the hsa from achieving its goal. treasury has conducted more than 0 on-site compliance reviews across this maiden hsa as well as targeted reviews. these reviews if i were a number of critical functions which is s the homeowners by valid in accordance with theuidelines. program dispersant and administrative expenditures on appropriate. the information reported to treasu is accurate and the hsas intro controls or function as intended minimize the risk of noncompliance. treasury takes break of actual instance of noncompliance arise. this includes requiring the hsas to read i would homeowners that were improperly denied, to reimburse for improper expenditures and to strengthen internal controls and/or to prevent further noncompliance. treasury also shares this committee and sigtarp's meant to preventing fraud waste and abuse in and all tarp programs and we consider the recommendations in that regard. treasury response to recommendations inviting. they are made available to the public. we were card to address concerns raised by th

the treasury has a responsibility here. and i don't like the idea of us having to have hearings like this and then coming back and trying to fix a problem that should never have occurred to art with. so, i just want to know, does the treasury take seriously its oversight responsibility to make sure that the people at the state level who are handling federal dollars, taxpayer dollars, are not abusing those dollars? >> ainly. actually are identifying many of the items that sigtarp has identified ourselves, through our work, and then we refer it to sigtarp for their review, but we're very focused on that, mr. chairman. >> well, tell me what action's been taken. has anybody been fired? has anybody been referred for investigation for, you kn, criminal issues? >> there are many cases where we have required the states to replace their management teams to make sure that, in the case of nevada, for instance. we worked with their hfa to ensure that proper accountability was occurring and that they -- >> he was forced to resign and pai

jonathan: allen, the other thing to look at is the treasury curve. always have the debate on this program, what does the shape of the treasury curve actually tell you? what does alan higgins say about that? everyone talks about it now. i think it was the atlanta fed president who said his job was to avoid an inversion year. we are getting flatter and flatter. part of it i think is the issuance you are seeing. maybe the u.s. can take a lesson of what we do in the u.k., our debt in the u.k. is long, probably too long. i can't understand why they are hitting the front end so much. that doesn't help with the flattening curve. jonathan: we could talk about what they should and shouldn't do. it is what they will and won't do, do you just assume the forces will continue pushing the front? would play the flattener. it is not that i'm comfortable having to do so, but i would point out that we have had two rate hikes this year, in march and a couple weeks ago. in march, the ten-year treasury was at 292. today, we are at 292. if the fed decides to move twice mo

we always have the debate on this program, what if the treasury -- what does the status of the treasury curve actually tell you? as we know, everyone talks about it now. i think it was the atlanta fed president who said his job was to avoid an inversion. we are getting flatter and flatter. -- ourf it, i think, is debt in the u.k. is long, probably too long. i can't understand why they are hitting the front end so much. that doesn't help with the flattening curve. jonathan: we could talk about what they should and shouldn't do. but what they will and won't do -- pushing the front end up? >> i would play the flattening. it is not that i'm comfortable having to do so, but i would point out that we have had two rate hikes this year, in march and a couple weeks ago. in march, the ten-year treasury was at 292. today, we are at 292. if the fed moves, i think it is inevitable that the curve inverts. the fed might be going gradually and slowly, but they might well have hiked another 100 basis points before the ecb thinks about interest rates. both front and boasting treasuries -- approaching 320

on the treasury side of it, massive amounts of treasury issuance. ude way ofretty capturing the transatlantic divide, the u.s. versus european economy. i guess there are not many better ways, comparing. ring trueg america for you, is that where people should be adding exposure to risk assets? for now u.s. high-yield has held it quite well, as i mentioned. european high-yield, we have been underweight this year, and we have been wrong for some time on european high-yield. tracks this week, as the widened versus italy, we took some of the protection off. away from italy, european fundamentals are still pretty healthy. u.s.,eing said, for the we are not jumping up and down about high-yield at these levels. , if thingsecognize were to get worse in europe, we could see spreads widen. right now it feels like we're still pretty insulated. jonathan: mary bowers is with me, alongside robert tipp, and bob miller. , we will get a check on markets. 2, 10, 30 yields. down just a basis point after the week we have had. still ahead on the program, the final spread.

