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00:00VONNIE: FROM NEW YORK CITY FOR OUR VIEWERS WORLDWIDE, I AM VONNIE QUINN. BLOOMBERG REALLY YIELD STARTS RIGHT NOW. VONNIE: CONSUMER SENTIMENT SINKS FOR THE FIRST TIME SINCE APRIL AS INFLATION EXPECTATIONS RISE. THE DATA PUTTING A DAMPER ON A SOLID RETAIL SALES PRINT WITH PRICE PRESSURES UP IN THIS WEEK'S PPI REPORT. GREAT RATE DEBATE HEATS UP RATE WHAT SHOULD THE FED DO AT ITS MEETING NEXT MONTH? INFLATION CONCERNS FRONT AND CENTER. > > INFLATION IS ALIVE AND WELL. > > WE ARE IN A STAGFLATION ENVIRONMENT. > > WE HAVE BEEN CALLING THIS ENVIRONMENT STAGFLATION LIGHT. > > THE ECONOMY IS SLOWER THAN PEOPLE THINK. > > THE ECONOMY WILL BE SLOWER IN THE SECOND HALF OF THE YEAR. > > TO ME THAT SEEMS LIKE A LOT. > > COULD WE GET THERE? POTENTIALLY. WE WILL NEED THE DATA TO JUSTIFY THAT. > > ABSENT A SIGNIFICANT RECESSION THE FED DOES NOT NEED TO CUT. > > WE EXPECT THEM TO CUT IN THE SEPTEMBER MEETING AT PROBABLY ANOTHER 100 BASIS POINTS THIS YEAR. > > THERE'S NO URGENCY ABOUT CUTTING RATES. I THINK THEY WILL CUT RATES. > > JUST BECAUSE THE FED EASES LET'S LOOK AT WHAT THE BOND MARKET DOES. > > WE NEED TO SEE WHAT THINGS LOOK LIKE INTO SEPTEMBER. VONNIE: WHAT A RANGE OF EXPECTATIONS. THE UNIVERSITY OF MICHIGAN SHOWING CONSUMERS EXPECT INFLATION TO RISE FOR THE FIRST TIME SINCE THE SPRING. WE HAD THAT HUGE UPTICK INFLATION EXPECTATIONS. IT CAUSED ALL SORTS OF MARKET ERUPTIONS. ANCHORED. THIS IS THE ONE YOU'RE INFLATION EXPECTATIONS FROM CONSUMERS, THIS IS FIVE TO 10 YEAR, BOTH RISING. WE ARE NOT AT THESE LEVELS BUT WELL ABOVE WHERE WE WERE WHEN LIFE WAS A LITTLE BIT SIMPLER. LET'S FLIP UP THE BOARD AND HAVE A LOOK AT WHERE THE TWO YEAR HAS BEEN TRADING. WE ARE SEEING IT IN A RANGE OF 12 BASIS POINTS. WE WERE AS HIGH AS 3.77 AND AS LOW AS 3.66 AS THE MARKET CONTINUES TO REPRICE WHAT IT EXPECTS FROM THE FED SEPTEMBER 17. WE HAD THE BENIGN CPI DATA WHICH CAUSED RELIEF AND THEN THE LESS NINE PPI DATA WHICH CAUSED REPRICING. WE WILL DIG IN WITH OUR GUEST. SCOTT BESSENT SPOKE TO BLOOMBERG AND HIS COMMENTS ON RATES GOT THE ATTENTION OF EVERYONE. > > WE SHOULD PROBABLY BE 150 OR 175 BASIS POINTS LOWER. THE COMMITTEE NEEDS TO STEP BACK . ONE OF THE MOST POLITICIZED GOVERNORS JUST WENT OFF THE BOARD. VONNIE: JOINING US IS KATHY JONES, CHEAP FIXED INCOME STRATEGIST AT THE SCHWAB CENTER FOR FINANCIAL RESEARCH AND KELSEY BARROW FROM J.P. MORGAN ASSET. LET ME START WITH YOU AND THE TREASURY SECRETARY'S COMMENTS WHICH HE INDEED WALKED BACK. WHAT IF THE ECONOMY WERE EXPERIENCING RATES 