Live on Bloomberg TV

00:00> > BLOOMBERG REAL YIELD STARTS RIGHT NOW. STAGFLATION FEARS RE-ACCELERATE AS TRUMP'S TARIFF POLICY HITS THE ECONOMY. YIELDS ON A STEADY CLIMB WITH THE DEMAND FOR TREASURY AS INFLATION FEARS RETURN TO THE FOREFRONT WITH THE U.S. CPI ON DECK. WE BEGIN WITH THE BIG ISSUE UNCERTAINTY CLOUDING THE PATH FORWARD FOR THE FED. CLEARLY, THERE HAS BEEN AN UNCERTAINTY IMPACT TO THE ECONOMY. > > MACRO DATA HAS BEEN QUITE RESILIENT. > > THE QUALITY OF THE DATA HAS DETERIORATED. > > I WORRY WE WILL BE IN A STAGFLATIONARY ENVIRONMENT. > > WE NEED TO BE PREPARED FOR MORE VOLATILITY IN THE DATA. > > WHAT MATTERS IS WHAT IS GOING ON IN THE REST OF THE INFLATION BASKET. > > IT COULD COMPLICATE THINGS FOR THE FED. > > OF WE GET ENOUGH PAIN-AND-SUFFERING, THE FED WILL HAVE NO CHOICE BUT TO REACT. > > THE SAND IS IN THE RISK MANAGEMENT. > > THE FED PUT IS MAYBE NOT AS SECURE AS PEOPLE THINK. > > WE DON'T SEE THE SAME ROLE AS DIVERSIFIERS. > > YIELDS COULD STAY ELEVATED FOR A BIT. > > IT MAKES ME CAUTIOUS ON LONGER TERM TREASURIES. > > WHERE THIS LANDS IS STILL UNCERTAIN. VONNIE: OPEN INTEREST ACROSS THE CURVE RISING AS YOU CAN SEE THIS IS THE 10-YEAR YIELD. THE WEAKER ECONOMIC DATA OUT OF THE LABOR MARKET. AND THEN, WE SAW THE 10-YEAR YIELD CLIMBED STEADILY ACROSS THE WEEK. NOT SO MUCH AN APPETITE BELOW FOR 25 FOR THOSE 10-YEARS. WE SAW A COUPLE OF WEAK AUCTIONS. WE ARE BACK AT WELL ABOVE 4.25 NOW. ARE WE GOING TO STAY IN THE RANGE OF 4.25 ZERO. IT DEPENDS ON WHO THE NEXT GOVERNOR AND A NEXT FED CHAIR IS. WE HAVE BEEN SEEING FED TALK SKEW MORE DOVISH, BUT WE ARE PRETTY NEUTRAL AT THE MOMENT. THAT COULD CHANGE IF STEVEN MIRREN IS CONFIRMED BY THE SENATE AND ENDS UP BEING THE NEXT FED GOVERNOR EVEN TEMPORARILY. HE IS BACK FROM MATERNITY LEAVE AND IS IN A PLACE WHERE HE COULD SPEAK OUT. JP MORGAN SAYING THAT THIS COULD SKEW THE FED MORE DOVISH, AND THAT MIGHT MAKE A HUGE DIFFERENCE WHEN IT COMES TO RATES IN THE NEXT HALF OF THE YEAR. GOLDMAN SACHS' VICE CHAIR AND THE FORMER DALLAS FED PRESIDENT JOINED BLOOMBERG TV YESTERDAY AND SPOKE TO HOW A PIVOTAL WEAKENING LABOR MARKET IS FOR POLICYMAKERS. > > IF I'M GOING INTO SEPTEMBER, I AM SAYING IF I SEE ONE MORE NEGATIVE JOBS REPORT TO CONFIRM WHAT WE HAVE SEEN, THIS TREND, WHICH YOU WILL SEE IN EARLY SEPTEMBER, I WOULD BE INCLINED TO BELIEVE THAT MAYBE I'M WILLING TO TAKE SOME RISKS IN ORDER TO HEAD OFF A FURTHER WEAKENING IN THE ECONOMY. VONNIE: JOINING US IS THE SENIOR FIXED INCOME PORTFOLIO MANAGER