coming up, the auction block. u.s. treasuryoosting long-term debt sales to the highest level since 2010. that conversation is next. this is "bloomberg real yield." ♪ jonathan: i am jonathan ferro. this is "bloomberg real yield." i want to head to the auction block now, where we start in japan amid a volatile week. a 10-year debt auction saw a anderage bid to cover ratio pricing that was weak. the difference widens to the most in two years. elsewhere over in europe, daimler injected life into the region for the sleepy primary bond market with a 3 billion euro deal a week after reporting sales that missed the lowest estimates. it tighten prices across the three branches by as much as 17 basis points. and finally, here in the united states, the treasury said it will raise long-term debt issuance to $78 billion this quarter. it is also launching the third -- a new two-month bill. it is the third consecutive quarterly increase. with me to discuss here in new york is mary bowers from hsbc global asset management, krishna i ofy from -

coming up, the auction block. u.s. treasurysting long-term debt sales to the highest level since 2010. that conversation is next. this is "real yield." ♪ ♪ jonathan: i am jonathan ferro. this is "real yield." i want to head to the auction block. japan amid a volatile week. a 10-year debt auction saw a pricing that was weak. the difference widens to the most in two years. in europe, daimler injected life into the region's bond market with a 3 billion euro deal a week after reporting sales that missed estimates. it tighten prices across the three tranches by as much as 17 basis points. in the united states, the treasury said it will raise long-term debt issuance to $78 billion this quarter. it is also launching the third consecutive quarterly increase. still with me is mary bowers, krishna memani and bryce doty. we caught up with scott minor at guggenheim. take a listen to what he has to say about treasury refunding and what it meant for crowding out other assets. >> i think we are getting to the point where we are getting a crow

a good first of all the treasury short is far larger. the dollar long as the longest in a year, but it has been longer before. this treasuries position is worse than anything seen before. normally a dollar long in a treasury short are two positions that are coherent. if you imagine that if you're going to get a big dollar move upward, that would imply there is going to be a flow down in exports. it also implies disinflationary pressure. it is the opposite view to the treasury short. with both positions in extreme, it is likely one is going to be squeezed. our view tends to be it is more likely treasuries will be squeezed more painfully than the dollar view. have been talking about the possibility of an inverted curve for a very long time. i am presuming the bulk of the squeeze would come around the 10 year point. could this be the thing that finally inverts the curve? if we get a massive squeeze, what it need help? help and itld need could be the trigger for an inversion, but i do not think we are there yet. i think we're going to get the

back up the accusations that are justifying these new sanctions and economic attacks meanwhile the u.s. treasury house frozen millions of dollars worth of russian assets or washington correspondents america has more samir it's getting harder to keep up with the rate of sanctions washington's imposing what do we know about this latest statement from the treasury well the treasury department did explain it all and its statement saying that these efforts have been taken in order to counter russia's efforts to challenge the u.s. and its allies listing a few examples including the occupation of crimea subverting western democracy its neighboring the assad regime just to name a few now in the statement to the treasury department also reiterated how well they're saying they go away saying quote the treasury's russia sanctions program is among our most effective and impactful since january twenty seventh this administration has sanctioned two hundred seventeen russian related individuals and entities for a broad range of activities check out what else was the bread and brazenness of russia's malign cond

jonathan: the treasury has not had a problem coming to market. other dynamic is the competition for capital. a lot of people come on this program and say, we have a real competition for capital now. does 2% really get it done? mary: if you think about the cash,ion rate and holding it is not unattractive to hold to your treasuries versus parts of the market. if you are going to try to earn an income and earn something off your investment, he probably still need to try to reinvest at a higher rate than that. lothna: 2% does not sound a but you are not investing in treasuries to get rich. 3%is not high relative to for locking in your money for 10 years, is meaningfully higher. the flatness of the curve certainly gets people attracted to the front end of the market. jonathan: a lot of people want to be in a highly liquid security, freddie to allocate capital when things turn over. i have been hearing that argument for a long, long time. things are not turning over. high-yield credit look strong. looking at a load of funds being raised to allocate capi

