lisa: your call on treasury yields? matt: we are at 1.75. marilyn: when you look at the liquidity in the system, that it is increasing again into next year as well, i think the fed is doing a lot going into year-end, helping with the repos. when you look at that, that will continue to contain the dollar, support growth. it is hard to see a reason why i think the u.s. would deteriorate significantly from here. we think it will remain on trend. lisa: what is your 10 year treasury call? maryland: we are between 1.8 and 2. lisa: you mentioned repo, that is the magic word. the fed announced new repo terms, taking place this month and next. a strategist weighed in on this, saying the fed expects take up to be this large and they want to make sure they provide that level, or they just wanted to make sure everyone knew they were not going to undersize it. i would not expect this to be fully subscribed, but it should be fully comforting to participants that it is available. the interesting thing is that we have seen all of the recent repo operations

i want to understand where treasury is with regard to disseminating data in the treasury market. this is something but for assets that are traded, you get price for the fact, which has led to increased competitiveness, liquidity, and lower transaction costs. i know treasury has been looking into that for quite a while and recently said they were going to tart disseminating volume data but weren't going to put out pricing data or volume data that were very close to those trades. i was curious why that decision was made. are there further steps that are going to be taken to release more data around transition in the treasury market? sec. mnuchin: let me respond. this is a complicated issue. first, let me just say the u.s. treasury market is one of the most liquid markets in the world. it has very small transaction costs. obviously, it facilitates our borrowing. the number one objective is to make sure we don't do anything that is detrimental. reppo hollingsworth -- representative hollingsworth: i understand that -- sec. mnuchin: we've studied this arefully and trying to balance the

10 people that are directly in the treasury work on that, but we have probably 50 people within treasury -- >> does anybody work just for fsoc? >> yeah, there is a small number of people. >> how many, sir? >> again, it is roughly, it's slightly less than a dozen people. >> less than a dozen. >> yes. >> do you know what the maximum number was at the height? >> again, comparing it to the middle of t.a.r.p., in the middle of the financial area, and by the way, there were not -- >> thank you very much. >> let me start over again, and i would like to thank the secretary for his time today and without objection, all members will have five legislative days in which to submit additional written questions to the chair which will be forwarded to the secretary for his response. i ask the secretary to please respond as promptly as you are able. without objection, all members have five legislative days in which to submit extraneous materials to the chair for inclusion in the record. thank you very much. this hearing is adjourned. >> thank you very much. subcomm, this is an hour and a off. >> my colle

lisa: what is your 10 year treasury call? 2.ilyn: where we are now and lisa: the fed announced new repo terms, taking place this month and next. in on this, weighed saying the fed fever expects this to be large and they want to make sure they provide that level, or they just wanted to make sure everyone knew they were not going to undersize it. i would not expect is to be fully subscribed, but it should be fully comforting to participants that it will be available. the interesting thing is that we have seen of the recent repo operations oversubscribed. does this indicate there is some concern among market participants? i wouldn't call it stress or concern. people are stressed out a couple when, in the wake of what happened in september, they thought we need to get our act together for year-end. i don't think there is necessarily going to be a lot of stress over year-end, in part because the fed is sending a significant signal here. you also have to remember the treasury's cash balance is expected to go up, so the fed will hav

treasury work on that, but we have probably 50 people within treasury -- >> does anybody work just for fsoc? >> yeah, there is a small number of people. >> how many, sir? >> again, it is roughly, and slightly less than a dozen people. >> less than a dozen. >> yes. >> do you know what the maximum number was at the height? >> again, comparing it to the middle of t.a.r.p., in the middle of the financial area, and by the way, there were not -- >> thank you very much. >> let me start over again, and i would like to thank the secretary for his time today and without objection, all members will have five legislative days in which to submit additional written questions to the chair which will be forwarded to the secretary for his response. i ask the secretary to please respond as promptly as you are able. without objection, all members have five legislative days in which to submit extraneous materials to the chair for inclusion in the record. thank you very much. this hearing is adjourned. >> thank you very much. >>> and we stay on capitol hill for more live coverage. the house armed services

