if the fed wants to be patient, some other officials might quite not be so patient. steve, go ahead. >> i was just going to add, you want the quick road, th

don't forget we also have some fed speakers due. it looks like the hawks may get more airtime than the doves. just like that, asian equities getting the bed. csi 300 pretty flat. coming off a week when those properties support measures, the skepticism of whether it will be enough, really rain on sentiment. also the taiwan strait tension. among currencies, we are seeing recovery in the yen. cannot say the same for japan's 10 year bonds. continued selling. the expectation of the boj's policy normalization. but i guess to your point about how we are going to be data focused this week, let's flip the board and take a look at what we are seeing out of china. industrial profits rose in that is against the backdrop of exports having returned to growth, domestic demand improving, so some signs of that recovery. haslinda: that's right. lots of data to digest. avril hong, thank you. some of the top economic news we are watching. core pce data. this will be a key indicator for the u.s. of course on the back of uncertainty remaining over when t

the fed.ew york, this is bloomberg. ♪ at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real. jonathan: equity futures -0.6%, the bond markets, yields high yesterday and again this morning up two basis points, 4.5718. under surveillance, the fog of november. >> u.s.-based investors are struggling to come up with the salience interest between the two candidates. we would like to be forward-looking. there is a lot of clout and clogs. we are stuck talking about the fed. -- there are a lot of clouds and fog, and we are stuck talking about the fed. jonathan: president biden reading former president trump, his largest lead since march 2. historically, markets tend to run up during u.s. elections, one exception is if the outcome is unclear. however, there is no help baked into the idea that we could have a prolonged 2000 style situation where the results are not immediately known, and amy wu silverman is

going to cut, the fed's going to save us with rate cuts everyone in commercial real estate, fed's going to save us with rate cuts and also just the way the fed works when they move they move in a progression of events when they cut they slash when they hype they go like this so the fed had a very difficult time of communicating that if we cut it's not the beginning of a trip down to zero, it's just a tweak. and i think they got way too carried away but the fed's job is also difficult because i see a remarkably mixed economy and very uneven. and you have commodity prices near the highest level in a couple years i think they're trying to even figure out, they're like in this hall of mirrors that they're looking at the next meeting. they may give us their forecast for multiple meetings out but they have no idea what's happening past the next month or the next cpi print >> you're saying don't expect them -- dave, put your spin on it what do you think is going on here and have they gotten it right all along? >> they're going to get it wrong in nuances here and there and everybody's going to

in june 2009, janet yellen had this to say about the fed.notch and our forecasting record is second to none. the actual fed funds rate ignored the dot plot over and over and over again. charles? charles: it looks pretty scattershot. that's the problem we have, danielle. how can jay powell to your point say no more rate hikes and be data dependent? by the way you got 400 phds, why aren't you predicting some of this stuff in the first place? >> they should be, pay closer attention to fairly recent history. when we were heading into the 2007, 2008, 2009 absolute debacle, economist worth their salt, any phd worth their salt you should have known the economy was inflection point when they see bear stearns go down. there were surprises inside the institution. i know there was. i was there. you have to understand how, you have to embrace humility in the fed and understand when cycles are turning and they're turning hard. you see things like the third quarter of 2023 turn from a large positive number of jobs created to a large positive number of job

treasuries following after fed minutes showed officials wondering if -- the fed may prefer to wait untilf the way. if either side wins a clear victory u.s. fiscal policy may become more expansionary again, with significant tax cuts or further spending increases. holger schmieding joins us. talk to me about the prospect of rate hikes next year. and imposing making a case yesterday. holger: i don't quite believe it, because we rarely get in the u.s. an election result that is clear-cut, that one of the two sides, where congress is in control, really do something dramatic. we had huge fiscal initiatives in the u.s. right after the pandemic, and everybody was panicking. we knew to do something big, but now with that unusual situation over we will likely be in congress -- regardless of the election result, into the kind of gridlock were not much happens. that means the fiscal impulse which is currently propping up the u.s. economy will weaken over time, and that argues for rate cuts next year rather than rate hikes. jonathan: what kind of budget deficits are you expecting? we are running 6% t