now go back to our top story as promised as the us treasury says it has frozen millions of dollars worth of russian assets and we now will go live to daniel mcadams the executive director at the ron paul peace institute thank you for joining us now as i was saying earlier where is the limit here how far do you think washington and its western partners will go to put pressure on russia. well i think it's right now the only tool in washington's toolbox and i think it however irritating it might be to the europeans the question the questions actions are much stronger than words the europeans aren't happy but will they go along with that there's a continuing to go along what's amazing about these new sanctions the that were announced by the undersecretary of the treasury is they sound identical to the obama hillary clinton foreign policy so the question is the president trump was elected on a different foreign policy why do the people who are working for him pursue an absolutely opposite foreign policy is completely perplexing and another wave of sanctions that are due to kick in in november

up the accusations that are justifying these new sanctions and economic attacks now meanwhile the u.s. treasury has frozen millions of dollars worth of russian assets or washington correspondents america has more on that so it's getting harder to keep up with the rate of sanctions washington's imposing what do we know about this latest statement from the treasury well the treasury department did explain it all in its statement saying that these efforts have been taken in order to counter russia's efforts to challenge the u.s. and its allies listing a few examples including the occupation of crimea subverting western democracy its neighboring the assad regime just to name a few now in the statement to the treasury department also reiterated how well they're saying go away saying quote the treasury's russia sanctions program is among our most effective and impactful since january. twenty seventeen this administration has sanctioned two hundred seventeen russian related individuals and entities for a broad range of activities check out what else with the bread and brazenness of russia's malign con

the treasuries. versus the and right now. spread to u.s. treasuries have been wider since 2016 where we had a real concern in china. emerging markets. does that differential. add up to you? back to the strength of the dollar. as creating this differential. why are treasuries more attractive today than they were three months ago? the dollar is stronger. that is there is elitist in the economy. been a flipside. emerging markets are weaker because of the strength of the dollar. those dollar-denominated assets is cautioning you more. the benefit for the spread differential favors the treasuries more than all year long. >> it is an important variable right now. >> i think taking it one step deeper is funding conditions around it. what the fed is doing with their balance sheet, people want to focus on being very technical. liquidity is going to continue to pick up pace. this funding aspect dollar, you are not seeing it the way it should be. taxly because of the reform. we have had a lot of dollars coming back home to the u.s.. they are finding a p

back up the accusations that are justifying these new sanctions and economic attacks meanwhile the u.s. treasury has frozen millions of dollars worth of russian assets or washington correspondents america has more samir it's getting harder to keep up with the rate of sanctions washington's imposing what do we know about this latest statement from the treasury well the treasury department did explain it all and its statement saying that these efforts have been taken in order to counter russia's efforts to challenge the u.s. and its allies listing a few examples including the occupation of crimea subverting western democracy its neighboring the assad regime just to name a few now in the statement to the treasury department also reiterated how well they're saying that they go away saying quote the treasury's russia sanctions program is among our most effective and impactful since january twenty seventh team this administration has sanctioned two hundred seventeen russian related individuals and entities for a broad range of activities check out what else was the bread and brazenness of russia's mal

the treasury imposed sanctions. the treasury imposed sanctions on companies and individuals. and new laws were passed by congress. the visa restrictions laws as well as the renewal of the iran sanctions act. all of these were in violation of the nuclear deal. in fa ct, violation of the nuclear deal. in fact, iranians, despite the fact they signed on to the agreement, weren't able to send money out of the banks nor bring in money.

the risk of treasury yields going up. part of it may be supplied. lot of it has to do with the fact that u.s. economy is doing much better. it may go up. longer-term, the structural issues that we have faith in the past, we still face them today. jonathan: i was speaking to blackrock to get their view. the idea that they put forward to me is the treasury, the issuance, we might be reaching the point of exhaustion where you can only stomach so much. do you think we are close to that point? getting there.re this next week, the fed will be participating in the auction. buyingey will only be $10 billion of investment off their balance sheet. versus 18 billion in the product -- previous time we have three tens in 30 years. the next two months, the fed will be buying zero treasuries in the auctions. that is going to add some more pressure. the market is going to start choking on that volume. i think what could solve that issue is if the fed was not paying such a high rate on interest and excess reserves. the key bill rate stays just below the 1.95% that ba

