♪ jonathan: from new york city for our viewers worldwide, i'm jonathan ferro for 30 minutes dedicatedo fixed income. this is "bloomberg real yield." ♪ jonathan: coming up, the u.s. economy showing signs of losing momentum with a retail sales fading and inflation rolling over. the fed says it is transitory, janet yellen says it is premature, with the trend falling short. loading up on risky assets. dominating the recent junk-bond issues. we begin with a big issue, inflation injecting down to the next move for the fed. >> we are very focused on trying to bring inflation up to our 2% objective. >> the fed is expected to hike rates in december and if inflation does not move back to the target they will have a pretty healthy debate about that. >> whether or not we get a hike in december depends on where the inflation data goes. on our forecast, inflation will be flat between now and the end of the year. if that is the case, they will not hike. >> accommodation of slow growth and low inflation will mean everything goes slowly. pointay never get to the they are telling you that they will get

♪ jonathan: from new york city, i am jonathan ferro. 30 minutes dedicated to fixed income. om new york, this is "bloomberg real yield." ♪ jonathan: coming up, payroll top estimates, wage growth disappoints. central bank policy nervousness continues to grow when the bond yields climbed to 2017 highs. and added protectionism dominating the g-20, and emerging-market resilience with major test after a big year about performance. we start with the big issue. a big beat for u.s. payrolls, but wage growth disappointing. >> we look at the revisions, job growth, labor force participation, it is a solid report. >> we need more americans back to work. some are opting not to join the labor force and it is important that we make it attractive for them to join the labor force. >> you are talking about another 222,000 jobs, the moving average -- three month moving average now is 194,000 jobs. we are down to a 4.3% unemployment rate, it is almost inconceivable. >> wages and price pressures will eventually show up, so it is not going to bring the bond yields down very much and it will not ca

jonathan: from new york city, i'm jonathan ferro with 30 minutes dedicated to fixed income. this is "bloomberg real yield." ♪ draghi's president dovish words for european bonds. trade struggles to find buyers. a 10 year option has the weakest demand in nine years. and counting down to the fed decision. the inflationto goal undermining the case for another rate hike. we begin with the big issue, a dovish draghi. ande need to be persistent, patient. a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the medium-term. also unanimous in communicating no change to the forward guidance. we only have to wait for wages and prices. setting nonimous in for when to discuss changes. the last thing that the governing council wants is for n unwanted tightening of the financing conditions. jonathan: joining me around the table, the cohead of global portfolio management fixed in and a columnist for bloomberg gadfly, and the chief investor at hyman capital. let's begin with

jonathan: from new york city to our viewers worldwide, i'm jonathan ferro with 30 minutes dedicated to fixed income. this is "bloomberg real yield." ♪ jonathan: coming up, the u.s. economy rebounds, but inflation raises questions about the fed's next move. away with the biggest debt market deal of the year. the market wanted even more. billionaire investor howard marks of oaktree capital issues a warning about current valuations. we begin with a big issue -- fading inflation forces raising questions for the fed. >> yes, inflation has come down. we have gone through a string of low inflation. i do not think it dissuades the fed from doing what they had planned to do. >> the fact that inflation is being made out the way this and the decision could be driven by it, i assume that they will not be data dependent. it is going to be employment and other things driven, which is doing very well. the fact that they may not tighten or take immediate measures because of low inflation, that is news. >> yellen is getting dovish anyway, but it plays in flat trends and the market has gotten a little s

jonathan: from new york city, i'm jonathan ferro. his is "real yield". ♪ jonathan: coming up, yellen says evaluations look somewhat rich. a bond tantrum. did investors misjudge the speech? halfway through 2017 sales are on track with the 2016 record. we begin with the big issue. did investors misjudge draghi's speech? >> i think it was actually very eloquently put. >> i think the words are pretty confusing to be honest. >> a titanic shift we have been waiting for. >> the speech itself, i'm not sure the market misinterpreted it. there was a very clear shift in the tone relative to the last policy meeting. it was quite a dramatic tone. >> a back slide to explaining how the tight seasoning not really a tightening and i think the hope was if you explained it that way, financial markets will not get into a tizzy. >> i didn't read draghi's statement on tuesday to be anywhere near as bearish it is a market is taking it. actually i took it the other way. i think it was a signal from draghi that even if there was going to be further support an