that is why the ultimate change is quite muted. i will point out that treasuries are wide relative to the internals of the fed funds market. the fed funds swaps beyond the 10 year point are inverted. there only 2.5%, and the focus may change as the rate gets higher and people realize those expectations are inverting. jonathan: let's continue the conversation. coming up, the auction block. italy bringing some relief to markets following this week's meltdown. this is "bloomberg real yield." ♪ jonathan: this is "bloomberg real yield." i want to head to the auction block where italian bonds have gotten relief. the country sold 3.6 billion euros with an average yield substantially higher than last month. the nervousness around politics showed up across europe this week, including in poland, where they may scrap its only regular bond auction for june, leaving its calendar blank for the first time this year. in european corporate's, only 82 billion euros of bonds were sold across may, a decline of nearly 50% versus a year earlier. issuers brave to debt markets this week,

it's going back to the treasury. so that we will take a look at cuts to head start, maternal child health programs, child immunization, newborn screening, tell the whole story and with that i yield five minutes to the ranking member of the appropriations committee, mrs. lowey from new york. the speaker pro tempore: the gentlelady is recognized for five minutes. mrs. lowey: mr. speaker, it's outrageous that we are beginning this appropriations season by debating president trump's recisions bill which fails the american people, hurts children and families, injects needless partisanship into congress' important appropriations work. first and foremost, this bill fails the american people by eliminating funding for the children's health insurance program. just months after exploding nual deficits to the tune of $1.5 trillion and lavishing massive tax breaks to big corporations with their tax scam, republicans are now proposing to make children and families pay with a $7 billion cut from chip. . targeting chip for a resciss

this is the ohman bank contacting the u.s. treasury department saying we need your help. they were going to convert $ 5.7 billion into euros on behalf of iran because the real was paid to the u.s. dollar, the most efficient conversation was through ale u.s. bank -- through a u.s. bank using u.s. dollars. iran was adamant getting this done quickly. despite his public stance that it would not provide iran to u.s. financial systems and u.s. banks on february 24, 2016, ofac, this didn't ofasury agency, issued a specific license to bank moscat authorizing iranian assets worth approximately $5.7 to flow through the u.s. financial system. today i heard some say this specific license was just a narrow exemption, or just a minor fix. to that i directly -- direct you to an e-mail from a bank moscato official who said that the license was a gigantic breakthrough which has assured iran of almost fl global financial inclusion. end quote. doesn't sound like a eurofix to me. anyone who said that it didn't grant access to the u.s. financial system has not read the report from the bureau o

for instance, on on the 10 year, u.s. treasury versus the 10 year bond, it is 250 basis points.never been at that level. jonathan: that was bill gross. bob miller, if you are expecting that spread to narrow, and you want to do it by shorting bunds and going short u.s. treasuries, how do you do it? we have an incredibly distorted market. inflation south of 2%. can you short bunds? is it just a widow trade all over again? bob: you can short them for sure. whether you will reap a profit, is a very different question. i go back to their prior comment, to echo what you just said. german bunds do not trade at valuations that have anything to do with german economic fundamentals. the trajectory of growth or inflation, is a function of negative short-term interest rates set by the ecb, and overwhelming intervention through large-scale asset purchase programs. yes, there are running less now than they were a year ago and are expected to taper toward zero. our expectation is the ecb will have a very difficult time exiting large-scale asset purchase programs over the next three to six mont

it's going back to the treasury. so that we will take a look at cuts to head start, maternal child health programs, child immunization, newborn screening, tell the whole story and with that i yield five minutes to the ranking member of the appropriations committee, mrs. lowey from new york. the speaker pro tempore: the gentlelady is recognized for five minutes. mrs. lowey: mr. speaker, it's outrageous that we are beginning this appropriations season by debating president trump's recisions bill which fails the american people, hurts children and families, injects needless partisanship into congress' important appropriations work. first and foremost, this bill fails the american people by eliminating funding for the children's health insurance program. just months after exploding nual deficits to the tune of $1.5 trillion and lavishing massive tax breaks to big corporations with their tax scam, republicans are now proposing to make children and families pay with a $7 billion cut from chip. . targeting chip for a resciss

