over here, this is the treasury department. men and women worked on the same machines renting money. down here is the government printing office, and here are ,omen working as stitchers stitching pages into books. in clerical positions, many of the tasks had been carved out for men's jobs. federal work at this time was not well structured. a man could come in and copy a letter for two hours, then tabulate accounts. when women came in, some supervisors carved off jobs that did not require training and gave them to women. copying was the main example. women would copy letters into ledgers, or any kind of copying work. for being charged with comparing the copy work of others. tasks that were given to women -- women developed this prized expertise, respected inside and outside of the government. these women are an example of that kind of job. notes, and ating the same time, looking for counterfeits. they became prize counters. the secretary of treasury recommended that these counters be compensated equally to mail workers, because t

the other element that bob brings up is how treasuries behave and of the risk mitigation of treasuries and whether that has diminished somewhat over the last three months. has it? i sat here and looked at equities getting smacked around and looked at the treasury looking stable and i thought, maybe the treasury market is trying to tell me something. maybe things aren't that bad and the equity story is wrong, but is it actually another story that treasuries are not the haven asset as they used to be? anupam: a little bit of shine as come up in treasuries cash looks more attractive as a risk-free asset. but i think the market correlations between equities and treasuries has gone back to the traditional norm. there's massive risk aversion taking place, and you run into still what is somewhat a safe haven, the treasury bet. and the fed- remains very focused on financial conditions, and so does the market. if financial conditions are tightened due to sharp equity volatility, you may have a slower fed. jonathan: george? bob: -- george: the bond markets behave pretty well here. uncertainty is

the treasury announcement on the same day.w, george, the more important thing on fed day, the treasury announcement. >> it happens in the early morning. and we will be teed up. if there is an increasing supply, and they have to continue to do so, that mmay weigh -- >> you look at the tax reform, and whether growth, tax receipts can offset that. we've got supply to digest. where is it going to come? at the front end of the curve? then it will have curve implications. jonathan: is that what you are looking at more specifically? >> partly, but i think the markets are looking at the front end paper, understanding what happens for long-term issuance are what markets are looking for. >> if we are right about the dollar strengthening, if you are a foreign investor, treasury yields look pretty juicy. tack on a stronger currency, and that's -- jonathan: what you make of the treasury issuance we will hear about next week? >> there is that expectation we have to fund the stimulus. i also think it is attractive to overseas investors, even

jonathan: kathleen, we have spent weeks talking about the risk-mitigation quality of treasuries and thebsence of treasuries over the last month. what has changed in the last week when the volatility came back up and the bid came back into treasuries. kathleen: the bid did come back. but when you look at the magnitude of the volatility, i would have expected a bigger rally. so i do think it speaks to the demand that is coming in temporarily. and i think we have to remain focused on the fundamentals. the data for the underlying economy is still positive. we are expecting a good jobs number. jonathan: yeah. kathleen: we have not seen wage group. things are really percolating underneath. jonathan: greg, i think this is a really good point that kathleen makes, and i thought the same thing a couple of weeks ago. i was quite surprised that treasuries only dropped lower by about 3-4 basis points on a 10-year yield. it was not so dramatic. why do you think that is? greg: positioning was such that everyone believes that rates are going to move higher. i think what has kind of reset the levels her

the 10 year. two-year treasuries, when you're treasuries, is where we are seeing the realtor pricing -- treasuriesis where we are seeing the real repricing. george: it hurts to see higher rates on the back end. for a long time people thought you would get an environment where the fed thought long-term rates would move. -- wouldn't move. it is good to see long-term rates going up. jonathan: bonnie, six month builds are where 10 year treasuries were in september. two-year notes are where 10 year treasuries were at the beginning of january. nie: the whole treasury curve has moved by 60 basis points year to date. what is the market pricing at? the market is in line with the fed this year, in terms of how many hikes the fed will do. giveneems reasonable, where the unemployment rate is and how growth is coming in. thatyou look farther out, is where it gets interesting. if you look at the five year yield, five-year sobered, the market is pricing in at 3.2%. if you compare that to the fed, their long run rate is two and 7/8. the market is more hawkish than the fed, which is what we have not seen in quite

