there was a story about what fx reserve managers in china may do, but it was not the front end that sold off but the longnd. priya: well, i actually would disagree. i think the bear steepening made sense. i would argue a lot of the buying from central banks in the last year has been in the long end of the curve. we don't have data on this. all i am saying is there is a significant amount of buying, somebody is taking the place of the fed and that is the official institutions, and the curve is flattening. i can see if i am a foreign reserve manager, do i really want to buy five-year treasuries when the market is not pricing close to what the fed is projecting? forget upside risk from inflation, so then, why would i buy the two to five-year sector? maybe i buy further of the curve. i actually think foreign central banks may have been buying the long end. if they are actually stepping away, then the curve can start normalizing. jonathan: matt? matthew: my perspective is, you need to look at the last time central banks actually had to sell treasuries. the last time was in 2015. as priya suggested, we don't h

that is what is driving the long end of the curve in our minds.e are in a highly disinflationary environment where inflation doesn't always follow the upsurge in cyclical strength like it has done traditionally. and so, that could come at some point in the future, but again you couple this inflation with , high debt loads and you end up with pretty low rates at the long end of the curve. julie: we remain with that inflation challenge. it is facing all of us and the fed, for that matter. we have got a chart that looks at inflation expectations. that versus the curve. it shows that people are not expecting much inflation out there. that continues to be the case. the blue line is the university of michigan 5-10 year inflation expectations, versus the 2-10 spread. ira, i want to bring you into this, because that is not a picture i look at and think inflation is going to perk up in 2018. ira: inflation expectations are certainly not expected to move up. in fact in that survey, the university of michigan survey, you see that long-term inflation expectat

do you think there was a reason for the u.s. long endsell off sharply if the banking deregulation bill kicks in and -- kicks in around q1? as suggested by gary cohn. kathy: i do not think it will happen very quickly. i think it will take some time for deregulation to work its way through the system to produce the kinds of results that would cause the long end to sell off. in terms of all the regulatory changes and the tax changes, i'm more focused on the high-yield market at this stage of the game than i am about the financials. jonathan: we are going to talk about credit in just a moment, i do want to get your thoughts, krishna on the inflation dynamics. break even rates are picking up. are we thinking about inflation this year as a tale rift? do you need to hedge out or a base case that is going to materialize through this year? krishna: i think, as michael was saying, that's the great mystery. inflation would pick up a tad. i don't think it picks up a lot. if it picks up a lot, we will see a much more forceful response from the fed to

do you think there is a reason for the u.s. long endo sell off sharply if the banking deregulation bill kicks in and around q1 as suggested by gary cohen? kathy: i don't ignore happen -- think it will happen very quickly. i think it will take some time for deregulation to work its way through the system to produce the kind of thing that will cause the long end to sell off really quick. in terms of all the regulatory tax changes, i am focused on the high-yield market. jonathan: we will talk about credit in a moment. i want to get your thoughts on the inflation dynamics. break-even rates are picking up. are we thinking about inflation this year? do you need to hedge out, or will it materialize through the year? krishna: as michael was saying, that is the mystery. i think inflation would pick up a tad. if it picks up a lot, i think we would see a much more forceful response from the feds. so, counting on break even. for inflation materializing, i don't think this year's context is real. jonathan: it was about term premium and what it would

see 30 year auctions -- auction sizes increase and that is when people get scared about the long and. -- the long endjonathan: i spoke to gary earlier and he spoke about banking. the question was as follows, do you think there was a reason for the u.s. long and to sell off sharply if the banking deregulation bill kicks in and around q1? kathy: i do not think it will happen very quickly. i think it will take some time for deregulation to work its way through the system to produce the kinds of results that would cause the long end to sell off. in terms of all the regulatory changes and tax changes i'm more , focused on the high-yield market at this stage of the game than the financials. jonathan: we are going to talk about credit in just a moment, but i want to get your thoughts on the inflation dynamics. breakeven rates are picking up. are we thinking about inflation l risk?ar as a tai do you need to hedge out or a base case that is going to materialize through this year? krishna: i think as michael was saying, that's the great mystery. i don't think inflation will pick up a lot. if it picks up a lot,