FOR --. ONSET, THE HEAD OF FIXED INCOME AND TRADING AT DWS GROUP. WE HAVE SEEN A LOT OF DATA THIS WEEKEND, A LOT OF CHANGING IN THE ENVIRONMENT, FRANKLY. THE POTENTIAL FOR STEPHEN MIRREN TO BE IN AT THE FED. THE POTENTIAL FOR THE NEXT FED GOVERNOR TO BE -- FOR THE NEXT FED TO BE CHRISTOPHER WALLER. HAS THAT CHANGED ANYTHING IN YOUR OUTLOOK? > > I THINK MOST NOTABLE OUTSIDE THE CHAIR NOMINATION IS THE JOB SPRINT WE RECENTLY HAD. WE HAVE SPOKEN ABOUT THIS PERHAPS AD NAUSEAM, BUT THAT NUMBER IS PIVOTABLE IN CHANGING THE NARRATIVES THAT THE ECONOMY IS STRONG AND RESILIENT. THE STRENGTH OF THAT LABOR MARKET. I THINK, REGARDLESS OF WHERE WE END UP WITH THE FED CHAIR, THE GOVERNOR NOMINATION, WE ARE STARTING TO SEE THIS SHIFT THAT PUTS THE FED PROBABLY IN MORE OF A SPOT TO START TO GET READY TO CUT. RECENTLY, IF THERE IS ONE MORE PRINT IN AUGUST THAT IS WEAKER AND POSSIBLE FURTHER REVISIONS TO THE JOBS NUMBER TO THE DOWNSIDE, THIS, TO ME, CEMENTS A SEPTEMBER RATE CUT AND REALLY SOMETHING THAT THE FED MAYBE WANTS TO START ACCELERATING IF WE START SEEING FURTHER CRACKS IN THE LABOR MARKET. ONE THING WE CONSTANTLY TALK ABOUT, WE STILL HAVEN'T SEEN WHERE TARIFFS LAND, WHAT IMPACT THAT HAS TO INFLATION. THAT IS WHERE WE ARE ALSO THINKING THAT THE FED IS GOING TO BE IN A TOUGH SPOT HERE. THEY COULD START THE FED CUTTING CYCLE. I THINK THE MOMENTUM OF THAT IS GOING TO DEPEND ON HOW MUCH OF THE TARIFF IMPACT WE START TO SEE ON INFLATION AND THE CPI NUMBER NEXT WEEK WILL BE A BIG ONE. VONNIE: WE ARE PASSED OF THE WEAK JOBS DATA RIGHT NOW. IT WAS WEAK, BUT THE ECONOMY IS STILL CREATING JOBS AND WE SAW A BETTER JOB STATED THIS WEEK IN AN INITIAL CLAIM. IS IT FOR SURE THAT THE FED WILL FEEL THE NEED TO CUT, ESPECIALLY IF WE GET A HOT CPI PRINT NEXT WEEK? > > THAT'S PART OF THE PROBLEM. THE ECONOMY THE FED THOUGHT THEY WERE LOOKING AT WEDNESDAY IN THEIR MEETING WAS DIFFERENT ON FRIDAY. AS OF JUNE, 19,000 ADDS IN HEALTH CARE. THAT IS NOT A HEALTHY SEGMENT IF YOU WANT TO GROW THE ECONOMY. IF YOU BACK IT OUT IT IS A NEGATIVE PRINT. WE WILL LOOK IMMEDIATELY AT INFLATION WHITE THE MARKET IS GOING SIDEWAYS AND THE FED WILL HAVE TO DECIDE WHICH SIDE OF THE MANDATE IS MORE IMPORTANT AND IF LABOR IS WEAKENING WHAT THREE-MONTH TRENDLINES AROUND 35,000 JOBS, WHAT YOU DO IF THEY START RE-ACCELERATING BECAUSE OF TARIFFS? YOU'VE SEEN IT IN FURNITURE, WE HAVE SEEN IT IN BANANAS. I THINK THAT IS WHY POWELL HAD A TOUGH PRESS CONFERENCE TRYING TO BALANCE BOTH SIDES. VONNIE: HE