is it time now to buy treasuries? matt: treasuries are not a terrible investment.e see real difficulty at a 3.15 to 3.25, above that level. it is not an environment to be overly afraid of treasuries. probably a push higher. but the trade tensions are inflationary long-term. remember, the feedback loops are a stronger dollar and more active fed, which suppresses the market near-term. inflationary long-term but suppression near-term makes the 10-year not a terrible investment, particularly not at a 3.10 level. oksana: i'm always here to bring some dissonance. lisa: please bring it on. [laughter] oksana: i am going to kind of put this in a different light. we just went through a multi-year period of extraordinary accommodation from the fed. the mantra was, don't fight the fed. if you are trying to stay away from the risk you are fighting , the fed. the fed is not your friend anymore as a fixed income investor. all of the investors that were espousing that mantra should now start to believe it on the other end of this because that is the biggest issue for fixed income

now, treasury and importantly the office of the foreign asset patrol is the department within the treasurythat is keenly responsible for this although obviously you are going to have to work with the secretary and state departments to reinstitute the sanctions. that's correct and we've already activated that plan. >> you've only got about 200 people up that are very hard-workinhardworking but witha work i am concerned whether you have the resources to do this. you just lost your top three people that do the sanctions work they just left so the reinsurance system isn't well-founded. the other problem is on the state department, we have done work with the host countries to make sure the sanctions are observed so it would be ideal if we have an ambassador in saudi arabia for example, but we don't have one. none have been nominated. the hype is just fair couple of weeks ago and in jordan a couple of weeks ago we don't have an ambassador in jordan or egypt that was there three weeks ago. mexico you think we would need an investor of mexico with everything we have going on with the immigration o

both a team of treasury and the tfi area. they're working with others and is actively underway. >> you anticipate they will put out some type of report? obviously they will report to you but we have an opportunity to see what the recommendations and suggestions are and >> i'm not sure will be in the form of report that we will make sure that we communicate back to you in terms of us putting out some type of guidance or general comments along those. >> excellent i look forward to that. i look forward to that time. >> the gentleman from michigan, you're recognized for five minutes. >> thank you mr. chairman and thank you mr. secretary for your time today and all of your tremendous work on our economy and job growth. it is just amazing. one of the benefits of going at the batting order is i get to listen to all of my colleagues and respond to some of them. for the record, i consider you to be a genius. >> thank you, i take that >> take it as a compliment. >> the long is by definition, i am. >> for the record, mr. meeks is misgui

what is happening with the treasury curve? it has been flat and then all of a sudden we get steepness during the week. bob: there are a couple things going on. certainly there is a belief the fed is going to stick to its rate path, that we will see increases every other meeting for now. great set of words, but i think also there has been some news out of japan that the bank of japan may tinker with its optimal yield curve control. so they may let the long end go a bit and be supported by market forces. jonathan: lisa, perception is absolutely everything. considering every single word, if it wasn't under a close watchful eye of the market, it is going to be much more so now for chair powell. does chairman powell's job get more difficult because of the president, regardless of what you think he will or won't do? lisa: i agree with bob. i think the fed will continue on with its independence. chairman powell has a path that he is going to follow, and i don't think that changes as a result of the comments from the will result of th

looking at treasury through the week.losing out last week with a yield curve, but it was flat at about 25 basis point. -- points. today we steepen. slightly through the end of the week. next up, the final spread, the week ahead. a decision from the ecb and mario draghi. this is "bloomberg real yield." ♪ jonathan: i'm jonathan ferro. this is "bloomberg real yield." we are live from jp morgan asset management. time now for the final spread. we get a decision from european central bank. we have a g20 weekend meeting of finance ministers. another round of earnings that include tech and european banks and gdp in the u.s. here is quick final thoughts. i am joined by bob michele. want to go over your for convictions. do you believe the federal reserve will raise former times -- for more times and then close? bob: absolutely. that brings the fund rate to two and three quarters to 3% depending where inflation is. that is a real yield of about 0.5% to 1%. that is still generous by historic fed terms, but not overly accommodative. t

