u.s. budget shortfall causing the treasury to set a record. that is next.his is "bloomberg real yield." ♪ jonathan: i am jonathan ferro. this is "bloomberg real yield." i want to look at where we stand in 2018. we start with the rise of issuance from the u.s. treasury. there has been $1.2 trillion raised in net new cash, dwarfing previous years. high-yield issuance was the opposite. sales slowing to levels we have not seen since 2009. we are on track for the slowest november since 2008. the search continues. more than $762 billion in new loans issued, with new money rising around 8% over a year ago. we are largely driven by a wave of repricing. joining me is ira jersey, noelle corum and jose rasco. high-yield investment great, those in euros and in dollars set for an annual loss for the first and since 2008. how significant is that? noelle: killing back to my growth you for 2019, we expect growth to moderate. we are guessing it will be around low two's by the end of the year. that's a relatively positive platform for credit. we think it is going to -- as lo

u.s. treasury releasing its funding plan and more treasuries are coming. bt sales will surpass levels last seen during the financial crisis. a ballooning budget shortfall, issuance to $83 billion. u.s. corporate bond issuers have their worst in two months. sales totaling $4.3 billion. corn failed to move from initial prices. this is the first time this is happened for a deal since september. gep hainesville failed to attract enough demand. environmental have also been withdrawn. still with me is andy chorlton, noelle corum and tom atteberry. are we finally seeing a bit of a fracture, or something to be concerned about? noelle: it is not quite something to be concerned about . we think growth is moderating a bit from here. as i said earlier, we expect 2.8 into the first half of next year. the second half a little more uncertain. but the thing that we are really trying to always go back to is growth is still pretty healthy. we don't need 3% growth for companies to be healthy. that is why we like credit here, although we tend to be somewhat physically position

u.s. futures point to a slightly higher option. the results doing the chance for any major fiscal initiative for president trump's administration. former treasuryretary paulson has warned of an economic iron curtain dividing the world if the u.s. and china oil to resolve -- fail to resolve strategic differences. he argued the u.s. and china have divergent interests in critical areas that go beyond and 17 years after china entered the wti, it has not opened its economy to foreign competition. theresa may is set to ask her to approve a draft of brexit deal in the coming days if she can persuade eurosceptic members of her team. the chance of wrapping up a deal soon seems to be fading. the leaving judge in brazil's car wash corruption investigation said he agreed to expandstice minister to the fight against graft and organized crime. meanwhile, the president-elect has backtracked on some of his proposals.versial day.l news, 24 hours a powered by more than 2700 analysts.s and thank you. we have broken the numbers, beating the highest estimates. third-quarter operating income, great capital buffers. joining us from amsterdam. welcome on the numbers.

u.s. treasury.n the calendar year, there has been $1.2 trillion raised in net new cash, this number dwarfing previous years. high-yield issuance was the opposite. year-to-date sales slowing to levels we have not seen since 2009. plus, we are on track for the slowest november since 2008. and in leveraged loans, the surge continues. more than $762 billion in new loans have been issued so far, with new money rising around 8% over a year ago. last year's huge volumes were largely driven by a wave of repricing. still with me to discuss the world of credit is i read the from bloomberg intelligence -- i were jersey from bloomberg intelligence, noelle corum and jose rasco. you i want to talk about what is happening in credit. high-yield investment grade, both in euros and in dollars set for an annual loss for the first time since 2008. how significant is that? noelle: so kind of going back to my growth view for 2019, we expect growth to moderate. and we are guessing it will be around low two's by the end of

u.s. treasury releasing its funding plan and more treasuries are coming. bt sales will surpass levels last seen during the financial crisis. a ballooning budget shortfall, happening to raise long-term debt issuance to $83 billion from $78 billion three months ago. u.s. corporate bond issuers have their worst in two months. sales totaling $4.3 billion. failed to drum up much interest. one example was corning, which failed to move from initial prices. this is the first time this is happened for a deal since september. and some deals in high yields, a gas company gep hainesville failed to attract enough demand. deals from international fc stone and gfl environmental have also been withdrawn. still with me is andy chorlton, from schroders, noel coram from invesco, and tom atteberry. what are we seeing in credit? are we finally seeing a bit of a fracture, or something to be concerned about? noelle: it is not quite something to be concerned about just yet. we think growth is moderating a bit from here. as i said earlier, we expect 2.8 into the second or the first

