let me tell you where you had on treasury markets. -- head on treasury markets. have seen substantial moves on treasuries this week. we are at 132 now on the u.s. 10 year. have we done the testing whether this can go to the downside, or is that to come? >> we think they will trend higher from here. the rally we saw this week was a recalibration. the way we view it as the market has gone from expecting a be plus shaped recovery to more of a -- and so we have this in -- we were always going to have this reopening burst of activity . the data is still on track. we think concerns about the delta variant are a bit overdone because in populations where large shares of the adult population are vaccinated, you are seeing that vaccines remain effective against hospitalizations. that is not a uniform narrative. is an emerging markets there are concerns driving this risk off sentiment. mark: your base case is that tapering from the fed will start in early 22. if we suddenly find the fed starts tapering the third quarter, started the fourth quarter, where do you think we wil

deputy treasury secretary.alked about the economy, jobs and inflation. >> because we lack supply in some places, we have seen prices go up. we think this is temporary and transitory. we are continuing to think about what we can do to make sure we can grow the economy, invest in ways that create jobs and ensure we expend the potential of the economy going forward. joe: what does that look like specifically? you say we are looking at the next round of investment planned for later in the year. what does that look like to expand the potential supply-side capacity of the economy? >> it comes down to investing in two areas. one is infrastructure. the president has put out a plan and we see the bipartisan group working on this. investing in infrastructure will not only improve our economy in the near term that will ensure we expand the economy in the long term and make the economy more competitive. the second part is investing in human capital. expanding the child tax credit to ensure we are investing in our children

and treasury yields grinding lower. we begin with a big issue, a nuanced payrolls report. >> the report was mixed. >> this is a mixed report. >> for every positive thing, there is something less positive. >> the bulls and bears have something to chew on. >> there is something for everybody. >> you have to put perspective on it. >> it is supply, not demand. >> supply-side bottlenecks that are pushing up prices and impacting real activity as well. >> people pour over the jobs report because they wonder what the fed is going to do with it. >> it is a wait-and-see approach. >> you let the inflation genie out of the bottle. >> 3.6% was the average hourly earnings growth. >> it baffles me that they have not started tapering already. >> there is just too much support. >> unanswered questions that need to be answered. >> genus is frances donald, krishna memani and michael collins. start with the payrolls report. what are your initial reactions? frances: i learned nothing. we are in a vacuum of information and there is still sup

if treasury envisions hiking taxes on u.s. businesses domestically including onerous taxes to the minimum tax guilty before other countries adhere to global minimum taxes, the u.s. could suffer from a first-mover disadvantage. higher u.s. tax rates instituted before other countries move poses the risk of others not following through and a new wave of inversions and foreign acquisitions arising because u.s. businesses are once again unable to compete. congress needs to understand the analysis behind these proposals and whether any agreement would allow foreign targeting of u.s. companies or carve-outs for specific you can inclusions. including china. the g7 understandings also advocate for new mandatory financial disclosures and funding for multilateral financial institutions including a new $650 billion general allegation at the imf of special drawing rights. i'm interested to hear about the outreach you have done with kong republicans on those funding increases. initially, i again ask that treasury work to improve its respons

are you saying treasury yields have to rise materially? because if this situation continues, couldn't they persist where they are in tandem with otherwise robust conditions elsewhere? michael: no doubt about it. we ask ourselves why is the equity market at current levels the answer is high profits, high liquidity, and very low discount rates. so the question is, what is the threat to the equity market? it would be one of those variables turning. so if we can sustain these liquidity levels and high profitability at low discount rates, there's no profit to the equity market. but instead we have real rates below equilibrium levels persisting in the next year, even if it is growth. the second derivative stuff has gone too far. for inflation to persist, we need above trend growth to continue. with that, if we did inflation persistence, i think we are going to have an outlook that is putting upward pressure on treasury yields, and that is going to hurt valuations. but you are exactly right with that question. jonathan: let's wrap it up. cpi tomo