it was nominally headed by the sectors of wars, state and treasury but was housed on the third floor treasury with almost all the staff were treasury department lawyers and 35 -year-old assistant secretaries john served as the war refugee board director. for the first time in january 1944 the united states as an official policy about the holocaust and by the end of the war in europe, 17 months later, they saved thousands of whites. rescue board is the first non- self published book about the war refugee board. who they were, what they did, they did. this seems strange given the tens of thousands of books that are published about world war ii and the thousands about the holocaust that are published every year and for the decades that i was writing the book i expected someone to come behind me and get their first and the self published books have all come out last five years and they are relying on similar, older scholarships of why we watched the abandonment of the jews while 6 million died in many of these books tear at each other or play the selected game of hidden stories and teleph

the treasury's brexit panic music and along the trusts the treasury forecast which is why george osborneing out. we only have until march for any deal between britain and the eu to be agreed and those making the decisions on both sides of that debate really have to get on with it if the risks, as the treasury puts it ofa no if the risks, as the treasury puts it of a no deal, is to be averted. —— the risk. the headlines on bbc news. scotland's former first minister, alex salmond, strongly rejects allegations of sexual misconduct, dating back to his time in office, and says he'll take the scottish government to court over its handling of the allegations a postmortem is to be carried out on the bodies of a british couple who died in egypt while staying at a hotel in the red sea resort of hurghada. a new prime minister in australia. scott morrison is sworn into office just hours after his predecessor was forced out. sport now. that afternoon to you. the iconic spa in belgium is the iconic menu for the formula 1 return. it is where mercedes usually does well. sebastian vettel is showing his d

>> there was a report yesterday saying that potentially the treasury had asked mark carney to stay onor another year. already extended his tenure by one year after the brexit vote happens. the treasury denied they had asked him but is not a huge surprise they would because he would be able to provide some stability and a government that is very tumultuous. we do not know if theresa may will be in power in six months, one year, and she would take her chancellor with her if she left. taylor: thank you. depending brexit deal we never seem to get to the come into my terminal at the tv , it allows you to rouse right -- recent charts and features. this one is about rate headwinds. pending home sales weaker than expected. u.s. homebuyers are turned off by higher rates. this is bloomberg. ♪ york, i ame from new taylor riggs. romaine: i am romaine bostick and this is the european close on bloomberg markets. laborke with the french minister outside of paris and the unemployment rate policies of their president. law will have -- the first impact of an inclusive policy for the most vulnerable

and effectively the u.s. treasury department saying. if left in a particular term for a bunch of money going back to china. it's which the u.s. government pays interest. with the fed did his decided to conjure the money in order to buy these bonds that they are were supposed to sell elsewhere so the treasury department creates debt for basically no reason which goes to the banks because they are the brokers that are supposed to use it for the rest of the world and investors and it goes back to which they pay interest to the banks. if you cancel all of that out, you save a few trillion dollars but that isn't what happened. it didn't happen throughout the world and this is one of the reasons i talk about the term collusion not any sort of russian voting sense but in terms of an actual effort between the fed and central banks of the world to have this process work in such a way that the major banks of the world can all benefit from having the money rendered cheap and having these subsidies and central banks create becaus

the spread to u.s. treasuriesi think they are the we had ance early 2016 real concern in china and emerging markets. does that differential between emerging markets and the united states added up to you? >> i have to go back to the strength of the dollar. why are treasuries more attractive today than they were three months ago -- because the dollar is stronger. not because there is a weakness thehe economy or there is flipside of this, emerging markets are weakening because of the strength of the dollar. what you are lending is costing you more. the benefits for the spread differential favors the treasury. jon: the strength of the u.s. dollar and what happens with it? >> the funding conditions around it takes it one step deeper. what the fed is doing with their balance sheet, people do not like to focus on it. but the draining of liquidity is going to pick up. you are not seeing it really the way it should be partly because of the tax reform. we have had a lot of dollars coming back to the u.s. they are finding go