the fed says restrictive the fed says they will be dialing back restrictions.he marketplace is pricing that in so it all makes sense to me. but where my ax to grind is, is that the inverted yield curve itself turbo charges any given level of restriction on the policy rate, because it is effectively a tax on the banking system, or put differently, a tax on maturity transformation, the old fashioned banking business of borrowing short and lending long i think the fed is restrictive not just because of the level of the policy rate, but because the fed and the market anticipate dialing back that restriction, and you've got an inverted curve. i think the inverted curve is effectively an instrument of restraint. >> do you think it's weird that they're still anticipating an economic slowdown when we've been waiting for a couple of years at this point and still jobless claims are at 201,000? >> i think the market is anticipating a slowdown, but not a precipitous slowdown i think the inverted curve, the tightness in credit conditions for main street business, not for wa

dallas fed president lori logan said rates may not be restrictive enough, so you are getting some fed if speak saying maybe rates need to stay higher e for longer -- jackie: i think the fed knows it's not really coming out with what it's going to do, and i think the markets got it wrong once again. we've seen this trend. market gets excited about something, it gets excited about what it wants to hear, not listening to actually -- brian: right. and did not pay a lot of attention to that consumer sentiment number. taylor: bingo. and the inflation expectations in that number too, really worrisome. not worry esome is charles payne. "with making money" starts now. charles: thank you all very much. the market worry when it wants to worry or when it's too late. i'm charles payne, this is "making money." breaking right now, we are seeing a bifurcation in this market. it's been an amazing may, but it's been stagger all of the names you normally wouldn't hear about like utilities. when will the magnificents step up, because at some point it's going to be needed to keep this rally going. althoug

plenty of fed speak on tap. we will also get the fed minutes as well.ms and the umiss consumer sentiment survey. when you are light on data you run the risk of putting too much emphasis on the data we do get and that data is very light. lisa: the fact that you said university of michigan sentiment survey. it is shifting from 100% phone two 100% online. if you thought it was unreliable before, it might be more so. i think ongoing commentary from the likes of macy's and lows and target this week, even though those are second-tier names and second-tier data points will give us color in the consumer following on what we heard from walmart and whether the downshifting that walmarts's gain as everybody else's loss. annmarie: michael gapen is talking about the minutes being important. potentially we get more insight into what they were thinking. jonathan: i'm always wondering how much more dovish chariman powell is on the fomc. lisa: every single time there is a fed meeting everyone says this is jay powell's chance to push back against the market and tighten f

the fed or fiscal policy? there is a winner or a loser, you have to be realistic to what's going on and who is trying to do what. the biden administration has been insistent on policy. they have been trying to spend money and put money into the economy since day one, since the first covid really. $1.9 trillion has gone in early. they continuously find ways to put money into the economy for student loans. they are continually looking for ways to physically stimulate the economy. on the other hand, the fed is responding to the outcome of the money being in. there is a cost-effective. many of us think that the effect is more of what's being put in, money supply expanding so quickly, you have too much money chasing too few goods, therefore an inflationary pressure. the fed is responding to the effect of the cause and raising rates trying to slow that. if i were going to bet, the biden administration continuing with fiscal stimulus, if they have a lot of stimulus approved where they have not given out the money, th

we don't have the fed cutting until december.part, because that high year on year rate of inflation in the second half of the year and what we think from them will be an upward revision of their inflation forecast in june will make it hard for them to start in sent. so i think it is later than perhaps markets may be thinking. >> steve, final word? >> yeah, just two things i would add to what michael says there. the possibility -- look, we did zero on retail sales today. so if the consumer does weaken, you could get a better response, even in the service sector in pricing. it takes a little longer to show up there. but a weaker consumer, discretionary services could come down a little more. the other thing is i believe the fiscal impulse is supposed to wane over the course of the year. so that is something that could help inflation bring down a bit the growth rate. so those are two things that could add to the momentum of inflation coming down. >> gentlemen, we'll leave it there. thank you all so much. appreciate your time. >>> co

