we thought treasuries would underperform relative to bunds.t is mostly because of the differential in the policy front. the ecb will remain very cautious. a few elections coming up in italy and france. generally speaking, but they'll be focused on in the first quarter is shifting from the pandemic program to the app. the focus will be on keeping policy accommodative in the first quarter. you are seeing the exact opposite in the u.s. if anything, the fed is very focused on trying to remove accommodations gradually by raising the balance sheet runoff. it makes sense that yields will rise and treasuries will under arm in a selloff. jonathan: troy, do you agree? troy: same old story with europe. much higher terminal growth rates, higher neutral rates, the ecb is doing qe forever. given where we are in the recovery cycle, based on every metric, whether you look at inflation, the labor market, treasuries, u.s. fixed income high-grade should underperform europe. jonathan: the ecb has a challenge that the fed does not have, italy. the federal reserve

k. treasury ministry, and it was the politicians are completely clueless and service the treasury because there was they were pains to a man. remember the canes actually worked for the treasury. so suddenly before the, the, the 2nd of our war in a bit off. the 2nd world war, so they were all sort of into the sort of keynesian stuff and consequently they, they just didn't understand markets and it was market basically the whole thing done. and we had 3 stocks which had 15 percent coupons. there was a 1515 percent, a 15 and quarter percent, an a 15 and a half percent treasury. just to mention, if the fed had to introduce us treasury's with coupons even half that what that would do to finance is in the government. finance is what it would due to financial asset values in america. i mean, this is actually what we've faced, which is why i say the thing that's going to matter in 2022 is interest rates. all right, you mentioned the bank of england there, and of course that's the grandaddy of all central banks. i think they were chartered back in 16941696 if i'm not mistaken. and interest rates i

take a look at the treasury curve, all right? treasuries are going our way right now. tear no longer pricing in four or five hikes by the fed. now they're pricing in a tougher environment for the economy in general. liz: yeah. 10-year yield came up way -- came way down. 1.75, yesterday it was at 1.83. sarge, david, great to have you both. it is a rocking session right here. the bears are happy, the bulls not so much. [laughter] but we've got to get to the semiconductors, the chipmakers which got slaughtered in yesterday's selloff have kind of been dividing all day into haves and have nots. texas instruments and semiconductor qualcomm was hire, it is right now down half a percent. none of these three are up for the year. and the have nots, take a look. micron, nvidia -- and, by the way, micron for the year so far, it's early, of course, but down about 11% year to date. nvidia down about 18% so far this year. but intel definitely in a class of its own today and at this hour. take a look at the stock. you can see it was up higherer by more than 1% after today's historic a

morning, we discussed the treasury department. kathy chase, president for highway safety will be on to talk about what state and federal laws are needed to curb traffic that's -- deaths nationwide. watch live seven eastern, or on c-span now. join the discussion with your phone calls, facebook comments, texan tweets. >> the national action network this morning held its annual martin luther king day breakfast. speakers included were al sharpton, martin luther king iii, joyce beatty and treasury secretary janet yellen. >> it is my honor to introduce the founder and president of the national action network reverend al sharpton. >> the martin martin day holiday, day of recognition, national holiday takes on special meaning to the national action network. i started my activism when i was 13 years old formally started it. as youth director of the new york chapter of operation breadbasket founded by dr. king. i took that position the year he was killed. this organization from its inception said that we would build on the principles of dr.

treasuries were one of the worst performers.orporate debt did a little better, but when we are looking at the bloomberg corporate unlevered index, still off about 1%. this shows this rotation, how can you not be in these equity markets and it was the case last year. with yields rising finally on the 20 year, is that a relatively attractive opportunity? caroline: so many that already lost the loaner money. i'm thinking of high-profile hedge managers out there that really lost their shirts on the back of this volatile bond market. ashok bhatia is a deputy cio for fixed income and it's great to have you on our show. talk about the volatility we see in the treasury market today of all days. what yields moves and it something we are just getting used to for 2022? ashok: we think this is the big theme for this year. for the last two years, we have had central bank policy being one directional. purchasing bond and maintaining interest rates at zero or negative rates. in the case of the ecb, the emergency programs are being reduced and