i want to commend your entire team at treasury.t's been a pleasure to work on the uncollusion work. thank you to your commitment to that and so many important issues. i yield back. >> i thank the gentleman. the gentle lady from west virginia is recognized to inquire. >> thank you, chairman and ranking member. and thank you madam secretary for being here today. as many of my colleagues have raised during today's hearing, we are gravely concerned with many of the promises made over the course of president biden's campaign. the policy proposed in the fiscal year of 2022 budget and ability of the department of treasury to complete its duties effectively. with our limited time here today, i would like to quickly get to my questions. secretary yellen, in april democrats introduced a discussion draft titled "building an economy for families act." this proposal would create a new paid family and medical leave entitlement program rub run by the treasury department. given the massive amounts of unemployment insurance fraud that already exist

the treasury. if secretary, if you like to give a brief treasury secretary secretary answer? >> brief answer madam secretary. >> well, i i think think that the global that the economy is global paying economy has substantial changed -- substantially in in ways ways that our source of that income and source of income and residency. residency of corporations is not clearly the proper basis for all tax collection decisions. andmadam secretary for coming te with us. my republican friends >> thanks for being with us. my republican friends, keep making speeches, empty arguments, taxpayer info on the richest billionaires. we should give all americans -- for the cost of our democracy. freedom is not free. i've been a businessman for more than 45 years. is there any reason that my family business should have lower reporting requirements than you are ire any coworker as individual taxpayers? >> and what reporting changes will be most helpful for improving irs enforcement tax? wise >> well, i think i think they need insights into streams of income that are currently. opaque there isn't

sometimes we see that in response to treasuries, and we see a drop in treasury yields. german bund. how much more downside is there when you think about what we already know about the ecb strategy, and where it goes from here? iain: i do not think there is a huge amount of downside. i think the big rally has happened, and we get consolidation. when we look at where we were in the pandemic, 40 basis points lower than today, things today are looking better. the vaccine rollout is picking up in europe. europe is reacting to what should be a longer term dovish message from the european central bank. it probably means the purchase programs continue for longer as they target flexibility. there will be continual support for our portfolio, and only things like the peripheral of europe when you can get a spread around 100 basis, buying italy. continual support from central banks does not look too bad of an option. anna: thank you for joining us, iain t. stealey, cio fixed income, jpmorgan chase. let's get a bloomberg business flash, corporate stories we are covering. laura: brit

treasury market.: these are delicate phrases, and we appreciate the candid former fed official. if the market goes above $1 trillion, how will the market adjust to that? william: there's no magic number where if the fed is soaking up $1 trillion of repose through their rivers overnight repo facility, that is not a problem. but i think it does tell you that there are consequences of the fed's asset purchases. banking systems are potentially awash in reserves, and that is making the leverage ratio more binding, which is constraining bank activities, and also causing banks to essentially push away corporate deposits by making changes to how the leverage ratios are calculated. i think they should do this sooner rather than later. lisa: is the treasury market as it is broken? william: i don't think it is broken. i think it just needs more voted suspenders. as a report published yesterday points out, a lot of things need to be done to the u.s. treasury market. a central clearing of treasuries for customer t

treasury has provided unprecedented amount of relief over the last year.irst round to the advanced. however some have difficulty using those. how does the 2020 or 2022 budget increase this technology and capacity for more physical checks for taxpayers if not an option and the technology to give taxpayers choices with such payment methods? >> you know, the main goal of the fiscal services is to try to pay people by direct deposit and they were distributed in that way with the checks and also we have the appropriations for the irs and for the limitations as you mentioned on the capacity to print checks but we would like to see the direct deposits. >> to see the assets to their long and large established payment protection program as congress tries to keep it afloat during the pandemic. however, including the subsequent rounds are so critical in these underserved businesses and communities and we know that [inaudible] how does the budget request support the small businesses especially as we look to rebuild the economy after this pandemic? >> it proposes addit