1.5% TO 1.75% LOWER? WHAT WOULD IT BE DOING? KELSEY: THAT IS THE QUESTION OF WHERE IS THE NEUTRAL RATES. HOW MUCH STIMULUS ARE YOU EXPECTED TO SEE? IT IS IMPORTANT TO RECOGNIZE NO ONE KNOWS WHERE THE NEUTRAL RATE IS. YOU'RE ALL EXAMINING IT IN REAL TIME BASED ON THE DATA. WHAT I SEE IN THE DATED TODAY IS THE CURRENT LEVEL OF POLICY RATES WHICH IS 4.25% TO 4.5 PERCENT IS MODESTLY RESTRICTIVE RATE IS MORE RESTRICTIVE IN CERTAIN PARTS OF THE ECONOMY LIKE THE HOUSING MARKET, LIKE FOR ANYONE WHO IS BUYING BIG TICKET ITEMS AND FINANCING THOSE ITEMS LIKE AN AUTOMOBILE. IN OTHER AREAS OF THE MARKET IT DOES NOT SEEM TO BE AS MUCH OF A CHALLENGE. IF YOU THINK ABOUT FINANCIAL CONDITIONS, THEY HAVE CONTINUED TO EASE AND FOR THOSE LOOKING TO BORROW MONEY IN THE PUBLIC CORPORATE BOND MARKET THE MARKET IS ESSENTIALLY WIDE OPEN FOR THEM. IT IS A MIX OF VIEWS BUT WHAT I CAN SAY IS I DO FEEL THE CURRENT POLICY RATE IS STILL MODESTLY RESTRICTIVE. VONNIE: LET ME COME TO YOU AND ASK YOU THE SAME THING. JOHN AUTHERS OF BLOOMBERG OPINION WRITING WITH THE CURRENT FED FUNDS RATE AT 4.43 HE IS SUGGESTING IT SHOULD BE ABOUT 2.6%. OVER THE LAST 70 YEARS THE RATE HAS NEVER BEEN THAT LOW WITH INFLATION AS HIGH AS IT IS CURRENTLY. WHAT ARE YOUR THOUGHTS AND WHERE THE NEUTRAL RATE IS RIGHT NOW? KATHY: I AGREE WITH KELSEY. WE ARE ALL TRYING TO FIGURE OUT WHERE THE NEUTRAL RATE IS. I AM NOT SURE WHERE THE TREASURY SECRETARY GOT THAT ESTIMATE BECAUSE THERE IS NOTHING I CAN SEE IN THE DATA THAT WOULD SUGGEST WE NEED RATES SLASHED THAT SHARPLY AND I THINK THAT WOULD BE FAIRLY INFLATIONARY ON THE ASSET PRICE SIDE AND ON GOODS AND SERVICES. IT IS DIFFICULT TO MAKE A CASE FOR THAT BIG A CUT IN RATES UNLESS YOU ARE REALLY LOOKING FOR THE ECONOMY TO FALL OFF A CLIFF. I THINK THERE IS ROOM FOR A 25 BASIS POINT RATE CUT AT THE SEPTEMBER MEETING. THAT HAS BEEN OUR CALL ALL YEAR BECAUSE THE IMPACT OF TARIFFS AND DOES BENDING CUTBACKS WILL WORK THEIR WAY -- AND SPENDING CUTBACKS WILL WORK THEIR WAY INTO THE NUMBERS BY THE FALL. GOING MUCH BEYOND THAT, IT MAY BE ANOTHER 25 BY THE END OF THE YEAR, WE NEED TO SEE THE DATA PLAY OUT IN A WAY THAT CONSUMER SPENDING SLOWS DOWN AND HIRING GETS MUCH WEAKER THAN IT ALREADY HAS OR THE UNEMPLOYMENT RATE MOVES UP. I AM NOT CONVINCED ANY OF THAT WILL HAPPEN. MAYBE ANOTHER 25 BY THE END OF THE YEAR. 150 OR SO, I HAVE NO IDEA WHERE THAT COMES FROM. VONNIE: THE DATA, MUCH AS WE SAW PPI BE DANGEROUS OR A RED FLAG, YOU ARE NOT CONCERNED SO MUCH ABOUT THE LABOR SIDE OF THE ECONOMY OR THE CONSUMER WEAKENING OR ALL OF THE CORPORATE