are yielding what treasuries were in the beginning of january. >> the whole treasury move has moved 60 basis points today. you have to see what the market is pricing in. essentially this year the market is in line with defend -- in line with the fed. that seems reasonable given where the unemployment rate is. when you look further out, to see the market pricing in is where it that gets interesting. if you look at the five year yield five years forward, the market is pricing in close to 3.2%. when you look at the fed, their is where it gets interesting. moreet rate is hawkish. lookmakes the front end interesting for the first time in a long time. jonathan: let's talk about that divergence between what the fed and thein the long-term markets. what do you think between the two? george: i think the curve is telling us maybe the terminal rate of this tightening cycle is less than what the fed thinks right now. i think it is the rate of change. 10 year yields have had roughly 100 basis points move in six months. that is a pretty significant move. the markets have to focus on some adverse

the whole treasury market has moved by 50 basis points to date. u have to look at what the market is pricing in. what we are seeing for this year, the market is in line with the fed in terms of how many hikes the fed will do. that seems reasonable where it seems that the unemployment rate is, and how growth is coming in. when you look further out and what the market is pricing in for growth and inflation, that is where it gets interesting. if you look at the five-year yield five years forward, what the market is pricing in is close to 3.25%. you compare that to the fed, and their long run rate is 2.78. that, to me and us at western makes it look interesting for the first time in a long time. jonathan: let's talk about the diversions with what the fed expects in the long-term and where the market has it priced at. what do you make of that distinction? >> i look at what the curve is telling us. i think the curve is telling us how flat it is, maybe the terminal rates, the endpoint of the tightening cycle is less than maybe what the fed thinks right no

there is the supply, particularly in the treasury asset class. u are seeing the deficit moving up. the expectation is there will be more issuance. you are seeing less buying, with the balance sheets beginning to shrink. but we think the demand is somewhat limited because people are concerned about u.s. political behavior at the moment. the cause of greater geopolitical uncertainty and stable hold off anymore money back to the u.s. treasury markets. we think the demand will be there. as inflation continues to move up, it will bring people back to the treasury markets. jonathan: just to pick up on thething rachel said, is cbo is out this week, saying we could have a $1 trillion deficit, in 2020. say people i have spoken to this could be next year. is that weighing on treasuries as well? --ig: treasury yields want 2% last year. the rising debt isn't a new story. the markets are anticipatory. the rising yield was in anticipation of that, as well is what the fed is going to do with sheet.ance our rates have seen likely close to the highs for this year,

so the treasury bill supply has been overwhelming the market, to some extent.nd on top of that, you have got incentives from the tax reform that are encouraging money at the short end to be liquidated. so there is a lot of selling pressure that is going on at the short end that could continue to weigh on the market and push short rates higher. jonathan: greg, is that the reason you think the front end is broken? the dynamic above -- dynamic at the front and? greg: that is a big piece of it. you are seeing all sorts of huge issues with libor, bill issuance, other factors around tax policy, and there is really no bid. jonathan: jim? jim: i actually think -- there are opportunities to get high quality carry or ticket some income on the front end of the curve. we actually do like the bank loan market. there are more floating-rate instruments you can buy at this time. there are opportunities that you can buy, credit instruments globally, and hedge back the dollar. you can get a pretty nice carry associated with that. at a period of time when you are seeing a lot of

you end up with a flatter yield curve in the treasury market. ahead the final spread of , the week ahead featuring earnings from u.s. banks. that is coming up next. this is "bloomberg realyield." ♪ ♪ jonathan: i'm jonathan ferro. this is "bloomberg realyield." it's time for the final spread. coming up over the next week, earning season in the u.s. is picking up with bank of america, goldman sachs, and morgan stanley reporting. plus the president of the united , states will be meeting with prime minister of japan shinzo abe. bank of canada will make a rate decision. and we get the fed book as well. still with me, craig, rachel, and matt. just time for some final thoughts. rachel, i want to go to you. i want to reflect on the final quarter as quarterly earnings come through. what has changed in the last three months, if anything at all? despite all the volatility we have seen in equities and global politics? rachel: that is just it, i don't think a lot has changed, and yet , the market has gotten very flustered at a pickup in equity volatility. his