i want to understand where treasury is with regard to disseminating data in the treasury market. but for assetsng that are traded, you get price for the fact, which has led to increased competitiveness, liquidity, and lower transaction costs. i know treasury has been looking into that for quite a while and recently said they were going to start disseminating volume data but weren't going to put out pricing data or volume data that were very close to those trades. i was curious why that decision was made. are there further steps that are going to be taken to release more data around transition in the treasury market? sec. mnuchin: let me respond. this is a complicated issue. first, let me just say the u.s. treasury market is one of the most liquid markets in the world. it has very small transaction costs. obviously, it facilitates our borrowing. the number one objective is to make sure we don't do anything that is detrimental. --po hollingsworth representative hollingsworth: i understand that -- sec. mnuchin: we've studied this carefully and trying to balance the disclosure issues

as well as the demand from treasuries -- for treasuries from overseas accounts is quite overwhelming. even though there has not been millions much yield pickup currency adjusted basis. under currency adjusted basis. under the circumstances, i don't see yields rising meaningfully from here. if there is any weakness in the data, you will see a rally in bonds. matt: the thing we are focused on next year is the confidence c suite level and corporate america. we don't have reason to believe that you'll continue to see a deterioration in ceo confidence. in order to get the economy to slow to a point where the fed would qualify it as a material change in their outlook, you are going to have to see ceos get pretty pessimistic on the outlook in order to start laying people off. eventually and that would happen, the fed would react to that, but we don't have reason to believe ceo confidence will all that hard in an election year because of the uncertainty. you don't want to lay out 20% of your workforce prior to the election because if the outcome is a positive outcome, you will have to hire al

treasury money market and the u.s. treasury government money market, which a lot of americans hold -- i hold those through t. rowe price -- we currently have a prices debt crisis in the repurchasing market, putting in the $160 billion a day and have been for the past two and half to three months, into these repurchasing agreements. and what the federal government did was the interest rate, as the gentleman spoke, was 1.75%. it rose to 10% in less than one week's time, at which time mr. powell came in, federal reserve chairman, and we have but a cap on what you can earn on those two funds. they did that just for the reason we were discussing. we cannot afford to be paying s, repurchasing agreements, so we are right back where we were in the 2008 crisis when banks cut in over their head. otherwise, why would we have mr. powell come in and cap those two marketplaces? in those two funds, u.s. of thosemoney, 30% funds, both have 30%, are of repurchasing agreements. i feel that that goes against everything when it comes to a

within treasury-- . does anybody work just for fsoc? >> yeah, there's a small number. >> how many, sir? >> again, it's roughly-- it's slightly less than a dozen people. >> less than a dozen. >> yeah. >> do you know what the maximum number was at its height? >> again, comparing this to the middle of tarp, okay, in the middle of the financial era, when, by the way there weren't-- >> thank you very much. >> let me start over again, i'd like to thank the secretary for his time today, without objection all members will have five legislative days within which to submit additional written questions to the chair which will be forwarded to the secretary for his response. i ask the secretary to please respond as promptly as you're able without objection all members will have five legislative days with which to submit extraneous material for inclusion in the record. thank you very much, this hearing is adjourned. >> thank you very much. [inaudible conversations] [inaudible conversations] [inaudible conversations] [

after you left as secretary of treasury, hank, you did something that was unusual. many of them go back into the finance world or go into the finance world if they have not been there before. you chose not to do that. hank: i really enjoyed my business career. i had 32 years there. i had an opportunity to serve my country. what i really wanted to do was take my experiences and apply them to addressing two of what i believe are the most pressing issues of our time. u.s.-china relations and climate change. david: many people say you get on a merry-go-round and cannot stop making money, but you said when you left treasury, i have enough money and i will go do the nonprofit things. is that right? hank: i never had what i called the disease or addiction to money. when i went to goldman sachs, it was 1974. the firm had a couple of loss years. i was interested in working on financial issues and working with clients. i was interested in markets. david: when you were at goldman, you were not a person who bought your own private plane. you were not a person who had a big hous

after you left as secretary of treasury, hank, you did something that was unusual. many of them go back into the finance world or go into the finance world if they have not been there before. you chose not to do that. hank: i really enjoyed my business career. i had 32 years there. i had an opportunity to serve my country. what i really wanted to do was take my experiences and apply them to addressing two of what i believe are the most pressing issues of our time. u.s.-china relations and climate change. david: many people say you get on a merry-go-round and cannot stop making money, but you said when you left treasury, i have enough money and i will go do the nonprofit things. hank: i never had what i called the disease or addiction to money. when i went to goldman sachs, it was 1974. the firm had a couple of loss years. i was interested in working on financial issues and working with clients. i was interested in markets. david: when you were at goldman, you were not a person who bought your own private plane. you were not a person who had a big house in the hampto