u.s. treasury. well the sanctions have been imposed in terms of the global magnitsky act which provides for accountability for human rights violations anywhere in the world now in terms of this act and the list of seventeen names that is now being mentioned by treasury they have all their financial press. any financial with things they have in the u.s. are completely frozen u.s. citizens are forbidden from doing any form of business with them now that list of seventeen names include a very close aide to the crown prince saud al qahtani as well as the consul general from in stumble of muhammad out of tabor so these names of similar or identical to the seventeen names that the saudis initially listed as being responsible for this killing certainly the state department has just had a briefing describing this as a very important first step the supposition being that they are going to be further steps to come possibly is this likely to satisfy congress or will they still want more well already there's be

u.s. treasury -- of a response is this from the u.s. treasury department?> we are still going through the list and we are expecting more details from the treasury department shortly. it targets all of the officials who are believed to be involved killingg to assemble khashoggi and returning to saudi arabia afterwards. it will not include anyone like conference mohammed -- crown prince mohammad bin salman, so the question is whether these sanctions satisfy people who believe that this assassination goes to the very top of the saudi government. it is definitely an effort to address a lot of concerns we have heard in one guest -- in congress. it restricts the movement and the finances of these individuals. but it's so will leave unanswered the question of who ultimately ordered this operation. was it the crown prince or was it more of a rogue operation? a lot of people in congress believe ultimate responsibility lies with the crown prince. vonnie: right, so basically freezes the assets of these 17 individuals, what does it leave open the opportunity for the u.

u.s. treasury. the success of our health care system isn't just up to us. you have a role to play right now. open enrollment for health insurance is here. if you're uninsured or you don't get your insurance through your employer, go to health care.gov today to shop around and pick the health insurance plan that fits the needs and the budget of you and your family. do your research. just be sure to pick a plan by the deadline of december 15. everything that i and my colleagues in the senate or the do democratic house majority to defend patient protections will be meaningless if you don't go out make sure that you have health insurance. so do it. it is easy. and it is the single best thing that you can do to protect you and your loved ones for 2019. oh, and one last really important thing. we get to take to the streets to protect the mueller investigation. we did to have these arguments about the future of american health care, because we live in a democracy where everyone gets a say. and so, remember that. this sunday veterans day. asdays both were presented

u.s. treasuries meaning the prices for u.s. bonds increased why yields were on the decline and actually fed chairman powell does see some headwinds for overseas of color me in the u.k. but in other countries as well during this week we've got worse economic data out of germany out of japan and so the u.k. just if you want to see it this way to the trouble that we are my seeing overseas while the u.s. so far is still doing pretty well and how much could a disorderly breaks it united states let's say in the long run. well first of all it really depends how much the united kingdom's economy will suffer and then the u.k. is not the biggest trading partner to the actually ranks on number seven behind south korea was a total trade off a good one hundred billion dollars let's say breaks it is done that could also mean that the united states could negotiate a bilateral trade agreement but the bottom line is it really depends how much the u.k. economy will suffer down the line a financial correspondent yang's quarter on wall street yes

u.s. treasury secretaries he mentioned speaking in washington d.c. and next to him is the secretary of state my phone play on they were outlining the extent it's often these sanctions that have now come into effect on iran the u.s. calling them the toughest. the toughest sanctions so far on the country let's cross over to rosen georgia who's standing by at the state department in washington d.c. so as i say the two men outlining the extent of the sanctions rosalind and what they think their objectives are going to be. well daryn pompei i made it very plain at the beginning of his remarks he said that the trumpet ministrations goal is to try to persuade iran to give up his revolutionary government and to try to prove pursue a democratic form of government whether these new sanctions which are essentially a return to the status quo before the signing of the iran nuclear deal remains to be seen but certainly the administration has been suggesting that it's this kind of full throated economic pressure that ultimately will persuade the government in tel h