the havens at all. you don't see a proportional move from equity into treasuries the same way we did a year ago. am trying to get a better understanding as to why treasuries don't have the same risk aversion characteristics, that safe haven quality they used to. what has changed? >> we are seeing the correlations between stocks and the higher-quality bonds change. one of the reasons is we are getting more back to normal, more back to an inflation mindset. clearly, you are right. it does not feel risk-on, risk-off anymore. it feels as though things are moving in the same direction. that is causing problems for people. they are hedges aren't working. they may have too much leverage giving to volatility. -- their hedges aren't working. they may have too much leverage going to volatility. there is no quick answer, and i think it is going to take a couple quarters at the earliest to see which way this falls. i think the inflation answer is the strongest right now. rachel: we don't disagree, although we think the more bullish case is possibly around the corner, that there is some technical and fundamen

getting an outlook on the fed meeting and treasury yields. is is bloomberg. ♪ "daybreak asia." >> a big week when it comes to data earnings coming up. alibaba and apple reporting. will find out what we will see in the next couple of days, and also what is going on in the treasury. we have the inflation and jobs data coming out. -- treasury spending announcement and the apple decision on wednesday as well. ed is here to talk about all of this. of all of those events you are seeing here for the bond market, what is most important in terms of gauging what direction yields are going to go from here? in terms of expectations for core pc, they will get to about 2%. fed, i think the fed statement will remain largely unchanged at this point. it will be struggling with defining the extent to which the economy is overheating and evidence on that front remains quite mixed. the funding announcement will give us a lot of cues in terms of how much demand there is in the market. >> when it comes to supply issues, the treasury itself, they are kind of in a sw

weaking the currency, treasuries, that's a nuclear option i don't think we're anywhere near that, but the way things are going, it's not good and not good for markets very bad for emerging markets. any pressure on global trade, if you're in the emerging market, you're on the front line i'm nervous about e.m., despite my negative, somewhat negative dollar view. >> win, thank you. win thin joining us from the new york stock exchange. we want to check on the markets. right now, we're at session lows it appears the market is responding to what jay powell is saying in his prepared remarks his speech indicating he thinks the economy is still strong enough for rate hikes in a path the fed had already been on. the pay roll number earlier today threw into question whether or not the fed would be full steam ahead with its planned rate hikes, and the market took some comfort on the back of that, but here we are, we have the s&p down by 1.75%. the dow is down 500 points, two full percentage point drop, and nasdaq down by 1.7%. steven mnuchin, the treasury secretary, whom we just spoke t

jonathan: the other element that bob briggs up is how treasuries behave in the risk mitigation of treasuriesnd whether that has diminished somewhat over the last three months. has it? equities is getting smacked around and treasury is looking stable. ande things aren't that bad equity story does rock, but is it another story the bob's point? which one is it? anupam: a little bit of shine has come off the treasuries -- but i think the market correlations between equities and treasuries has gone back to the traditional norm. there's massive risk aversion taking place, and it is somewhat a safe haven. i think the fed remains focused on financial conditions, and so does the market. if financial conditions are tighten is of a sharp volatility, you may have historic bets. uncertainty is the new certainty. it hasn't bled into the fixed income markets, and i think it is smart and strong for the fixed income or fixed to look or strategic. jonathan: a lot of people in this market,'s docs can get as hard as a can for the week, and treasury yields will barely move because bob, you can weaken, the fed is