after you left as secretary of treasury, hank, you did something that was unusual. many of them go back into the finance world or go into the finance world if they have not been there before. you chose not to do that. hank: i really enjoyed my business career. i had 32 years there. i had an opportunity to serve my country. what i really wanted to do was take my experience and apply them to addressing two of what i believe are the most pressing issues of our time. u.s.-china relations and climate change. david: many people say you get on a merry-go-round and cannot stop making money, but you said when you left treasury, i have enough money and i will go do the nonprofit things. hank: i never had what i called the disease or addiction to money. when i went to goldman sachs, it was 1974. the firm had a couple of loss years. i was interested in working on financial issues and working with clients. i was interested in markets. david: when you were a goldman, you were not a person who bought your own private plane. you were not a person who had a big house in the hamptons

not an fsoc issue but a treasury issue. >> okay. we've got student loan debt does not pose a risk to financial stability, climate change potentially, leveraged lending does not, medical debt does not, mortgage origination does not. what are some for the largest risks to our economy right now? >> while again, -- >> and the financial system. >> so again i would, i did know if you had a chance to read the report, but if you just look at, and we highlight cybersecurity, structural issues, alternative reference rates, risk to the credit expansion. we . we specifically talk about non-bank mortgage origination, financial innovation, housing, finance. >> do you see there's kind of a decoupling here with the quality of life from what we are seeing in terms of measurements of financial stability? >> no, i'm not making that connection but i'm happy to explore that. >> thank you very much. >> the gentleman from kentucky mr. barr is recognized for five minutes. >> thank you, madam chairwoman, and mr. secretary, you're almost at the end of the li

when i left to go to treasury in 2006, i think we had 1500 people in greater china. i put the pedal to the metal. david: today, we have two greater economies in the world, china and the united states. in your view, is there a clash between the two of them inevitable leading to a real-war and not a cold war? sec. paulson: i would begin by saying that china is a strategic competitor. there are some compelling differences when we look at our national security interests. there also are some important shared interests in terms of global stability and things like climate change. but to get to your question, i am concerned, really very concerned about what i see as a militarization of the u.s. view towards u.s.-china. i will tell you what i mean. i take national security very seriously. but national security has bled into basically every aspect of the economic relationship. i look at it and i say -- i hear about cold war all the time, and there is no way this is a soviet-style cold war. china is very integrated into the global economy. we are looking at the number one manuf

when i left to go to treasury in 2006, i think we have 1500 people in greater china. i put the pedal to the metal. david: today, we have two greater economies in the world, china and the u.s. in your view, is there a clash between the two of them inevitable leading to a real-war and not a cold war? sec. paulson: i would begin by saying that china is a strategic competitor. compellingome differences when we look at our national security interests. there also are some important shared interests in terms of global stability and things like climate change. but to get to your question, i am concerned, really very concerned about what i see as a militarization of the u.s. view towards u.s.-china. i will tell you what i mean. i take national security very seriously. but national security has bled into basically every aspect of the economic relationship. say -- i it and i hear about cold war all the time, and there is no way this is a soviet-style cold war. china is very integrated into the global economy. we are looking at the number one manufacturer, the number one trader,

when i left to go to treasury in 2006, i think we have 1500 people in greater china. i put the pedal to the metal. david: today, we have two greater economies in the world, china and the u.s. in your view, is there a clash between the two of them inevitable leading to a real-war and not a cold war? sec. paulson: i would begin by saying that china is a strategic competitor. there are some compelling differences when we look at our national security interests. there also are some important shared interests in terms of global stability and things like climate change. but to get to your question, i am concerned, really very concerned about what i see as a militarization of the u.s. view towards u.s.-china. i will tell you what i mean. i take national security very seriously. but national security has bled into basically every aspect of the economic relationship. i look at it and i say -- i hear about cold war all the time, and there is no way this is a soviet-style cold war. china is very integrated into the global economy. we are looking at the number one manufacturer, t