jonathan: from new york city, i'm jonathan ferro, with 30 minutes dedicated to fixed income. this is "bloomberg real yield." ♪ jonathan: coming up, payrolls top estimates, but wage growth disappoints. central-bank policy nervousness continues to grow, bund yields climb. protectionism dominating g-20, as emerging markets face a major test of a big year of outperformance. we start with the big issue, a but wage.s. payrolls, growth disappoint. >> look at labor force participation, it's a solid report. we need to get more americans back to work. some americans are opting not to join the labor force, and it's important that we make it attractive for them to join the labor force. >> you are talking about 200,000 jobs, the three month moving average is 394,000 jobs. thatalmost inconceivable, wages in price pressures are going to eventually show up. it will not bring bond yields down very much, and it is not going to call the fed, i don't think, beyond a very short period of time, because if we are really doing 200,000 jobs, i think they are still going to face inflation pressures. >>

jonathan: from new york city to our viewers worldwide, i am jonathan ferro with 30 minutes dedicated to fixed income. this is "bloomberg real yield." ♪ jonathan: coming up, chair yellen says value waiting looks somewhat rich. draghi's words sparked a bond tantrum. did investors misjudged the speech? credit is on track for the past record. the big issue, did investors misjudge draghi's speech? >> i think it was eloquently put. >> the words were confusing, to be honest. >> is this the titanic shift we have been waiting for? >> the speech itself, i'm not sure the market misinterpreted it. there was a very clear shift in the tone relative to the last policy meeting. it was a dramatic tone. >> a backslide to explaining how tightening is not really a tightening and i think the hope was, if you explain it that way, financial markets will not get into it. >> i did not read the statement on tuesday to be anywhere near as bearish as the market was taking it. i took it the other way. i think it was a signal from draghi that even if there is further support and tailwind, the central bank is still

jonathan: from new york city, this is jonathan ferro. this is bloomberg real yield. ♪ coming up, president draghi -- his words fall on deaf ears elsewhere. to --ion trade juggles struggles to fly -- find buyers, and counting down to the fed's decision. we begin with a big issue, a dovish draghi to push back against markets. ande need to be persistent patients. a very substantial degree of monetary accommodation is still needed for underlying and nation pressures -- inflation pressures to build up and support headline inflation development in the median term. we are also unanimous in communicating no change to the guidance. we only have to wait for wages and prices, we are unanimous in for setting no precise date winter to discuss changes. -- when to discuss changes. the last thing the governing council may want is an unwanted tightening for the financing conditions. jonathan: joining me around the table, head of the global -- and the credit columnist for bloomberg gadfly. over in dallas, the chief investment officer having capital manage

jonathan: from new york city to our viewers worldwide, i am jonathan ferro. with 30 minutes dedicated to fixed-income, this is "bloomberg real yield." ♪ jonathan: coming up, president draghi's dovish words, coming up, but his words fall on deaf ears elsewhere. reflation trade struggles to find buyers. the 10 year tips auction draws the lowest number in five years, and counting down to the fed's decision. the long-run miss of its inflation goal undermining for another rate hike. we begin with a big issue, a dovish draghi doing his best to push back against markets. mario draghi: we need to be persistent and patient. a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation development in the medium-term. we are also unanimous in communicating no change to the forward guidance. we only have to wait for wages and prices. we were unanimous in setting no precise date for when to discuss changes. the last thing the governing council may want is an unwanted tightening of