the treasury and the irs may end up settling the dispute. 100%.hen they cut it to 50%, everyone thought it was the end of the world. law firms are going to have a tough time. somehow, we survived. what this be likely to happen e likely ton't this b e happen again? sahil: i don't know that not being able to deduct 50% of the does it expenses is pulling them out of business. avid: earned their lobbyists in washington trying to get some favorable interpretation of the regulations? usel: they would try and every leverage to maximize their ability, their tax situation. i think restaurants do benefit a lot from wealthy businesses that splurge on expensive meals to try and impress possible clients. we will be hearing more about that from these lobbyists. lawyershat our tax telling these banks to do in the meantime -- are tax lawyers telling these things to do in the meantime? sahil: to be cautious. businesses want to be able to take clients out for expensive meals. they are being advised to recognize they may not be those.ely able to deduct we don't know

treasuries. the u.s. is so liquid and deep and there are few other places for china to put its money. you have others well versed in what happens in china warning that this was potentially something china may look at further down the line in any heated trade dispute if these trade tensions continue. you have the u.s. or chinese ambassador to the u.s. not ruling out looking at u.s. treasuries, so it is an does remain a concern, but for many it feels like a rest -- last resort move. treasury holdings picking up by $8.5 billion in february, china billion in.8 treasuries, making china the largest holder about japan, which comes in at number two bank. u.s. bulking up on treasuries as the u.s. is looking to sell more debt to cover the deficit as a result of tax cuts. betty: that's right. in tandem with this, the chinese currency has strengthened as it puzzling to hear president today calling china currency manipulator? of course he is going against what the u.s. treasury have said. they have not labeled china a

>> right now we're seeing a market really trading with the 10-year treasury. e consumer staples sell off when the 10-year treasury sells off. the story is the 10-year treasury right now. when you see volatility driven by interest rates, i think that creates opportunities for long-term trend like disruptive ideas we're talking about. liz: disruptive talking about robotics. ai, yes or no. >> absolutely. liz: artificial intelligence. thanks for joining us. jay jacobs, has billions under management. listen to that guy. [closing bell rings] we're tell red across big names and indexes. that does it for the "claman countdown" live from d.c. see you tomorrow from new york. david: stocks are slumping. the dow ending lower for the second straight day. closing down 81 points. we had been down nearly 200 earlier. so it improved. this is the first time we've seen back-to-back losses for the dow more than three weeks. s&p and nasdaq lower as well, snapping a three-day winning streak. hi, everybody, i'm david asman. melissa: i'm melissa francis. this is "after the bell." more

yieldss you the treasury . e spreads are at the lowest level since 2007, and for market watchers, some say that is a recession, raising if not a red , at least a flag yellow flag that recession is coming. what do you think? been a bond market participant since the beginning of my career, and i started my career as a bond trader. i have great respect for the bond market. it's the bond market predicting what i believe will occur, which i think the fed has been, i think, a bit reckless and cavalier in announcing what they hope to achieve, which is as eight rate increases over the next two years. ishink that the bond market extremely skeptical, and i think they believe that there will be a correction in pricing, that will causelundering a correction in economic vibrancy. think they are forecasting that in the way they are trading different parts of the yield curve. betty: where do you see the direction of quality going? we have seen toys "r" us, strapless when it comes to retail as well as the hotel sector. what doe

the ruble. >> it's counter to what we saw from a treasury report last week where china was not labeled a manipulator. >> that sounds like the president wishes the dollar -- >> no. that's not the case. it was a warning shot at china and russia about devaluation china has devalued their currency in the past as a matter of fact, up to 2016, they devalued it significantly starting in 2017 right after the president was elected, they've used a lot of their reserves to actually support the currency. so, you know, the president wants to make sure they don't change these plans and he's watching it. >> although the treasury report from a few days ago said that china recently has been actively trying to prop up its currency and not let it fall below those issues >> it's a warning shot to make sure that china doesn't devalue the currency as they have in the past >> you're not handicapping anything for me. can you handicap the likelihood that some of the most punitive tariffs actually go into effect? or does something happen to solve some of these issues before then? >> well, i'm not in the handicap business. >>