ALSO HAS ANOTHER PROBLEM THAT STEVE MIRREN COULD BE CONFIRMED. IT'S POTENTIALLY THAT HE COULD BE CONFIRMED AT THE NEXT FED MEETING. IF THAT IS THE CASE IN POWELL DID NOT WANT THE CUT, HE WOULD BE RISKING THREE DISSENTS? GEORGE: WALLER LOOKED COMING UP ROSES WITH HIS LAST DISSENT, AND NOW WE KNOW HOW MIRREN IS GOING TO VOTE IF HE GETS IN ON TIME. CERTAINLY REPRESENTING A DOVISH VIEW AND THAT WILL BE THE THORN IN THE SIDE. I'M NOT WHY KUGLER RESIGNED EARLY BUT POWELL HAD A NO GOOD VERY BAD DAY ON FRIDAY. VONNIE: IS NOT GOING TO FACTOR IN FOR FED CHAIR JAY POWELL THAT THERE COULD BE THREE DISSENTS IF HE REALLY DOESN'T THINK THAT HE AND THE COMMITTEE REALLY DOESN'T THINK THAT THE DATA SHOWS THAT THERE SHOULD BE A CUT IN SEPTEMBER? NISHA: I THINK THIS IS GOING TO BE A FACTOR IN THE DECISION, BUT I THINK CHAIRMAN POWELL HAS DONE A GOOD JOB OF STAYING INDEPENDENT OF POLITICS AND THE PRESSURE HE HAS RECEIVED FROM THE PRESIDENT AND ADMINISTRATION TO SAY THAT WE HAVE TWO DUAL MANDATES. VERY CLEARLY ARTICULATED. FROM HIS STANDPOINT, HE WASN'T SEEING ANY NEED TO MAKE THE CUT, ESPECIALLY AS WE WERE SEEING, AGAIN, PRE-FRIDAY, A VERY HEALTHY LABOR MARKET. AND WE HAVEN'T SEEN A NOTABLE UPTICK IN INFLATION. THIS CHANGES THE NARRATIVE TO WHERE IT'S POSSIBLE CHAIRMAN POWELL NOW IS ALSO THINKING THIS IS POSSIBLY THE TIME FOR US TO START BEGINNING ON AN EASY EASING CYCLE. TO YOUR POINT, I THINK THIS IS CERTAINLY GOING TO BE A FACTOR. BUT I ALSO THINK THAT CHAIRMAN POWELL MAY ALREADY HAVE COME TO THE REALIZATION THAT, LOOK, WE ARE STARTING TO TEETER ON, YOU KNOW, THE LABOR MARKET NARRATIVE STRENGTH, AND POSSIBLY THAT IS THE DECISION HE MAY HAVE ARRIVED AT ANYWAYS. VONNIE: GEORGE, WHAT ARE THE ODDS WE GET A 50 BASIS POINT CUT OR THING START TO ACCELERATE FROM THERE? DOES IT ALL DEPEND ON TUESDAY? GEORGE: 16,000 FUTURES CONTRACTS WENT THROUGH FOR A CUT ON FRIDAY. THE MARKET WILL HAVE TO PRICE THIS IN AGAIN. YOU HAVE A SIMILAR SET UP TO LAST YEAR WHERE IT DIDN'T SEE A 50 BASIS POINT CUT BUT A CATCH-UP CUT FOR WHAT THEY SHOULD HAVE DONE IN JULY. IF YOU GET ONE MORE BAD DATA PRINT OR SANGUINE INFLATION, .2, .3, THE FED FINDS THEMSELVES QUICKLY BEHIND THE CURVE WITH A VERY LOUD ADMINISTRATION IN THE BACKGROUND. VONNIE: WE HAVE AN IDEA WHAT THE FED'S MARY DALY THANKS, BUT LISTEN TO WHAT SHE TOLD US THIS WEEK. MARY: THE LABOR MARKET HAS SOFTENED. YOU CAN SEE THIS EVERYWHERE IN THE U.S. ECONOMY. I WOULD SAY ADDITIONAL SLOWING IN THE LABOR MARKET IS AN UNWELCOME SIGN. ESPECIALLY