from new york, this is "bloomberg real yield." ♪ jonathan: i'm jonathan ferro.rom new york, this is "bloomberg real yield." i want to head now to the auction block where we saw a few landmark deals throughout the week. we start here in the united states with the treasuries $26 billion 2-year note sale that drew a yield of 1.395%, the highest since 2008. at that level, the auction had a bit to cover ratio north of 3%, the strongest since november 2015. on the corporate side this week, saw the biggest investment grade deal of the year so far and the third biggest deal in history. at&t sold $22.5 billion of bonds in a multipart offering, said to have drawn almost three times as many orders as there were securities for sale. and to wrap it up in europe, yield hungry investors welcoming -- guess what? some new greek paper. greek stocks $3.5 billion of bonds in the first tapping in the markets since 2014. the country paying 4.625% to borrow for five years. still with us to discuss risk and the prospect of complacency are colin, andrew, and marilyn watson from blackroc

jonathan: jonathan ferro with 30 minutes dedicated to fix income. this is a bloomberg real yield of it -- real yield. ♪ banks --, central chair yellen says it looks rich. words, did investors misjudged the speech? credit is on track for the past record. issue, did investors misjudged mario draghi's speech? >> i think it was eloquently put. >> the words were confusing, to be honest. >> this was a titanic shift we haven't waiting for. >> i'm not sure the market misinterpreted it. there was a very clear shift relative to the last policy meeting. it was a dramatic tone. >> that a tightening is not really a tightening and i think the hope was, if you explain it that way, rental market will not get into -- >> i did not read the statement to be anywhere as near as bearish as the market was taking it. i think it was a signal from mario draghi that even if there support and tailwind, the central bank is still there. >> they need to get going early here. jonathan: soap was it eloquent or confusing? -- so, was it eloquent or confusing? boston, senior portfolio

. ♪ jonathan: from new york, i'm jonathan ferro, this is "bloomberg real yield."o the auction block, where we saw $56 billion in treasury 10, and 30three, year bonds. ratio higher than the average of the past 10. direct bidders bought nearly 10%, the most since october. 'ser incorporate, a moody report stated last month that nearly $27 billion of junk bonds had the highest proportion of deals on record, with weak investor protections. investors are so confident about debt rallies that many are dismissing the likelihood of some companies going bankrupt. e the leastnds hav extra yield over benchmark since 2007. still with us around the table, our guests. you were talking about this before the commercial. the story of covenant light in the junk bond space. lock me through it and whether it is something we should be concerned about. >> sure. isn you think about it, it the kind of protection that the bond investor gets from issuers. over the last several years, we have seen a gradual is aulation, and today high-yield bond market and load market, that deterioration is v

this is "bloomberg real yield." ♪ ♪ jonathan: from new york city, i am jonathan ferro. "bloomberg real yield." time for the final spread now. g-20g up, the summit wrapping up this week and janet yellen testifies in front of congress, the president in france for bastille day, and bank earnings and a rate decision is coming from the bank of canada. of course, with rates and protectionism at the g-20 and emerging markets facing a major test this week as bond yields go back up. sentiment starts to sour and money starts to flow. the story for the emerging markets complex is a big year for 2017. do they have the resilience to carry this through? krisha is with us, oksana and robert as well. when we talk about risk, let's talk about a test for the asset class for the rest of the year. em, big bid, banker bid through 2017. is that a big test right now? oksana: this is the beginning of the test. this is what i have been saying for quite some time because the rhetoric this year has been self-serving. we have watched em gobble up $35 billion on the debt side, more of that on the e

at your trading desk, the bloomberg terminal, you can look back at a gorgeous chart that only jonathan ferroanything guy johnson did. ♪ ♪ jonathan: from new york city, for our viewers worldwide, i don't know whose idea this was, but here we are, jonathan ferro alongside time king. was this all you? is francine coming back? tom: the rumor has it she is coming back. it is a british thing. jonathan: the u.k. has a knowledge for the first time on paper -- acknowledged for the first time on paper that it will have to pay obligations to the eu. joining us now is tim ross in london. i guess this shows how far we have come, which is not far, that the u.k. has just admitted there might be a bill to pay. >> for the first time in writing, we have got this statement saying there will need to be a financial settlement. it is not say the u.k. is going to have to pay a lot of money or what that will be for or how much. jonathan: the u.k. and the eu will need a fair settlement of obligations according to the u.k. spokesperson. what kind of settlement are we talking? >> all kinds of rumors, no official numbe