the year. we will approach 3% by the end of the year, that is not the same kind of shock. for ahave been moving up couple reasons on the longnd. you have to differentiate long and versus short end. long end versus short end. banks control -- through bond buying. bonds -- netying negative accommodation. think that rates on the long end will be moving a lot more, especially given how low long rate volatility is. will it affect equity markets? we think temporarily. shery: great to have you, peter cecchini, chief market strategist at cantor fitzgerald. tomorrow marks president trump's first year in office. will he be celebrating the anniversary with a government shutdown? ♪ vonnie: this is bloomberg markets. shery: lawmakers are running out of time to avoid a shutdown. the federal government is set to close at midnight tonight. thursday, the house voted to pass a short-term measure to extend funding until february 16. the bill hit a wall in the senate. joining us is kevin cirilli on capitol hill with the latest. how close are we to a potential shutdown? kevin: just over 12 hours until the government will partially shutdown. ear

david: how is that related to the long end of the yield curve? the long end if you think you think you're going to see higher inflation. the yields will go up. if you are worried about inflation, you want to buy inflation protection. if you have a strong auction that says the market is starting to look at higher inflation, based on tom barrack, he is buying the long end because he does not see real inflation pressures. david: it is hard to figure why if the tax reform thing is going to be that effective, why we won't have inflation coming through. if we are really going to grow the economy numeral three percent, we are going to have inflation sooner or later. alix: some of the market estimates are showing that. we are starting to see that, maybe not in the hard data, but at least in love the soft data and the measures of inflation expectations. check it out and then the options coming up. david: does the fed see it? alix: exactly. watching morgan stanley. investment banking pipelines remain healthy. it was a solid quarter across the board for morg

the end of the week. yields up on a two-year note by eight basis points to 1.96%. we are zooming into that 2% level. up on the longs well by seven t 22 point a one. bank earnings in the united states and important data out of the americas coming at the back end of the week. this is "bloomberg real yield." ♪ ♪ jonathan: this is "bloomberg real yield." on jonathan ferro for audience worldwide. -- i'm jonathan ferro for audience worldwide. time for the final spread. a series of economic reports concluding on friday when we get cpi data and retail sales as well. learning side kicks off big time .t jpmorgan wells fargo in politics, a lot going on is always. keep an eye on the french president as he heads over to china and talks in korea something to keep an eye on as well. final thoughts with michael cloherty, kathy jones, and krishna memani. something you got your focus on? kathy: your usual for the time a month. decent readings on both. the important thing about cpi is that on a year-over-year basis, it's slightly higher for technical reasons. we had a big dip early last year. looking year-over-year, it will actually

, bond yields on the long end.is market. liz: okay, let me tell you that i think people are watching right now and wondering where do i go? which sectors? or do i stand back? it's awfully rich at the moment. the entire s&p trading at 26 p/e ratio. that's really historically high. >> there's no question, valuations are stretched, i think there is probably good reason for that, and an old wall street axiom that says it's never to late to buy and never too late to sell. i think it's never too late to buy. the sectors that are benefitting from the expansion in the global economy, that would be material sector, the industrials and now in the u.s. the financials are doing very well as we see rates rising somewhat, but loan demand is likely to pick up substantially this year, and that will help the bottom line in a lot of banks. liz: what's the floor like right now, nicole? are you there? reporter: i am. liz: we're now at 26,113 about. to see that close for the first time above 26,000. reporter: look, they're walking arou