SINCE WE KNOW, AND IMPORTANTLY BECAUSE WE KNOW, THAT ONCE THE LABOR MARKET STUMBLES IT FALLS, AND IT FALLS QUICKLY, AND IT FALLS HARD. I THINK WE WOULD LIKELY NEED TO ADJUST THE POLICY RATE SOMETIME IN THE COMING MONTHS. VONNIE: YES, WE SAW THAT AS WELL AND SOME CORPORATE EARNINGS, THINKING OF MCDONALD'S, TALKING ABOUT CUSTOMERS SKIPPING BREAKFAST. WE HAD WHEN THESE WITH A BAD OUTLOOK TODAY AS WELL. WHERE WOULD YOU BE COMFORTABLE RIGHT NOW, GIVEN THE MOVE THAT WE'VE SEEN IN THE CURVE, STEPPING IN? NISHA: YEAH, SO I THINK RIGHT NOW THE BIGGEST RISK, IF YOU ARE AN INVESTOR RIGHT NOW, IS POSSIBLY BEING UNDERWEIGHT DURATION AND SITTING IN CASH. WE HAVE BEEN SEEING, CERTAINLY, OVER THE PAST FEW DAYS, THE PAST WEEK, WHERE WE HAVE SEEN THE MONEY MARKET SIDE OF THINGS, THE AMOUNT UNDER IN ASSETS SEE A PRETTY SIZABLE UPTICK. YOU ARE SEEING A LOT PULLING OUT OF EQUITIES OUT OF MARKETS, MOVING INTO CASH, AND MORE OF THE PAIN TRADE COMES FROM NOT HAVING ANY DURATION EXPOSURE. MANY CLIENTS OUT THERE COULD BE EASILY UNDERWEIGHT FIXED INCOME. IN TERMS OF HOW TO TAKE EXPOSURE, I THINK OVERALL JUST HAVING SOME DURATION AND LOOKING TO LEVERAGE SOME OF THE YIELDS WE ARE SEEING, LOOK, THE INTERMEDIATE PART OF THE CURVE, WE ARE LOOKING AT YIELD LEVELS FROM A REAL YIELD PERSPECTIVE ARE VERY ATTRACTIVE, 2% NOMINAL YIELDS OF ROUGHLY 4%.YOU START LOOKING AT OTHER MARKETS, TAX-EQUIVALENT YIELDS ARE NORTH OF 6%, 6.5%. I THINK THIS IS MORE A STORY ABOUT LONG-TERM INVESTORS REALLY HAVING AN OPPORTUNITY TO NOT ONLY LOCK IN INCOME, BUT ESPECIALLY WHILE YOU HAVE THE NARRATIVE AND THE REINVESTMENT RISK RISING SUBSTANTIALLY OF SITTING IN CASH. ESPECIALLY IF THE FED STARTS CUTTING, AND THAT STARTS HAPPENING FAIRLY FAST. VONNIE: I WANT TO BRIEFLY ASK YOU ABOUT FANNIE MAE AND FREDDIE MAC. THIS COULD HAPPEN THIS YEAR PENDING CONGRESSIONAL APPROVAL AND SO ON, BUT THERE MIGHT BE SOME KIND OF AN IPO IS MUCH AS 500 BILLION DOLLARS OR MORE. MY QUESTION IS, WHAT WOULD IT MEAN FOR THE HOUSING MARKET IN TERMS OF INTEREST RATES FOR HOMEOWNERS? GEORGE: THE HOUSING MARKET IS BROKEN RIGHT NOW. I THINK THAT ACTION WILL HELP FANNIE MAE AND EQUITY MARKETS. WE LOVE MORTGAGES. WE WOULD LIKE TO THEM FOR A WHILE. THEY SCREEN CHEAP SO WE CONTINUE TO BUY. CONVENTIONAL'S, FIVE POINT 5% COUPONS, LOCKING IN SOME OF THE YIELDS NISHA IS TALKING ABOUT. GOING BACK TO HER POINT, I THINK YOU HAVE TO TAKE SOME DURATION IF YOU HAVE 7.5 TRILLION IN MONEY MARKET FUNDS. WE ARE LATTER IN THAT DURATION OUT THE CURVE