and then there is treasuries pandemic response. we knew the communities hurt most by covid were often communities of color. so as we began implementing relief bills like the american rescue plan, we did so with equity in mind. reverend sharpton, we were very glad to host you at our friedmans bank forum last month. we announced there the treasury was injecting $9 billion into community development financial institutions and minority depository institutions. these cdf eyes served people in places that the financial sector historically has not served well. we also included ceos from some of the country's largest financial institutions in the meeting. beyond just injecting capital, we wanted to find ways that these larger institutions to partner with them so they could scale up further. of course, no one program or no one administration can make good on the hopes and aspirations dr. king had for the country. there is still more work treasury needs to do to narrow the racial wealth divide. we also know that progress requires a constella

thank ou both within governmental treasury. thank you both for — within governmental treasury.emy thorpe, just want to leave you with the abolition of the seat that was held by an a neighbouring conservative mp who was persuaded to retire, and jeremy thorpe said, "i thought a gentleman gave up a seat for a lady." but those are old—fashioned times. have a good night. hello, i'm marc edwards, thanks forjoining us. watford have sacked their head coach, claudio ranieri, after 1a games and less than four months in charge. a run ofjust seven points since his appointment on four 0ctober, which culminated in 3—0 home loss to relegation rivals norwich on friday. that defeat saw them drop into the bottom three with 18 matches left, prompting ranieri's departure. the italian, who famously guided leicester city to the premier league title in 2016, managed just two wins in his time in charge at vicarage road. his dismissal means watford are now searching for their third permanent head coach of the season. they take on bottom club burnley on sunday. in the past, we've had unknown names from

when the treasury recovery officer left here today and the deputy treasury secretary and i held sessionsyou all, county leaders and governors, we heard one word over and over, flexibility. flexibility. over and over, we heard that each city and state has been hurt in its own unique way, as its own significant needs, and needs that flexibility to fix the fiscal health and economic damage covid has wrought. in the spirit of spider-man no way home. with great flexibility comes great responsibility. if you are looking at how the public is looking at us and what we are doing with the american rescue plan, i think they are looking and asking, are we using these resources that have not just the power and flexibility to deal with the immediate crisis, but to deal with learn going challenges you face, people are asking, are we using it to address those top economic challenges? at the top of that list, among the top economic challenges we will deal with in 2022 is the issue of whether we are doing everything to retain workers in essential jobs and to expand the supply of workers needed to meet our

treasury too. here is a treasury minister whose brief - treasury minister whose brief related to efficiency, pouring scorn on the very department he was representing as he resigned at the dispatch box in the house of lords, saying that the treasury had been nowhere near good enough in keeping an eye on its money, our money collectively, as taxpayers, during the worst elements of the covid pandemic. he said that he wasn't making a critique of the prime minister particularly in the current context of the swirl of awkwardness for borisjohnson, but nonetheless he contributed to that swirl of awkwardness because there are ways and means of resigning then there is going to the dispatch box and doing it publicly, which is exactly what he did, getting stealth a round of applause which is pretty rare in the rarefied echelons of the upper chamber as he departed, clearly not happy at how the treasury handled some of its approaches in the early stages of the pandemic. the response from the government, i was in

treasury yields surge. oil markets roiled. hits a seven-year high as a drone strike on abu dhabi sparks tension. an crisis planning. finance ministers meet in brussels on how to tackle the challenges of energy and russia. it is all about this turmoil in bond markets. two yields heading above 1% for the first time in quite a while. all the superlatives stacking up to be the most since pre-pandemic levels. what effect is that going to have on risk assets this morning? >> you know, to quote mads pedersen, he does not like duration. long-duration would be a poor investment. there you go. dani: exactly, 100 percent equities. i tried to give him grief on that. he said that is where you need to be positioned. when the time comes, switch to treasuries. i love it when people bat me down. sometimes i get a little bit too much in my head. manus: when you are as unconstrained within algorithm fund, you can do those bold pivots. if the fed goes too far forward in terms of rate hikes and balance sheet reduction, he would be prepared to vaul