because of the enormous demand at the long end. really depend on stocks. s&p 500, when it was going up and up each day, you would have regular selling of stocks to buy long bonds, the liability match demand. stocks dropped and that is the increment, your funding ratio of a prime benefit plan drops with them. that puts a pause in their. -- in there. correlation may be changing. i want to ask you about supply. we got quarterly refunding and it is higher by $4 billion mostly on the long end. what does that do to rates on the short end, clearly people expecting that to balloon even more. dan: i think that is accurate. again, left to our own devices within our own markets, that would help drive up interest rates. unless the central bank decides to counter that. that really does become the question. i keep coming back to this point, because our central bank has a domestic mandate. we have gone over this in years past. it has a domestic mandate but has international concerns. particularly in the current political environment. you have to handle that one very caref

at this point, the banks are more leverage on the short end of the curve them the long end, and if itontinues to hike, they should see income growth. some point, our customers going to demand higher rates? >> we'll see. with each successive hike, you see -- increase. you see deposit costs go up. the fed didn't hike in quarter for until the bottom few weeks. if we think about 2018 overall, we think -- this year than last year. not pastfargo still its consumer banking scandals. when can we expect them to stop suffering from ongoing problems? >> it's month 15 since all of this stuff came to life -- came to light. they cometer it seems closer to changing personnel, business practices. this quarter had a sizable tax gain and we think they used that to the back and build their legal reserves. we think it is behind them from eight legal and consulting cost perspective. they need to improve revenue momentum. speaking of that momentum, mortgage banking fees in wells fargo down 35%. residential origination down a bit. does that meet your expectations? seasonally, quarter four is -- slowdown, re

the front end of the issuance than on the back end. the back end is benefiting from discussions on deregulation. that would make it easier for dealers to carry inventory of longreasuries, since you are seeing pressure on swap deals that is it, they don't really go rather than treasuries as treasuries become easier for dealers to hold. jonathan: i want to get your thoughts, robert, on what has been happening with inflation linked securities. you now see the breakeven spread between the 10-year and 30-year go to negative. what does that mean when the spread starts doing that? what happens if that break goes negative? robert: the difference in inflation is whether the drivers are short-term or long-term. on a long-term basis, there are global dollar precious on prices that are likely to keep inflation under control for the foreseeable future. in the near term, commodity prices have been strong, they've been the biggest driver in the near term of breakeven risks. that is why you see commodities prices going up, more of an adjustment in shorter maturities than longer. jonathan: what have you been doing on the tip side of things? robert: the tips have been unattrac

we're tapering september may be the end of the bond buying in the ecb only because you stick around too longzero bound, and you cause disruptions that really don't need to be there. i think the ecb starts talking about september being the end of the bond buying. tapering before that and i think having synchronized monetary policy would be a positive thing exiting '18 >> art, thank you very much for joining me art hogan there discussing the broader market picture >>> the numbers are officially in hedge fund rueturns were up mor than 8% for the year, making it a good year, but not a great one. leslie, you can frame it. >> that's it it's relative to the market. that's the key hedge fun hedge funds posted their best full-year performance in four years, but an index that compiles hedge fund performance showed gains of 8.5% in a year, that's not quite the resounding affirmation that the industry needs after years of under-performance, that's because when you look at the s&p 500 including dividends that jumped by nearly 22% or 2.5 times the return of hedge funds. so certain strategies did better th

over the next several months, and lower end long treasury yields. than: robert is going to catch his breath and have a drink. jack flaherty and marilyn watson also staying with us. the front end up nine on a 10-year notice. we take out some of the postelection highs. from new york, still ahead, the final spread. the week ahead featuring decisions from the ecb and the boj. a look ahead, coming up next. this is "bloomberg real yield." ♪ ♪ jonathan: i am jonathan ferro. this is "bloomberg real yield." it is time for the final spread. coming up over the next week, you have rate decisions from the bank of japan and the european central bank. the world economic forum in davos, switzerland opens on tuesday. a big highlight being president donald trump, who gives a keynote speech on friday. also next week, another round of earnings, massive talks and gdp rates from the united states and the united kingdom. everyone is still back with me. we have robert tipp from pgim, marilyn watson of blackrock, and jack flaherty of gam. something we have not talked about m