treasury bonds. the physical exposure relates to holding bonds that are [inaudible] this account is fully funded, which means that we sent $1.1 billion to black rock, and they bought $1.1 billion of u.s. treasury bonds, replicating the treasury benchmark that we set. the synthetic exposure refers to holding of market treasury futures. to match [inaudible] and requires about 10% of the actual exposure in cash. that is $40 million in cash funding to gain 400 million of economic exposure to the one to ten viewer treasury mix. the remaining 160 million cash is available to be drawn should we have a large capital call. however, if you see on the six calls that we did not use this 160 million cash. that means that we have sufficient cash, and that means we do not have fund level leverage. if you see, all the exposures add up -- [please stand by]. >> the annual cost [inaudible] was 63 basis points, which included 30 basis points of administrative fees and 33 points back to our lending cash collateral accoun

we referred this matter to the treasury inspector general and to the department of justice. the irs commissioner is looking into the matter as is the treasury's inspector general for tax administration. but we're only one week out on this, and i really want to emphasize we do not know what happened. we don't have any facts at this point. i promise to keep you updated on what we find, but it is absolutely top priority to safeguard taxpayer data when we see the results of the investigations that are done, if there are actions we need to take up -- need to take to shore up the protection of this information, you have my absolute word that we will do so, and we will keep you and congress informed on what we're doing and what we're finding on this. >> mr. chairman, my time has expired, but i will submit for the record dealing with the issue of step-up and basis the tax proposal as it pertains to family-owned businesses, farms, and ranches. i'm very interested in what the administration's proposals are to protect those types of entities from what would be an incredibly crushing an

treasury publishes the report, not hud. we consulted. >> judgment time has expired the program overseen by the treasury when she's before us and these -- >> i've raised the question. >> the chairman has since recognized for five minutes. >> secretary fudge. honored to have you here, broke to say the words sec. fudge and i can think of -- it's so appropriate that you are a sole witness for this hearing and i can think of no better use of the committees time thing to hear directly and solely from you at this hearing. the first question is something i would like you to respond for the record, our colleague has a naomi safe parking act and i want to think the chairwoman for noticing that bill for this hearing that focuses on those sleeping in their cars. vehicular homeless and i hope you would respond for the record as to whether we can do more to help people who are sleeping in their cars. and happens especially in southern california particularly you and your staff could look at the naomi schwartz safe parking program act. i

spending, recovery, reversing the 40 year bull market and treasury.n the last two and half months, it is all gone. >> it's interesting you frame it around georgia. that may be the single most important factor here. people got very excited about inflation, it is possible this is all been about biden getting much more backing than he was expecting to. and steadily running into trouble, as you almost inevitably expect any present to do when they realize they have overstated the potential fiscal impulse. they overshoot both directions. i think probably, the single biggest factor here is excitement subsequently dissipating about what we used to call a blue wave. caroline: excitement around inflation i feel like has reason still to be there. oil was at $76. blink and you miss it, it comes down a little bit. i don't understand why we are's all of a sudden thinking that inflation is not a problem. >> that is what most and current -- what most concerns me, there is nothing other than the transitory elements, such as lumber. but what has improved in the last th

on the treasury side of things, we are keeping a close eye on the 10-year benchmark treasury note yieldthe 1.4% level. we got down to 1.26, 1.27 at the lows this past few weeks here. the 2-year note yield at .25%. on the wti crude front, u.s. benchmark prices, 74.73. ice brent crude futures down 3/4 of a percent $75.96 there the last trade. bitcoin trying to find some stability. just about flat on the day roughly 32,300 and change. ethereum below 2,000 at 1935. >>> as investors await another key round of earnings with the big banks once again in focus, those numbers are coming on the heels of goldman sachs blowout results. speaking exclusively to cnbc yesterday, goldman's ceo david solomon arguing the market's next leg hinges on the economy's next moves >> i think that the market is looking at the robust economic recovery we're having and it's pulling forward some of that recovery >> is it a bit risky >> it depends where the economic recovery is going. you are reporting on it. the market is catching up with the big strong economic recovery the big question is what do we see in 2022, 202