not bonds-treasuries. u.s.and european high-yield, will they narrow and spread in the coming year, and from which direction and why? bob: both look great. if we look at u.s. high-yield, it has traded in a range of 330 to 380 since february. we are kind of in the middle of that range. as lisa pointed out, there is a tremendous tailwind coming to corporate earnings. that will be reflected in better credit quality. of cycle u.s. high-yield tends to go to 300 over. i think there is at least 50 to 60 basis points of tightening. we have european high-yield at a 4% handle. but europe looks good. you have an accommodative central bank, you have them buying investment-grade corporates. money will spill over to the european high-yield market. we expect yields to go to 3%. jonathan: should we get to the elephant in the building? your boss on a higher floor, talked about companies this week -- zombie companies this week in european high-yield. what is the thinking? bob: it is a reflection of looking at european central ban

one is at the front end of the treasury curve.ave an 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, the margin of safety. it probably will. nonetheless, it is priced for it. you have a modest margin of safety. secondly, another topic from earlier, 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. right? that is a very unusual relationship, so it strikes me that there is some value there. you know, it is also in the crosshairs of trade wars, of china deceleration, of the u.s. tightening financial conditions. there are challenges, but it is now priced to some degree for those 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. so many people come on this program and are sti

treasury department in washington.'ve got a huge lineup, some of the countries top leaders on the economy and fiscal policy coming up on the program. coming up treasury secretary steve mnuchin will be here, plus later on in the hour, president trump's national economic council director larry kudlow here, along with the advisor and daughter to the president, ivanka trump is here. along with the office of management and budget director, mick mulvaney all coming up. we have extended preview of my exclusive one-on-one interview with president donald trump. >> big thing i'm focused on i have to straighten out trade deals. maria: this marks the six-month anniversary of the of trump tax cuts, first major reform to the tax code in more than 30 years of the legislation had an incredible impact on the economy. i spoke with treasury secretary steve mnuchin about the tax plan six months later and much more. >> we couldn't be happier with the progress that we've made. but we still have more to do. and i think you saw yesterday, i w

debt russia cut its holdings of treasuries nearly in half in april as washington slapped the harshest sanctions to date on the selection of russian companies and individuals and a shift adults bank attributed to a deepening geo political standoff russia is instead keeping up its purchases of gold some people. ask whether the russian central bank sold them to support the ruble in april but it's about changing allocation as reserves continue to grow said latimer midwest chef ski senior economist at downscale bank in helsinki rising u.s. eels have fueled the sell off right while global debt to g.d.p. is almost three hundred percent you know countries like japan it's way higher and one big central bank of the world in twenty eighteen twenty nineteen will go bust probably the bank of japan but could be the european central bank and that will be an enormous catastrophe in the financial sector and gold will be a safe haven play and russia is anticipating this because it's been trying to do trade with the west for a long time fifteen years sixteen years under putin and the west america keep p

treasury department in washington.'ve got a huge lineup, some of the countries top leaders on the economy and fiscal policy coming up on the program. coming up treasury secretary steve mnuchin will be here, plus later on in the hour, president trump's national economic council director larry kudlow here, along with the advisor and daughter to the president, ivanka trump is here. along with the office of management and budget director, mick mulvaney all coming up. we have extended preview of my exclusive one-on-one interview with president donald trump. >> big thing i'm focused on i have to straighten out trade deals. maria: this marks the six-month anniversary of the of trump tax cuts, first major reform to the tax code in more than 30 years of the legislation had an incredible impact on the economy. i spoke with treasury secretary steve mnuchin about the tax plan six months later and much more. >> we couldn't be happier with the progress that we've made. but we still have more to do. and i think you saw yesterday, i w

this is one of the top priorities with treasury. it is critical to close hold in sify us that we need, particularly around joint ventures and other areas. >> at the end of the day we don't want to look back and see that we have not done this job. >> thank you. >> time has expire. we now recognize the gentle later from wisconsin. >> mr. secretary, let me say welcome to you. welcome to the let me get right to it. our chairman referred to the economic miracle of the tax cuts, and i just want to say that the only time that income inequality has been greater than it is now is when, but don, and advent of the great depression. so income inequality is not a good thing for our economy and other peoples economy. before i go on to talk about this a little more i just want refer back to the things i talked about in my opening statement, a universal service fund. there are many, many, manyy more poor people with falling out of the middle class because of the bifurcation of benefits from that tax bill. and so despite the declarations that people