what impact will that have on treasuries?nother factor impacting treasuries right now, brent crude trading $87 26 cents. it appears to be the energy market leading the rates market which is leading the equity market. we will discuss that further. we need to throw earnings into the mix. we need to throw the m&a story into the mix as well. all of these factors impacting the u.s. markets. abigail doolittle here with more detail. abigail: it is a bit of a bearish day in the u.s. as well, not exact a what you would expect after a long holiday weekend and the u.s. stocks are down. the s&p 500, the dow, the nasdaq all down more than 1%. truly underperforming, the sox, that chips index, on pace for its worst day in nearly two weeks. that is the case for all of the major averages. we are looking at a monthly decline of a serious magnitude for most of the averages, the worst month for the sox, the s&p 500, the nasdaq going back to september. as you were just mentioning, the culprit, rising rates. the 10 year yield not so long ago was a

she's also been instrumental in safeguarding the credit of the united states treasury, so central toease welcome a friend of america cities, and exemplar of a life devoted to public service, secretary of the treasury, janet yellen. ♪ ♪♪ ♪ ♪♪ [applause] >> thank you. thank you so much. thank you. thank you very much. thank you mayor and thank you all for welcoming me. more than that, thank you all for your carless work over the past two years. and there has been few harder or more crucial jobs during this pandemic it in being a mayor and local governments have in the first ones to fit against this pandemic and as much as anything else, it is been the work of the city that skipped her - on track and that is what i want to talk about today. almost exactly a year ago, 300 city for days since this morning to be precise, i was putting on a very large coat and getting ready to drive to the rent an additional amount watch president-elect biden and vice president-elect harris to take office. it was a historic day for the country. and played out against the backdrop of real jeopardy. roughly 3

that is for treasurys. as far as mortgage-backed securities from 20 billion a month to 10 billion a month this, is more of the taper, if you will. now go to the things they're say saying in the statement really quick. first up let's talk about the actual, this is new. it is called principles for reducing the size of the federal reserve's balance sheet. remember this is a 9 trillion-dollar balance sheet. a lot of people have a lot of issues with this balance sheet. they're basically giving us, we haven't seen this ever really from the federal reserve. they're giving us a guideline how they will start to shrink the balance sheet of the federal reserve. they're starting discussion if you will. okay. here is the big line out of the second piece of the paragraph. the committee expects that reducing the size of the federal reserve's balance sheet will commence, okay, after the process of increasing the target range for the federal funds rate has begun. what does this mean if we know, they have already told us the

the treasury sometime ago. so is _ announced by the treasury sometime ago, so is not new money, andd said the new fund was not new money at all but would — new fund was not new money at all but would be made up of leveling of funds— but would be made up of leveling of funds that _ but would be made up of leveling of funds that have been announced by the chancellor. so confusion, announcements, but how does the no cover— announcements, but how does the no cover it? _ announcements, but how does the no cover it? it _ announcements, but how does the no cover it? it is— announcements, but how does the no cover it? it is different, isn't it? nigel. _ cover it? it is different, isn't it? nigel. the — cover it? it is different, isn't it? nigel, the mail scribes it is a radical blueprint of stability do indeed, they say this would turbo—charge the economy! just indeed, they say this would turbo-charge the economy! just as the express _ turbo-charge the economy! just as the express was _ turbo-charge the economy! just as the express was bullish _ turbo-charge the economy! just as the express

— that's facing opposition from the treasury and there is one insider quoted _ treasury and there isiscriminate between the wealthier and less wealthy people. so there's— wealthier and less wealthy people. so there's all sorts of wrangling going _ so there's all sorts of wrangling going on— so there's all sorts of wrangling going on between number ten, the treasury— going on between number ten, the treasury and conservative mps particularly from the new intake in the red _ particularly from the new intake in the red walk as it was these were they obviously have quite different demographic voters to the ones in traditional— demographic voters to the ones in traditional southern heartland, so it's a _ traditional southern heartland, so it's a very — traditional southern heartland, so it's a very difficult square ft. number_ it's a very difficult square ft. number ten to it's a very difficult square ft. numberten to circle it's a very difficult square ft. number ten to circle and in the run-up— number ten to circle and in the run-upto— number ten to circle and in the run—up to april the