RIGHT NOW. THE ADMINISTRATION HAS ALSO INCENTIVIZED TO GET THOSE RATES DOWN FOR HOUSING AS WELL. YOU HAVE THE GENIUS ACT, YOU HAVE SLR, YOU HAVE BUYBACKS GOING ON, SO DON'T BE SURPRISED THE REINVESTMENT RISK IS THE LARGEST RISK OF THE WHOLE CURVE IS A LITTLE FLATTER AND LOWER NEXT YEAR. VONNIE: NOT TO TODAY BUT MAYBE NEXT YEAR. THANK YOU TO GEORGE CATRAMBONE AND NISHA PATEL. THE ISSUANCE OF U.S. JUNK-BONDS RUNNING AT THAT STRONGEST PACE SINCE 2021. THAT CONVERSATION, NEXT. THIS IS BLOOMBERG. ♪ VONNIE: THIS IS BLOOMBERG "REAL YIELD." IT IS TIME FOR THE AUCTION BLOCK WHERE WE KICK THINGS OFF IN JAPAN. FINDING SOME RELIEF AFTER A SOLID 30-YEAR AUCTION, COMING IN ABOVE THE 12 MONTH AVERAGE, SIGNALING HEALTHY DEMAND DESPITE LINGERING UNCERTAINTIES. IN THE U.S., INVESTMENT-GRADE BOND MARKETS RECORDING THEIR BUSIEST WEEK AND OVER THREE MONTHS. MORE THAN 30 COMPANIES PUSHING WEEKLY VOLUME OF ABOUT $40 BILLION. AND FINALLY, ATTRACTIVE YIELDS AND TIGHTER SPREADS POWERING SUPPLY AND HIGH-YIELD PRIMARY MARKETS. SALES OF U.S. JUNK-BONDS TOPPING $11 BILLION THIS WEEK, MARKING THE BIGGEST STRETCH SINCE JANUARY. SPEAKING CREDIT SPREADS, WEAKENING MACRO FUNDAMENTALS ARE SETTING UP FOR RISK OFF, SHE SAYS. > > IF WE DON'T HAVE THE FED TO BE PROACTIVELY EASING AND WE HAVE THESE INFLATIONARY IMPACTS AND ALSO A WEAKENING JOB MARKET, IT SOUNDS LIKE YOU ARE SETTING UP FOR RISK OFF AND IMPORTANTLY WIDER SPREADS IN CREDIT WHERE FUNDAMENTALS MATTER AGAIN. VONNIE: JOINING US IS KELLY BURTON. THANKS TO YOU BOTH. KELLY, WHY ON EARTH ARE CREDIT SPREADS SO TIGHT WITH SO MANY RISKS, NOT JUST TAIL RISKS, BUT RISKS COMING AT US THICK AND FAST? KELLY: WE HAVE DEFINITELY BEEN SITTING AT HISTORICALLY TIGHT SPREADS IN THE WORLD OF HIGH-YIELD FOR SOME TIME, ABSENT THE DISLOCATION THAT WE SAW AROUND LIBERATION DAY. THERE ARE A FEW FACTORS THAT SUPPORT IT. WE HAD A STRONG TECHNICAL BACKDROP. OVER THE LAST 15 CONSECUTIVE WEEKS, WE HAVE HAD ABOUT $15 BILLION COME INTO THE MARKET FROM HIGH-YIELD ETF IN FLOWS. WE HAVE CONTINUED, AS MANAGERS, TO COLLECT A LOT OF COUPONS ON OUR EXISTING ASSETS. THIS YEAR, MOST DEALS, WHILE IT HAS BEEN MORE RAMPANT AS OF LATE, IT HAS BEEN PRIMARILY REFINANCING ORIENTED. WE ARE RECYCLING A LOT OF THE SAME RISKS. MANAGERS NEED TO REINVEST BACK INTO THE MARKET AS THEY ARE GETTING BONDS CALLED AWAY FROM THEM. WE HAVE A PRETTY HIGH QUALITY MARKET NOW TOO. VERY DIFFERENT THAN 10, 20 YEARS AGO WITH THE MAJORITY BEING DOUBLE BE RATED, AND WE ARE SHORT DURATION ASSET