but not bonds-treasuries. u.s.yield and european high-yield, do you think they are going to narrow in spread in the coming year, and from which direction and why? bob: both look great. if we look at u.s. high-yield, it has traded in a range of 330 to 380 over since the start of february, and we are kind of in the middle of that range. as lisa pointed out, there is a tremendous tailwind coming to corporate earnings. that's going to be reflected in better credit quality. high-yielde, u.s. tends to go to 300 over. so i think there is at least 50 to 60 basis points of tightening. you have european high-yield at a 4% handle, but europe looks good. you have a very accommodative central bank, you have them buying investment-grade corporates. money will spill over to the european high-yield market again. so we would expect yields to go to 3%. jonathan: should we get to the elephant in the building quickly? bob: absolutely. jonathan: your boss on a higher floor talked about zombie companies this week in european high-yield.

having said that, we are not sure the 10-year treasury. we find it much more efficient to be short -400 basis points on the german midpoint. that is a completely artificially created price point by the ecb. a moneytt, you are manager, real investor, you have to put money into fixed income instruments. point, the supply demand dynamic, and the fed rolling up its balance sheet, are you concerned about holding a significant duration exposure? >> we are not. we the supply demand dynamic, and the fed rolling up its balance would prn germany. i would agree with the shorts in the near term. pushr 10 push after this down to 2.85 make sense. the fixed income markets are more concerned about down side risks. equity markets can do well to a trade war. fixed income markets need to be concerned about the downside. that is why you see treasuries move lower, corporate bond spreads move higher. near-term is slightly higher in yields but not a prolonged move higher. lisa: when did we see the next recession, matt? today looks like 2020 always are moving up

treasury targets.trated on the front end, it might be slightly more of a range bound rather than outright steepening. fora: what does this mean corporate's, where do you see the opportunity and the corporate space fixed income question mark diana: in the corporate space, we think the reasons for [indiscernible] has provided opportunities in that area. we think u.s. high yields particularly when you look at things such as leverage and the earnings season we are going through also provides interesting opportunities within emerging markets. we are starting to see how much value has been created in some of our space. particularly when you look at the latin american markets where -- corporate's in argentina underlying earnings look robust. opportunities have to be selective. nejra: are you saying the u.s. equity market tell you one thing where high yield is telling you another, equity markets are saying late cycle and high yields say made or -- midcycle? a: there are areas in some sectors of the european ma

. >> that the treasury department official that oversees cfius the company has a lot of data on americans. >> so the chinese economy is government controlled so there is a relationship between the communist government of china and i think the concern is with china it keeps personal information on their people potentially healthcare information and if a chinese company with close ties to chinese government had access to billions of america's health records are being records, that information could be used for purposes if they know who works in the state department if the bank is deep in debt or somebody has four kids going to college may be person is a better target. so there is a growing concern is power it is something that cfius never conceived of with energy stealing gas company there were a defense contractor is a clear alarm bell. but now it is a much broader range of things that in the wrong hands could be misused. >> and to talk about potential theoretical concerns him and espionage perspective there are cases of individuals arrested in the u.s. charged and targeted by chinese spie

this is something to treasury is very actively involved with. actually on my way to puerto rico next week, on my way to the g. 20, puerto rico is an opportunity zone so somethin ths something we are excited about promoting a. can you get an idea when we might see any kind of final regulations that might be to implement this? >> i think you will see regulations soon and again, people will be able to invest in it. we have had very specific conversations with many investors. do you care to put any parameters suing? >> as soon as this year. is there anything the congress can do to help facilitate the process? >> i think we are all set. now that the u.s. has withdrawn we have the opportunity to use additional sanctions to change the behavior. how does the administration intend to apply sanctions going forward to achieve the desired result? >> how does the administration intend to apply sanctions to achieve the results we want to see? >> we are going to snap bac bacl of the iran nuclear sanctions that are in place and we will continue to roll out them