the easing in financial conditions is actually pushing the front end higher that has an impact on the long end what's remarkable is that as opposed to other bond markets that are expensive, the space for the long end of the u.s. curve to adjust. we see it happening. >> so you see it flattening then >> flattening and deeper potential inversion than the previous cycle >>> want to ask about sterling that weaker dollar makes cable look slightly more positive. i wonder whether you think after this rally the last few weeks if there are geopolitical shocks down the road when it comes to brexit is that something you will be watching closely >> absolutely. brexit is important to think about. for sterling in particular the most interesting bit is sterling is not a lot stronger than what it is today. you had significant positive surprise in economic data, the central bank adjusting monetary policy, and at the same time sterling is very geared to global growth. actually the global pick up in earnings is boosting the current account of the uk significantly. in many ways, sterling is the new aussie the

end rates. as julia mentioned, the continued flattening of the yield curve, that is something that is likely to continue as the short end moves higher on fed headaches but the long end doesn't price in potential g.d.p. >> we are already more than half way through january. if you are looking for four rate increases this year, presumably starting in march, wouldn't the market want to be getting in front of that a little bit? and will we see a very steep move? germany schneider talking about a 30 basis point move for the five-year. >> looking at last year, the market was really underestimated what the fed was guiding the market towards, and the fed had to go out on parade and talk the market to its view. the market had a pretty sharp shift up in february going into e -- and early march going into the march meeting where they ended up hiking. it is better prepared for the march hike, and it is really dependent on inflation numbers we will see over the course of the year, whether well goatee 2%, 3% or 4%. if the labor market stalls out at 4.1 but inflation picks up, that will enbolden the feds to hike turn they are. if the unemployment rate stalls, shah is when they

not onlyhe fed doing with the short end of the curve, but the long end of the curve? hi doing, because clearly some of the demand for our long end of the curve is coming from overseas. and to what extent the boj -- boj is doing as well. vonnie: the only two underrates you have our u.s. bank core and northern trust. what are they doing wrong? what the is more about opportunity set is from upside from here. top picks skewed towards institutions that are either big beneficiaries of tax rates without yield curve pressures, or are making significant changes on the consumer banking expense line. my super regional banks, the institutions that are able to invest in tech, and also manage their branch efficiencies as tightly as possible, those are the ones that are going to be in our overweight bucket. vonnie: betsy, thank you. always great to speak with betsy. bitcoin's 2018 slight deepens and we look at what is behind the latest cryptocurrency selloff. shery: a quick check of the markets. we are seeing u.s. markets high with the dow and s&p 500 both topping 26,000 and 2800 res

that will motivate independent into debt which will support the long end of the curve.a: the growing consensus is growth is picking up globally. synchronized global growth is the catch phrase of the moment. why are we not seeing more of a rally? why are we not seeing more of yields rising? bonds should be crossed right now. every news item has been terrible for them and the yield curve continues to flatten. why? subadra: we are still between 2% and 2.5%. we might every priced in the second half of 2017, but for the most part growth is still subdued globally. it is better than what it was before, but we are not seeing 4% growth or really large numbers. i think inflation is extraordinarily contained globally. the third factor keeping bond yields relatively low is the fact there is a huge stock effect of central bank holdings of bonds. that will be something that will prevent yields from rising meaningfully. lisa: i remember when people used to care about debt. when people used to worry this would be a problem. no one seems to care anymore, even though the amount of debt i

arebank of depend -- japan not buying bonds on the long end . etter data out of germany, so perhaps that is helping things move along. we will talk more about inflation, aren't we manus? manus: absolutely. we looked at the amount of money flowing into those treasuries. inflation will be the core focus at the end of the week. the bank of japan has i think, set out a store. if the u.k. has raised rates, if there is a debate in germany talking about the need for the end of --. signaling thatan they are just adjusting the rates at the longer end of the curve. it is certainly unsettling the bond markets. the is definitely igniting viewpoint that in the bond markets, you are going to have to reconsider. the bank of japan is beginning to fiddle with the long end of the curve. you may think about less negative rates before the end of the year, not rate hikes. juliette saly has much more clarity. she's got your first word news. verytte: donald trump is close to making a decision on his nominee to be vice-chairman of the fed, according to a white house off