CLASS, JUST AROUND THREE YEARS OR SO IN A DURATION, SO THAT MITIGATES THE SPREADS AS WELL. VONNIE: MATT, WE HAVE HAD $40 BILLION PLUS OF VOLUME THIS WEEK. WHAT IS THE OUTLOOK? DOES THAT CONTINUE? DO PEOPLE TAKE A STEP BACK? WHERE ACROSS INVESTMENT-GRADE ARE YOU LOOKING FOR OPPORTUNITIES? MATT: KELLY I THINK WAS ACCURATE WITH A LOT OF THE STATEMENTS THAT SHE HAD AROUND THE DEMAND FOR FIXED INCOME. SHE IS ON THE HIGH-YIELD SIDE. A FEW YEARS AGO, THEY GET HIGH-YIELD YOU GOT 5% AND NOW YOU'RE GENERALLY GETTING THAT IN INVESTMENT GRADE. I THINK THAT'S BEEN DRIVING A LOT OF DEMAND. WE'VE SEEN A LOT OF PICKUP IN ISSUANCE THIS WEEK, SO IT HAS BEEN A HEAVY WEEK, BUT OVERALL YOU SEE INVESTORS WANT OUT OF THE CURVE, ESPECIALLY INSTITUTIONAL INVESTORS WANTING TO GET THE 4.5% TO 6% AND LOCK IT IN FOR A LONG TIME AND STAY IN HIGH QUALITY INVESTMENT GRADE. VONNIE: BOTH OF YOU, KELLY, HOW DOES IT IMPACT HOW YOU THINK ABOUT YOUR AREA, HIGH-YIELD, WHEN IT COMES TO THE POTENTIAL FOR STEPHEN MILLER TO BE A FED BOARD GOVERNOR? HE IS ONE OF THE AUTHORS OF THE RESEARCH PAPER THAT BASICALLY SET OUT THE MAR-A-LAGO ACCORD. HE THINKS TARIFFS WILL BE DISINFLATIONARY AND SO ON. DOES IT IMPACT HOW YOU SEE THE NEXT SIX MONTHS? KELLY: OVER THE NEXT SIX MONTHS WE WILL BE FOCUSED ON INDIVIDUAL CREDITS. IT'S ABOUT MORE IDIOSYNCRATIC FACTORS IN OUR MARKET THAN I THINK THE BROADER MOVE ON THE FED. HERE OUR HOUSE OF YOU IS THE FIRST FED ACTION IS LIKELY TO BE OCTOBER, WHICH IS A LITTLE OFF CONSENSUS AT THIS POINT, BUT WE FEEL LIKE THERE COULD BE SOME COOLING IN THE MARKET, MORE SLOW DOWN, BUT OVERALL THE CONSUMER HAS BEEN FAIRLY RESILIENT. NOW, SOME OF THE MORE MACRO TRENDS AS OF LATE, MAYBE THE REST OF IT IS EARLIER. I KNOW THE REST OF THE MARKET IS THINKING FIRST RATE CUT IN SEPTEMBER, BUT OVER THE SHORT TERM IT IS MORE ABOUT CREDIT SELECTION. MOST COMPANIES ARE PERFORMING HEALTHILY THROUGH Q2, BEATING EXPECTATIONS, BUT THOSE WHO ARE MISSING, THE BOND PRICES ARE GETTING PUNISHED. IT IS ALSO ABOUT AVOIDING THE LOSERS IN THIS MARKET AS OPPOSED TO JUST PICKING THE RIGHT CREDITS THAT ARE PERFORMING. VONNIE: MATT, ARE YOU AS A SINGLE AND AS KELLY ABOUT, SAY, THE CONSUMER? MATT: THE CONSUMER HAS BEEN CHALLENGED FOR SURE. HIGHER PRICES. YOU SEE THE LOWER END CONSUMER CONTINUED TO BE VERY UPSET WITH THE DYNAMICS THAT HAVE BEEN IN PLACE FOR THE LAST SEVERAL YEARS. THE CONSUMER HAS BEEN CHALLENGED BUT THE JOB MARKET HAS BEEN GOOD. EVERYBODY -- NOT EVERYBODY, BUT A LARGE PERCENTAGE OF PEOPLE