as the u.s. treasury hints at tougher measures for moscow's quote maligned activity we can bring even more economic pain to be are we will not hesitate to do so if its conduct does not demonstrably and significantly change. also this hour microsoft claims russian hackers are out it again by targeting u.s. senate and conservative think tanks and all listing the suppose that culprits the tech giant used to claim to push its own products. and as the syrian army gears up to retake the militant held play both western media outlets warn of a civilian massacre the same outlets though fail to mention the area is under the control of jihad as groups accused of war crimes. a warm welcome to the program from all of us here at r t h q and moscow thanks for joining us for a live news update this hour sanctions is definitely the buzz word in washington this tuesday with yet more calls to tighten restrictions against russia over a series of issues for which moscow is being blamed i got more details earlier from our corr

the u.s that's crazy it's insane. a country with very real risk where u.s. treasuriesically the safest investments, well, that's why we call them risk-free, right because they're so darn safe in short, our bonds give foreign investors much more bang for their buck, and that's been leading to a flight quality. and when you add all this stuff together, would it be really so crazy for the yield on the ten-year to work this back towards, say, 2% where we were just last summer finally, why don't we look at the weekly chart of the ten-year treasury futures garner points out while treasury prices have dipped multiple times this year, each of the move has ultimately been rejected in fact, when she looks at the action in the ten-year period, sees signs of a double bottom. hey, that's classic formation where buyers step in preventing prices from sinking below a previously established floor of support. she also notes that double bottoms tend to be followed by significant rallies. at the same time garner thinks we're seeing a wedge pattern see the wedge pattern like that? she beli

split into it in your case of best three categories one category of the miners one category of the treasury and then one category is the what the third category the third category is the master the master knows themselves and then the master to get the vote on how to spend that treasury that's correct so you've got like a governance thing baked into the cake that's right and other thing about gas is that it's got this treasury and it's remarkable in a lot of ways and the most remarkable thing that's happening right now and the reason we've got john is what's happening in venezuela can you tell us what's going on yes so we're seeing oh large amount of adoption taking place in venezuela it's grown to become our second largest market and really the reason that we're seeing that type of growth is of course because of what's happening with the ball of are they're expecting a million percent inflation this year in venezuela and this is kind of the the prime example of a broken currency and what what the treasury system allows the community there to do is to organize and to fund a lot of their act

the dollar. and things like u.s. treasury's. hedge funds and other speculators in new york have cut their bets that are most bearish on gold since 2006. investors of also been pushing back on their holdings. investors fundamentally, the story here, is that investors are going to the dollar rather than precious metals. anna: i am looking at a correlation. the 20 day rolling correlation measure, it is a correlation between what happens with gold and with the dollar. where does the market see gold prices going in the near-term? i think you're absolutely right to point out the correlation. the future of gold this year does depend very much on where the dollar is going. if we see a dollar weakening we could see more upside in gold. but, apart from that, that is the main thing. unless there is something that we have not forecast. it is hard to see gold making head waves. the goal does not pay the interest. the fed is tightening. it is a tightening cycle. it is shrugging its balance sheet. that makes gold even less attractive in that en

the president asked the treasury department to look into it. on the second part in regards to the shutdown, the president is not focused on the timing of before or after, he is focused on the results. he has been talking about this for a year and a half. our immigration system is completely broken and he is begging for congress, particularly democrats to step stop kickingjobs, the ball down the field and work with and to fix our system. it is that system. reporter: does the president have a personal opinion as to whether or not the current -- sarah: he is asking the treasury department to look into it . reporter: does the president incurs a supportive people who showed up last night in these qanon fringe groups? is the white house willing to say in view of what happened with one of our tv colleagues last night it is wrong for his most vocal supporters to be menacing journalist doing their jobs? theh: on the first part, president condemns and denounces any group that would incite violence against another individual and certainly does not support

and the u.s. treasury hints at tougher measures for moscow the line activity. we can bring even more economic came to be are we will not hesitate to do so if it's conduct does not demonstrably and significantly change. also the microsoft claims russian hackers are added again by targeting the u.s. senate and conservative think tanks. but while listing the supposed culprits the tech giant took the chance to push its own products. and as the syrian army gears up to retake the militant held flavor of the good live western media outlets warn of a civilian massacre the same outlets though fail to mention the area is under the control of jihad as groups accused of war crimes. you're watching are to international bringing you your global news update this hour welcome to the program. sanctions is definitely the buzzword in washington this tuesday with yet more calls to tighten restrictions against russia over a series of issues for which moscow is being blamed the british foreign secretary who's on his first official visit to the u.s. urged western partners to unify in

