mike mckee, thank you so much. ira jersey, bloomberg intelligence chief rates strategist, joins us now. the bond market reaction off the bat makes sense. money coming in, 10 basis move in the yield. now we are not really doing that much. what do you make of that? ira: well, i think the knee-jerk reaction was a lot of shorts really getting scared and stops being hit at certain intermediate technical levels. 1.5 4% on the tenure yield was a sort of intermediate stopping point, so you get below that and then you normalize. i think when you look at the shape of the curve, the fact that you have the five-year and the seven year sector outperforming among the curve, that is just a sign that people are pricing out a more aggressive fed earlier. when you look at what is going on in some of the front end markets, where we are no longer pricing for any chance of a 2022 hike, so we have pushed that back to the middle of 2023. so i think this is a region will react a reasonable reaction to an economy that is still going to gro

we want to bring in laura davidson and mike mckee. mike, i want to start with you. some of the ascension's --these assumptions seem kind of goldilocks. matt: -- mike: it even as an economist, these numbers are meaningless. it is put together on the assumption that nothing happens over 10 years to change any of this, and that will not be the case. a year ago, you would not have said anything about a pandemic. the numbers are put together to try to make the numbers work in the budget, because they will probably try to use reconciliation for this and they have to hit certain caps. the third thing, these are as of february 19, when they locked these numbers in place and the economy has changed a lot since then. you get a bump to 3.2% in 2022, but then you go back to the potential growth you had before the pandemic. if that's the point of this whole economic program, people are going to ask, why don't we get more growth out of it? the inflation numbers might be a little unrealistic because they don't take into account the inflation we will see in the short run, and the 1

mike mckee looks at one, i look at another, etc.. what i am really looking at is called atlanta sticky from the federal reserve bank of atlanta. i want to know what sticky prices are doing as they micro move, and paints in inflation seen. lisa: still, you've got janet yellen coming out yesterday, transitory. it is a restart. i am looking at this and got to say, you are starting to see these labor market shortages and a question mark around that. romaine: at the end of the day, it is not just about what you see in the aggregate data area it is really about inflation expectations, and the market is just not buying it. you look at five-year five year breakevens here, and we are priced just slightly above that 2% level, so this is a market at least right now that is not all that worried. tom: and the market call of 30 years a disinflation and a deflationary tendency to get when i look at steve major, david rosenberg, and others saying wait, don't be an inflationista, the heart of the matter is technology and what has done to this america

tom: mike mckee has some doge in his wallet, next to his ve enemies dong -- his vietnamese dong. [laughter] jonathan: no. tom: it's true. jonathan: no. have a drink. that was wrong. carry-on. tom: it's a true story. mike mckee carries some via mise currency -- some vietnamese currency and is walloped, and is probably adding some doge to it. wendy benjaminson is esteemed with a lot of good perspective on where our government is. once again, you and i are far too young to remember 1948 or even 1967, but once again we have israel and palestine, and always a most interested democratic party is just a mess here. what does the president do to corral the herd as he tries to get to a cease-fire? we -- wendy: i am not sure if he is trying to corral the herd or if the herd is trying to corral him on this. america's position is we are defending israel. they can do no wrong. the trouble is that the next generation of americans is coming up not seeing israel as a tiny little country surrounded by enemies, but one of the most powerful countries in the region with a very powerful military. the

mike mckee, over to you. michael: i am going to blame you guys on this bet number on pending home sales because the folks on "surveillance" this morning had all good news. pending home sales is in part a function of the fact that there's not enough homes for sale, and those that are for sale are going up in price. the only category that gained was upper end homes. in the hamptons, it may be raining, but people are buying houses out there. these are the pending home sales up a little bit. durable goods were down, but durable goods ex-transportation were up 1% because cars weren't produced because of the chip shortage. it shows that business is spending. this is sort of a proxy for business spending and gdp, so that is good news. also good news, the jobless claims numbers come in at 406,000, a post-pandemic low. you can tell that we are almost into the threes. we were in the high twos for years before the pandemic, so we are getting back to a much better labor market. dallas fed president robert kaplan says he

mike mckee is here. mike: whether ua way or not depends where you are on the spectrum. the people who say this is temporary are not concerned. the michigan numbers, as you mentioned, are really important today. the consumer generally overestimates the amount of inflation there is, so we take this with a bit of a grain of salt, the actual numbers, but the spread is what is interesting. the number four one year inflation is how i 4.6%, but it did not change over the month. the number for five year inflation, three to five years, falls by attempt -- by.1. we did get the pce inflation numbers, and they did come in hot, and people are concerned. you can see the changes there. pce in at 0.6% of the month. 6.3% is the highest. and 3.1% is the highest since 1992, so the people a little nervous can be nervous about that. the question is does that remain sustained? let's take a look at income and spending. the income and spending numbers is something people have been watching for quite some time. at this point, consumer spending, the question has been do we see services pick up?