to your question earlier, why are treasury yields so low, will we get some answers in may treasury international capital of -- capital flow that comes out? please give us some indication of the foreign buying we see in the treasury market. people have been blaming this from what we have seen with respect to yields going so low, because this is a high-yield from japan, germany, some european countries. how much has that been the reason behind the treasury yields move? jonathan: you're making a bold call this morning. you don't think retail sales is a data point of this morning? lisa: i am wondering how messy it is going to be given the rotation. i don't understand what we can clean in terms of long-term trends. the people -- the thing that people are watching is the rolloff in the stimulus tax are from march could lead to a decline -- the stimulus checks in march. not saying it is not important, however, fed chair powell pinpointed consumer inflation expectations as being a key driver of their view on price rises and that is -- has underpinned all the price action. jonathan: looking forward to th

this is a completely out of consensus move in treasuries.xpectation broadly speaking was for a gradual rise in yields in the second half, and now we have basically reversed all of the losses we have seen in the last quarter that we thought the beginning of the year. we saw a dramatic selloff between january and march. the flattening of the curve is also not a consensus view, so i think those are all trying to figure out where things go from here. i feel like the bond market is in a limbo. we are waiting on a whole bunch of other factors to come into play for fundamentals and for treasury yields to rise. kailey: if it is not high-end -- not hot inflation prints, what is the catalyst that makes yields go higher? subadra: i think employment is key. we saw some data that made last month's employment look quite strong. i feel that the fed has reached their substantial further progress mandate on inflation. the only concern now is on the employment front. we need to see anywhere between 500,000 to one million jobs being created for the remainder o

treasury committee with things like, "the u.k. recovery is more fragile than appears.lar approach is needed to asset prices. the u.k. inflation is affected by complex factors. interest in the global recovery may be hit by global infections -- by covid infections." last week, you had the hawks in charge, but the doves kind of came out over the last 24 hours, and catherine mann one of them, talking about how fragile the recovery is. so we will keep track of that as we go. yields dropping in the u.k. as well, down by about nine basis points on the 10 year. coming up, hyzon motors is a maker of hydrogen fuel cell powered vehicles. we will speak to the ceo, craig knight. this is bloomberg. ♪ leigh-ann: this is "bloomberg markets." you are looking at a live shot of the principal room. coming up on "bloomberg markets: the european close," mike jackson, autonation ceo. this is bloomberg. ♪ let's check in on the bloomberg first word news. i'm leigh-ann gerrans. for the first time, nato is calling out china for cyberattacks. the u.s., u.k., and theirllies have formally blamed th

on a one day basis it's not going to be so tightly linked to three or four basis point mov in the treasury. this morning it looked like it was going to be but now you have banks bouncing after that. >> michael santoli, thank you. we'll see you soon speaking of the banks which turned positive as a group, morgan stanley rounding out earnings that stock a little bit under pressure what are the highlights? >> off its lows from this morning. the results are solid to be fair nice beats across their departments investment banking up 16%, to $2.4 billion, and equity trading up 8% a year to $2.8 billion and like the other banks those picked up some of the slacks from fixed income trading down 45% year over year to $2 billion all together banks are enjoying significant elevated capital markets compared to prepandemic and likely with lasting market share gains for the big u.s. players. wealth management for morgan stanley up $6.1 billion. the ceo was also asked on the earnings call about his fairly firm words in late in terms of wanting staff back in the office. >> the comment i made about the work p

you say that treasury yields now, 25 basis points too low relative to their drivers?n argument to be made that you can see yields move back to sort of fair value over time and in our forecast for the balance of the year we see rates moving higher to back to where they were and finishing the year closer to 195 we need a catalyst for right now. i don't think that positions are fully cleaned up and it's likely we'll need to see more in order to fully get back to neutral beyond that we need a fundamental catalyst we talked about the unemployment numbers. the fed's flexible average targeting rate is focused on 2% inflation for a period of time it's contingent upon being at maximum employment we need to see the unemployment rate resume its descent. we need to see where we go on fiscal the infrastructure package is being debated right now. but it's been stalled for the last couple of months. and we need a better sense that congress is finding a way to pass an infrastructure bill later this year in order to be a catalyst as yield bess begin tos from where they are now. >> whe