michael: some risk off is driving that treasury bid. but before january, since last spring, you saw a range bound back end. all the excitement was on the front end of the curve. this comes back to this discussion of what will happen with the long-term terminal rate, long-term view of interest rates. the bond market keeps triangulating that we are not going to be too much higher than 1.6, 1.8, maybe 2% on fed funds out to 2025. as long as that condition holds, i don't see reasons why the 10-year has to explode higher here. i know you have a german centric perspective on some things. the bund yield was creeping higher here. that is an interesting security to keep an eye on, if that were to change from being negative to positive. possibly the ecb shifts here. that would be an interesting thing to reinforce a bearish 10 year treasury on the side of the ocean. those things are -- those cases are being considered. matt: at the end of the session, we are approaching a p/e on the s&p of 24. the trailing dividend rate is only 1.4%. do valuations

would be well aware _ obviously the treasury would be well aware of _ obviously the treasury would beested to people might think there's a lot of dark arts going on in the _ there's a lot of dark arts going on in the background there. also embarrassingly for liz truss it also emerged _ embarrassingly for liz truss it also emerged later on the day that in 2007— emerged later on the day that in 2007 she — emerged later on the day that in 2007 she co—authored a report from the reform _ 2007 she co—authored a report from the reform think tank in which he talked _ the reform think tank in which he talked about public spinning cuts in which _ talked about public spinning cuts in which she _ talked about public spinning cuts in which she said that publishing the workers _ which she said that publishing the workers should treat track chair money— workers should treat track chair money as— workers should treat track chair money as if

treasury yields.et's be clear, i thing the outlook for global government bond markets is still pretty tough over the course of this year. i would expect negative returns from most major developed market government bonds this year. but i think if you start to see bund yields pushing higher, you will have to raise estimates for where 10 year treasury yields get to. we have a range for 10 year treasury yields from between 2% to 2.5% for the end of this year , but if you see a change in tone from the ecb, we may be forced to revisit that view. guy: upwards, i am assuming. stick around. we need to talk more about what is happening in the united states in a bit more detail post payroll ahead of that inflation print next week. hugh gimber, jp morgan asset management, sticking with us. the president is poised. we think we are going to be hearing from him in the next few minutes. we can see the podium. the president speaking shortly. we will bring you his comments live in a few minutes. this is bloomberg. ♪ >>

treasuries in 2022 is going to be over two and a half times the amount of treasury supply, net treasury supply in 2021. so the market's going to have a lot to digest going forward. all at that time when qe is coming to an end, which we expect by the end of march, and without a lot of that support, that's going to create a very interesting dynamic >> you've nailed it there for me you've got all this supply coming on so to sell that supply, you're going to have to offer higher yields and your big e egsest buyer in the market is stepping away. >> correct that's one of the things we're going to have to contend with into 2022. we don't know what the treasury market's going to really act like when the biggest buyer starts to step away and iro ironically, this is going to come at a time when inflation is declining. so it's not all bad news there could be some support for the treasury market, but the bottom line though is with the fed stepping way and gdp growth expected to be good, that's probably going to at the margin, push bond yields higher. >> the stock market side of this equation you sa

when the treasury recovery officer left here today and the deputy treasury secretary and i held sessionsyou all, county leaders and governors, we heard one word over and over, flexibility. flexibility. over and over, we heard that each city and state has been hurt in its own unique way, as its own significant needs, and needs that flexibility to fix the fiscal health and economic damage covid has wrought. in the spirit of spider-man no way home. with great flexibility comes great responsibility. if you are looking at how the public is looking at us and what we are doing with the american rescue plan, i think they are looking and asking, are we using these resources that have not just the power and flexibility to deal with the immediate crisis, but to deal with learn going challenges you face, people are asking, are we using it to address those top economic challenges? at the top of that list, among the top economic challenges we will deal with in 2022 is the issue of whether we are doing everything to retain workers in essential jobs and to expand the supply of workers needed to meet our

treasury. technology stocks always lose ground when interest rates rise. bitcoin, 41,$000 a coin, that is a low of the last 2 or 3 months, bitcoin stocks, nasdaq, composite, tech down. covid news, we may be at a turning point how we deal with this was a group of the president's former medical advisors, prominent medical people calling for change of policy, stop trying to eradicate it, learn to live with it. they want some big policy changes. today the supreme court considers biden's vaccination mandate, if those mandates are struck down or suspended that would be a turning point, a major shift. heads up, there's a new variant called ih you that has appeared in france. the alarm bells are not yet ringing. vice president harris getting sharp criticism. in a speech she compare the mohammad omar baradar riots the pearl harbor and 9/11. novak djokovicz is still industrial, he was detained at the melbourne airport and taken to a quarantine hotel where he still is, there are two guards outside his doo