at the end of december 1943, a lawyer at treasury said, and this is a quote, mr. secretary the only question we have in our mind is that has to be taken by the horns in dealing with this jewish issue and get this out of the state department to sub agency's hand that is willing to do it differently. for instance, take the complaint what are we going to do with the jews? another staff member quietly added, we are seeking a citizen now. armed with their evidence, the treasury department wrote a new report title in the report to the secretary of the acquiescence of this government in the murder of the jews. this is a d.c. town of a lot of a separate government report that is not generally the title of any of these reports. it began one of the greatest crimes in history, slaughtered the jewish people in europe is continuing unabated unless remedial steps of the drastic nature are taken immediately, i'm certain no effective action will be taken by this government to prevent the complete extermination in europe and that this government will have to share for all times res

i went to head to the auction block where the u.s. treasurytioned off more than $280 billion this week. we focus on the seven-year sale. the bid to cover was 2.6 five, marking the highest demand since january. the primary dealer take was a run the years average. looking closer at the short end, the two-year sale of $36 billion had a yield of 2.65%. a bid to cover of 2.89%. over and corporate scum a was much, much quieter. u.s. stock bonds had no prices are launches to speak of. issuance is the lowest year to date, total sense 2010. -- since 2010. still with me is priya misra, michael collins, and iain stealey. i want to turn to europe. the eyes are all on italy. income is into our in europe, let's start with you are we are bondsng on the fact that have climbed to the highest and about twice 14. and the gap between booms and italian yields. --e climbed to the site this to the highest since 2013 p or gwen is going on? what is the fear with italy? iain: i think there's a couple of things going on. you have this general risk off -- thatt that is g

you can go through the transcripts of what they're saying. in december 1943, a lawyer at treasury side, and this is a quote, mr. secretary, the only question we have in our mind is the ball has to be taken by the horns and dealing with this jewish issue and get this thing out of the state department and agencies and is willing to deal differently. for an dense, take the complaint what are we going to do with the jews. we let them die because we don't know what to do with them. another staff member, randolph paul quietly added we are speaking of citizens now. armed with their evidence, the treasury department wrote a new report title in the report to the secretary on the acquiescence of this government in the murder of the jews. this is a d.c. town and a lot of us have read government reports and that is not generally the title of any of these reports. it began one of the greatest crimes in history come to slaughter the jewish people in europe is continuing unabated unless remedial steps of the drastic nature are taken immediately, i am certain no effective action will be taken by

is that something the treasury does?ment >> absolutely, senator. >> it does? >> again, criminal authorities department's ce uthorities but we go after illicit money activity world.ring all over the >> can you give me how many laundering episodes in the last have occurred and how many have been actually prosecuted? prosecutions -- >> determined and turned over to the department of justice, how about that way? >> i'm sorry determined that it was a money laundering situation and turned over to the department of their , we'll deal with prosecution later? can you give me an example of how many have happened in the years?ive how many have been brought forth in the last five years by the prosecuted f -- not but just pointed out to the department of treasury? >> i can't give you a number. me a number if you go back to your office, write it down and acceptedt to it would depend on the specifics. we work very closely with the justice department. of these hearings in a classified session that was worthless and it wasn't because the chairman and ranking, because you have a

after months of rating the state and treasury department. these hearings and it audits were not simply a reaction. it was widely. on both sides of the aisle on both sides of the atlantic. with a few exceptions the president has refused to forcefully use the new authorities under cap step. they were responsible for the use of syria. our un ambassador announced the imposition of sanctions. the next day they were withdrawn. it said the administration requested a broader waiver to sections 231 be included in the defense bill. basically because they could not certify with key condition. i think is a bad idea to use a recent defense bill to relax waiver authorities. instead of strengthening sanctions. we've got gone in the opposite direction. they continue to face that. why a new round of oversight hearings and been convened. and they give get the chairman credit for that. they're both proposing a new sanctions. i think most of us agree that they should also do more to increase pressure. they acted last august by overwhelming majorities. we should