vonnie: what is your average duration in the treasury fund? is approximately 22 years. are very long, we have been there, and we think the trend in long-term interest rates -- although it will be very volatile over the next year -- the basic trend will be downward. the late nobel laureate give us a important proposition and saying that monetary deceleration -- although they beat to higher short-term interest rates over time, long-term yield falls. that is the view we are pursuing. shery: the offsetting income affect. lacy, always great to talk to you. coming up, as 2018 stock volatility, hasn't ended or are the fireworks ahead? this is bloomberg. ♪ abigail: it is time to chart futures worried that at the futures markets, and today we're turn to the question of where major stock markets alstom be ahead. think you for taking the time to join us. the last time we chatted we talked about in major stockmarket selloff, and since then you published what you are calling the most important chart of the year, so allow me to share this with our viewers. you can see this in the blo

the irs and the treasury department. in february the treasury department released a guidance plan which listed 18 items under the initial implementation of the tax cuts and jobs act. acting commissioner carter, can you provide the committee an update on how this process is going? whether there is a timeline for these provisions? when should we expect new information on these matters need guidance concerning deductions under section 1998. >> immediately upon enacting of the tax cuts jobs act we started to approach tax reform in the processed approach. we sought stakeholder input as part of the process. we've mapped out with mapped out all the forms that needed to be amended and updated and publications that need to be changed. will need to amend 450 tax forms and publications to implement the act. we expect to have new forms drafted and the end of april. most new instructions drafted by the end of may. the plan is to release the forms of instructions over the summer for taxpayers and tax advisors to review and comment on.

themnuchin: no, i think good news is the u.s. treasuryhe most liquid and robust market in the world. i won't comment on interest rates because i respect the independence of the press, but what i will say is that the market, the forward curve, expects interest rates to go up. it goes up and how fast, we will see if it is more or less in the market predict. part of the reason why was he interest rates going up is that we create economic growth. that is a good thing. onhave been focused targeting 3% sustained gdp. and part of the reason why just rates of backed up is because of that economic cover. stephanie: on bloomberg this morning, it was said that he had never seemed to demand and supply conditions in the treasury market with so much supply coming on. others running, down the balance sheet. mr. mnuchin: let's just say it is a robust market and the most liquid market in the world. is a lot of supply. stephanie: when we talk about the bumps in the road ahead, there has always been a lot of concern about how this more normal monetary polic

not say it's you the fed that bailed us out it's you the treasury and the department of justice that allowed us to get away with this they can't say that because why would they because they're just going to be like targeted the next go round the next crash as we're experiencing i want to keep. a very close a closer and closer really quickly i'll also tell you about another headline and this is the similar case in south korea and that south korean millennial is are reeling from the bitcoin bust the country of around fifty two million comprises seventeen percent of all the theory and trading it's one of the top crypto currency markets especially from last summer until the end of the year so a lot of koreans piled in to crypto currencies at the top but the thing this stood out about this article in the last minute here is one thing they say about americans and all these unemployed americans is that we don't have the right educated population we need to bring in these immigrants and people just have the right a qualifications maybe the economy would be better but this up it stood out to

is certainly not going to say anything to the treasury about the treasury or the fed because of course they want to make sure they get a jet get out of jail try to rationalize all the phony that they got receive for free to bail themselves out and the fact that it caused economic dislocation they're characterizing those rather obtuse long paragraphs long winded they are they are identifying a genuine situation which is the bottom are poor and the bottom cannot pay even their mobile home loans of course can they. and not say it's you the fed that bailed us out it's you the treasury and the department of justice that allowed us to get away with this they can't say that because why would they because they're just going to be like targeted the next go round the next crash as we're experiencing i want to keep. a very close a closer and closer really quickly i'll also tell you about another headline and this is the similar case in south korea and that south korean millennial is are reeling from the bitcoin bust the country of around fifty two million comprises seventeen percent of all the th