EARNINGS WE GOT THAT SUGGEST SOME CONSUMERS ARE SKIPPING BREAKFAST AND THINGS LIKE THAT? KATHY: I THINK THE ECONOMY IS SLOWING DOWN AND THAT IS WHY A 25 BASIS POINT RATE CUT IN SEPTEMBER AND ANOTHER BY THE END OF THE YEAR MAKES SENSE BUT IN LESS THAT UNEMPLOYMENT RATE REALLY MOVES UP OR HIRING GOES INTO NEGATIVE TERRITORY IT DOES NOT LOOK LIKE CONSUMER SPENDING IS FALLING OFF A CLIFF. WE SAW THE RETAIL SALES NUMBERS TODAY. NOT BAD. WHEN WE LOOK AT THE INFLATION SIDE OF THE ARGUMENT A LOT OF THE INCREASES ARE STILL IN THE SERVICE SECTOR SIDE. WE ARE NOT GETTING AS MUCH OFFSET ON THE GOOD SIDE. WE HAD A 10% DROP IN THE DOLLAR THAT WILL BEAT ITS WAY THROUGH IN IMPORT PRICES AND PETROLEUM IMPORT PRICES WERE UP .3% LAST MONTH AND THAT IS THE HIGHEST WE'VE SEEN IN A YEAR. THERE ARE A LOT OF COMPONENTS WERE ALL THERE WE SEE SLOWING IN THE ECONOMY WE THINK THAT WILL INFLUENCE THE FED TO CUT RATES. WE DO NOT SEE THE CYCLE PLAYING OUT FOR A SERIES OF RATE CUTS ABSENT A REAL DECLINE IN THE LABOR MARKET. VONNIE: WE WERE JUST LOOKING AT THE CHART THAT SHOWED TRADERS PRICING OUT THE PROSPECT OF A RATE CUT IN SEPTEMBER. IS IT A DONE DEAL? KELSEY: IT IS NOT A DONE DEAL. THE MOST IMPORTANT DATA POINT IS THE NEXT PAYROLLS REPORT. KATHY, I AGREE WITH THE ASSESSMENT THAT THE BIG GAME CHANGER FOR THE FED AND FOR THIS MARKET WOULD BE IF YOU START TO SEE MATERIAL INCREASES IN THE UNEMPLOYMENT RATE. RIGHT NOW THE MARKET IS LOOKING AT AN ECONOMY THAT IS SLOWING. CONSUMPTION THAT IS SLOWING. PAYROLL GROWTH THAT IS SLOWING. THERE IS ENOUGH AMBIGUITY ABOUT WHY IT IS SLOWING AND IF THAT SLOWING WILL CONTINUE THAT IT IS NOT NECESSARILY CAUSING THE FED TO MOVE MORE AGGRESSIVELY AND WHAT CHANGES THAT IS IF YOU SEE AN INCREASE IN LAYOFFS, AN INCREASE IN CLAIMS, AND INTEREST IN THE UNEMPLOYMENT RATE. IF WE GET A JOBS REPORT FOR THE SEPTEMBER DATA POINT OR FOR AUGUST THAT IS ESSENTIALLY CONSISTENT WITH THE CURRENT TRENDS, THE FED IS GOING TO DELIVER ON THE 25 BASIS POINT RATE CUT. VONNIE: WE HAVE JACKSON HOLE NEXT WEEK. THERE HAVE BEEN TIMES WHERE IT HAS BEEN A NONEVENT BUT THEY'RE UP IN PLENTY OF TIMES WHERE IT HAS BEEN AN EVENT. WHAT KIND OF MESSAGE DO YOU THINK THE VENTURE WILL WANT US TO TAKE AWAY? KATHY: THAT IS A GREAT QUESTION BECAUSE I DO NOT KNOW WHAT TO EXPECT FROM POWELL AT THIS ONE. I THINK HE WILL WANT TO BE CONSISTENT WITH HIS RECENT STATEMENT SAYING THEY ARE BALANCING THE DUAL MANDATE AND THEY ARE STILL FARTHER AWAY FROM THEIR INFLATION TARGET THAN THEIR UNEMPLOYMENT TARGET. HE ALSO WANTS TO OPEN THE DOOR TO THE POSSIBILITY OF A