u.s. treasury secretary steven minutia has reportedly been meeting with chinese vice premier louhi ahead of the summit in buenos sorry is that the end of this month the u.s. side is reportedly still insisting china put an offer on the table for discussion meanwhile china says a framework for further talk coming out of buenos aires should be the goal some news reports suggest the well known schism of the u.s. side between mr minutiae and u.s. trade and bassett or robert light highs or are hindering u.s. negotiators from taking a clear direction in the talks and on the canadian front justin justin trudeau the the prime minister of canada of course expressed optimism that he and president trump can resolve their trade related issues and one of saris the plan is for the leaders to sign the us mexico canada agreement the renegotiated version of nafta at the summit and turning to some apparent consequences of president trump's trade crusade honda motor company says that they will increase production of the acura r.d.x. luxury vehicle in china rather than producing inputs in the u.s. and shipping

the treasury curve -- the high-quality debt space, whether it is u.s. high greater treasuries come are very vulnerable to us. between supply, refinancing, correlations. the fact that japan in china, the two largest buyers of treasuries are starting to get along better. bargaining power and buyers. that is something to pay close attention to. mary: for credit, all year we have seen -- not seen the bid from overseas that is fueled inflows over this credit cycle. a lot of it is the dollar cost of hedging. if you look at euro hedge yield into dollars, it is almost doing better at this point, given we do not have some of the same bottom-up issues from a sector perspective. that is a risk like you said for both investment-grade and high-yield. jonathan: i want to put that question to someone in london, someone outside the u.s.. will he get those outflows through 2019? from where you are sitting, what does it look like? alberto: in the emerging markets in the u.s. there have been some outflows, that the area which really has suffered this year has been europe,

barbelling the portfolio using treasuries and tort dated u.s.ld outperform the market going forward. yousef: hold that thought. we still have a lot to talk about. let's see a snapshot of what is coming up. the latest impacts of the jamal khashoggi case on stocks as trump denies any conclusion about the crown prince's role. what does it mean for the pound and for global markets with the current situation in the u.k.? this is bloomberg. ♪ yousef: let's get to our other top story, the u.k.. challengersvative to theresa may's premiership, according to the sunday times. the prime minister has sent there is no alternative on the table to her brexit deal. lowerund ended the week as uncertainty groups markets. the ceo of the imperative always in. -- bnp paribas weighs in. >> i think we don't know. nobody knows. the british don't know. the only solution is to work on options. be ready to serve the kleins whatever happens and to be strong and resilient. -- the clients whatever happens and to be strong and resilient. yousef: a lot of investors are looking

u.s. treasury. ton of issuance this week, but the one that made a lot of news was the $19 billion of 30 year bonds with a bid to cover ratio that hit the lowest level since 2009. it was awarded 3.42%, above the bidding rate. on the corporate side, this past wednesday investment-grade bar was posted, the biggest supply total since early october. volkswagen led the way with an $8 billion, seven part deal, just shy of $60 billion. and in leveraged loans, spacex is planning to launch a $750 million loan, which will now be led by bank of america. goldman recently led talks on a smaller $500 million financing. still with me to discuss these issues is henry peabody, mary bowers, and alberto gallo from algebris. mary, many people might have missed it. especially if you are outside of fixed income. for leveraged loans, it was the busiest month since may, in october. that was october, where everyone was going crazy, and october was still that busy. how? mary: they posted a small positive return in october. it