that spread will be under is facing a germany surplus, there is no supply and on the treasury side, aassive amount of issuance. jonathan: it is a pretty crude way of capturing the transatlantic divide. but there are not many better ways to do it then comparing bunds to treasuries. does by america bring trail at the moment? is that where people should adding exposure? mary: for now, yes. european high-yield has been under this year and we have been under -- we have been wrong for some time. it did widenweek, on italy. we took some of that protection europeanse fundamentals still look healthy. jumpingu.s., we are not up and down about high-yield and we recognize that if things were to get worse in europe, he could see spreads widen but for now, we feel insulated. ,onathan: sticking with me mary, robert, bob. next up, where bonds have been this week. believe it or not, after the week we have had down just one basis point. on the program, the final spread. the week ahead as trade tensions spread. this is bloomberg really ill. -- "bloomberg real yield". ♪ ♪ this is "bloomberg real yield."

across the bond curve in treasury, yields up three basis points on a 30 year. week if you take the last five days together. that is the story in the bond market. still ahead, the final spread. the weekend, featuring decisions from the fed, ecb and boj, the three big ones. we will discuss them. this is "bloomberg real yield." ♪ ♪ jonathan: i'm jonathan ferro. this is "bloomberg real yield." it is time for the final spread. over the next week, a trio of central bank decisions by the fed, ecb, and bank of japan out with announcements, a ton of economic data as well, including u.s. cpi and retail sales. plus, the trump-kim summit in singapore. the president set to publish a final list of targets on chinese imports. unbelievable week ahead that we have coming up. with me around the table, andy chorlton, kathy jones, and jay berry. is international diplomacy a risk for the global bond market? is that something you even have to think about over the next week? kathy: we have had a few surprises recently when it comes to the international diplomacy. obviously, the big t

i have worked at the treasury university,t a worked at a startup at the dawn of the great recession, worked in the white house to and that recession, spent four years at facebook, and the last three as coo of instagram. married with two amazing boys who teach me and my husband more than we could ever teach them. adventures,of these in government, business, and life, every lesson i have learned can be summed up in two words. you really could recite standing on one foot. maybe even tonight after you celebrate too much. two simple words. kind."the rest is commentary. region --n amazing important reason to talk about this topic today. au are entering the world at time when cruelty seems to be on the rise. headlines in the news are filled with talk of dictators, thoughts and bullies, name-calling and nastiness, which makes for challenging conversations between me and my two boys at the dinner table. i believe you can change that. in your workplaces and in the world. showsod news is, research that companies and careers that are built on kindness are more successful by every definition. kin

but the big story for us is on the blind side, short treasuries are decent value. at stretch for crossover investors, you don't need to stretch as much to make 2.5% on the two-year treasury. jonathan: that is a good point. elsewhere. you have treasuries more competing for capital elsewhere and a more attractive yield. that attraction to u.s. assets and competition for capital from elsewhere, is e.m. a loser or can they still do well? jay: we have gone neutral on e.m. it is the tension which will make returns more challenging. the u.s. is going to continue to look more attractive, if we are right and get three more hikes, we will get two-year yields over 3%. jonathan: kathy, yield up a 3% in the united states on a front end of a two year yield. if i say 3% on a two-year, do you say inversion? kathy: i think we get close to it. i think two more hikes this year is probably more realistic than three. we are seeing global growth, it's going to turnover, i don't see the impetus for that last rate hike at the end of the year. we are getting close to the neutral rate. we ha

which would be something new i think michelle asked the treasury secretary about that and confirmed that know there are partnerships in the interest of national security the market likes it. it's not the worst possible in terms of confrontation. >> no, it's the existing tool that is used to be expanded for that use and what many people say should have been the chosen road as opposed to a separate plan for dealing with the investments does it take the pressure off on other fronts are we not going to see some tweet that indicates, well, we're going to ratchet things up july 6th is fast approaching only $34 million in tariffs going into places on chinese goods. but does this mean that's it you know, it would seem based on history who knows what tomorrow will bring it's certainly a sigh of relief. >> right mnuchin made a few other headlines. said it's unfortunate that the market had to deal with mixed messages in some of the trade stance no comment on where talks with china are right now. but he's always willing to listen any proposals and said he expects a big q 2 he did reference atlanta f