. _ this sort of language even about the treasury, the story says £5 billion is thought— treasury, the that's an incredibly high amount of money at a time when _ incredibly high amount of money at a time when our purse strings are tighter— time when our purse strings are tighter than ever. i think this story— tighter than ever. i think this story would have a lot more prominence were they not constantly firefighting these stories, because with the _ firefighting these stories, because with the cost of living rising, inflation _ with the cost of living rising, inflation at a 30 year high, the surge — inflation at a 30 year high, the surge energy bills coming — the prime _ surge energy bills coming — the prime minister this week refusing to rule out _ prime minister this week refusing to rule out national insurance hiked, he was _ rule out national insurance hiked, he was asked eight times and has not ruled that _ he was asked eight times and has not ruled that out even though it said there's— ruled that out even though it said there's wriggle room that could be postponed, the chancellor

the focus, repricing, what is happening in treasuries.re closed because it is martin luther king day. if you work in london, here is a way to get a pay boost. quit your job and get a new one. financial services workers in london secured an average 19% pay raise. joining us is tom. it did not feel significant apart from the fact that we are in the middle of the pandemic. >> i think it is more a sign of how hot the job market is as well as the salary uplift that you see. there is also a huge number of available jobs. messages come if you are in london and in finance, it is a good job market. tom: the demand for talent. how are things changing inside the u.k. financial services. let's focus on china. the economic growth slowing as consumer spending took a dive eating the central bank to cut its key interest rate for the first time in almost two years. let's bring in james. the economy grew faster than expected but the pboc surprised by cutting rates and deeper than many expected. what is the rationale within the official policymaking of the

on but the treasury role is very large.ant role in working with our allies around the world on a whole raeng of issues from climate change to support for recovery that's even across the global economy. helping relieve dead of poor countries. and we have a huge role in running almost a trillion dollars of programs here at treasury that are part of the american recovery plan so there are wider range of responsibilities, many operational but also an important role in broader economic policy. >> and you mentioned that you hoped and expected inflation would get back towards 2% from the 7% level if it doesn't who deserves more of the blame, you and the prt and the political seats or chair powell in the fed seat >> well, these are responsibilities that are shared the fed clearly has an inflation mandate to be combined with a mandate to achieve full employment the world is a very uncertain place. we have been hit by a pandemic that is created economic challenges that none of us anticipated and it is our hope and intention to bring

when the treasury has not got enough — at a time when the treasury has not got enough of money.ment is considering spreading the number of years to try and lessen— spreading the number of years to try and lessen the immediate impact on families, but if you get is pretty clear— families, but if you get is pretty clear the — families, but if you get is pretty clear the government is called have to do— clear the government is called have to do something and probably do something pretty sharp us —— going to have _ something pretty sharp us —— going to have to— something pretty sharp us —— going to have to do something. not only to miligale _ to have to do something. not only to mitigate the impact but also the sort of— mitigate the impact but also the sort of worry many families will be facing _ sort of worry many families will be facing looking at it april, when the price _ facing looking at it april, when the price cap _ facing looking at it april, when the price cap goes up. facing looking at it april, when the price cap goes op— facing looking at it april, when the price cap goe

there was a focus on the treasuries.ine: how it is playing out in the treasury market is the anticipation of how the yield curve will move after this. which sector of the treasury market is vulnerable? the rolling off the balance sheets of the fed, but also all of the inflation pressures that are coming into commitment, or is it a repricing from the short end that it may be done for the pricing of the fed. to sum up how this displays in the treasury market, there is going to be confusion over the next couple of weeks with investors trying to figure out what it means for the fed to be raising rates and rolling off of the balance sheets. this has never been done in recent fed history. this tightening action that we are seeing here. it is introducing a lot to the treasury markets that we have probably never seen before. francine: this is the most interesting part, the fact that if we look at the historical charts, a lot of what we say about the flattening yield curves is this qt. what are we expecting? where are markets exp