treasury debt to keep their currency buying all of the reasons yields might be where they are. to your point, you're saying, no, we're not going to chase this we're not chasing tech we're not chasing it your topics. madison square entertainment, mosaic tell me about the time line for people who go are we talking about a five-year move here or what >> yeah, usually i'm really encouraging people to think five years long term. i always want to have people think that way i think these picks are good in the short term the economy is very strong the management teams are very optimistic about the short-term earnings all of the names you mentioned have good news in the short term and long term. borg warner, their demand is huge mosaic sells fertilizers madison square garden, you have to give me a couple of years when they do it's the number one attraction venue in the world. you have to give me a year on that one madison square garden entertainment. >> massive attraction in las vegas is not where people want to put their money to work i've seen some of the renderrendering i s. are you

stocks struggling to end the week on a high note as treasury secretary janet yellen lays out a rough road ahead for inflation and covid-19 >>> on the pandemic case, the count is rising as the delta variant is spreading now states are looking to enforce more. >>> and didi chinese regulators stepping up the probe into the ride hailing giant. u.s. companies are under estimating the risk of doing business in hong kong. now he is preparing to take action over his concerns >>> and jack dorsey doubling down on the future of bitcoin. it's friday, july 16th, 2021 you are watching "worldwide exc exchange" here on cnbc >>> good morning tgif i'm dominic chu in for brian sullivan today quick check on the friday morning money. we are seeing stock futures showing very, very modest stability here you see the dow implied higher by 37 points at opening bell s&p higher by 3 points and nasdaq up by 5 the under performer yesterday. the dow is the only index still positive for the week and also on pace for the four-week winning streak nasdaq is about to snap an eight-week winning streak of its own. >>> br

treasury bonds. the physical exposure relates to holding bonds that are [inaudible] this account is fully funded, which means that we sent $1.1 billion to black rock, and they bought $1.1 billion of u.s. treasury bonds, replicating the treasury benchmark that we set. the synthetic exposure refers to holding of market treasury futures. to match [inaudible] and requires about 10% of the actual exposure in cash. that is $40 million in cash funding to gain 400 million of economic exposure to the one to ten viewer treasury mix. the remaining 160 million cash is available to be drawn should we have a large capital call. however, if you see on the six calls that we did not use this 160 million cash. that means that we have sufficient cash, and that means we do not have fund level leverage. if you see, all the exposures add up -- [please stand by]. >> the annual cost [inaudible] was 63 basis points, which included 30 basis points of administrative fees and 33 points back to our lending cash collateral accoun

so you know, how much longer are folks willing to hold these treasury bonds? i mean, you know, that seems to be the lunch pin of the whole system. if there's still support in the treasury market, they can keep this thing going. but how much longer is i going to last you thank greg from a technical standpoint. if you look at the very long term chart, the 10 year and the 30 year, we're really in a corrective phase, it feels like a bare market where interest rates are going higher and bond prices are going lower . but to the extent that we've had that for a while, it looks corrective to me. on the other hand, i don't think that you know, the, the current interest agent coming down. i think they have a little further to go. but i do feel that there's going to be an upward skew and interest rates before the larger that, you know, long term trend going back 40 years in bonds, research itself, with, by way of higher bond prices and lower yields. we've got a little bit less on the bond rally, i guess the 10 year could flirt with one percent my guess. and then that 40