for the last question we will go to my committee -- mike mckee. >> i want to go back to paul's question and not why you are thinking of tapering, but why you are not. are you afraid of a taper tantrum, or is it as one money market -- one money manager put it, -- bottom line is what can we get for $120 million a month that we could not get for less? >> we articulated the substantial further progress test at our december meeting. we have made relatively little progress toward our goals. vaccinations started to get more widespread, the economy reopened, we got a nice job report for march. it does not constitute substantial further progress. we are hopeful we will see along this path a way to that goal. we believe we will, it is a question of when. when the time comes for us to talk about talking about it, we will do that. that time is not now. just one rate jobs report is not enough. we need to see more data. it is no more complicated than that. >> leaving interest rates where they are does not change anything, but if you spent less, would you still get the same effect? >> i think the effe

tom: the idea of the supply versus the demand for labor, and mike mckee loves the jolt survey. that will be fascinating. if you want a reaffirmation of 10% gdp, we got regional sales on friday. jonathan: later in the program. i'm bringing that chart. we are good to talk about the employment to population ratio and bring that chart to the table. what is in store for "bloomberg surveillance" for the next couple of hours? tom: when do we talk about the dodgers losing five series and around? jonathan: we can do that now. what about the red sox? tom: they are getting it done. jonathan: do we discussed the yankees? tom: the yankees are putting it on. they started weak.i swear the players want to live on the west coast, san francisco, l.a., seattle. jonathan: live in madrid. tom: i did not know that. how about those? vonnie: -- jonathan: how about them. coming up, we are over time. this is bloomberg. ♪ tom: i like dogecoin. i really like doge. ritika: crude oil and gasoline rose after a cyberattack put the largest oil pipeline in the u.s. out of action. colonial pipeline still has n

for more, let's bring in mike mckee, bloomberg international economics and policy correspondent. after yesterday's cpi, this was like, eh. [laughter] michael: we were shocked by yesterday's cpi, but no surprise in the ppi because we know there is some inflation out there, and this is not it. but what we got today was the highest ppi numbers in quite some time. the year-over-year index for the ppi headline was up by 0.6% for the month. this pushes it up for the year, on a yearly basis to 6.2%. for the core, it was up 0.7%, and that pushes that up to 4.1%. so you are seeing some major moves in ppi in the producer prices, the wholesale prices. here is something that is also worth taking a look at. one reason the ppi doesn't feed directly into cpi is that we see the number of -- well, that is not the right when either. alix: we will get there. it's only tuesday, so we have more time. [laughter] guy: what i was going to -- michael: what i was going to say is that the ppi for final demand was up a lot, but intermediate demand was up even more, and it just means that companies are compr

let's get to bloomberg's mike mckee. michael: i don't know if you are a birdwatcher, but this is the rare avis of the numbers that we get in here. the pmi for services up to 71. that has never happened before in the history of the series. we also see a big rise in the manufacturing number in the united states. we thought that we had reached the best, and now we still see more going forward. that follows what has been happening in europe. you could see maybe april showers bring may flowers. they have pretty much gone up across the board. these are among the highest numbers recorded for those as well. as we come back from the pandemic, we will finish up with the u.k. not only did you have extraordinary retail sales today , but they pmi's for the british isles show a very big increase in manufacturing services and the composite. things are getting much better. but as alix mentioned, the market folks have said that in each of the countries we have talked about, including the united states, not just input pressures are at a r

here is mike mckee as we wait for the numbers. michael: this is the inflation you're looking for and it comes in hotter than anticipated. cpi a month over month basis up .8%. the forecast was for a .2% gain. that pushes the your average year cpi to a 4.2%. that is much faster than the 2.6% we saw in march and the 3.6% that was anticipated. let's take a look at the core rate, up .9%. there is the one that will worry wall street. the forecast was for .3%. is three times the amount in march. we are up to 3% on the poor. the estimate, 2.3%. i'm sure you want to look at the market reaction. i will look at the breakdown of the cpi. jonathan: i will look at the price action right now. the nasdaq down hard, off 1.6%. the s&p in 1.1%. an upside surprise, it is going to hit the nasdaq harder. yields higher. on a five year, up two basis points. on the 10 about two basis points as well. basically unchanged on twos. it is an upside surprise. high-yield through the belly of the curve. we will have this conversation in just a moment. the nasdaq