i think we are going to see a move higher in treasury yields.nk you are going to see the 10-year note go above 2% over the course of the coming months. i do think that the fed is going to put it in a more hawkish direction, partly because it is starting to tighten policy. at the moment, the s&p is behaving very well, so this is giving the fed more latitude to do a bit more in terms of policy tightening. in that sense, we have had a bit of a trial balloon and the prospect of quantitative tightening. the "wall street journal" story today following on this comment on last week, it does look as if we are potentially moving more hawkish in terms of the fed, but if it is quantitative tightening, that is more of a bear steepening versus other moves that have been a bear flattening. so we do think u.s. yields be moving higher. is it going to be exerting upward pressure on markets? maybe somewhat less in europe. guy: let's dig into the details of that. 180 basis points between bun ds and treasuries right now. do we get to zero on the bund ? mark: i think

i but that aside, a lot of people in the treasury will be saying, don't reverse this. . which is only a tax rise anyway and you're going back on it. i but do find a way to use some of the extra money you have i got in your coffers. it now looks like we have got maybe an extra 14 billion knocking - around from the lower. borrowing than expected. so he does have a bit of money to play with that he didn't - know he was going to l have a few months ago. what he also didn't know - he would have a few months ago is this big rising energy prices, so if i was at the treasury i - would say don't reverse _ national insurance, but find a way to spend quite a lot of money easing the pain for households _ of this energy price rise. it is interesting that you say it is extraordinary in a way that they've chosen this particular tax rise at a time like this, but it would also be extraordinary for the treasury to go back on something like this that has already gone through the law, it would be a big political signal for the treasury to undo something like that and leave a hole in the f

if you really want to do something, quit buying more treasuries now. back to you. >> we'll have more on geo politics in a minute let me ask you, because what david just said was interesting. the main market narrative right now is the fed has sparked this selloff because of its tightening so everyone is speculating if they're going to have to back off because the market is down so much david said that's not what's happening. the stocks collapsed under their weight they ran up too much in which case it would have no implications for the fed backing off, and maybe they maintain or stay aggressive and hawkish. >> that all sounds easy to say i don't necessarily disagree with the logic, but the fed and the free put with equities goes back to alan greenspan i'm not so sure how much nerve they have, but i agree that somewhere along the line since 2007 and 2008 and all the sins committed against the free market where people have price discovery, there has to be a cost, and has to be pain and we are experiencing that right now. >> all right rick, thank you. it's

with this astonishing selloff i treasuries -- selloff of treasuries driven by the hawkish fed minutesrong concerns about inflation and the idea that inflation is going to persist is a major global problem, and central banks led by the fed will have to respond, that is a big part of what is driving bunds toward zero, which has been the upward bound since 2019. manus: if we look at the german inflation data, it dropped from the previous month, coming in just ahead of expectations. as we push toward zero on the bund yields, and inflation is not as aggressive or topside, it will hand the hawks on the ecb the opportunity to pivot more aggressively when the ppe runs out in march. do you think the discussion will center around what they do with the balance sheet more than rates? garfield: the first thing that will be going on in big contrast with the ecb, they are strongly committed to continuing to purchase. that is what the inflation data could lead to in europe, that would be the spark for that discussion. even with the germans easing off, there is expect tayshaun that will ease off in th

a haven bid for treasuries at 1.772 3%. from new york, this is bloomberg. ♪ leigh-ann: with the first word news, i'm leigh-ann gerrans. as tom was discussing, and geneva, russian foreign minister sergei lavrov says the u.s. secretary of state antony blinken promised to respond next week to moscow's demands for security guarantees. he also repeated that russia has no plans to attack ukraine. blinken says he told lavrov that the u.s. stands firmly behind the ukrainians. he also says that the kremlin needs to address u.s. security concerns. investors are bracing for the prospect that netflix is entering a new fillets of -- a new phase of slower growth. share fell as 20% after the forecast for new customers disappointed. netflix also says the slowdown will continue for at least another quarter. china is vowing to curb the influence of technology companies. authorities say they will also route out corruption tied to what they call the disorderly expansion of capital. this is something that -- banks here in england are starting t