u.s. treasury secretary hank paulson contributed to the discussion of crisis management.e led the response to the collapse of lehman brothers in 2008. he sat down with erik schatzker at the new economy forum. >> trade and investment as we know it are apt to change significantly. i see the real prospect of an economic iron curtain where we have both sides throw up walls and unmake the global economy as we know it. >> when you use that term economic iron curtain, you were harkening back to the days of the cold war, and the divide, cultural, economic, military that separated the united states from the soviet union. >> we are not in a cold war now. people who say that, it is overblown. we have the real threat of a cold war if we continue down this trajectory. it is a dangerous trajectory. what i see happening is a growing consensus in washington that china is no longer a strategic competitor, but in danger of becoming a strategic adversary. >> you do not see the risk of china would be a strategic adversary? >> i see the real risks, i see that trajectory. >> a trajectory that

u.s. treasury bond has come down somewhat and also the dollar is slightly weaker today it was with the market reaction of those midterms thank you. the german council of economic. predicts the national economy to grow by only one point six percent this year at the previous estimate of two point three percent they say the government has a number of problems to address because of the aging population the report suggests increasing the retirement age and lowering taxes council also urges the government to take precautions against the ongoing trade war germany relies heavily on exports putting it in a precarious position. allows fed is on that council of economic experts and joins us now just how much of an effect is that trade war having on germany. while the trade force is actually not affecting german economic growth in the course of this year that much we expect a little bit more of a negative effect next year what we see in this year is a special effect from the motiv industries we have a negative third quarter economic growth which is just due to the adoption to the new emission control sys

u.s. treasuries? >> the trade deficit with china is macro economically not the important thing. if you get a shrinkage in the overall trade deficit, that could be significant that would mean a smaller current account deficit, less demand for dollars, a bit -- i guess supportive of treasuries, which means that rates in the u.s. are probably likely to go up a little bit faster than one would expect again, the premise of the question is wide-reaching. for me, trade deficits are a function of macro economics. you have fiscal deficits, the way you have the trump deficits going on in the u.s., you'll have large trade deficits as a result we warned about this we said it doesn't matter what you do, tariffs or no tariffs, if you're having a fiscal deficit approaching 5% of gdp, your trade deficit will grow that remains unchanged i don't see fiscal correctioning in the u.s. in the near-term my high school economics teacher got it so wrong. he said if you can get someone to sell you goods on credit for as long as you want, you're winning. >> why is that wrong >> the president says we shoul

u.s. treasury releasing its funding plan and more treasuries are coming. at sales last -- a ballooning budget shortfall. issuance to $83 billion. u.s. corporate bond issuers have their worst month. sales totaling $4.3 billion. it failed to drum up much interest. this is the first time this is happened for a deal since september. hainesville failed to attract enough demand. still with me is andrew chorlton , nick wadhams --noelle corum and thomas atteberry. we are seeing a little bit of a breakdown or something to be concerned about? noelle: it is not quite something to be concerned about just yet. as i said earlier, we expect 2.8 into the first half of next year. the second half a little more uncertain but the thing that we are really trying to always go back to is growth is healthy. geton't need 3% growth to companies to be healthy. that is why we like credit here, although we can to be physically positioned. andy: i don't disagree but the fundamental picture not being scary. we had refinancing. it gives the issues more flexibility and it's great for bondh

u.s. treasury secretary larry summers says brexit is not a top risk as long as it's orderly. more from my interview coming up next plaque psoriasis can be relentless. tremfya® is for adults with moderate to severe plaque psoriasis. with tremfya®, you can get clearer. and stay clearer. in fact, most patients who saw 90% clearer skin at 28 weeks stayed clearer through 48 weeks. tremfya® works better than humira® at providing clearer skin, and more patients were symptom free with tremfya®. tremfya® may lower your ability to fight infections and may increase your risk of infections. before treatment, your doctor should check you for infections and tuberculosis. tell your doctor if you have an infection or have symptoms such as: fever, sweats, chills, muscle aches or cough. before starting tremfya® tell your doctor if you plan to or have recently received a vaccine. ask your doctor about tremfya®. tremfya®. because you deserve to stay clearer. janssen wants to help you explore cost support options. >>> we just had confirmation or reports that michael gove will remain as environmen