coming up shortly, >> bloomberg americas, jonathan ferro. you making history. eally a big fx and it speaks to a diminished risk. euro-swissack toward 120 which used to be the floor, we are nowhere near that, but i think the real news is thomas jordan find a little bit of relief. theegin to feel what pressure is the banks have been under. tom: it shows the risk on today as the u.s. 30 year gets on again at 33%. i don't see a velocity yet, i don't see a range reg out. breakout?- range do you? jonathan: no, i don't be a i have to say, it down and d.c. now that health care has failed the idea we will get an upside and fiscal stimulus, i think that is a big hope as well. too much is foreign-exchange talk. real yield, 12:00 noon today, this is a big shock. i thought it would be terrible, and it is outstanding. jonathan ferro on the fixed income market. ajra: markets awaiting balance sheet announcement as early as september after the fed says the unwind will happen soon. unchanged.icies tim adams, president and ceo of the loomis sayles finance. ad george of wells fargo

. ♪ jonathan: from new york city, i'm jonathan ferro. yellen says evaluations look somewhat rich. president draghi's words start a bond tantrum, but did investors misjudge his speech? halfway through 2017, sales are on track to pass the 2016 record. we begin with the big issue. did investors misjudge draghi's speech? >> i think it was actually very eloquently put.

i'm jonathan ferro. muted price action in the equity market.nt to look out for morgan stanley. the freeement in market positive as well. that's a bit of a novelty compared to earnings from the banks so far. higher today by a single basis point. euro-dollar retraces some of the move from yesterday. down .25%. isr intraday high for 2017 11583. that's the market action. let's get you up to speed with some headlines. here's emma chandra. >> president trump had a second meeting with vladimir putin at last week's g20 summit. the white house says that they had a previously undisclosed conversation during a dinner for global leaders. the meeting lasted an hour and the only other person present was prudence translator. mitch mcconnell plan to repeal obamacare appears to be dead on arrival. three republican senators have come out against the repeal without a replacement. mcconnell can't afford to lose more than two votes if the repeal is to pass. plan to return to the international bond market has been put on hold partly due to a ceiling set by the imf o

i am jonathan ferro, alongside david westin and alix steel. a decent bid, .25 on s&p 500 and the euro on a stronger footing. german business confidence at a record high, climbing for a sixth straight month. up withes very much yields around two basis points. alix: the optimism in germany helping the dax with a rally. still underperforming the rest of europe. who guessed it? greece back in the bond market, reportedly 7 billion euros, but the 10 year seeing a selling as yields back up by three basis points and copper futures up by 3%. it could be a two-year high for prices. returns. copper it is time for your morning brief. s and p prices will be out and then we get july consumer confidence data at 10:00. at 1:00 eastern time, the u.s. treasury will sell to your notes. alix: it is a tale of two earnings. and unsettling trend on spending on advertising for alphabet and caterpillar jumping 5% after boosting its outlook. ise to take us through it bloomberg's global technology reporters. i want to start with is this a cat specific think or industry

i am jonathan ferro. 30 minutes dedicated to fixed income. ing up, payroll top estimates, wage growth disappoints. policy nervousness continues to grow when the bond yields climb. and protectionism dominating the g-20, and emerging-market resilience with a big your about -- big year about performance. we start with the big issue. looking at payrolls, wage gr

jonathan ferro is off today. alix: here are the markets. s&p futures relatively flat, although the high for the assion, sterling getting boost. it was lower earlier and then we got those job numbers out of the u.k. with the 10 year treasury pocket , that is supply later today as markets handle that as they move lower. crude is getting a big relief rally by over 1.5%. they lowered the estimate for production in the u.s. for next year but this feels like a call before potential more storms. david: time for our morning briefs. it is a big day for the federal reserve. at a: 30 this morning, 8:30 this annual monetary policy report delivered to the house financial services committee. she will appear in front of congress at 10:00 a.m. to deliver remarks and answer weston's. we will watch for indications on how fast they will raise rates or when they will start reducing the fed's balance sheet. in the afternoon, they will release its beige book and in the afternoon, we will hear from esther george in denver on the economic outlook of the balance sh