HAVE HAD JOBS AND THEY HAVE BEEN SPENDING. I HAVE CONCERNS WITH THE SLOWING OF THE LABOR MARKET. IT IS THIS NO HIRE, NO FIRE MARKET. YOU AREN'T SEEING PEOPLE BEING LAID OFF BUT NOT COMPANIES ACTIVELY SEEKING MORE WORKERS. OVERALL, THAT, GENERALLY, LEADS TO A SLOWING CONSUMER, A SLOWING, WEAKENING CONSUMER. I HAVE CONCERNS AROUND THAT, BUT THAT IS THE ONE AREA OF THE ECONOMY THAT IS IN TROUBLE, THE LOWER END CONSUMER. THE REST OF IT SEEMS TO BE DOING VERY WELL. VONNIE: ARE YOU LOOKING OUTSIDE THE UNITED STATES AT ALL GIVEN HOW MANY POTENTIAL RIPPLES THERE ARE IN THIS MARKET? TODAY WITH GOLD WE SOUGHT A BIG IMPACT ON THE MARKET FOR A TIME, AND I'M SURE THAT AFFECTS, YOU KNOW, PART OF THE INVESTMENT-GRADE UNIVERSE ON DAYS WHEN THAT HAPPENS. IS THERE, A REASON TO LOOK OUTSIDE THE UNITED STATES JUST FOR THOSE REASONS ALONE? MATT: I THINK SO. IN THE LAST SEVERAL MONTHS, THE WEAKENING OF THE U.S. DOLLAR, THAT HAS RENEWED A LOT OF INTEREST IN GLOBAL DEBT. WE HAVE SEEN THAT FROM CLIENTS. EVEN IF WE ARE INVESTING IN WHAT WE CALL HARD DOLLAR, EURO DENOMINATED INVESTMENT-GRADE DEBT, IF THAT IS, IF THE DOLLAR IS WEAKENING IT IS EASIER FOR THOSE COMPANIES OR COUNTRIES TO PAY THAT DEBT BACK. THAT HAS BEEN GOOD. WE HAD A LOT OF CONCERNS AROUND THE TARIFFS AND WHAT IMPACT THEY WILL HAVE ON OTHER COUNTRIES, BUT FOR MOST OF LATIN AMERICA PARTICULARLY THEY ARE NOT HUGE EXPORTERS TO THE U.S., OUTSIDE OF MEXICO, SO OVERALL IT HASN'T BEEN A HUGE NEGATIVE AND WE ARE STARTING TO SEE REAL OPPORTUNITIES THERE OVER THE LAST SEVERAL MONTHS. VONNIE: KELLY, WILL WE SEE A RUSH TO ISSUANCE OVER THE NEXT FEW MONTHS OR WILL WE HAVE MORE ISSUANCE ONCE THINGS ARE MORE CERTAIN IN TERMS OF TARIFFS, IN TERMS OF HE WAS ACTUALLY GOING TO BE LEADING THE FED, IN TERMS OF WHO WILL BE ON THE FED BOARD? KELLY: WE HAVE HAD A RAPID PACE OF NEW ISSUE ACTIVITY ALREADY THROUGH THIS SUMMER AFTER A BIT OF A PAUSE IN APRIL OR SO. I THINK OVER THE NEXT COUPLE OF WEEKS WE WILL BEGIN TO SLOW DOWN SEASONALLY INTO THE LABOR DAY HOLIDAY, BUT IT WON'T BE SURPRISED TO SEE A SLEW OF ACTIVITY ON THE BACKEND OF THAT. I THINK WE HAVE SEEN NOT JUST REFINANCING ACTIVITY, BUT AS OF LATE A SIGNIFICANT UPTICK IN STRATEGIC M & A TRANSACTIONS TO BE ANNOUNCED. WE WILL SEE DEALS IN THE MARKET TO FINANCE THOSE EVEN IF PROCEEDS ARE INITIALLY PUT INTO ESCROW FOR SOMETHING THAT IS IT EVEN CLOSING UNTIL NEXT YEAR. I THINK THAT THAT WILL BE A THEME TO WATCH GOING INTO THE END OF THE YEAR AND EARLY 2026 IS MORE TRUE NEW RISK