that will motivate them to pivot out of equities into debt, which will support the long end of the curvelisa: i don't understand one thing. the growing consensus is growth is picking up globally. synchronized global growth is the catchphrase of the moment. and yet, why are we not seeing more of a rally? why are we not seeing more of yields rising? bonds should be crushed right now. every news item has been terrible for them and the yield curve continues to flatten. why? subadra: well, growth is starting to pick up, but we are still between 2% and 2.5%. we might reprice it to 2.5% to 3% in the second half of 2017, but for the most part, growth is still very subdued globally. it is better than what it was before, but we are not seeing 4% growth or really large numbers. and more importantly, i think inflation is extraordinarily contained, not just in the u.s., but globally. and the third factor i'd say that's keeping bond yields relatively low is the fact there is a huge stock effect of central bank holdings of bonds. so that, again, will be something that will prevent yields from rising me

we have seen steepening that will be exaggerated as the long end gets higher. s. this is good economic news that does suggest there are inflation pressures building. we won't know too much of the inflation aspect yet until we see if this continues. alix: in terms of inflation targeting, is 2% something the fed has to hit or is it a trajectory? it might not be the absolute level, just the idea we are moving higher. is that going to be enough? michael: this will be a debate . this will get into wall street. does the fed let the economy run over to present inflation? they still have some room to go isthe fed has been saying it asymmetrical target. we can run above percent for a little while. they think of it as a ceiling. that is a debate we may have in the next few months. alix: how does oil play into this going forward? >> it will be reflected in the headline should numbers. it becomes a question of whether demand can be sustainable. another retail sales were lower than expectations. when we consider how strong holiday sales were, we can see a lot of activity in

the short end should be higher by about $1150 basis points and the long end, in the same magnitude.strong recovery going. inflation is picking up just a bit. so the days of low long term rates, i think, should be over and the long rates, they should be long term treasury should be at 4.5%, in that ballpark. >> now robert, bob, i agree with you. i totally agree with you but yet even though we're now at 271, the highest yield since april of 2014, it still commensurate with the economy you depicted wouldn't it be dbetter to accelerate and match the selling of the balance sheet in real time with the rate hikes and real time otherwise the distortions of the curve can work against policy? >> well, once the full runoff is in place, we're talking about $50 billion a month runoff that's $600 billion a year that's a sizable amount. and it's probably an appropriate amount could you do i will still faster go to a trillion a year and run off? well, you're pushing the envelope there a little bit. i think $600 billion a year will be significant amount and once you pull that much stimulus out of th

jack: i think they should be issuing at the long end. t they will keep issuing out to 3-5 years, but that is it. that is where the pressure will stay. on then: carry on sure front end is your idea, robert? robert: i think it will be short and intermediate. i think the fed will keep a lid on the front end of the curve. there is less impact on the front end of the issuance than the back end. the back end benefiting from the discussions on the regulation, that would make it -- de rugula tion. treasuries on swap yields. they have become easier for dealers to hold. jonathan: i want to get your thoughts on what has been happening with inflation linked security. you now see it spread between 810 and 30 year go to negative. what is that mean when the spread does that when 10-year and 30 year breaks even. ? the difference in inflation, whether the drivers are short-term and long-term. on a long-term basis there are a lot of downward pressures on prices that are likely to keep inflation under control for the foreseeable future. commodity prices hav

another issue i want to focus on, they'll have a big effect on the long end of the treasury market andarket which really has been rip van winkle and starting to wake up that is the break evens for inflation. you know, the five year break even is now hovering right around 2%. the ten year break even is around 205 not that they haven't been higher they actually have been higher but they were higher in a time before the fed was tightening like 2013. if we look at present day and the fact that we've already had quite a nice run of tightening since the end of 2015, we need to take a fresh look if the numbers continue to stick at 2% or higher, compared with the kind of growth i expect to see, i can't imagine that the fed is going to take notice. "squawk alley" gang, back to you. >> great thank you, rick santelli at the cme. rick, i'm a little disappointed that you don't have the hand drawn charts today but good data. >> we'll have one tomorrow >> still ahead -- okay still ahead, bitcoin up slightly today. still down almost 20% this year. as investors weigh more regulatory concerns. listen to