. ♪ ♪ jonathan: from new york city to our viewers worldwide, i am jonathan ferro. dedicated to fixed-income, this is "bloomberg real yield." ♪ jonathan: coming up, president draghi's dovish words, coming up, but his words fall on deaf ears elsewhere. reflation trade struggles to find buyers. the 10 year tips auction draws the lowest number in five years, and counting down to the fed's decision. the long-run miss of its inflation goal undermining for another rate hike. we begin with a big issue, a dovish draghi doing his best to push back against markets. mario drhi

. ♪ jonathan: from new york city, i am jonathan ferro. 30 minutes dedicated to fixed income. coming up, payroll top estimates, wage growth disappoints. central bank policy nervousness continues to grow when the bond yields climbed to 2017 highs. and added protectionism dominating the g-20, and emerging-market resilience with major test after a

. ♪ ♪ jonathan: from new york city for our viewers worldwide, i'm jonathan ferro for 30 minutes dedicatedan: coming up, the u.s. economy shows signs of losing more momentum. retail sales fade and inflation rolls over. the fed says it is transitory, janet yellen says it is too premature to conclude the underlying inflation trend is falling short. loading up on risky assets. dominating the recent junk-bond issues. we begin with a big issue, inflation data injects some doubt into the fed's next move.

. ♪ jonathan: from new york city to our viewers worldwide, i'm jonathan ferro, with 30 minutes dedicatedming up, the u.s. economy rebounds, but inflation forces fade, raises questions about the fed's next move. at&t gets away with the biggest debt market deal of the year. the market wanted even more. billionaire investor howard marks of oaktree capital issues a warning about current valuations. we begin with a big issue -- fading inflation forces raising questions for the fed.

this is bloomberg. ♪ ♪ jonathan: from new york city, this is jonathan ferro. to fixed-income, this is bloomberg real yield. ♪ coming up president draghi's dovish words his words fall on , deaf ears elsewhere. reflation trade struggles to find buyers, and counting down to the fed's decision. long-run miss of its inflation goal undermining for another rate hike. we begin with a big issue, a dovish draghi doing his best to

. ♪ ♪ jonathan: from new york city for our viewers worldwide, i'm jonathan ferro for 30 minutes dedicatedcoming up, the u.s. economy showing signs of losing more momentum. retail sales fade and inflation rolls over. the fed says it is transitory, janet yellen says it is falling short. too premature to conclude that janet yellen-- says it is too

. ♪ jonathan: from new york city to our viewers worldwide, i'm jonathan ferro, with 30 minutes dedicatedd income. this is "bloomberg real yield." ♪ jonathan: coming up, the u.s. economy rebounds, but inflation forces fade, raises questions about the fed's next move. at&t gets away with the biggest debt market deal of the year. $22.5 billion with the bon worts sold -- the market wanted even more. billionaire investor howard marks of oaktree capital issues a warning about current valuations. we begin with a big issue -- fading inflation forces raising questions for the fe

. ♪ jonathan: from new york city to our viewers worldwide, i am jonathan ferro with 30 minutes dedicated,than: coming chair yellen says value waiting looks somewhat rich. draghi's words sparked a bondage antrum -- bond tantrum. did investors misjudged the speech? credit is on track for the past record. the big issue, did investors misjudge draghi's speech? >> i think it was eloquently t.