i think we will start the year rough for treasuries. higher yields, deeper curves as the global growth curve gets priced in. a little fiscal stimulus out of europe. taylor: john? john: the better growth optimism is an argument for higher yields, but i would highlight two other components. inflation continues to be very subdued. 2019 was supposed to be a year of higher inflation. not only did that not happen but inflation moved lower across a set of measures. the second component is the fed. the fed has adopted an asymmetric reaction function, and i think they are unlikely to raise rates given the low inflationary environment. there is a chance they cut rates, whether in response to a growth downturn, which would be a straightforward reason to cut, or even if inflation is too weak, chance that they cut. growth optimism is a reason for higher yields, but against that, subdued inflation and asymmetric and accommodative fed. our view is those things will matter more and keep yields low for the foreseeable future. taylor: i wanted to talk ab

and hecomes president, made in to you to be secretary of the treasury. you repeatedly said you were not interested. why? hank: i enjoy doing what i was doing. was thefamily that vmminently -- th ehemently opposed to the president. i knew i was doing a good job running goldman sachs, so i said no a few times. they kept coming back. the last time jim baker made a compelling case, and more than was ing else what hit me looked at things and said, guess what? i go around to recruit business goals, i tell people welcome change, change is your friend. maybe it was fear of failure preventing me from serving my country. as soon as i saw that, i said i will not let that stop me. when you join the government as secretary of treasury, you expected the economy would be in reasonable shape. hank: yes. david: what happened? hank: very early on, in the first meeting that i had with david, hebush at camp got his economic team together, he wanted me to talk about entitlement reform, that was one of the things that brought me to washington. i told him i wanted to talk abou

. >>> next, testimony from treasury secretary steve mnuchin on the u.s. economy and financial stability. he also talks about digital currency, world bank lending and the potential impact of climate change. >>> the tcommittee will come to order. without objection the chair is authorized to declare recess of the commit at any time. this hearing is entitled promoting stability, reviewing the administration's deregulatory approach to financial stability. i want to inform all concerned that this meeting will end at 1:00 p.m. per the request of the secretary. i now recognize myself for four minutes to give an opening statement. so let me welcome back secretary mnuchin. today we're here to discuss the trump administration's actions that have undermined and not promoted our nation's financial stability. as i have said many times before, i am very concerned about this administration's actions to eliminate important protections for consumers, investors and our economy. it appears that our banking regulators are following the deregulatory blueprint that the treasury

and staffers at treasury did raise these objections to officials at treasury that were in charge of this and ultimately they did not win the day. >> the bottom line, as it were, is that as much as we thought the trump tax cuts cost the treasury, it cost much more. the deficit is much higher and now cbo is projecting new numbers for where the deficit is going, and the deficit and the debt are going way up higher than they projected, even when they saw what the congress intended the tax cuts to be. >> yeah. there's two things to say about that. for one thing the deficit doesn't have to go higher. the alternative is the government can cut spending. they can cut spending at the eta, at osha, department of education and nasa. they can cut spending and you.net have you don't have to worry about the deficit going higher. remember, the reason they were able to get this passed so quickly was because of a reconciliation. they promised the deficit would only be over a certain amount, then they'll ram the law through and the democrats don't have the ability to filibuster or stop the bill from becomi

john: for the 10-year treasury? taylor: upper bound. john: 2. taylor: what part of high-yield upper forms? you know what, i will just get one answer their. collin martin, peter tchir, john bellows, thank you both. this is bloomberg "real yield." ♪ mark: i'm mark crumpton with bloomberg first word news. japan is calling on south korea to help improve ties between the two countries. this comes days after shinzo abe and south korean president moon jae-in met at a summit in china. the leaders agreed to tone down their feud, though they may little progress in resolving disputes. the icy relationship has heard tour is him, and security relations between the two nations. violent protests continue in india. there are military and police forces were deployed in muslim majority districts in a north indian state today. officials also shut down the internet. nearly two dozen people have been killed and 1000 arrested in the nationwide demonstrations. the testers have called for the citizenshipf a new law that excludes muslims. ireland issued more than 900,

gershon: you don't look at the treasury market as much. that is where you see it, that is consistent with the equity markets, still a tremendous demand for yield. i don't see how that goes away anytime soon until you see the equity market crack. the underlying data, if you believe in the consumer story, says yields should be higher at the long end. do you believe nominal growth over 10 years will be less than 2%? i have news for you. that will not be a pretty environment for the equity market, if that's the case. krishna: as a treasury analyst, what the market is telling you is the fed had truncated the distribution. they are not hiking until we get above 2. when we talk about how high the fed funds rate can go, can you get the 10-year above 2%? as much as there is a demand for yield, if the fed is not taking back these insurance cuts -- they put insurance in. if they didn't need it, are they taking it out? they are telling us they are not. the reason why treasuries are not reacting as much is the fed is telling us they are not about to hi