RATE CUT IN SEPTEMBER BECAUSE I THINK THE LAST LABOR MARKET REPORT WAS PROBABLY A GAME CHANGER FOR THE FED. YOU HAVE HEARD OUTSPOKEN MEMBERS OF THE FED TALKING ABOUT RATE CUTS AFTER THAT AND IT WILL PROBABLY SWAY THEM IN FAVOR OF A RATE CUT. YOU WANTS TO LEAVE THE DOOR OPEN TO THAT BUT I ALSO THINK THIS IS POWELL'S LEGACY AND HE DOES NOT WANT TO BE GOING OUT WITH INFLATION ELEVATED AND LOOKING LIKE THEY HAVE ABANDONED THEIR INFLATION TARGET. MY GUESS IS HE WILL WALK A LINE AND OPEN THE DOOR TO RATE CUTS BUT ALSO IN SEED -- BUT ALSO CONCEDE THE FUTURE IS STILL UNCERTAIN AND THEY ARE WAITING TO SEE THE FULL FLOW THROUGH OF IMPACT FROM TARIFF POLICY AND SOME OF THESE OTHER FEDERAL POLICIES THAT HAVE TAKEN PLACE AND CREATED A LOT OF VOLATILITY IN THE NUMBERS. A LOT OF VOLATILITY IN TERMS OF EXPECTATIONS. THERE IS A GOOD POINT ON THE CONSUMER EXPECTATION NUMBERS. THE FED DOES WATCH INFLATION EXPECTATIONS CAREFULLY. SURVEY DATA CAN VARY A LOT AND WE KNOW THERE ARE SOME ISSUES WITH THAT. WE ARE NOT REALLY SEEING THE INFLATION EXPECTATION NUMBERS COME DOWN TO A LEVEL THAT GIVES THE FED A LOT OF COMFORT IN TERMS OF GOING FORWARD. I THINK HE WILL TRY TO WALK THAT LINE. VONNIE: SAME TO YOU, KELSEY. JACKSON HOLE NEXT WEEK. WHAT ARE YOU ANTICIPATING? KELSEY: I THINK POWELL WOULD LIKE FOR HIS COMMENTS DO NOT NECESSARILY MOVE THE MARKETS AND FOR THE MARKETS TO REPRICE A RATE CUT BASED ON THE DATA FLOW ITSELF. IT IS NOT ABOUT WHAT PEOPLE ARE CALLING FOR. IT IS ABOUT WHAT THE DATA WILL GUIDE THEM TO DO. WHEN YOU SAW THE MARKET REPRICE THAT IS WHAT BROUGHT US FROM 50% PROBABILITY OF A RATE CUT IN SEPTEMBER TO POST 100% PROBABILITY IN SEPTEMBER AND THAT NEXT JOBS REPORT IS WHAT WILL KEEP US AT 100% PROBABILITY OF A RATE CUT IN SEPTEMBER OR CAUSE PEOPLE TO QUESTION THE NECESSITY OF A RATE CUT. REALLY WHAT HAS SHIFTED IN TERMS OF THE VENT'S -- IN TERMS OF THE FED'S REACTION FUNCTION. THEY CONTINUE TO HAVE THE SAME BASE CASE OF YOU. THEY WERE MORE CONCERNED ABOUT INFLATION A FEW MONTHS AGO. NOW THERE IS A POSSIBILITY THE NEED TO BE MORE CONCERNED ABOUT THE LABOR MARKET. VONNIE: THANK YOU SO MUCH FOR JOINING. THAT IS KELSEY BARROW OF JP MORGAN ACID IN OUR THANKS TO KATHY JONES OF CHARLES SCHWAB. THE FORMER -- THE FED CHAIR SPEAKING NEXT WEEK. STRONG DEMAND AND ROBUST EARNINGS HELPING TO DRIVE A SUPPLY BOOM IN HIGH-YIELD. WE TOP CREDIT NEXT. THIS IS "REAL YIELD" ON BLOOMBERG. VONNIE: I AM VONNIE QUINN AND THIS IS BLOOMBERG "REAL YIELD." TIME FOR THE AUCTION BLOCK WHERE WE LOOK AT CREDIT ISSUANCE FOR THE WEEK IN THE MONTH. MONDAY WAS THE