mike mckee has all the details. michael: we had the biggest increase on a month over month basis in the core rate since 1991. that's a long time ago -- 1981, actually. the core and headline numbers are much higher than anticipated. we are over 4% on the headline rate, and the core is now at 3%. these are not what the fed anticipated. however, when you break down the numbers, this may be why we are not getting such a reaction from the markets, you see that a lot of what the price pressures were in is the reopening trade. businesses that slashed prices are now just trying to get them to the point where they can make money because they are starting to get a little bit more business. used cars, that is a bottleneck problem. new chips, there's a bottleneck, so people are buying used cars. lodging, people are starting to travel again. those are some of the biggest movers in this monthly index. that is not something you are going to buy every day, and it is not going to keep going up month after month. so we have a reason

mike mckee is here with us. michael: what a week we have had. loretta mester, the cleveland fed president, said earlier today that it is going to be rocky coming out of the shutdowns. we are going to have a lot of volatility in the data. that's what we got in the retail sales numbers. the appear disappointing on the face of it because they didn't change at all. they were flat on the month. but the march number was revised up from 9.8% to 10.7%, so that takes out almost all of what was missing in april. take a look at what happened in terms of dollars spent, which is the way retail sales are reported. we had a big month in april and a big month in march, both about the same. no change in spending level. but look at what happened in february, and both march and april were up big from those months. so people are still getting stimulus checks. they are just spending them for had -- spending them perhaps at the same rate instead of spending more. take a look at what happened with eating and drinking places, up 3%. people are going out. when we get th

mike mckee, bloomberg economics and policy correspondent, talking to neel kashkari in that interview, joining us now. what does it mean for monetary policy? what does it mean for the markets? the markets have started to get a little bit excited about the possibility we could get a taper, and that talk would start fairly soon. michael: that is starting to go away as people look at what happened. we don't have the kind of pressures that would suggest the fed is going to have to do something soon. the thing you've been looking at in the shorter and longer run is average hourly earnings because if we are seeing a tight labor market, wages should go up. they are distorted by what has happened over the last year. you take a look at where we are, we are not seeing any particular gains. we went down a significant amount last month. when people start coming back to work and that starts going up, then the fed will be looking at it. but for right now, wages, earnings are not a problem. what we are going to have going forward is an ongoing debate between the fed and the markets over what is going

mike mckee was joking about a bidding war. is it 1.2, 1.3 million? maybe we are getting a little over our skis in terms of our ambitions for but that payroll number will deliver. maybe the market is repositioning around that a little bit. we will find out tomorrow. alix: i was just looking to see how much, if any of the biotech names would be hitting the tech stocks harder. but anyway, moving on. guy: i will take that as a no. house financial services committee holding a third hearing on the gamestop story today. sec chairman gary gensler will be testifying. in his prepared remarks, he said it hasn't legations for robinhood and the likes of citadel. joining us is the cio for qvr advisors, benn eifert. what do we expect? benn: we expect him to go through the wild swings we saw in gamestop and other stocks in late january, and basically here what he thinks for the first time the sec -- the first time what he think the sec should do in response. this is his first time facing lawmakers since he started the job, so i think we can expect them to be asked s

bloomberg international economics and policy correspondent mike mckee is here to do all of that for us. michael: it is a little hard to interpret the new-home sales numbers, although they follow the existing home sales numbers coming in little shy of where we expected them to be, but there was a revision to the prior month. they revised the number down, so the drop was not as bad as we thought. take a look at the right side of that graph there. you can see that homebuilding, home sales still well above the pre-pandemic level, so we are making progress, but as you mentioned, we are probably somewhat capacity restrained at this point. interesting news earlier today on homes was the price levels. the s&p corelogic numbers up on a year-over-year basis by 13.3%, the biggest jump since 2005. the fha puts out its own numbers, and it was up by almost 14%. the interesting question, is this inflationary? when you take a look at the line at the bottom of that chart, that is home prices in the cpi. they ask you what you think your home would rent for. they don't put actual prices into it. if that