lisa: your call on treasury yields? matt: we are at 1.75. marilyn: when you look at the liquidity in the system, that it is increasing again into next year as well, i think the fed is doing a lot going into year-end, helping with the repos. when you look at that, that will continue to contain the dollar, support growth. it is hard to see a reason why i think the u.s. would deteriorate significantly from here. we think it will remain on trend. lisa: what is your 10 year treasury call? maryland: we are between 1.8 and 2. lisa: you mentioned repo, that is the magic word. the fed announced new repo terms, taking place this month and next. a strategist weighed in on this, saying the fed expects take up to be this large and they want to make sure they provide that level, or they just wanted to make sure everyone knew they were not going to undersize it. i would not expect this to be fully subscribed, but it should be fully comforting to participants that it is available. the interesting thing is that we have seen all of the recent repo operations

and staffers at treasury did raise these objections to officials at treasury that were in charge of this and ultimately they did not win the day. >> the bottom line, as it were, is that as much as we thought the trump tax cuts cost the treasury, it cost much more. the deficit is much higher and now cbo is projecting new numbers for where the deficit is going, and the deficit and the debt are going way up higher than they projected even when they saw what the congress intended the tax cuts to be. >> yeah. there's two things to say about that. for one thing the deficit doesn't have to go higher. the alternative is the government can cut spending. they can cut spending at the epa, at osha, department of education, and nasa. they can cut spending and you don't have to worry about the deficit going higher. remember, the reason they were able to get this passed so quickly was because of a process called reckonciliation. they promised the deficit would only be over a certain amount, then they'll ram the law through and the democrats don't have the ability to filibuster or stop the bill from bec

having some hedge, treasuries are cheap as a hedge against any risk asset. jonathan: there is a cycle that keeps on coming up. krishna, you think four more years now. you seem more conservative on this, priya, about what is happening in the cycle at the moment. gershon, i'm struggling to get my hands around where you think we are in the cycle. give me some color. where do you think we actually are? gershon: i don't believe in cycles. it is too simplistic a way of looking at the world. you look at some of the industrials in asia, latin america, i would argue they are early cycle. you look at the industrials in the u.s., we are later cycle, at least from a metric perspective. then you have the health care and retail going through secular changes. ison't think a cycle applicable. i don't like the whole cyclical talk. i think you have to decompose the parts of the economy. jonathan: you are all sticking with me. still ahead, the final spread. the week ahead featuring an fomc rate decision, and another news conference from chairman jay powell. that is coming up n

john: for the 10-year treasury? taylor: upper bound. john: 2. taylor: what part of high-yield outperforms? you know what, i will just get one answer there. collin martin, peter tchir, john bellows, thank you. this is bloomberg "real yield." ♪ here, it all starts with a simple... hello! hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! wifi up there? uhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today. >> i'm taylor riggs in for emily, this is the best of bloomberg technology, this is where we bring you the top interviews from this we contact, coming up, the tesla turnaround, one analyst says it looks credible. we will hear from dan ives of wes bush, who raises the price target on tesla to 370 from 270. and 2020 picks, we are covering the big tech in the new year,

john: for the 10-year treasury? taylor: upper bound. john: 2. taylor: what part of high-yield outperforms? you know what, i will just get one answer there. collin martin, peter tchir, john bellows, thank you. this is bloomberg "real yield." ♪ [ dramatic music ] this holiday... ahhhhh!!! -ahhhhh!!! a distant friend returns... elliott. you came back! and while lots of things have changed... wooooah! -woah! it's called the internet. some things haven't. get ready for a reunion 3 million light years in the making. woohoo! -yeah! haslinda: hello, i'm haslinda amin. he is the central bank governor of one of the largest financial hubs in the world, singapore's ravi menon is betting big on fintech, exploring digital currencies, looking to take the lead of what the future of banking will look like at a time of global uncertainty. this is a conversation with the managing director of the monetary authority of singapore. avi menon, thank you so much for your time today. ravi: thank you, haslinda. haslinda: when it comes to singapore's innovation efforts,