u.s. treasury sold $280 billion this week. we want to talk about two-year notes.he lowest amount since january. over in u.s. investment-grade, there was a bit of a bounce back. wednesday saw the most since november 7 with more than $13.5 billion sold. leverage loans, offerings are getting pulled at the fastest rate since july. ,till with me is priya misra krishna memani and jim schaeffer . what is going on with leverage loans right now? the market is getting a little concerned about what we saw from the earlier issuance. when you think about leverage loans, generally it is logical there is a bit of demand for the asset class. is defensive to the concerns of the market going into the year. rising rates. if we are wrong fundamentally, to get higher recoveries. that led to a lot of exuberance and issuance. he saw aggressive structures and pricing. the loans issued a few months ago were prized aggressively. they had a lot of flexibility for the underlying borrowers. you see a little volatility because of the demand pulling back. you will then see an impact. the second

u.s. treasury has imposed sanctions on seventeen solti officials for their alleged role in the killing of jamal khashoggi but washington stopped short of saying the government itself of the journalist was killed last month after he entered the saudi consulate in istanbul today these all the foreign minister denied that crown prince mohammed bin solomon had any involvement in the death toll in california's wildfires in el stands at fifty nine with authorities warning that one hundred thirty people remain missing thousands of firefighters are still battling blazes in the north and south of the state there with already say they are slowly gaining the upper hand. seven united nations peacekeepers have been killed ten wounded in the democratic republic of congo the peacekeepers were taking part in a joint operation against rebels close to the city of beni in north kivu province along with the country's armed forces. africa's fastest train line has just been opened in morocco by the king and the french president you see the my fair the two hundred kilometer stretch connects the country's two ma

u.s. treasuries. i want to look at the oil selloff and the treasury curve. it was mixed.imited movement on the 10 year. the seven year saw a lower move in friday trade. cable, this is how it closed. it found the footing at 1.28. recommended going rate of 1.32. they saw a deal and dissenting mp's backing it. we will get into that later on in the show. manus: let's get to first word headlines. trump and xi jinping have indicated they are ready for a meeting at g20 in argentina. engaged ineen escalating trade wars that is starting to have greater impact on financial markets and global growth. to make a china wants deal very badly after his administration placed tariffs on $200 billion worth of chinese goods. police in paris have used tear gas and water cannons to disperse protesters on saturday. officers were mobilized to come of8000 protesters the second weekend of demonstrations sparked by rising fuel prices. movemente yellow vest it has morphed into of wider protests against emmanuel macron's government. the deadliest wildfire in california history is nearly out. at least

u.s. treasuries have historically been a safe haven. -- we will continue to equity, trade-off from dividend paying stocks come into fixed income assets. we have seen that in the u.s. if you look in european funds flows, that is an opposite story. that is a reflection of some of the macro concerns and the divergent growth expectations we have seen between what we see in the u.s. and europe. taylor: quickly, what do you do in october -- what did you do in october, by, hold cash, use it as a buying opportunity? managers,active actually october was an exciting month. we were positioned well, underweight risk. coverk the opportunity to and take profits in some of our hedges toward the end of october. as i said, we added back some of our credit risk in ig as well as u.s. high-yield. we continue to be tactical. in the short-term, there will continue to be some price opportunity. in the longer-term, one of the things that we remind ourselves is some of the underlying risks that we see in the 12 months continues to be there, no matter what the m

u.s. treasury. well the sanctions were imposed by the global magnitsky act which was established by a letter from the senate to president trump about a month ago asking that the global minutes be be invoked in this particular case what that is is an act that provides for global to come to billet for any human rights atrocities so now what you have is these sanctions imposed on the seventeen individuals in terms of the global magnitsky act it means that any funds that they might have in the u.s. will be frozen that means to that no u.s. citizen will be allowed to do any financial dealings with these men and republican senator rand paul has said the saudi crown prince at least knew about the killing if not ordered it what can you tell us about that well indeed yes he reiterated those comments in an interview with a u.s. network saying that at the very least the crown prince knew about it and probably ordered it but significant that senator rand paul is not alone in contending this we've also heard in