needed one, after the boj earlier this week when it reduced the pace of its bond purchases toward the long end of the curve? is it a reminder? nature ofive investors to come in three i central banks as they look to unwind that crisis era approach -- investors to common tree -- the commentary by central banks as they look to unwind that cross-ice -- crisis era approach? with the ecbink and other central banks, they are trying to telegraph it in as much of a slow and steady way that there is no big shock for investors when 12 months down the road, the actual resumption of monetary policy normalization takes put -- takes hold. the ecb has been good in the way they have done this. we have seen hiccups in the markets, but they have been able to contain the really sharp knee-jerk reaction that we used to see in the past. right now, ecb communication seems pretty effective. vonnie: are they or are they not delinking asset purchases? richard: i think they are less concerned about that. and we mightncern get a bit more knowledge of it shortly, is that we actually get some wage gains in the euro area. w

the week has not been equities so much as bonds significant move higher in yields especially in the long ende've seen a steepening of the curve in the last couple of days we did not quite hit 2.6% on the ten-year yesterday we reached 2.597 the rise in yields has since abated since the peaks of yesterday. 2.54 we stand at today significantly higher than friday's close >> look at the trading action from around the world. starting in asia a mixed picture in asia. mainland china did see equities turn in higher at the end of the session. the nikkei was down 0.3%, as was the cob p kospi was down a half percent. the shanghai logged some slight gains. bitcoin slipping more than 11% thursday after south korea said it was preparing a bill to ban all cryptocurrency trading that's a big mover overseas because of the biggest market in seoul if you look at what was moving in those markets, chipmakers were down along with automakers and manufacturers look at what was going on in europe marginally mixed to start out trade. you can see here we are ever so slightly higher for most of the major european indice

not think the flattening of the yield curve is telling us all that much because we think the long endhe curve is being depressed by levels around the world. if you look at the real funds rate, it is zero. that tells you monetary policy is accommodative. measures to look at. the yield curve is less reliable now, but we will continue to about therns raised flattening of the yield curve and the handle and the two-year is significant in that context. julie: do you think we see more on the 10-year was at a head fake? in the short mark we hit to the take for the lows in 2014. i think that 10-year is -- was hit earlier this week. we may get a bounce off from that. we think we are headed toward 350 on the 10-year, and that will reflect the realization if the fed does that four times a year. some of the competition from international yields begin to see the firstwe step in that guard from the in announcement of the ecb when they say their commitment to maintain until inflation reaches 2% they get reviewed. i did not think they were going to do that. they will end asset or just program until th

at some point the long end of the curve is competitive for the stock market. we're a long way from that and the economy is strong. i'm more concerned about the economy and jobs and the underpinnings of some of the stocks you just mentioned. charles: kyle, to that point, i would be shocked to see the fed step up as things are turning around. for instance, home ownership, first time it's gone up year over year since 2004. wages, this is the best wage number last quarter was the best wage increase since the great recession began. we're just now turning the corner and gaining momentum. would the fed be nuts to snuff that out? >> if the fed jumps in and raises rates, it's a mistake, we need to be careful how this process happens which. is why i think the notion of outline there would be three rate hikes throughout the year. i think the fed needs to look at this marketplace and inch its way in the right way. market is going the right way, be careful how quickly you raise interest rates. >> i guess the moral of the story, boys and girls, is buckle up. thank you, appre

