bloomberg's bonds reporter lisa abramowicz joins us. investment grade debt been doing so poorly # lisa: last month in july, companies sold $135 billion of corporate debt. this is a sleepy time, it is summer. last year there was less than half of this in july. investors have pretty much seemed insatiable, this is debt lisa abramowicz -- is debt that pays more than government debt. the government is still stimulating the economy through its easy money policies. why are people moving away now? it is not just that the fed is thinking of hiking rates. people are concerned about lower commodity prices. there are oil and coal and other companies that are affected by the plunge in commodities. people are concerned about that. people are showing there are limits to how much they will buy. acquisitionsrs and we have seen, a lot of them have been funded through the debt markets. companies are saying we want to buy that company. charter wants to buy time warner, they are going to go to the debt market. olivia: after several years of raising debt, y

joining us to discuss this, michael mckee and our bond guru reporter lisa abramowicz. start us off here. after what we saw with the chinese currency -- do we collect a selloff of the short end of the curve right now? lisa: everything is fine now. pimm: oh, ok. we should all go home. obviously, people have been expecting the fed would make a move this year. there is a 73% chance -- pimm: a quarter point in december? point. whole quarter and the probability the fed is going to hike in september is about 40% -- scarlet: which is a pound note -- statisticmost useless in the world. 48% is based on yesterday's feds funds closing. after the retail sales report, you will see that go up. on friday, it was 56%. devalues, 40%. it bounces around so much. the only time fed fund futures are useful is the week of the fed meeting. it does not tell you anything, because they will react to every bit of data. i would say investors i speak with our focus to beyond the fed. they are not interested in when the fed will hike rates. they are interested in the price of oil. huge, huge determine

here to explain is lisa abramowicz.t week when we were struggling to find a catalyst for the big global route, i did have a couple of people come on and say credit spreads told you so. creditver since may, spreads portend of broader weakness that may not be correlated to specific high-yield companies. those also tend to be a good tea leaf for stock market. ever since may, credit spreads have been widening. companies have been selling hundreds of billions of dollars of corporate bonds to buy back their shares and pay dividends and acquire companies. bond investors have been saying, enough already. stock investors have loved it. they continue to buy and enjoy the ride. typically, since 1996, three times when credit spreads widened this much, 32 basis points, in three months the s&p 500 has declined 18%. that would be a problem. it suggests that we have a lot more to go. olivia: explain what we are looking at. lisa: what spreads are, the extra yield investors demand to own credit, corporate bonds, over government bonds. it

thank you so much, lisa abramowicz of bloomberg news. much more ahead. how do you like $67 oil?ll talk to the alastair thinks that will be the key. ♪ moments away from the closing bell. >> i'm joe weisenthal. alix: u.s. stocks closing lower. ishares and shanghai dropped the most in three weeks. joe: the question is what did you miss? turmoil,ncertainty and what is coming next. alix: reading the tea leaves. scanning for hence of a rate hike. joe: and we talked to a texas bank chief about oil, housing, how the lone star state does it different. alix: we begin with the stock for the dow jones industrial average falling, ending the three-day advance. all about the commodities leading declines lower

lisa abramowicz is here. cinating is as the threat of higher rates emerges, markets have moved in front of that, what does that look like? lisa: if you look at the pound, it is the strongest since 2008, versus the euro. we are looking at decade highs in the u.s., we have come off a little bit, but the dollar is at a four-week high. there are expectations that the fed hike will come in september, so currency markets are heading in front of central banks and that is a problem for them. alix: when it comes to the bank of england, maybe them rating --e earlier, it looks like hey the currency market might be doing the central banks job for them. lisa: in a sense. they do not want to be at these levels. when they say that the currency market is doing their job for them, they want to do their job. let's be clear about that. i think the issue is people are hoping that the economy has been stimulated with this, do not get overheated. if you have a stronger currency, that has a dampening effect on growth because compani

for more, i want to bring in lisa abramowicz. in general, are lower commodity prices good?ned to think that. >> the logic is typically of companies have to pay less for oil, less oil -- coal and other types of energy, that means they have more money to put in research development, more on the bottom line. think about when you have lower pump, that isthe typically a good thing. in this case, not so much. the commodity prices are less a cause as much of a weakness than a symptom. people are singing there are a lot of conflicting data point coming out of every place in the world, but the one thing you can rely on is he's commodity prices are not lighting. is that these commodity prices are not lying. gotten worse. last month the bloomberg commodities index had its worst monthly performance since september 2011. this is after the pain that has already been incurred. scarlet: peoples of end of last year through the beginning of this year was worse and just kept going. you have companies issuing a lot of that. the window to raise money cheaply is starting to close. talk about why

joining me now for more bloomberg, lisa abramowicz.re a catalyst to the e analyst -- to this? joe: the progress that we saw yesterday, people come in and cover their shorts. money come in, but that is not likely to economy to reassess the lows that they saw. when it hits a loan like that, they almost always expected to come back and retest that low. maybe a slower pace in a few days. not dramatic plunge down and we saw. really no news to account for this. it was just clear that the enthusiasm for this rally kind of faded. alix: when you treasury market, there are data specialist in the short-term treasuries. --any of this related to the >> the implied volatility searched to its highest since february. that is interesting to me. the other thing that is interesting is you see this basicallyng on, and what you are seeing people are expecting a rocky road ahead. riskier assets at a time of intentionally limited liquidity, you are seeing a bond trading volume below average but below where they were last year. people are not going to go ther

when we talk about the markets and the fed, lisa abramowicz describes the market as a spoiled six-year-oldand when the fed gives the markets a cookie, it has to make sure that the market appreciates it properly. doings the dance we are right now. the markets are throwing a tantrum. the question we are asking is how does the adult handle it? tom: coming up today from wyoming, we will speak to various and sundry french presidents -- fed presidents. also, an extended conversation with the central bank had for india. stay with us worldwide. "bloomberg surveillance." good morning. ♪ tom: good morning, everyone. let's go into new functionality on the bloomberg terminal. the green line is the fed probability of when they will raise rates. the yellow line is 60 days ago. this is a lower gas of where interest rates will be out two years and three years. at the same time, a greater likelihood of that september or october or december rate increase. right now, we need a single best chart. vonnie: 10 years since hurricane katrina, the costliest natural disaster in u.s. history. new orleans has rebounde

here to point us in the right direction is lisa abramowicz, bond market reporter at bloomberg. jason trennert of strategic s continues with us. all bets are off as it looks like the safe haven trade, ll let's talk about the euro. it was safeday haven and today it is perhaps anything but. the difficulty of finding a safe haven is symptomatically of the post central bank intervention era. the central banks have gone to the bond markets and have basically pushed down yields so far on government bonds that for those same bonds that were traditionally safe haven be atments to once again place that you can stash your money is being called into question. you're seeing a reversal in yields on the u.s. 10 year and u.s. two-year and u.s. 30 year. we are going back to a situation where bonds are not the supersafe place to park your cash anymore. it sort of shows the dilemma that want investors and other investors are having right now as they try to hedge against downside risk. brendan: jason trennert, this is lesson, risk is everywhere. jason: even private equity, which people are trying