looking at treasury through the week.losing out last week with a yield curve, but it was flat at about 25 basis point. today we steepen. slightly to the end of the week. next up, the final spread, the week ahead. this is "bloomberg real yield." ♪ jonathan: i'm jonathan ferro. this is "bloomberg real yield." we are live from jb morgan asset management. -- a j.p. morgan asset management. never g20 weekend meeting of finance ministers. -- we have a gt -- g20 weekend meaning of finance ministers. i am joined by bob michele. do you believe the federal reserve will raise former times and then close? bob: absolutely. that brings the fund rate to two and three quarters to 3% depending where inflation is. that is a real yield of about one half to 1%. that is still generous by historic fed terms, but not overly accommodative. they will have raised rates for 3.5 years. why not step back and see what other banks are doing and also see how the economy is doing? that takes me to the second conviction -- jonathan: that takes me to the s

treasury curve.o we do expect -- also with the increased supply coming through as well into the market -- we do expect to see a steepening eventually. you are just not paid to take the risk of being longer, actually. jonathan: will the steepening be policy driven or will it be driven by the economic fundamentals? when i say policy driven, we are looking ahead to a boj decision next week. will the catalyst be a bank of japan move to change the yield curve control they have had as a policy tool for quite a while now? marilyn: that is right. they have had this policy tool for quite some time. we have seen a slight move in jgb's, obviously, on the 10-year part of the curve. we know they want this to start to steepen. we are positioned for a steepener as well, but i think based on the fundamentals, economic growth is relatively stable. inflation is still pretty lackluster, but it's starting to come through a little bit. but they need to see profitability, they need to see the banks, the pension funds, the

this is not coming from the treasury, it is coming from the treasury, it is coming from the treasury,ming from other government departments that will have to make cuts elsewhere to fund it. what we have not heard a lot of recently is austerity cuts. last month we had the nhs budget rise, £20.5 billion. on that occasion the government said taxes would have to rise to find that money. but here it is a very different tone. but the figure itself for how much it will cost for these pay rises is relatively modest, about £120 million. the overall bill for public sector pay is £181 billion, a small amount of money. the treasury insists this money. the treasury insists this money can be found by departments. some departments and spend every year and the treasury says that can be recycled and public finances are in better condition at the moment, soa in better condition at the moment, so a bit more money. but a note of caution. departments say they have been under pressure for a decade and there is a lot of money to find to pay for these pay increases. mps have voted to suspend the democratic u

even now with treasury, treasury meets the training process and nine other agencies but even out with treasury stepping out more a senior treasury official told us they are now between 20 and 30 people working at cfius and that's probably one of the biggest because most agencies only have ten people work on cfius and even with those resources they were not able to take vacations in their working wall street banker hours and that is one thing the legislation we've been discussing what address and it would change the cfius budget into a single line item so you request a single number for cfius for the year which they say would help them and empower them to have more hiring authority to address some of those issues but traditionally it's been an ad hoc for the first five years of said cfius and only met ten times so it was obscure until very recently , too be honest. >> host: the mid- 70s the committee on foreign investment comes out in a lot of focus on japan and auto through the 80s and what happened after 911 -- how did cfius mission change? >> guest: congress got interested suddenly.

you never get rich from owning treasuries though. even if you inrest in 30-year u.s.asuries our government bonds with the highest yields their lower terps don't produce much in the way of appreciation. 30 year treasury bonds yielding 3.578%, relatively low% that is much higher than the range we saw in the first nine months of 2015 with that 3.5% yield, as long as you reinvest your coupon payments back into treasuries you might double your money in 20 years the average historical return for the s&p 500 benchmark for u.s. stocks can 10% annually which will let you double your money in a little more than seven years. under the age of 35 and you own a bunch of bonds with the idea that they'll slowly but steadily make you money, you're being way too cautious i know it puts me out there. i've been around that's how i feel. even in your 401(k), ira, you want to be heavily weighted towards stocks when you're young to allow your gains to compound tax free year after year i've told you how great compounding is as you get older, owning treasuries becomes essential because unlike