when i left to go to treasury in 2006, i think we had 1500 people in greater china. i put the pedal to the metal. david: today, we have two great economies, china and the united states. in your view, is there a clash between the two of them inevitable leading to a real war, not a cold war? hank: well, i would begin by saying that china is a strategic competitor. there are some compelling differences when we look at our national security interests. there are also some important shared interests in terms of global stability and things like climate change. but to get to your question, i am concerned about what i see as a militarization of the u.s. view towards u.s.-china. i'll tell you what i mean by that. i take national security very seriously, but national security has bled into basicaly every aspect of the economic relationship. i look at it and i say -- i hear about cold war all the time, and there is no way this is a soviet-style cold war. china is very integrated into the global economy. we are looking at the number one manufacturer, the number one trader, a big

he is not ready to bet against treasuries yet. he does the longer term that yields are probably going to rise from here. he has a pretty good track record. he said in september we have probably seen the low for yields for this year. we really have rebounded, since then from that multi-year low of 1.43%. amanda: good track record, makes you wonder how this call stacks up to the rest of the street. katie: he is definitely a standout here. today, citigroup was out with a forecast that 10 year yields will hit a record low of 1.25% in 2020. they are not even the lowest option. he is definitely at odds here. it is again those longer-term risks he sees treasury yields rising on. risks, he thinks those are underpriced. he also thinks the u.s. budget deficit, it has been growing steadily and he thinks eventually that will reach a breaking point. shery: inflation risks scares this year or next year? katie: next year. this is something that we are starting to see more of on wall street. investors bracing for inflation. we have not seen it ye

what i'm for now is the treasury department will start issuing more duration. this department is focused on issuing a lot of t-bills and front-end bonds. they haven't issued as many 10's and 30's. the value is skewed a little to the front end. i would like to see them come out and issue more 10-year, 30, maybe introducing a 20-year. i think the steepening yield curves really gives a lot of comfort and it can help the economy. the other way around, it is really the yield curve that leads the discussion, rather than the discussion leads the yield curve. taylor: collin, do you agree, are you comforted by the steepening of this yield curve? this time is different with the re-steepening after the initial inversion. collin: i agree with john, this is a success by the fed. i do think it's important to put this in perspective. they lowered the rates and they got out of negative territory. it is still relatively flat if you look at the three-month, 10 -year you are still in the 25, , 30 basis point range. so when you pull back and really look at the broad yield curve, i

treasuries. here's dani burger. dani: you thought china hold a lot of you'd asked at, budget -- u.s. debt, but japan overtook china as the biggest holder of u.s. debt, and it keeps extending that lead. this chart is remarkable because -- one point $17 trillion in japan's holding of u.s. treasuries despite the fact jgb's are creeping back toward zero but it shows you how when we have a world with growing negative piles of debt, the u.s. is still the most favorite place in offering the best yields in developed nations. and you look at china, we saw their holdings fall to a 2017 low so a little give and take but for now, japan is still holding supreme in terms of the biggest holdings of u.s. treasuries. manus: lovely chart and roundup. let's bring it to our guest host. saed abukarsh of ark capital. that chart speaks volumes about a reach for yield. saed: absolutely. the amount of money in japan is tremendous and what you have seen is japan effectively play the kerry game, jgb versus treasuries. ironically, as yields be

the reason why treasuries are not reacting as 2. when we talk much is the fed is telling us they are not about to hike anytime soon. krishna: that is the most important point with respect to the rights market. the fed has told you they will do even consider, let alone a rate increase, until inflation gets north of 2%, which is never. if the front end of the market is not going to move, long rates need to move a lot. i don't think that's in the cards. even if we get economic growth back to 2 can change, even in that environment, the rates will not be 3%, 3.5 percent, the way they were before. jonathan: this is a quote from cibc. this year, we have had 90 rate cuts across 45 global central banks -- and here is the punchline -- human tivoli, the biggest easing we have had since the financial crisis. every time i read that, i think, has it really been that bad? worse than 2012, worse than 15, 16? as this year really wanted that kind of policy response? priya: if you look at financial conditions, you would say no. if you look at monetary

priya: as the treasury analyst, i will -- what the treasury market is telling you is that the fed has truncated distribution. howfed is not hiking -- high can treasury rates go? can you get the 10 year 2%? not taking back these insurance cuts, they put insurance -- they are telling us they are not. the reason why treasuries are not reacting as much is the fed is telling us they're not about to hike anytime soon. krishna: that is the most important page with -- important point with respect to the market. they will not do a rate increase below 2%lation gets which is never. i do not think that is in the cards. economic growth back to two and a change, even in that environment -- jon: i just find it astounding -- this year, we have had 90 rate cuts across 45 global central banks. here's the punchline -- camilo cumulatively -- whenever i read that, i sit back and think has really been that bad? has this year really warranted this -- that kind of response? priya: no. if you look at the headwinds and the notion that monetary policy is running out of ammunition -- why have they changed their