what will these new rules look like from the treasury department. ly when it comes on the heels of an m&a getting approved. week, that start off a wave of optimism that we would have further m&a in the communications sector. that is very related to tech. story,trade relationship it's not making the markets happy, particularly during earnings season. the market has a good guide, outside of earning season, there is a policy risk. all three of them have proven to the problematic this year. caroline: talk to us about where you are expecting the news to carry on. where do you see most exposed? stockn: i'm not a single sector analyst. seeni would say is we have a definitive change in the nature of price. it's very interesting. this is going to sound like a very banal observation. one of the reason the stock market is going down is most stocks are going down. changeally is quite a from the price action of the last few weeks. when we look at the average correlation, it was close to zero short run basis. last thursday, that was much more like a price action w

this afternoon, the u.s. treasury selling $36 billion in five-year notes. alix: time for bloomberg first word. i want to kick it off with the first topic. what is happening in china? we are over 6.5 to the dollar. are we looking at the yen the valuation and it rocked local market spirit what are trader saying about this now? >> there is worried, but people appreciate to key things have changed relative to that time when we had a lot of depreciation. markets are prepared for the idea the yuan will weaken. if you look at ford points, there is an expectation of declines. we are getting to that point, so deflation could oriole it. one thing corporate -20 16 is it so15 i had a lot of asset liability mismatches, so the economic damage from a depreciating yuan is not as big as it was back then. alix: i feel like we were confused on why we are seeing this right now. a lot of individuals target the conversation is changing the fundamentals of its economy. >> china has been trying to move from the old economy to the new economy and technology. for 2025heir big plan is

we're coming to you live from the treasury department. rsary of the tax cuts and jobs act being signed into law. it's had a huge impact on the economy, on business, on citizens nationwide. joining us right now is congressman kevin brady of texas. it's great to see you. you've got to be taking a victory lap right here. this has been one of the biggest accomplishments of yours, the president's. what are your reflections? >> look, every indicator is significantly better. i think the major change as a country, we've gone in six months from asking where are the jobs to where are the workers. and that is a problem but a great problem to have for a country that's trying to get -- been trying to get out of second gear for a decade. now we are and we can build off the momentum of tax reform. maria: it's true, james. we just saw the numbers, 7 million openings in terms of jobs right now and you don't have the people to fill those roles. james: we've been seeing so much lately about illegal immigration. a lot of controversy on the border. but what ab

one is the front end of the treasury curve. incremental 75 basis points of tightening priced into the front end of the curve. you have a margin and the fed may meet that expectation, it may not. it probably will. nonetheless, it is priced for it. you have a modest margin of safety. another is hard currency em. this stuff is down a lot. arguably, there is a margin of safety there that the hard currency spreads are above the high-yield spreads in the u.s. that is a very unusual relationship. it strikes me that there is value there. it is also in the crosshairs of trade worse, u.s. tightening financial conditions. there are challenges, but it is priced to some degree for the challenges. relative to a bunch of other asset classes that really don't have meaningful margins of safety. jonathan: let's talk about emerging markets. i'm not sure we have seen capitulation yet. some leaning people come on the program and are -- summary people come on the program and are still bullish on emerging markets. where do you stand on things in the

philip hammond has insisted that the treasury is not the enemy of brexit. in his speech last night he said he was focused on boosting prosperity by promoting ties with the eu after britain leaves. he also confirmed that taxes will have to go up to boost spending on the nhs. how's this for starting your day? people all over the world have been marking international yoga day. the event which is recognised by the united nations began in 2014 with the aim of fostering peace and understanding, with millions meditating on different continents. let's ta ke let's take a look. do you do yoga? never done it. i have never bought into it. these quys i have never bought into it. these guysin i have never bought into it. these guys in times square are doing it. isn't that just having guys in times square are doing it. isn't thatjust having a lie down? no, it is all about structuring. the

but the big story for us is on the blind side, short treasuries are decent value now. that stretch for crossover investors we talked about in the earlier segment, you don't need to stretch as much to make 2.5% on the two-year treasury. jonathan: that is a good point. you have attacked on two fronts and emi now. you have cash as an asset class -- in e.m. right now. you have cash as an asset class in the united states competing elsewhere. you have treasuries more competing for capital elsewhere and a more attractive yield. that attraction to u.s. assets and that competition for capital from elsewhere, is e.m. a loser or can e.m. still do well here? jay: we have gone neutral on e.m. and we think this downdraft in growth is set to slow in second half of the year. but it is the tension which will make returns more challenging. the u.s. is going to continue to look more attractive over the rest of the year. if we are right and get three more hikes, we will get two-year yields over 3%. jonathan: kathy, in the united states, yields are up by 3% in the united states on a front