we are the focus of that at treasury. that was the major focus of the president's trip. i actually had the pressure of signing the m.o.u. my trip last year was a major focus. i went to saudi arabia and saw the opening of the center. i'll be going back, i believe, in october, and i committed on an annual basis to go back. we've issued the first sanctions jointly out of the tftc, and this is one of our major priorities at treasury. mr. pittenger: thank you, sir. as well, do you have any comments you can make referencing the m.o.u. with qatar given the concerns we had in the past regarding the complicit role that qatar had with harboring known finance iers or funding -- finance or funding, said part of the m.o.u., which i read, that would cause, encourage qatar to be more engaged with us in our oversight? secretary mnuchin: i can't comment on past activities but i can comment on current activities. i think they made significant employee agrees. we're working -- significant progress. we're working with them. we had bilateral discussions. i met with them recently on an ongoin

even now with treasury, treasury leads the cfius process with nine other agencies and even now with treasury stepping up even more a senior treasury official told us they are now between 20 and 30 people working at cfius and that is the biggest and most agencies only have maybe ten fewer people focused on cfius so they told us even with those resources they were not able to take vacations and working wall street banker hours and that is one thing that we've had legislation that would address it with and it would change the cfius budget for a single number for the year which they say would help them and it would also empower them to have more hiring authority to address some of those issues but it has traditionally been a pretty ad hoc, for the first five years of cfius, they only met a few times it was obscure until recently. >> host: until the mid- 70s, the committee of foreign investment comes about a lot of focus on japan and auto through the 80s and what happened after 911? how did cfius eight mission change question. >> guest: congress got interested suddenly. [laughter] 911 was describ

treasury yields and commodities tend to be highly correlated because commodity prices feed treasury yields, not the other way around. what is happening at the moment, the common consensus around trade wars it will see u.s. prices rise, inflation in the u.s., but also global growth will fall. you are seeing treasury yields stabilize on the higher inflation story. i think the diversions is consistent with the common consensus in the market. that does not make commodities cannot rise or treasury yields will fall, but it will not be for that reason. guy: protestant erdogan -- president erdogan went on television yesterday. banks were down hard, the stock market down. should investors start preparing for the worse, and what does the worst look like? mark: unfortunately, they should repair for the worst. i really don't see how this ends. there are only two ways. erdogan completely changes his mind, and he decides they need to raise rates and do it aggressively, and restore credibility to their monetary policy. unfortunately, the other path, if he does not relent on how he is going, is capital co

you saw the 10 year treasury yields drop. if you look at eurodollar futures, this is more towards the fed stopping its hiking cycle. those went negative, suggesting a rate cut. let me show you this chart. it is the move index. treasury volatility coming down. any chance this could pick up? >> you got inflation prints. the major thing you are at the moment in terms of a pickup is really more inflation surprise. you have not seen much. you want to be careful that forecasting inflation to knowledgeably. but it looks like your pce is going to come more or less in line. probably not just yet, but certainly if you look at what's happening in the u.s. economy, you got full employment. you are adding a little spending, a load of tax cuts. -- a load of spending, a load of tax cuts. -- is economic models are right. of course, we have heineken numbers we brought you at the top of the show. another headline to update you on. heineken cutting its guidance to about 20 basis point decrease. later this morning, we will be speaking to the hei

treasury yield. look at equity indexes. in asia, led by the nikkei almost 2%. we had gains across the globe in markets that are now closed, but the s&p was up yesterday, stocks in canada were gaining. we saw brazil up. in fx, it starts to get interesting. possibly with the trump effect, you saw a weaker british pound against the u.s. dollar, but you see a stronger dollar against most of the major currencies. a stronger dollar against the euro, stronger dollar against the yen today. if you look at what we see in bonds and commodities, japanese two-year yields falling -- rising this morning. the price, down, but the yield is coming up. maybe we should flip that around. commodities, natural gas down. we saw brent crude down, but nymex gaining a little bit. that spread getting a little tighter. let's get the first word news with in hong kong with debra mao. debra: thanks, matt. u.s. president donald trump has dealt a double blow to u.k. prime minister theresa may on the first day of his visit. he told br