was fed speak nervous before the data? i don't know what it is, but it feels like a big sentiment shift. >> anxiety around inflation. i put this to chris williams, companies remain cautious with respect to the economic outlook with interest rates also citing geopolitical instability in the presidential election. >> pulling back, there's a feeling that the university of michigan sentiment survey matters. they may pole five hundred people online through instant messages or whatever else they do, but at the same time if people have deteriorating sentiment, there's a feeling that it will have a bigger impact going forward, not only on how hard it is to kill the inflation bogeyman, but inflation generally. annmarie: we've seen starbucks, others, looking for those products, and then there's janet yellen at the g7. this is what she had to say -- she talked about the concern, trying to be empathetic with where the american consumer is. saying that they see it when they shop for food, higher mortgage rates. it's tough for young peo

that's when the fed will consider its next move.hink it's important it's not just reprint softer than it is, but i think it is soft prints. we are still adding jobs. it's getting lower. it is true the unemployment rate kicked up been i think we got a soft headline ism data but the prices paid component was strong. we could be in a dynamic where we do see the economy slowed a little bit, which might see the fed say we will cut, it's a timing issue, december, next year, that might cap the front end. as long as prices are sticky, we are seeing sticky inflation and we see the curve steepen. that will become a bit more dynamic. rather than having a strong directional yield, i think the strong field at the moment is steeper in the curve. i think we finally see this record long and fruited curve finally ending its inversion in the coming months. haslinda: we have been talking about the yen for forever. despite the two interventions, suppose it interventions, which we saw, the yen did not manage to get to 152. >> bearish, bearish, bears the

what's go to our fed speak and an fed president rafael double down on his mantra. loretta says three rate cuts in 2024 are no longer appropriate. loretta: i was on the record saying i was at the median, three. developments i have seen right now i would not think that is appropriate because inflation risks. >> anything can happen. inflation will fall into 2025 and i think it will take a wild for us to get to 2% but i think we will get there. tom: ok, let's bring in mark cranfield in singapore. we heard from loretta messner. expectations on the number of cuts. dot plots signaled three, what are traders looking for? mark: traders are looking for one and two rate cuts by the end of the year. probably in november. the fed meeting coming up is the one, giannis the next time and it will give us a new outlook. there is no way they can go to three. we've reached the end of the year and they were projecting this in january or march. data has not worked out in their favor. they had to dial back and that is why your hearing a longer -- higher for longer mantra. people are doin

it seems like investors were bracing for a more hawkish fed. we got a fed that downplayed that the move would be imminently a rate hike. also the shrinking of the balance sheets to ease pressure on money markets. yet powell also signaled that while keeping the cuts on the table, they might not come so soon, especially given how he sees inflation in the country. have a listen. >> in recent months, inflation has shown a lack of further progress toward over 2% objective and we remain highly attentive to inflation risks. avril: lack of progress on inflation, that is the highlight. that's why perhaps we are not seeing that much convincing moves to the upside. the kospi is down. nikkei futures pointing to a slight gain when markets return to the lunch break. the focus has really been on the hong kong stocks. quite a rally. a well beating rally despite the crucial pillar of support today, mainland investors. of course, china is shot. a lot of the upside we are seeing might be thanks to what investors are expecting that optimism from chinese tech earni

david rosenberg counts us down to the fed. top stock prepare for a more hawkish fed. higher for longer rates with gradual rate cuts sounding scary at first, we remain maximum overweight on credit, equities, and death. next joins us for more. max, overweight. talk to me about five. max: i think i'm more in the camp of what lisa was just saying. we are all pretty desperate on getting something exciting out of the fed, but be honest, looking at what they did five months ago, the dovish pivot pretty much out of nowhere, out of the blue, it would be strange if they boxed themselves in now to basically say that the next move might be a hike. i do think that we are probably going to get something that sounds hawkish relative to the last meeting. if they give us one or two cuts instead of three on the dot plot, it won't the needle a lot. with a tail risk off of that h word, it takes away the tail risk and it looks pretty goldilocksy. it should be leading to a bit of a relief in the duration on the yield side, feeding through the asset classes where risk assets in absolute ter