china is on the treasury department's watchlist. that is of course in the crosshairs, but not named a currency manipulator. russia is not on the list. what is also perplexing. he is naming out russia and china as using current the in an unacceptable way. the immediate reaction, the bloomberg dollar index slipped into his -- its lowest since march. weak dollar expectations will remain entrenched in the market as long as these contradictions or talking down the dollar from the president. yvonne: it the u.s. doing the currency to evaluating? in the end, we are seeing the renminbi. su: the renminbi -- stephen: the renminbi is up 10% versus the dollar. it's its highest since 2015 and march. the rebel, keep in mind, it has weakened quite a bit, 9% versus the dollar. much of that is due to u.s. sanctions against russia. betty: later tuesday in the u.s., trump will be meeting with the japanese prime minister, shinzo abe. tell us more about what is at date between the two. stephen: a lot is at stake for shinzo abe. he's under fire at home wit

there is some technical and fundamental headwinds, for particularly the treasury asset class. dare seeing more issuance the deficit moving up. the expectation is there will be more issuance. you have seen the balance sheet beginning to shrink. we think the demand is somewhat limited, because people are concerned about he was political behavior at the moment. .s. political behavior at the moment. if they are concerned about geopolitical uncertainty, they will hold off on the bond market. we think demand will be there, as inflation moves up, it will bring people back to the treasury market. jonathan: just to pick something up -- pick up on something s rachel said, the cbo saying we could reach a $1 trillion deficits. is that what is waiting on treasuries as well? on treasuries as you? >> i think markets are always somewhat anticipatory. the rising get is not necessarily -- debt is not necessarily a new story. rates is we likely have seen close to the highs this year. 295, maybe 3%. we don't see rates moving significantly higher into next year either. jonathan: where you on the fr

you have the treasury second, steven mnuchin, they want behind the scenes to keep this from escalating even further so while he's doing that, the president

the treasury yield curve is close to adverting. >> rates have gone up somewhat. is totally normal that the yield curve gets flatter. >> i'm not too worried about the flattening we have seen. it is an amount of it. if it is inverted that is a different story.

the treasury yield curve is closer to inverting. >> the flattening of the yield curve we see is so far normal part of the process. moments are gone up somewhat but it is totally normal that yield curves give flatter. >> i am not too worried about the flattening we have seen. it is a normal development. if it gets inverted, that is a different story. see this in the near time. >> let's not get carried away. it is not unusual, early in the tightening cycle to see a flattening because it rises faster than the long and. u.s.i'm looking at is the tenure really guilds by 30 basis points and they believe growth is going up and that is good news. >> the big message is stop freaking out. , this ise at the table the head of u.s. rate strategy. plus, coming to us from london steeley.aling -- ian worry?d we start to everybody seems to be so keen on dismissing the flattening yield curve. ian: it is interesting because when you typically do see is that this has led to. i think what we will see is a few months when we hang around his low levels of yield curves. belowt moves down toward zero. that doe

that's something the treasury department has criticized. ctual property, negotiation to continuing this week. all three countries could have a deal. intellectualkdoors property in the united states. about, you've got to talk culture and the energy secretary and commodities. what we have seen with soybeans and wheat as well, that hit home politically. the chinese event successful in getting the administration here. we are just a few months away from the midterms and many conservative senators are looking at this and scratching their heads and sending letters to the white house. dozens urged the president to reconsider that chinese bilateral trade talk which we know will have a lengthy comment time lasting several months. they area time that anxious about just a few months away from midterms. on the subject of urging, -- french president will do some of his own on the iran nuclear deal, hoping the president won't pull out of it. he have inge does this upcoming three-day trip? kevin: let's look at the dynamic between macron and trump. it was te

the 10 year. two-year treasuries, when you're treasuries, is where we are seeing the realtor pricing -- treasuries, is where we are seeing the real repricing. george: it hurts to see higher rates on the back end. for a long time people thought you would get an environment where the fed thought long-term rates would move. -- wouldn't move. it is good to see long-term rates going up. jonathan: bonnie, six month builds are where 10 year treasuries were in september. two-year notes are where 10 year treasuries were at the beginning