, not the chairman and the treasury, not the people actually playing chess.nd as pope francis returns to rome today, there are going to be people, from abuse survivors to theologians like yourself, senior clergy and so on, sitting back and analysing the entirety of this visit, what has been said, what has been achieved, i am sure the pope will be doing that himself and those around him in the vatican. in terms of the dissection of the visit in ireland and looking at it so far, what do you think has been achieved? for the people who have met pope francis, they will remember his words. hopefully the wonderful words that he has spoken in his speeches, they will not get lost. calling for a deeper personal faith and greater service of your neighbour. i hope those words would be lost. but for the aftermath and the sense of the institution, i think people will step back and say, what more do we need to do to ensure those who have suffered he must sexual violence within church structures can find justice and be cared for. and for those survivors of abuse, the young w

jonathan: the spread to u.s. treasuries, i think they are the widest since early 2016 when we had a real concern in china and emerging markets. does that differential between emerging markets and the united states add up to you? >> again, i have to go back to the strength of the dollar. it is creating this differential. why are treasuries more attractive today than they were three months ago? because the dollar is stronger. not because there is a weakness in the economy or there is the flipside of this, emerging markets are weakening because of the strength of the dollar. those dollar-denominated assets in which you are lending is costing you more. the benefit for the spread differential favors treasury right now more than it probably has all year. jonathan: is it the most important variable for you right now, the strength of the u.s. dollar and what happens with it? >> taking it one step deeper is with the funding conditions around it. what the fed is doing with their balance sheet, people do not like to focus on it. but t

sorry, long the dollar, short gold, short treasurys. d the needle powell speech but not prepared for any kind of change. cheryl: i don't know, jack. say that they don't raise rates. say they raise rates in september pretty much babed in, but they don't in december, then they have to do it in january? >> not necessarily, i like the yield curve, the message embedded in the yield curve. bostick says he does do. he will not tighten yates to invert the yield curve. that is the key message -- cheryl: that would be a bad thing. >> don't flatten the yield curve. cheryl: flattened yield curve makes folks worry, jay, because that might be a pending recession that would not be out of the question since we had a nine-year bull market and we are seeing, there is some inflation out there. that wouldn't be so far off the reservation. >> that is interesting, that investors record short safe assets. there are things people are concerned about. trade uncertainty starts to close the corporate sector, c-suite, if they slow cap-ex, you see signs of consumers

this follows on from the fact that philip hammond, the chancellor, last week, sent a letter to the treasuryng that britain will be 80 billion pounds worse off if we crashed out without a deal. that was obviously not well received by the brexiteers. there is an official quoted on the front page. "this meeting is needed to find out once and for that we can survive an ideal scenario, said one official. " and for that we can survive an ideal scenario, said one official. we love cartoon. the treasury forecast is there and then the quote is, apparently after the no deal brexit, the only survivors will be cockroaches. and it knows either of you caught any questions. how big a deal is and no deal? what are your thoughts? the trouble is, nobody has ever done it so how can we possibly know? my feeling is, it feels like, from everything i have read, it will bea from everything i have read, it will be a catastrophe. all the brexiteers isa be a catastrophe. all the brexiteers is a project fear. theyjust shout those two words. fake news, rubbish. we won't have very long if it is no deal come march next y

this after the u.s. treasuryeiled its latest refunding plans with a total of $78 billion in sales. -- 3% for the first time since mid-june. ,e are bringing in lacy hunt thank you for your time. let's start with breaking news, sarah sanders coming out and saying they will update us on those chinese tariffs. we have heard the possibility they could tariffs -- could double the tariff rate to $200 billion worth of chinese goods. monetary the macro environment, what is the threat of inflation with more tariffs potentially on the way? well, there's the first round effect, then there is a knockoff effect. as people have studied econ 101 all other things being constant, you raise tariffs and increase inflation. but the knockoff effect are more serious. they serve to reduce trade flows, capital flows, and produce a retaliatory process that weakens economic activity. when you take it all together, the net result is that economies have less vibrancy and lower inflation. there's been great concern about an version of the yie

weakerfx market, the dollar. treasury up by a basis point. reserve. saying he thought jay powell would be a cheap money chairman. >> the fed's independence is guaranteed. they've got a crystal clear mandate. >> the only way the central bank can deal with this is to continue to do the right thing.