a month and sales going smoothly at this week's treasury issuance.y the seven-your offering seeing a drop in demand. believing the charge in high-grade debt markets. pushing weekly sales above forecast. high-yield markets coming to life following chairman powell's news conference. july's tally to roughly $29 billion. backed with those are marilyn watson, lisa coleman, ashish shah. you don't have to comment directly on apple if you don't want to, but for a company with that much cash, tapping the debt markets four times since may of last year, what is behind that activity? lisa: without getting into too much detail on apple, they have the stated cash of being that cash neutral. this is a company that accumulated off a lot of cash. about $90 billion in free cash flow per year. it makes sense they are coming to the debt market to achieve that goal. what is interesting about the issue, good for them, at a blended rate, achieved about 1.6% funding. for companies that can grow at that rate, why not? it's a great opportunity for you. jonathan: they keep say

from the treasury market, a bid into treasury yields. we are down to 11 on a u.s. 10 year.yd austin in singapore, criticizing china, going on to say --here is the headline that sticks out to me. the specter of coercion from rising powers, this along with u.s. officials saying yesterday, reportedly for chinese. tom: we start the show i'm economic finance investment and look at the united states international relations. general austin in singapore. this as dutere fights for his life in philippines with his final state of the union, addressing what we are talking about here, the exhaustion of the united states navy, this is about austin in singapore, the uss nimitz and marie horton finally home after 341 days at sea. this is showing the flag and it costs money. lisa: i would say the optics of this speech right now as you have mr. austin in singapore, you have the deputy secretary of state, wendy sherman who is in china for talks and these talks are on the heels of the last -- of the alaska meeting with china. you see the push from this administration, and especially this week

from semis to financials, crypto treasuries, what's this market saying about what's happening next >> reopening risk. live nation, the ultimate recovery play. the ceo tells us with the rise of the delta variant could mean for his business >>> and bucking the trend, money is flowing into and under the radar part of the real estate market right now or some stocks in that area are hitting new highs even as this market continues lower. "power lunch" continues right now. >>> and let's get right to the markets this hour. the dow, the s&p and the nasdaq all off their lows of the session. you see here the dow down. at one point down 536 points that's at the low. american airlines trading a little bit higher right now. energy stocks also getting a lift we're seeing devon energy up 1%. one of the big things, those meme stocks, doing a big turnaround amc up here more than 5% gamestop only up fractionally. >> i even know what a meme stock is now >> nice haircut, by the way. >> thank you very much >>> the yield on the trading levels not seen since february we'll talk about that and much more here

that is the key lesson for the treasury going forward. ,, w' , key lesson for the treasury going forward_ forward. quickly, you already told mr cameron, when _ forward. quickly, you already told mr cameron, when he _ forward. quickly, you already told mr cameron, when he appeared l forward. quickly, you already told - mr cameron, when he appeared before your committee, that "many people would conclude at the time of your lobbying, your opportunity to make a large amount of money was at risk". he denied that. did you ever discover how much he was being paid? 0ne discover how much he was being paid? one recent report suggested it was £40,000 per day he was being paid by greensill £40,000 per day he was being paid by greensil ., ., , ., , greensill there are lots of reports about lots of _ greensill there are lots of reports about lots of things. _ greensill there are lots of reports about lots of things. we - greensill there are lots of reports about lots of things. we put - greensill there are lots of reports about lots of things. we put that l about lots of things. we put that specific q

treasury yield coming from?hina, in some respects, and replicated in very big moves in commodity prices and the world going back on the idea we are going into some sort of inflationary boom. then the chinese authorities react. they are not prepared to tolerate a downturn more than any other country. again highlighting how supportive the environment is. critical in assessing this will be the impact on earnings and the profit story over the next few weeks, which our expectation is it will be strong and supportive. i think it will not lead to any sustained volatility. not to be complacent. there are issues out there, but china seems to have moved very aggressively. anna: william, stay with us. william porter, credit suisse securities head of european credit strategy. we will get his thoughts on the credit market shortly. coming up, get ready for guidance. christine lagarde tells bloomberg that investors should prepare for a policy change in the next 10 days. hear more from our exclusive interview. this is bloomberg