i will tell you this we're taking a bite on the dollar index in the treasuries every day. don't see it show up very much, but we really do need to be prepared as one of the guests said, if restart to see bund yields under 30 basis points, that's a test for treasuries, which, for the most part, every day this month have settled 289 to 298 >> if we see tightening elsewhere, what's the effect on equities and u.s. in particular? >> could be somewhat restricted, but to rick's point is the shanghai market is at a two and a half year low, and there's this theory out there that china really can't afford to get into a trade war with us, and they know that, we know that because they are clearly the surplus country, and if they were to escalate to a full trade war, which i don't know if anyone has correctly defined yet, china's not going to win that. as much as people make fun of trump saying it's easier to win a trade war, it is easier if you are the -- if you run a trade deficit. >> let me ask this how many swing voters does president xi face in guangdong province none >> they woul

do you believe the secretary of the treasury and what does this mean? >> i don't think we're going to pull out of the wto organization. i thought we ought to back pedal on this as fast as we can and continue on free trade. free trade is something that's making the united states very rich along with other things. we have to remember something about the u.s. which is different from france ore germany or the united kingdom or japan. we don't depend on trade for the enormous part of our growth domestic product. those countries do. we can get along without as much trade as they do. why cut off or nose to smite our face. why cut down on trade. the amounts that we're talking about here are trivial compared to the size of the u.s. economy. it's a way of thumbing or nose at our enemies. we don't need it. and we're not the stupid country. we've never been the stupid country except maybe leading up to world war iu. but we've never been the stupid country and i don't like the idea of saying and implying that our nations' leaders are corrupt and behind the eight ball

the moves that occur. jonathan: if this can happen in treasury, it can happen anywhere. what are you worried about when you look across the world and the fixed income universe? kathy: now that em is starting to react, we are less worried about it because it is during the price and -- price in. i am worried about the domestic investment grade and high-yield. the reason is, the deterioration in credit quality, especially in investment grade, we have half the universe is triple b and even the single a category is looking less robust these days. i am worried about that. markets are not priced very well for it. jonathan: how you convince people there is a concern there where the macro banks so solid the g7united states when is going to take place over the weekend and everyone is talking about the g6 and plus one. the plus one is the outperform or -- outperformer. they are alone because they are better than the other six. how do you convince people there is a concern when there is no problem with the economy in the united states? kathy: that's the reason we are neutral. they a

the interesting move over the last 48 hours came from the treasury market. 10 year yield and the blitz that happened late afternoon, treasury yields dropped nine basis points, and then recovered some, but now, we are all five basis points. bellore on that is lindsay , an investment strategist. good to see you. >> good to be here. alix: we worked 20,000 years ago. yesterday, what you understand that happened to treasury markets? interestingwas an look at treasury markets. it is been up and down in the treasury and stock markets. there is a lot of anxiety out there right now. if you are one of those types of investors that is anxious, you have to be in some safe havens to ease your fears, but we ultimately think the stock market will continue to go higher as a year proceeds. alix: how do you hedge? many say it is not the time to buy yet. there is a lot of short positions in the vix. how do go about doing that? lindsey: that is a very good question and one that a lot of investors have grappled with recently. your typical high yield inspectors have not done well

let's look at the gmm and the treasury's story. this is where the u.s. 10 year is, a two-day chart. we continue to be roughly 2.91. we are watching what is

it was housed on the third floor of treasury, almost all of the staff were treasury department lawyers, and 35-year-old assistant secretary -- assistant to the secretary john paley served as the director. so for the first time in january 1944, the united states has an official policy about the holocaust. by the end of the war in europe 17 months later, they had saved tens of thousands of lives. rescue board is the first non-self-published book about the refugee board, who they were, what they did, how they did it. this seems really strange given the tens of thousands of books that are published about world war ii and the thousands of books about the holocaust published every year. and for the decade i was writing the book, i kept expecting someone to come behind me and get there first. the three self-published books have all come out in the last five year, and they're all kind of relying on similar older psychological hardship; why we watched the abandonment of the jews while six million of them died. many of them play this elaborate game of historian telephone where one person will ci