u.s. treasury department indeed mike let's talk about democratic senator ben cardin saying i'm just quoting here i remain concerned that the administration is enabling the kingdom of saudi arabia in its effort to protect crown prince mohammed bin salon from accountability exactly what you said how is this playing out in the sort of the domestic audience in the u.s. because some senators are also talking about the fact that saudi arabia was sanctioned after the nine eleven attacks where one of the states was implicated in the attacks but there was sort of eluded to the fact that some members of the saudi hierarchy might have supported al qaeda these sorts of issues in a real ring their head seventeen years old very much so it was the obama administration that to the fear.

u.s. treasury department indeed mike let's talk about democratic senator ben cardin saying i'm just quoting here i remain concerned that the administration is enabling the kingdom of saudi arabia in its effort to protect crown prince mohammed bin salon from accountability exactly what you said how is this playing out in the sort of the domestic audience in the u.s. because some senators are also talking about the fact that saudi arabia wasn't sanctioned after the nine eleven attacks where while the state was implicated in the attacks there was sort of they looted to the fact that some members of the saudi hierarchy might have supported al qaeda these sorts of issues in a reassuring their head seventeen years old. very much so it was the obama administration that to the fury of many in congress struck down attempts to hold saudi arabia responsibility for the deaths in nine eleven attack for the families attempting to take legal action against saudi figures because of those attacks bomber actually ruled that he vetoed any legislation that that was the case now since then there has been disqui

u.s. treasury yields heading from here onwards? >> i think u.s. treasuries right now are finally poised 10, 15 more basis points on top would mean that, you know, we go into unchartered territories, then there's a lot of upside territory to go to 4 that's not what we're predicting those increased signs that the global economy is slowing, finally those trade frictions that president trump and others, the chinese are engaged with, the trade war we're seeing and intensifying all the time is having an impact consequently that will put a cap on yields rising further i wouldn't read too much into gilts rallying today that's just a risk-off trade we'll have to see what happens over the next few days and weeks with brexit to see where gilts might end up >> of course just one other broader question, this year there's been a lot of talk about investors pulling out cash away from bond funds into other types of funds looking at your numbers, you had strong net cash inflows for the third quarter of 2018. do you think the appetite from the investor community is

u.s. treasury. the one that made a lot of news, the $19 billion and 30-year bonds.y in the lowest level since 2009. it was awarded at a four-year high above the prevailing rate bid deadline. far worse posted their biggest supply total since early october. they led away with a seven-par deal -- seven-part deal. spacex is planning to launch a loan that will not be led by bank of america. still with me to discuss some of these issues is henry peabody, mary bowers and alberto gallo joining us from london. mary, many people might've missed it. loans -- it is the busiest month since may and october. that is when everybody was going crazy. yet the market was still that busy. mary: i think they posted a small positive return in october and outperformed much of fixed income this year. over 4% year to date. we have had over $100 billion in issuance this year. all the new issue supply out of high-yield. the technical has been good despite the -- in the market. for now it seems like the leverage loan space will be able to print a lot of new issuance. jonathan: is this attractiv

u.s. treasury announces sanctions against seventeen saudis for their alleged roles in the journalist's killing. unarmed taylor says al jazeera live from london also coming up. i believe with every fiber of my being that the course i have says algis the right one for our country and people u.k. prime minister to resume a stand firm on her draft breaks it deal despite affaires backlash within her own administration. and a dash suspends plans to repatriate range refugees after failing to find any volunteers some say they'd rather.

u.s. 10 year yields, it is the very epicenter of a global, contentious conversation. treasuriesg. that's the reality in southeast asia, and that shows you why we are the way we are with u.s. equity futures. that is the situation as it is in the global market. plenty more ahead on bloomberg. this is bloomberg. ♪ >> the following is a paid advertisement for the shark with , presented bylean shark ninja. why is shark the number one brand with millions sold? because they listen to what the consumer wants. of told shark you are tired vacuums that pushed the mess ar