treasury yields in the u.s., it is huge. it would be the biggest gain since 2016 on a monthly basis. tom: went to be get to that 2% level? does it continue to be a bearish curve that we are seeing with rates picked up on the front end unless so towards the back end of the curve? in terms of the markets. the highest elation print for consumer prices in three decades. pressure to act on that. down by .5 of a percent in the ftse 100. -- 0.5 -- .05 of a percent in the ftse 100. in terms of france, -- is down. the flat. across asset. -- cross asset. we are going to time when they are not content with pain them to hold the funds. that is no longer happening because the german 10 year bond has broken above zero. as you can see for the first time since we 19. the futures are point towards lawsuits towards .6%. as investors readjust for the prospects of more aggressive rate hikes. u.s. 10 year at 1.88. mark geopolitics rupture the pipeline between turkey and --. francine: i think we should bring the talk about contagion. i'm also lat

he asked her to move to treasury. she was the highest ranking woman ever at the treasury department. she has gone back to teaching anymore, but what people like about her is she has written about aging financial risk for banks from climate change and opening the door to doing something about it. this is another thing that appears to have putter at the top of this very important list, but she brings a lot to the bid. people feel they have someone with a track record. shery: big changes coming up at the board, kathleen hays with a look at the fed. over in hong kong the city is imposing strict new virus control measures for the near -- first time in the new year as the omicron variant threatens a new wave of infections ahead of the new york winter holiday. >> my view is given the dire situation we have a critical moment, we have to contain the pandemic to ensure there will not be a major outbreak in the community again. shery: let's bring in stephen engle. what steps are being taken right now? >> hong kong is in a pickle

this treasury committee report makes the point treasury committee report makes the ooint that— treasurynflationary pressure on the system. there appears — pressure on the system. there appears to— pressure on the system. there appears to be less than forecast government borrowing, which fiscal studies _ government borrowing, which fiscal studies say will free up {12.9 billion, — studies say will free up {12.9 billion, perhaps the chancellor didn't— billion, perhaps the chancellor didn't think he would have that, which _ didn't think he would have that, which creates some wiggle room. i suspect— which creates some wiggle room. i suspect that actually, johnson will stand _ suspect that actually, johnson will stand his — suspect that actually, johnson will stand his ground on the national insurance — stand his ground on the national insurance increase — but what he will have — insurance increase — but what he will have to _ insurance increase — but what he will have to do something about is the cost _ will have to do something about is the cost of— will have to do something about is the co

as you know, there's an even more interesting correlation between cpi and the ten-year treasury so i would like to talk a little bit about where you think the ten-year goes historically with cpi. >> well, certainly, if we go back in the '70s we had very, very high interest rates and high inflation a lot of people are puzzled and why upon is the ten year higher? the ten-year has become the favorite short term hedge of so many money managers because if something bad happens issue the dow is down 2,000 or 3,000 points and the treasurys are up three points and that insurance policy has become and it shows that more valuable over time it's not an answer for long term investors and short term investors are like a short term cushion that are willing to pay the price. i think they're paying far too high a price for that, but that's one reason yet ten-year is not 2, 2.5 or 3% now. it's that there's been a tremendous flood of demand into longer term treasurys as that so-called risk asset hitch. >> professor, can you do me a favor? i don't know if you have a class to go teach. can you stick aro

the treasury picks up steam. stocks and futures drop as tech sells off.und deals make a break for zero. german inflation today may shift the narrative. gradualism is toast. the balance sheets will be reduced. the question for the bond market is, what is the pace of balance sheet reduction? how and when will they do it? good morning. dani: good morning. it's not often that we have a minutes that will take the market by surprise. the fed is abandoning gradualism. yesterday, it looked like a step change. that's a shock to markets. the past four days, this is the biggest move for real yields since march 2020. manus: the question is this. we are moving from qe to qt. this is what we must abate, the scale of the shock and equities. that has not manifested itself to a far shock. that's what the fed must avoid. avoid the shock. dani: absolutely. for the most part, we've continued to have accommodative conditions which has allowed stoxx to remain easy. if we do get this tightening in financial conditions finally, is that what prompts the bar shock? everything acro