PUT BACK IN THE MARKET IN THE FORM OF M & A ACTIVITY, AND FOLLOWING ON THAT, MAYBE THERE IS A RETURN OF PE INTO THE MARKET AS WELL. TODAY, THAT HAS BEEN QUITE MUTED, BUT WE ARE SEEING A CHANGE UNDERFOOT IN TERMS OF M & A WITH STRATEGIC'S. VONNIE: THANK YOU FOR JOINING ME TODAY. KELLY BURTON AND MATT BRILL. IF YOU CAN'T GET ENOUGH, PLEASE CHECK OUT THE CREDIT EDGE WEEKLY PODCAST ON THE TERMINAL AND WHEREVER YOU GET YOUR PODCASTS. STILL AHEAD, THE FINAL SPREAD. THE WEEK AHEAD FEATURING U.S. RETAIL SALES AND ANOTHER BIG INFLATION PRINT IN AMERICA. THIS IS "REAL YIELD" ON BLOOMBERG. ♪ VONNIE: IT IS TIME NOW FOR THE FINAL SPREAD, THE WEEK AHEAD. A BUSY STRETCH OF FED SPEAK IT GETS UNDERWAY WITH MICHELLE BOWMAN ON SATURDAY, IN FACT. ON TUESDAY, WE GET U.S. CPI, AN ALL-IMPORTANT CPI REPORT, AND IN THE U.S.-CHINA TRADE TRUTH IS SET TO EXPIRE TUESDAY. WE WILL SEE IF THAT GETS EXTENDED. WEDNESDAY, MORE FED SPEAK FROM GOOLSBY AND BOSTIC FOLLOWED BY U.S. PPI, AND ANOTHER READ ON THE LABOR MARKET ON THURSDAY WITH INITIAL JOBLESS CLAIMS ONCE AGAIN. THE NEW MICHIGAN SENTIMENT SURVEY TO BUILD OUT THE WEEK ON FRIDAY. LET'S TAKE A CLOSER LOOK AT THE WEEK AHEAD AND THE CPI DATA ESPECIALLY, ESTIMATES CALLING FOR CORE CPI TO TICK DOWN FROM THE MONTHS PRIOR, 3% YEAR-OVER-YEAR. THAT WOULD BE A FULL PERCENT ABOVE THE FED'S TARGET. IF THAT DOES HAPPEN, WE WILL HAVE PLENTY OF QUESTIONS WHEN IT COMES TO WHAT HAPPENS AT THE NEXT FED MEETING, WHICH, DON'T FORGET, IS SEPTEMBER 17. YOU HAVE THE REST OF AUGUST, BUT THEN A COUPLE OF BUSY WEEKS COMING INTO SEPTEMBER, AND WE MAY EVEN HAVE A SENATE CONFIRMATION HEARING TO HAVE BEFORE THAT. THAT IS IF THE STEPHEN MIRROR AND PICK DOES GO AHEAD. THIS HAS BEEN REAL YIELD. SAME TIME, SAME PLACE NEXT WEEK. THIS IS BLOOMBERG. ♪

No schedule data available.

BTV Channel FinderWatch BTV in your area

Uncertainty Complicates Fed's Rate Path | Real Yield 8/8/2025

"Bloomberg Real Yield" highlights the market-moving news you need to know. Today's guests: Parametric SMA Fixed Income Portfolio Manager Nisha Patel, DWS Group Head of Fixed Income and Trading George Catrambone, Barings High Yield Portfolio Manager Kelly Burton and Invesco Head of North American Investment Grade Credit Matt Brill. (Source: Bloomberg)

More From Bloomberg Real Yield
All episodes and clips

Bloomberg Markets
"Bloomberg Markets" is focused on bringing you the most important global business and breaking markets news and information as it happens.
More episodes and clips