MOST ACTIVE DAY IN TERMS OF DEALS AND VOLUME IN THREE MONTHS BUT SALES WERE AROUND $9 MILLION SHORT OF THE FULL WEEK PREDICTIONS. SALES FROM THE LIKES OF CHEVRON, CBS, AND MERCK. IN HIGH-YIELD A SUPPLY BOOM PERSISTS -- THE BUSIEST START SINCE 2021 -- REPRICING IS HELPING RECORDS FOR NEW LOAN ISSUANCE AND IN AUGUST WE ARE ALREADY AT A RECORD FOR LEVERAGED LOAN LAUNCHES EVEN WITH THE SLOW DOWN TO CLOSE THE WEEK. WHEN IT COMES TO CREDIT PRIYA MISRA FROM J.P. MORGAN ASSET AND TOLD ME FUNDAMENTALS ARE STILL STRONG. PRIYA: HIGH-QUALITY SPREAD PRODUCTS MAKE A LOT OF SENSE BECAUSE CONSUMER FUNDAMENTALS ARE STRONG. LOW END CONSUMERS ARE STRUGGLING THE BUT THE MAJORITY SEEMS TO BE DOING OK. STAY IN THE GAP IN STRUCTURE BUT OWN DURATION. IT IS CLEAR FROM THE FED THAT IF THE ECONOMY SLOWS DOWN AND YOU SEE A NEGATIVE JOBS THEY ARE IMPACTING A LOT MORE AGGRESSIVELY. HAVING SOME MIGRATION AND CURVE STEEPENERS AND OWNING SPREAD PRODUCT BECAUSE WE ARE IN A SOFT LANDING. VONNIE: MYTH -- WITH US IS AMANDA LYNAM AND MAUREEN O'CONNOR. THANKS TO YOU BOTH. LET ME START WITH AMANDA. HOW ARE ARE WE IN SUCH A HEALTHY ENVIRONMENT GIVEN THE AMOUNT OF UNCERTAINTY IN THE REPRICING WE ARE SEEING OF THE SHORT END EVERY DAY? AMANDA: IT IS THE FOCUS OF THE BACK TO BASICS CREDIT WORK ON THE CORPORATE SECTOR AND IF YOU DIG UNDER THE SURFACE THERE IS A HEALTHY AMOUNT OF DISPERSION BUT MOST CORPORATE'S ARE NAVIGATING THIS WITH A DEGREE OF RESILIENCE DUE TO OPERATIONAL LEVERS AT THEIR DISPOSAL. COUPLE THAT WITH THE SOLID FUNDAMENTALS THAT PRIYA MENTIONED AT THE START AND IT IS A COMPLEX MIX AND DYNAMIC. IT LEAVES US COMFORTABLE WITH OUR VIEW TO SELECTIVELY MOVE DOWN IN CREDIT QUALITY AND WE ARE NOT SHUNNING CREDIT RISK AT THIS TIME. VONNIE: YOU'RE HAPPY TO MOVE DOWN IN CREDIT QUALITY. MAUREEN, YOU ARE STAYING AT THE HIGH END. IS THERE ANYWHERE YOU ARE CONCERNED ABOUT BUDGET MARK ANY POCKETS OF -- CONCERNED ABOUT? MAUREEN: THE DEMAND DYNAMICS ARE ROBUST ACROSS THE SPECTRUM AND ACROSS THE CURVE AS WELL. A LOT OF THAT HAS TO DO WITH SUPPLY TECHNICALS. WE HAVE HAD A LIGHT ISSUANCE SUMMER WHICH HAS HELPED BRING SPREADS DOWN TO CYCLE TIGHTS. WHEN YOU GET TO THESE VERY RARE IN VERY TIGHT VALUATION LEVELS WE ARE IN NOW IDIOSYNCRATIC RISK DOES START TO PICK UP. UNDER THE SURFACE IF YOU LOOK AT THE MORE CYCLICAL SECTORS THEY HAVE NOT PARTICIPATED IN THIS HUGE RECOVERY WE SAW FROM THE WIDENING PRESSURE AROUND LIBERATION DAY. THERE ARE MORE TARIFF EXPOSED SECTORS THAT COMMANDEER MORE PRESSURE IN THIS ENVIRONMENT. SAID ANOTHER WAY I THINK AVOIDING SOME OF THE LOSERS