where the dow was then think about where the dollar index was then look, here we are basically the long end, nowhere near the 260 market short end, of course, raised with the fed notion. i find it very fascinating you talk about almost an ill-conceived goldilocks tale. the long end is benefiting from policies i think were long overdue to come off,but the residual is we're building such a good cushion and the price of equities that when eventually rates do start to respond, next week we get inflation data, certainly we could get a market correction a market correction from 25,000 or 26,000 is a lot better than market correction from 18,000 or 19,000 where it was before the november 8th election. >> jeff, you know, we've been talking about the financials we're getting ready for the bank stocks next week to be reporting. you like them right now. how much do you like them? is it predicated, though, on the fed raising rates this year. >> well, i think the financials are really -- you can look at it from a couple different vantage points number one, is they're very, you know, on a relative basis

selling german, buying the southern economies long ends >> yeah, i don't think that people who do thatt's the ecb buying and especially last week was the classic case we know the ecb is supposed to be buying 30 billion a month of still a large scale asset purchases. last week they bought $10 billion euros because the first week was holiday week. so last week they bought more than would be typically the case so they're at $12 billion. they have $18 billion left to buy for the month. that drives the long end lower, especially for italy and spain >> yra, we're just about out of time do you think that the southern economy's rates are going to keep going down for the next several months, yes or no or kind of maybe? what do you think? >> no. and it's going to -- and that's the italian election that's going to be so very important. but what we don't know is if the ecb -- how much they're buying of each one. that's the unknown that we just don't have an idea >> all right yra, we're out of time thank you. i wish we could talk more on this carl, back to you >> all right rick, thank you. a lot mo

and we also expect some drift up at the long end of the yield curve to the 3% range from a little over so more of a parallel upward shift. whereas over the last year, it's really been the shortened going up, but the long end not doing much. >> has a couple weeks left more parlor games about john williams as vice chair who knows. where are you on that in terms of who is going to be? two questions, how do you expect powell to do early part of term? and who do you think is backup >> i think on mon tarry policy when we look at what powell has said, it's in line so we wouldn't expect major changes. we think he's on board with the media for three hikes. ultimately they'll add a hike, but looks like he's on board with that. who is going to get the other top jobs i don't know obviously there are a number of people under consideration but i don't know who it will be. >> sounds like this doesn't matter very much >> no, this does matter. these are important positions but we'll have to wait and see. >> a lot going on. thanks for rolling with the punishes of goldman sachs when we come back, adt ope

the long end of the curve has been flat.e seeing some upward lift on that, so we will see if that continues. at a starting point, higher interest rates should be good for financials. vonnie: should be interesting year for the banks. devin: absolutely. thanks, vonnie. vonnie: devin ryan joining us in the studio. mark: is this is $16 billion order enough to save the jet from a being discontinued? 20% todayairbus up by -- .8% today. this is bloomberg. ♪ mark: live from london, i'm mark barton. vonnie: in new york, i am a vonnie quinn. this is "bloomberg markets." time for the biggest business stories in the news right now. amazon has narrowed the field for hq2, the second headquarters, to 20 areas in the united states and canada. among the contenders, new york, boston, chicago, miami, and austin, texas. the project is expected to cost $5 billion and create 50,000 jobs. saudi aramco is ready for its ipo in the second half of this year, according to the ceo. he says the state-owned oil giant is looking at the possibility of listi

when we do our projections for where the long end of the bond market in germany goes, it's very difficulto get up to a high number if you think that inflation will remain low. irrespective of potential hikes to come. the more philosophical question around this, is 2% the right number historically, since 1999 to date, average core inflation has been below 1.2%, german inflation averaged 1%. so markets are doing nothing wrong in pricing the continuation of low inflation and ultimately central banks recognize we have had an inflation problem for quite some time and they will raise rates in any case. >> where do you see core fixed income and periphery bonds trading? >> we expect ten-year bunds to get to 75 basis points that's another 30 od bd basis point pick up. we expect tightening expectations to lead to the marketreasoning that inflation risk compression is also a trade. so we do expect break evens to drop in terms of then the periphery, there's tension with regards to the italian election in the short-term but ultimately we think it's a favorable back wind in terms of the growth profile