so they've effectively cornered the market in treasuries so it's going to be accentuated.k market is responding with the accentuated, so i think people have to be careful. the backdrop of the fundamentals, you mentioned this, the fundamentals are still improving. that's kind of taken a backseat to the gyration of the bond market i think the reaction will be we're going to hear an awful lot of jawbones from the federal reserve in the next four to six weeks as they try to reverse the flattening of the curve. i think that's what they're going to hear. i think to scott's point, that kind of jawboning, i think you win it here on the side of the cyclicals. >> you both are kind of similar. which groups in particular, because a lot of them have been hit very hard. does it make you a little worried that the ten-year yield is below 120 if you're going to go there >> it does, sara richard mentioned, you know, the spreads. i mean look at the 2 to 10 curve. it absolutely collapsed like it wasn't even there. so, you know, we think that the curve is going to steepen later, interest rates

treasury markets confusing just about everyone.e begin with the economy heating up. >> you are in the midst of getting hot inflation numbers. >> inflationary cpi number. >> cpi and pci print that were just insanely strong. >> you are seeing it in retail sales figures. >> inflation is going to be running hotter. >> the demand picture is robust. >> we underestimated the level of inflation. >> what chairman powell has laid out. >> inflation will be transitory. >> allowed things to run as hot as they can for as long as they can. >> is the fed in agreement that inflation will be transitory? >> the federal reserve will be late to the party. jonathan: joining us now is our guests. let's start with the idea that this treasury market is confusing just about everybody. we have had hot cpi, ppi, hot retail sales. we have talked about this every day of the week. what is going on in this bond market? >> as you mention, hot cpi, hot retail. we are seeing very little moves from the curve today. some steepening. it is the market not believing the

treasury securities. is that approximately right? >> sounds about right. >> and chair powell, isn't it true in the recent july monetary policy report outlined that the, quote, housing sector remains remarkably strong, closed quote. i know you've testified about housing but that's -- you agree that's what the monetary policy report says? >> yes >> so given that acceleration in home prices you and i talked about back in february when you were before the committee and that vigorous expansion of mortgage lending, is it necessary to be buying the $120 billion of assets a month particularly to the mbs portion? what's the committee's logic in maintaining that portion >> so really we look at the whole things we're buying. treasuries and mbs and they have the same effects on the economy, erpt of them mbs very modestly affects on housing. as you know we're in a process of looking at tapering those purchases. we had a meeting back in june. we have another one in a couple of weeks and if we continue to make progress toward our goal we articulate

, let's reallocate some of our money back into the treasury market. caroline: we get plenty of data this week whether it be on the housing market, whether it be on earnings season. are we destined to keep on crushing lower in terms of yields or are we going to have some sort of buy the dip mentality when it comes to the bond market? >> i think there will be some profit-taking at some particular juncture. things don't go down a straight line. the yield curve is still upward sloping more than 100 basis points. when people talk about recession, they're always talking at the yield curve inverting. we are talking about the potential for a growth slowdown. i growth slowdown does not necessarily mean we are going to a 50 paces points on the 10 year. it just means that growth is less than we would have liked and the question becomes, what does the inflation picture look like? what does the growth picture look like? is there more stimulus in the pipeline? how does the employment pan out in the near future? those are all things that are still to be resolved. by

treasury bonds for years.fact accelerated quite a bit until several months ago and now the foreigners are back. also, i think bond yields got very low right as we started july because of quarter-end rebalancing. bonds had been negative returners for year to date and stocks as you pointed out correctly were up. and so pension plans often rebalance at quarter end and also june 30th for many pension plans can be their fickle year-end. that's further motivating to maybe rebalance. so that's been going on as well. so there is a lot of factors that are just kind of -- well there is one other factor from the pension plan i should pension. that is as was reported fairly visibly in the press, many pension plans have actually reached some of their best funding status since prior to the global financial crises back over 10, 15 years ago. there is motivation for pension plans if they get to a fully funded status to just lock it in and they can do that by buying long-dated bonds now, it seems sort of strange you lock in su