IS AS IMPORTANT AS PICKING SOME OF THE WINNERS IN THIS ENVIRONMENT. AS A WHOLE WE ARE STILL SANGUINE ON THE OUTLOOK FOR SPREADS. TECHNICALS ARE FIRM AND FUNDAMENTALS -- WE ARE AT THE PEAK OF THE CREDIT CYCLE. I THINK THERE A LOT OF REASONS TO BE POSITIVE. VONNIE: IF YOU LOOK AT THE INDEX WE ARE TALKING ABOUT SUB 5% RETURN FOR INVESTORS. IS THAT ENOUGH OF THE AMOUNT OF RISK THEY ARE TAKING? WE HAD A GREAT EARNINGS CYCLE AND CORPORATE SEEM TO BE IN GOOD SHAPE BROADLY BUT SURELY THERE ARE TARIFFS AND GEOPOLITICAL RISKS AND OTHER THINGS? MAUREEN: I THINK IT DEPENDS WHAT RETURN YOU ARE TRYING TO GENERATE. THE INVESTOR BASE IS DIVERSE. WE HAVE HAD A POSITIVE RETURNING YEAR FOR THE ASSET CLASS. WE HAVE SEEN A LOT OF NEW CASH IN THROUGH ETF AND MUTUAL FUND FLOWS INTO OUR MARKETS AND YOU HAVE THAT DYNAMIC UNDERPINNING THE MARKET. THE PREDOMINANT BUYER OF CREDIT THAT HAS BEEN PERVASIVE SINCE THE START OF THE TIGHTENING CYCLE IN 2022 HAS BEEN THE YIELD BASED BUYER COME THE ASSET LIABILITY MANAGER. JILL AS WE DIPPED LOWER IN YIELDS 5% -- STILL AS WE DIPPED LOWER 5% IS STILL AN ATTRACTIVE ENTRY POINT IN THE LONG END OF THE CURVE HAS BEEN THE MOST UNDERSUPPLIED. THERE'S NOT A LOT OF PRODUCT FOR THESE ASSET MANAGERS TO BUY. IT GOES BACK TO WHAT TYPE OF RETURN ARE YOU TRYING TO GENERATE? LONG END OF THE CURVE IS STILL GOOD ENTRY POINT. TOTAL RETURN IS FOCUS ON THE INTERMEDIATE AND SHORT END OF THE CURVE FOCUSING ON THE MARKETS RECALIBRATION AROUND FED EXPECTATIONS. VONNIE: AMANDA, YOU SAY THE DRIVER FOR THE NEXT RATE CUT WILL BE MORE IMPORTANT THAN THE CUT ITSELF IN YOUR UNIVERSE. IF THE DRIVER IS A MORE FRAGILE ECONOMY OR LABOR MARKET AND THAT IS THE REASON THE FED MAKES ITS MOVE, ARE YOU STILL HAPPY TO GO DOWN THE CREDIT UNIVERSE? AMANDA: I THINK MAUREEN NAILED IT. YOU'LL BAKE TECHNICAL BID IS STRONG SO IF WE HAVE DEEP FED RATE CUTS BECAUSE OF A DETERIORATION IN THE ECONOMY THAT ERODES SOME OF THE YIELD PREMIUM THAT IS EXISTING FOR CORPORATE CREDIT INVESTORS. IF WE WERE TO HAVE A SEVERE DOWNTURN IN THE ECONOMIC BACKDROP FOR SEVERE DETERIORATION IN THE LABOR MARKET ABOVE AND BEYOND OF WEAKENING WE HAVE SEEN YOU SHOULD EXPECT A REBUILD OF RISK PREMIA AND THAT IS NOT SOMETHING THAT IS OUR BASE CASE BUT IT IS A RISK WE ARE WATCHING. WE ARE WATCHING THE FEEDBACK LOOP BETWEEN COMPANY MARGINS, CONSUMER SPENDING, AND ECONOMIC ACTIVITY. THE BEST CASE FOR CREDIT INVESTORS IS A NORMALIZATION OF MONETARY POLICY BECAUSE INFLATION IS COOPERATING AND TO HEAD OFF ADDITIONAL WEAKENING IN THE LABOR MARKET. THAT WOULD BE THE MOST IDEAL OUTCOME. HEADING