come about by treasuries. we will continue to hold the treasuries we have. havea: some of that, you on a 5% in the more high-yielding stuff. you referenced e.m. the senior portfoliowhere are ty bonds? dan: in emerging markets, five different countries. malaysia, philippines, indonesia. we like the yields there, the quality. they are on potential upgrades, potentially a currency kick. yields between 4% and 7.5%. latin america, small position in columbia -- colombia. we think brazil is at the bottom of its economic cycle, potential from a credit story and currency story. on the high-yield side, we are defensive financials, tech, and some energy related names. not e&p. it is a broad brush on the credit side. really picked over some of the lower quality names that we sold off that were risky. i think we are more with cash generators that we are comfortable with. shery: we see central banks continuing to say it is the end of the easing cycle. we have seen a lot of central banks coming out, signaling that we may be turning a corner here. concerned about some infla

james: treasuries. ian: i'm going to go with high-yield. i think we are at an interesting inflection point. lisa: have we already seen the cycle lows for u.s. treasury yields? iain: definitely not. james: absolutely not. ian: no way. lisa: will we see a credit explosion in the next two years? iain: i don't think so. james: yes. ian: yes as well. lisa: thank you all so much. from new york, that does it for us. this is "bloomberg real yield." ♪ scarlet: i am scarlet fu. this is bloomberg "etf iq," where we focus on the access, risks and rewards offered by exchange traded funds. ♪ scarlet: charles schwab wants to own the brokerage industry's tomorrow with a blockbuster purchase of td ameritrade. the next big thing paving the way for capita group and other fund giants into the etf world on their terms. and should you make this turkey the center of your investment menu? we will dig into the details in this week's there is an etf for that.

i asked the treasury secretary, though, how he's assessing the risk of using the u.s. dollar as a weapon not just when it comes to u.s./china trade talks but also when it comes to sanctions on iran and others. listen in. >> let me be clear, we are not weaponizing the u.s. dollar. if anything, i would say the opposite i take great responsibility that people use the dollar as the reserve currency of the world. and the dollar is quite strong sometimes the president says the dollar is too strong the dollar is strong because the u.s. economy and because people want to hold dollars and the safety of the u.s. dollar. so because of that we take sanctions responsibility very seriously. matter of fact, i personally sign off on every single sanction that we do, and we have to balance the reason why we're using sanctions is because they are an important form, an alternative, for world military conflicts and i believe it's worked. so whether it's north korea, whether it's iran, whether it's other places in the world, we take this responsibility very seriously. and for the comment t

finally, i want to note that we were purchasing treasury bills and conducting consistent with the plan that we not the summer. the operations are aimed of an ample level of reserves and money market pressures that could affect the implementation of monetary policy. our operations are going well so far, pressure and money market over recent weeks have been to do. to address pressure and money market over the year end we've been conducting term report operation spanning urine, we stand rate to adjuster operations has appropriate to keep the federal funds rate in the target range. thank you all be happy to take your questions. >> what is happening there isthp between utilization or on a moment and inflation has gotten weaker and weaker over the years. if you go back 50 years, you would see when labor markets were tight and unemployment was low, inflation moved up. as the fed got control, the connection got weaker and weaker to the point where there's still a connection but is a very faint and what that suggest is you would need to keep policy somewhat accommodative and we believe policy i

are you talking to the treasury department about reducing volatility? , is it thating repo you would be inclined to do it but need to figure out the details? what would drive the decision on whether or not to do that? chairman powell: on treasuries versus reserves, we have done a ton of work on that if you look at the banks, they are all over the place on their buffer. you have a business model that suggests what your stress outflows will be and what your buffer should be. he see them making different choices. some have lots of reserves and then change their mind. it's not obvious there's one ing.g happen tga, we have not tried to pull the tga into this yet. i don't know that at some point we won't have those discussions, we want treasury to have the cash it needs. we are essentially taking that enous tostion us -- exog our work. facility, we are more focused, frankly, on the year-and --es, the year end, and the regulatory issues we are digging into. these are structural things where you could, without sacrificing safety and soundness, allow the liquidi