so far it's been a free pass we'll see in terms of ten-year treasury yields.re going to move higher and that's going to change the equation for stocks and stock pickers. >> so the catalyst then for some more of the potential volatility is, what, fed tightening or just yields moving up independently of that? >> i think, listen, i don't even think that's necessary in terms of what you'll get from real growth, even nominal gdp growth when i started this seemed so hopelessly viktorian now you'd use nominal gdp growth as what you'd use as your answer for ten-year treasury yields obviously, we're a long way away from that by almost any -- however you slice it, we're a long way away from that. so i think rates can rise without even the fed tightening. i think also, you know, you'll have a -- i think all policymakers have a harder time stepping away from the table, the combination, than they perceived because of things you've seen just over the last week all sorts of concerns about whether it's employment or delta variant or health issues there are going to be some ve

treasury yields were creeping higher. i think the last couple of months, the moves in treasuries have rocked investors had made them a little bit nervous -- and made them a little bit nervous. mark: -- anna: let's get to the features picture. we are just an hour away from the start of trading. in terms of yesterday's session, we dropped quite substantially in european hours. the nasdaq hit a new record and cushioned the market from losses elsewhere. we did snap that seven-day winning streak in the u.s.. energy and bank stocks under pressure. that said test in the european equity markets. u.s. futures look a little bit more muted. a little flatter. undecided. if we think about what you said about the asian session, and now everybody seems to be in shock, one thing seems to be clear. more appetite for havens this morning. mark: definitely. there are not many broad macro themes on the gmm. what you are seeing is a follow-through from the u.s. session. you are right to point out, the risk aversion was very much in the europea

on the back of the bid into the treasury market over the last couple of weeks.lds are down by six basis points in this move is taking crude with it. wti, 71.53. tom: the velocities to the downside. the vix goes out to 20.90. jonathan: lows in the equity market and yields are low on the session. tom: we will watch those data checks today. that right now in washington, anne-marie, the washington post is followed the moderate and left of the democratic party for decades and he has a blistering note out this morning that there is no left-wing adventurism here. in new york city in the last three weeks we've seen no left-wing adventurism. how was the left-wing doing in washington as they adventure out into the end of july? >> they are certainly putting pressure on the white house when it comes to the human infrastructure bill which we saw the president try to get more of a pr campaign in the trump counties of the midwest especially yesterday saying that college to promote and explain why we need that second package, but interesting you see progressives riding to the w

the white house says and the treasury secretary, prepare for more, eat less, drive less. this week, the president, choice words, that prices are now up. and what does he propose? more spending. not working together. not finding to put an infrastructure package together but bernie sanders' approach of $3.5 trillion. if the president won't listen to us or his own economic advisers back when he was vice president, i don't know who he'll listen to. but america deserves more. republicans will continue to work to bring inflation down, secure our borders and stop crime in the streets. because unfortunately since democrats have taken the majority, took the majority in the house, first thing they did was defund the police. i watched in my own home state, people walk into stores and walk out without paying. big named brands like target have to close down and can't survive in a big city like san francisco. we see young kids walking the streets of new york being tackled and being shot. in chicago, where they defunded the police or a man and woman are pulled from their car and shot on

and then it offers the treasury bonds on reserves. i go to an interest on treasury bonds. i do like contract reserves. i can try treasury's, they buy them, and that is, it's like it's not financing at all. and as you and already barring off a bank, it's simply letting the banks make money out of the reserves. they've got by turning them into bonds. so that's the vision completely inverts with an aircraft still think is the right around a government. so let's look at the real world that what happened in the past year, especially in the united states, trillions and trillions of dollars were printed by the government. this is the 1st we've seen since the financial crisis of 2008, whereby, you know, it's been the central bank that has been, you know, taking bad assets and putting it on their balance sheet and whatever, you know, games with wall street. but this was the 1st time we've seen during the locked down where the actual us government issued treasury bonds, trillions of them and sent them out. the result has been, according to the fed, reserved data that they released e