i'm jonathan ferro.ees are up about .1% price action elsewhere, the dollar index at 82017 low off the back of that week data. now down .6% on euro-dollar. treasuries with a strong bid, done by six basis points on the 10-year. 2.29. that is the price action. it's get to the movers and the banks. alix: across the board banks are getting hit. yields move lower, that will affect the banks on a macro level. on a micro level, jpmorgan and wells fargo getting hit the hardest. trading down 19%. it percent happened year on year but the reserves built because of that. also cited a higher lost rate in cards. we want to know what that means when we hear from the call. wells fargo picking up some steam, now down to percent. deposits up 5%, net charge-offs modestly lower. those metrics seem relatively positive for the company. citigroup faring the best, off 5.4%. they had the best investment banking revenue in seven years. %. 0.4 we head into as the open. also watching some retail names. walmart, ulta getting an upgra

i'm jonathan ferro alongside david westin and alix steel. here's the market action. futures are flat. in the fxaction is market the dollar index the lowest since august of last year. the euro-dollar showing some strength. up 7/10 of 1%. treasuries with a marginal build. alix: the equity market will all be about banks and netflix. surging up over 11%, and are -- netflix, a little light after those results. goldman sachs on deck. still up 7/10 of 1%. front and center, will they disappoint? the banksides earnings, mitch mcconnell yesterday pulling the bill he had been working on to replace obamacare. instead he says he will try to repealing the health care law that keeping it in place while congress tries to figure out what comes next. joining us now is kevin cirilli. , he develop in washington wants to repeal obamacare, will it happen? kevin: unlikely. with several sources that say that it is unlikely that despite mitch mcconnell and president trump's assertion that they would like to see the senate and the house vote on the 2015 repeal bill -- the votes might not be t

to our viewers worldwide, i'm jonathan ferro.ses for you and get you set up for trading as wall street gets back to work. futures are stable on the dow. the s&p 500 is up a 10th of 1%. for 10th on the tech heavy nasdaq. here's the story for the bond market. last week yields priced aggressively hire. 2.35 is your yield today. the dollar is weak for the first half of 2017. a give some damage to the greenback. the dollar showing some strength, of a quarter of 1%. that is your cross asset story. let's go to abigail doolittle for the cash open. abigail: looking at a mildly bullish open for the major averages. the dow and s&p 500 up 1/10 of 1%. the nasdaq up 2/10 of 1%. we saw a big divergence monday with the dow hitting a new all-time high. the nasdaq finished down half a percent. and will be interesting to see whether tech sellings continues today. coming to what is trading lower on the open, we have to of the auto part makers taking lower. this is after the second quarter cost rose versus the previous guidance of three to 5%. and bi

scarlet: jonathan ferro with his roundtable on bloomberg yields earlier today.to know or want to know about fixed income every friday at 12 noon new york time, 5 p.m. in london on bloomberg real yield. in the meantime, let's get a check of the headlines with mark crumpton. attorney general jeff sessions announced today that his justice department is seeking a review by the san francisco-based federal appeals court of a ruling by a hawaii federal judge that the trump administration did not conform with the supreme court's instructions rolling out a temporary travel ban. yesterday, the judge in hawaii weakened the band by expanding the list of u.s. family relationships. that those can use to get into the u.s. including relatives such as grandparents, grandchildren, uncles, and aunts. schiff, the top democrat on the has intelligence committee says new information on donald trump jr.'s meeting last summer "adds another deeply disturbing fact about this secret meeting." a russian-american lobbyist says in attendance. it don't trump jr. discounted the information he w

on jonathan ferro.y down and futures flat after, dead kissing a 2017 high in the last 24 hours. this is an easy one. something try to get going. >> we are going to get u.s. economic data with additional jobless claims for the month of june. at 11:00, the u.s. congressional budget office will release an --lysis of the 2018 president trump's 2018 budget proposal. >> the politics still looked shaky under the federal act -- criticize european block. pretty done good. in this week's business magazine, he out loans -- he outlines why. john was us now. welcome to the table. great piece. andhat was thrown around ended of a joke. trump went against washington and going into the brexit vote, they really bad way. when brexit happen, but a lot of people forecast the beginning of the end. what brexit it was reunited brussels and i have macro coming in and you have this gloomy site. >> nothing but pleasure for many people of brussels. rules favor them. drawe amount of investors relative stability. >> it makes it feel