this year and next year, and it reflects the outstanding treasuries as well.he fed does not have as many longer maturity securities in order to control these yield curve,and that is the risk. risky assets will not like quantitative tightening being expedited, but jay powell has memories of what happened in 2018 when he was doing quantitative tightening at the same time as rate hikes. that was disastrous for the risky assets. matt: is the underlying growth strong enough to handle four or five rate hikes? we have four. the consensus for earnings growth is still in the single digits. bloomberg intelligence sees 15% this year. danielle: that is another good question. we have the situation of margins to consider. and the fact we have not seen a big margin, despite the fact that labor costs, and put have all increased. we have heard it on conference calls. as for the economy, we saw a record gains in retail inventories this morning, causing the market to take down their gdp estimate for the first quarter based on the fact that we have built up more inventory than an

. >> what long-term treasury yields are telling us is that the fed cannot hike that much. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: hitting the ground running. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. kicking off 2022 with equity futures higher, and a big week ahead. kailey: culminating in that jobs report. my question is, how close to consensus, if there is any form of consensus, are we actually going to get? i believe we are looking for 400,000, but it has been very hard to forecast whatever jobs report will look like, just as it is hard to forecast where the market is going over the last year. jonathan: it is a moving target. your median estimate is 400,000. does cooling the data help you cool the market? matt: i think if you call the data write and understand how the market values that data, it should help you predict the market outside a fixed income. if you knew what was coming in terms of inflation, and if you knew what was coming in terms of t

market it's almost completely offset by the issue shans of treasury.here's some of that supply being removed. the wild card is if we get a build back better over fiscal stimulus programs over the course of the year to increase that treasury issuance i think the bigger wild card what we saw on wednesday is the fed minutes and saw when they're released is talking about reducing the size of the balance sheet and a tightening behavior. we have marginal tightening but if they're going to let the securities roll offand because we have to run a deficit more treasuries have to be issued and a new supply of securities out there so if they wanted to do the balance sheet reduction quicker which has been talked about then potentially that is a net negative for yields and could be a catalyst for higher rates. this is a global rate sell-off this is not a u.s. phenomenon to see this week. there's been carnage across the global market so that relative value trade is intact and also just because yields risen in the u.s. there's not a natural buyer in the euro zone beca

overall treasury yields are climbing.epricing a lot of the fixed income space across the world. it did advance last week sparked by the federal reserve minutes, signaling a willingness to start hiking rates as soon as march. we will see what the inflation data brings on wednesday. let's get to the first word news update. an australian judge has ordered the release of novak djokovic, squashing the decision to cancel his visa. the tennis star argued he did not need proof of vaccination because he had evidence of recent coronavirus infection. the court agreed it was unreasonable to cancel the visa. they senior minister says the u.k. is in transition to endemic. the education secretary also backs moves to cut covid self-isolation periods from seven to five days as hospitals and schools continue to battle shortages. >> we know with covid, there are all he is variant -- there are always variants. i am confident we are on a path towards transitioning from pandemic to endemic, but you got to make an effort. francine: trips are pr

our base case is you probably start going 80 billion, split across treasuries and mbs.hat is a faster ramp up, not only the timing, but the taper window is compressed. once they start going, it is a faster ramp up. then you get the balance sheet unwind kicking in, much faster than what we had in 2018. jonathan: these are huge numbers. 2018 is the only example historically we have to lean on. can we digest those figures? victoria: you are right, these are really large numbers. i think the market can take it as long as things are done with enough set up, that we know what is coming, we can digest it before hand, and they announced it. if the surprises we are going to have start sooner than later, that is a form of tightening. are the expectations going to be four rate hikes and balance sheet runoff? i think that is too much, and i don't think the fed will take that step. i would anticipate maybe two or three rate hikes and start the balance sheet runoff. those numbers are in line with expectations. i don't think you can do all of those rate hikes and do those levels on th