goods, even using the yuan and treasury holdings as a trade weapon. still have some letters to paul here -- levers to pull here? jude: we have to look at it realistically so it doesn't shoot itself in the foot. treasuries is a choice. that's not u.s. specific. that's just a measure to buffer some of the costs of the u.s.-china trade war. you can turn to qualitative measures. china has to be quite careful about which ones it uses. it uses china at the same time that it's talking about qualitative measures, also careful to talk about how china is still open for business, the investment environment is still robust, and foreign companies are still welcome there. the broadase that strategic plans that china has, 2020ding made in china five, cannot exist if china really shuts down investment flows in and out of china, so to that extent, i think they are limited to what they can do. yvonne: you mentioned in your notes that you think made in must be a strategic disaster for beijing right now. what do you think china got wrong when it comes to the u.s. strateg

that does not make the treasury on my watch the enemy of brexit.ion of prosperity for the british people. 0utside makes it a champion of prosperity for the british people. outside the eu, but working and trading closely with it. now, it was only a year ago the conservatives were promising to cut taxes in their election ma nifesto. cut taxes in their election manifesto. my worry is, at the same time he is giving away taxes, tax cuts to corporations, but may well be increasing taxes on lowest and middle earners. now, we all agree the nhs needs more funding, but any tax increases have to be fair. this will be the battleground, funding the health service and the best way to raise money to do that. the chancellor made clear the night he wa nts to chancellor made clear the night he wants to stick to promises not to borrow more. it does seem clear that the only way that you can afford higher spending for the nhs is either through increased tax reve nu es either through increased tax revenues 01’ either through increased tax revenues or by raising borrowin

exports to china the new measures could be announced by the end of the week apparently it's expected the treasuryecretary will issue a report that wouldn't be administrating these new rules in other cases commerce and the national security council. >> yeah. already has an important voice on the same issues and we should point out chinese investment into the u.s. has slowed dramatically over the last year. and you only need to look as far as call -- qualcomm, a story i followed everyone is trying to understand are are tensions moving higher and what are the ramifications >> it's an escalation and we're seeing the ramifications the harley davidson filing they put out was stunning in is a company that president trump looked at to complain about tariffs in places like india making it hard guess what harley davidson saying this morning unwillingly it will have to ship some of the production internationally. specifically in europe because it cannot cope with the tariffs that the europeans are putting on harley davidson if it wants to sell to european customers, it has to move its production talk about

it's going back to the treasury. so that we will take a look at cuts to head start, maternal child health programs, child immunization, newborn screening, tell the whole story and with that i yield five minutes to the ranking member of the appropriations committee, mrs. lowey from new york. the speaker pro tempore: the ntlelady is recnized for five minutes. mrs. lowey: mr. spear, it's outrageous that we are beginning this appropriations season by debating president trump's recisions bill which fails the american people, hurts children and families, injects needless partisanship into congress' important appropriations work. first and foremost, this bill fails the american people by eliminating funding for the children's health insurance program. just months after exploding nual deficits to the tune of $1.5 trillion and lavishing massive tax breaks to big corporations with their tax scam, republicans are now proposing to make children and families pay with a $7 billion cut from chip. . targeting chip for a rescission, p

i think that partly underlies the negotiations that have been going on between the treasury and the departmentut this. they are worried first because this. they are worried first because this in itself is a lot of money, when they have commitments to reduce borrowings and when they are very certain about where the economy is going to be. the treasury is worried about this but you are right, they are also worried because if health is going to get this kind of money 01’ is going to get this kind of money or education and the home office and everybody else is going to come asking, because they, the home 0ffice asking, because they, the home office and local government have had a much tougher time than the nhs over the last eight years and they will perfectly reasonably say, if the nhs gets this, what about us? does that signalled the end of austerity in your mind? well, if everything else... if they do get this kind of increase, then yes, actually. i haven't given that a nswer actually. i haven't given that answer the board had that kind of question because when we have had the sort of announceme