treasury department in washington.hassebrook to the architects of the landmark legislation known as the tax cut in jobs spoke with him about the impacts to tax cuts and how to finally get our debt and deficit under control. >> if we look at the economic data the big thing we see is the capitol spending explosion we predicted would happen which would ultimately benefit workers as the wages go up and there's more capitol it's happening already. in fact foreign direct investment has skyrocketed in the first quarter. american firms are putting their money back to work with foreign firms are as well. >> you have the confidence levels. everybody looks at the government says they are not out to get us. they are going to let us succeed and let us prosper without getting in our way. that's what why you see consumer confidence up in business confidence up their foreign investors have more confidence than a state so it's exactly what will they would be. maria: a lot of people kept saying how do you pay for this and you kept getti

look at the treasury curve we have in the backdrop?we are not seeing the pickup and productivity. hike andd continues to goes about neutral, that curve is going to continue to flatten to zero and invert. the fed is saying we have to tighten but they are not changing that long-term rate. the other one will be global rates. it ended qe and was dovish. it will continue get to zero as the fed continues to-trouble growth does not surge. >> the level of rates in the mid 90's was higher than rates today. the front end is going to become most influenced by domestic purposes. long and term premium is very correlated. bojefforts of the ecb and to suppress real yields and keep the term structure low in those regions has a gravitational pull on the long end. the curve is going to stay flat, flatter and longer than i thought. i am not sure the 30 basis point curve today send the same signal it sent in the late 90's. >> i think the majority of our viewers would agree. mark, does that resonate with you? give myself a great for calls for the year comi

treasuries in april it is not just russia that is diversifying into gold in recent months and years india turkey mexico iran. kazakstan. than mongolia and of course china have been increasing their gold reserves as well erratic and risky economic and foreign policies pose a risk to the dollar as the reserve currency of the world so i think. you know even people like jim records who have been on the show we covered that years ago when the u.s. pulled the trigger or swift when they cut iran off from the system is that always a threat they had the ability to do that but once they pulled it. all other. nations outside the five sort of guys outside of canada australia new zealand in the u.k. start to think well are we going to be next but even canada in that group of people who are being a call you know unfriendly nations in canada has no gold at all they know everything but no china and russia are getting cozier belum he did so grow the new silk road project combining you know concepts and they want to do business outside of the dollar and so makes sense for both china and russia the be accum

treasury department in washington. i have got a huge lineup. some of the country's top leaders on fiscal policy coming up. steven mnuchin will be here. and larry kudlow. along with the advisor and daughter to the president, ivanka trump is here. along with the office of management and budget director mick mulvaney. and we have an extended preview of my exclusive one-on-one interview with president trump. that interview airs sunday at 10:00 a.m. eastern on "sunday morning futures" and monday morning at 6:00 a.m. on fox business network on "mornings with maria." here are the big headlines this week. reporter: another rocky week for the markets. despite a late-week rally by nike, jp more dan and goldman sachs. the markets finishing in the red in part from trade concerns. despite a strong month, consumer stocks and real estate raising rates for the second time this year. trade concerns causing the mark totes finish mixed this week. oil prices hitting a 3 1/2 year high. president trump was in wisconsin this week to break ground on foxconn's facility

the treasury -- at live go.utiny over foreign investments in the u.s., he talked about trade, saying that he was monitoring negotiations and outcomes break closely as to any economic impact. meanwhile, the man who helped to oversee the bailouts or even architected the bailouts is bringing his expertise now to guggenheim securities. guggenheim is purchasing the firm that was run and created by jim --james millstein. also with us is our bloomberg -- bloomberg finance reporter. jim, congratulations. i already asked you and you have already declined to answer, you want to give us a price and terms? [laughter] muchwell, i didn't get as as they wanted in the didn't pay -- i think they probably think they overpaid. [laughter] >> can you talk to us a bit about the rationale for this deal? what are they getting out of it and what are you getting out of it jim:? for the past seven years we have -- out of it? jim: for the past several years we have had conversations about this. i thought i wanted to see if i .ould know my