james: treasuries. ian: i'm going to go with high-yield. i think we are at an interesting inflection point. lisa: have we already seen the cycle lows for u.s. treasury yields? iain: definitely not. james: absolutely not. ian: no way. lisa: will we see a credit explosion in the next two years? iain: i don't think so. james: yes. ian: yes as well. lisa: thank you all so much. from new york, that does it for us. this is "bloomberg real yield." ♪ ♪ hey. hey. you must be steven's phone. now you can take control of your home wifi and get a notification the instant someone new joins your network... only with xfinity xfi. download the xfi app today. francine: how do you breathe life into one of europe's biggest lenders? let's ask jean pierre mustier. the frenchman has led italy's biggest bank since 2016. under his leadership, it has posted higher earnings and stronger capital. it's also changing the way it is run, down to making fiat the ride of choice instead of luxury cars. today on "leaders with lacqua," we meet jean pierre mustier, the chie

cashthan $300 billion is interest on treasury securities. the average interest is 2.5%, which is low. ofking up a trillion dollars new debt every year, at some point the interest rates are going to go higher. people are going to be reluctant to buy our dead. the treasury department publishes the major foreign holders of u.s. debt. china was a major holder. they were buying more than anybody else. times they've been eclipsed by japan. japan has more of u.s. debt than the chinese. at the people's republic of china, halfway around the world, those guys over there in the capital, they borrow money from the people's republic of china. six years ago it started to think, maybe there's other places that are better to invest. they are our second-biggest holder. they are down. that is a sign you will find more people reluctant to buy securities and we will have to raise the interest rate. message.d us a text he says why is the attention directed to spending and not to be tax cut for the rich? pieces, ifne of my you look at debt, the individual paide t

you never get rich from owning treasuries even if you invest in 30-year treasury, the highest yield, the lower terms don't produce much in the way of capital appreciation let's say for the sake of the example, 30 year are yielding 3.5%, a low level but higher than the 2.5% range we saw in the first nine months of 2015. with that 3.5% yield as long as you reinvest your coupon payment back you might double your money in to years. remember the average historical return for benchmark is 10% annually which will let you double your money in seven years. so if you're under the age of 35 and you own a bunch of bonds, with the idea that they'll slowly make you money, i think you're being way too cautious. i know it puts me out there but you know what, i've been around. that is how i feel even in your 401(k) and ira, be very heavily weighted toward stocks while young particularly because the tax advantaged retirement vehicle as lou you to avoid paying capital gains and gains to compound tax-free year after year and i've told you how great compounding is but as you get older owning treasury bec

these are liquid assets like treasury and gold they hold for rainy day purposes he said banks have so much additional liquid capital on hand that perhaps that is one reason why the market is seeing an impact there. that perhaps there could be some asymmetrical and unintended consequences because of the issues and also asked about the fed decision today he said that he would be happy if the fed did not cut rates further because the u.s. economy was strong and he said even when the fed does cut rates, it only helps the market a little bit and not as much as everything thinks scott. >> we appreciate that. this idea, the repo market what has gone there throughout the balance of the last few months, since september really. >> september 17th is there was a day of tax payments and bills being issued in excess of the bills maturing so there was a little bit of a liquidity problem, september 17th. what is interesting is the overnight repo market had been struggling to stay in line with the fed funds ratd b-- funds rat but that day it blew out and in an hour it went up so% and the fed had to pa

having some hedge, treasuries are cheap as a hedge or against any risk asset. jonathan: there is a cycle that keeps on coming up. krishna, you think four more years now. you seem more conservative on this, priya, about what is happening in the cycle at the moment. gershon, i'm struggling to get my hands around where you think we are in the cycle. where do you think we are? gershon: i don't believe in cycles. it is too simplistic a way of looking at the world. you look at some of the industrials in asia, latin america, i would argue they are early cycle. you look at the industrials in the u.s., we are later cycle, at least from a metric perspective. you have health care and retail going through secular changes. i don't like the whole cyclical talk. i think you have to decompose the parts of the economy. jonathan: you are all sticking with me. still ahead, the week ahead featuring an fomc rate decision, and another news conference from chairman jay powell. that is coming up next. this is bloomberg "real yield." ♪ jonathan: i'm jonathan ferro. this is bloomberg

i don't know that at some point we won't have those discussions but you know, treasury, we want treasury to be abl