in the treasury market.e risk that as we see the refinancing of china >> one of the things that comes up quite a lot is the wedge between u.s. treasuries and ten year buns. many are pointing to the big spread differential. we had the ecb meeting last week and mr. draghi is pointing to the slightly more weakening pmi backdrops and not the growth that you're seeing will this hold somewhat or do you expect the 200 basis points wedge between the two to continue for a while >> a lot of good fundamental reasons for the spread to widen or stay wide or beat on the macro side or beat on the supply side having said this at 240 basis points just last week we have revised the widening u.s. treasury is on an unhedged basis. we should see some support and coming in. the treasury market versus bunz is seen more as mourgs. >> is there anything that you've heard, the timing for the first rate hike? >> i think the most interesting thing was what was not discussed at a monetary policy meeting, which is monetary policy this sug

issue.t's dwell on the the treasury issue. e debate now seems to have shifted to how high do we go? how quickly do we get there? i am wondering what dish as you venture into the ground, what you're hearing? mark: most people believe there is a lot of value in front in yields going higher. there is debate about whether curve will flatten. at the moment, ultimately, u.s. yields, once this moves stops, long and u.s. treasury still offers a lot of value. they still do that liquidity premium. overall, once the momentum stocks, you see people by the long and. buy the longest. legs.ollar bounces the long-term on the dollar bear. this bounce could go another percent higher. are -- how are people making money right now? mark: short dollar was working brilliantly of until the end of last week. that killed people a little bit. the macro community, fx and rates are the main micro players. fx has been tougher players. players.en tough for much itbeen burned too would is working is the rate plan. everyone has been on the u.s. rates play. guy

we have the minutes from the fed, are treasury yields going to move higher from here? e fed was clear that -- also confirming that trend is picking up. feds highly likely as the continues its pace of normalizing. does it mean for the 10 year yield? guest: we had some consolidation over the past few weeks given the risks on the trade tensions. clearly if it is -- if inflation , tended 20 basis points. nejra: you're looking at 3%. guest: that sounds reasonable. nejra: despite the volatility we had and the increasing risks around trade tensions and other geopolitical risks, you have a pro-risk stance, where are you allocating or advising to allocate within risk assets? we are keeping pro-growth tilting in our locations. we continue to believe that equities are the best ways to be at the current juncture. nejra: you closed your u.s. equity position. are you looking for an opportunity to get back in? have exposure to equities after the downdraft in february. that is looking at equities, in terms of the risks ahead of a the geopolitical risks, very difficult to price, you ref

we start with the big issue -- the treasury yield curve is closer to inverting. >> the flattening ofhe yield curve we see is so far a normal part of the process. the fed is raising interest rates, long rates have gone up somewhat, but it is totally normal that yield curves get flatter. >> i am not too worried about the flattening we have seen. it is a normal development. if it gets inverted, that is a different story. >> certainly, we are worried about the yield curve flattening, especially if it is a signal of future recessions. but we do not see this in the near term, because we see the synchronized global recovery. >> let's not get carried away. it is not unusual, early in the tightening cycle to see a flattening, simply because the front-end of the curve rises faster than the long end. what i'm looking at is the u.s. -- by 30 basis points and they believe growth is gearing up, which is good news. lisa: the big message is stop freaking out. joining me at the table, this is the head of u.s. rate strategy. plus, coming to us from london is ian steely, fixed income portfolio manager

stocks plunging after the ten-year treasury yields across 3% mark. points, finishing lower for a fifth day in a row and that wasn't even the low of the day. global markets taking a cue from u.s. this morning. european indices down across the board. cac down two thirds of a percent and the dax in germany down 200 points. that is my .5%. right across the board as well, down better than 1%. earnings of focus on wall street as well before the bell this morning its stock is down. twitter also this morning on pace come expecting a strong quarter due to rising at sales for the stock is down better than 3% going into those numbers. "after the bell," facebook reporting for the first time since the company's data scandal broke. why investors are watching this this afternoon trades.down a quarter of a percent right now. president trump hosting french president emmanuel macron for his first white house state dinner last night during a bilateral meeting earlier in the day. leaders spoke about everything from national security to getting tough on