INTO JACKSON HOLE WE WILL TALK ABOUT FED CHAIR POWELL TO TALK ABOUT THE RISKS TO THE DUAL MANDATE. I WOULD LIKE TO SEE HIM CLARIFY WHETHER HE IS EMPHASIZING THE UNEMPLOYMENT RATE UNDER THE NUMBER OF PAYROLLS ADDED AND A COMMENTARY ON THE NEUTRAL RATE. THE BIG DIFFERENCE BETWEEN NORMALIZING AND EASING AND WE ARE NOT EXPECTING EASING AT THIS STAGE. VONNIE: IT IS PERHAPS OBLIQUE TO THIS MARKET BUT IF WE SEE A BREAKTHROUGH OR SOMETHING THAT COMES OUT OF THE PUTIN TRUMP DIALOGUE DOESN'T HAVE ANY IMPACT ON YOUR UNIVERSE? EVEN IF SANCTIONS ARE LIFTED DOES IT HAVE AN IMPACT? MAUREEN: I DO NOT LIKE TO BE CAVALIER ABOUT GEOPOLITICAL ISSUES BUT I WOULD SAY THAT IS MORE OF AN EQUITY MARKET STORY THAN A CREDIT MARKET STORY. YOU WOULD GET BROADER MACRO SENTIMENT ON THE BACK OF ANY CEASE FIRE STORY. UNLIKELY WE SEE THAT SHOW UP IN ANY WAY. IT WILL BE TECHNICALLY DRIVEN. WE ARE SITTING AT 75 ON THE INDEX. WE ARE ONLY A BASIS POINT OFF THE MULTI-DECADE TIGHTS. HARD TO SEE HOW MUCH TIGHTER WE GO FROM HERE. I DO NOT WANT TO DISMISS GEOPOLITICAL BECAUSE WHEN SOMETHING CAN ARISE AND DERAIL OUR MARKET MEANINGFULLY. OUR MARKET IS INSULATED FROM SOME OF THE HEADLINE TRAFFIC. VONNIE: YOU WOULD SAY THE SAME THING? AMANDA: THERE ARE TWO SIDED RISKS IN THE MARKET WE NEED TO NAVIGATE. THE MARKET EBBS AND FLOWS IN ONE DIRECTION BUT THERE ARE POSITIVE AND NEGATIVE RISKS WE ARE MONITORING. THE REGULATION OF THE FISCAL SPENDING, USING OF POLITICAL TENSIONS, I WOULD PUT THOSE IN THE POSITIVE BUCKETS AND MARGIN PRESSURES IN THE NEGATIVE. IT IS A PRETTY CONSTRUCTIVE ENVIRONMENT LONG AS YOU DO THE BACK TO BASICS CREDIT WORK ON THE CORPORATE BORROWERS. VONNIE: THANK YOU TO YOU BOTH. THAT IS AMANDA LYNAM OF BLACK ROCK AND MARLENE O'CONNOR -- AND MAUREEN O'CONNOR OF WELLS FARGO. CHECK OUT THE BLOOMBERG CREDIT EDGE WEEKLY PODCAST ON THE TERMINAL AND WHERE EVER GET YOUR PODCAST. THE FINAL SPREAD FOR THE WEEK AHEAD. RETAIL EARNINGS IN THE FED'S ANNUAL JACKSON HOLE SYMPOSIUM. THIS IS "REAL YIELD" ON BLOOMBERG. VONNIE: TIME FOR THE FINAL SPREAD. MONDAY AND BURKE SITS DOWN WITH THAT GOVERNOR MICHELLE BOWMAN AS WE KICK OFF OUR COVERAGE IN WYOMING. WEEKEND EARNINGS KICKS OFF WITH HOME DEPOT. LESS THERE IS ASSAULT CRYPTO CONFERENCE. THE FED JULY MEETING AT U.K. INFLATION DATA. WALMART EARNINGS THURSDAY. THE FED CONFERENCE IN JACKSON HOLE KICKS OFF AND FRIDAY THE BIG ONE. FED CHAIR POWELL SPEAKS IN JACKSON HOLE. THAT DOES IT FOR US. SAME TIME SAME PLACE NEXT WEEK. THIS WAS "REAL YIELD" ON BLOOMBERG. ♪

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