mike mckee is here to break down all the numbers for us. what do you make of that print? michael: it is not a bad print at all. the number is still relatively high. if you are staying in the 60's, you've got a very strong economy going. it is just growing at a slower pace. you can find perhaps the reason underneath. we are finding a shortage of supply. maybe it is people. maybe it is inventory, things like that. but inventories fell significantly to 49.1. that suggests contraction. supplier delivery times rose. the backlog of orders rose significantly, up 5.5 points to 55.7. it looks like demand is out there and the services industry just can't keep up, which may suggest why the overall number has weaker activity. the business activity number down almost seven points on the month. that is equivalent of the production number you would see in the manufacturing. overall, not a bad report. prices go up 76.8 from 70.4. that is not a surprise either. we have been expecting prices to be higher given everything that is going on. alix: it seems like it is confirming that we are de

mike mckee, over to you. michael: the fed has an interesting survey out of consumer expectations over the next couple of years. this is a monthly indicator. we are seeing that consumer expectations for higher inflation have risen to a series high for one year ahead, 3.4% is what people think we are going to get. 3.2% was the march number. that is the highest level since september 2013. however, the three year forecast is for inflation unchanged at 3.1%, so the consumer expectation numbers match what we are seeing in the market breakevens going forward. the people who think we are going to have higher inflation see medium home prices up significantly, and no surprise with that, although they do see a retreat in gasoline prices. i guess this was taken before the latest information about the pipeline. rent and college education going up. rent going up at the fastest rate it has gone up. there's an interesting stat. you can see the perceived probability of losing your job in the next 12 months increased by 2.2% t

guy: you've been listening to mike mckee speaking to atlanta fed president raphael bostic. if you want to carry on listening to the conversation, carry on watching the bloomberg businessweek event, you can always do so on your terminal. live go is the function that will take you there. we have an exclusive interview with senator shelley moore capito on balance of power. david westin will be taking the reins at the top of the hour on bloomberg television and radio. let me update you where we are with the price action as we come out of this program and into the next. the s&p down 1%. bitcoin now only down 13%. we are trading at 37. if you're watching on bloomberg television and radio in the united states, you will be hearing weston. aliz and i -- you will be hearing david westin. alix will be on dab digital radio. this is bloomberg. ♪ (announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your

. >> that was rafael bostick speaking to my colleague mike mckee here on bloomberg. remarkable resilience. we'll sks europe's recovery. we'll get more on what are the expectations for where the fed goes next and where that tarpe erring conversation comes in. >> welcome back to the european market open. six minutes into our european trading session. and we're making decent gains. not entirely bouncing back from what we lost yesterday, fearing inflation and watching crypto. dani burger has a breakdown. >> reporting earnings. they're looking strong. they're able to update their guidance. it's this d.i.y. effect. and it shows that that type of behavior is going strong for a lot of these companies. now, to the down side is b.t. group. they've eased some of their immediate losses that they saw when they opened you. now, this has to do with a rival or its rival telefonica. that's sending shares down nearly 1%. finally last earnings related mover for you, royal mayor seeing a profit increase. a lot of this has to do with their shift from letters to parcels. they went online

. >> that was loretta masters speaking to mike mckee. coming up, at&t plans to merge its media assets with discover. we'll get all the details. this is bloomberg. ♪ anna: welcome back to the european market open. 27 minutes until the start of the cash equity session. still gains from friday. we have modest expectation for this morning's session. at the asian market we do see some decent sized gains in places. taiwan's ban foreigners from entry may 19th through june 18th. the level of clamp down, the level of measures being introduced in some level of economies and taiwan one of those. >> yeah, taiwan's been one of the real weak lynx. and this is a major about kind of change because it was only about two or three weeks ago that taiwan was really one of the bellwethers of asia because it had the semiconductor thiem and it was this tech-heavy index. it was general euphoria trade. and it was the golden child. they've been free of the virus. but suddenly, they're changing neck active as they introduce more virus restrictions. the index is d

mike, what's happening out there for the commute? >> tougher drive for san jose, again, a disabled vehicle at mckee may cause a traffic break. some folks are ditching back over to 280 which had recovered from an earlier cushion removal. >> all right. thank you so much. thank you for joining us as well. another big good-bye, a sad farewell. i'm wearing black today in mourning because our producer natin is going to the big apple. we're excited for him but we will miss you dearly. >> we're going to miss your voice and your presentation. >> congratulations. >> love you, natin! >> just a phenomenal person. always good with some good laughs and honestly a very dear friend. we're going to miss you. we're so proud of you, though. never forget your roots right here in the bay area, baby. you come on back. you always have a home here on "today in the bay." >> and just think the end of the show all about natin is what he would want. >> finally he's in the limelight. have a great morning, everybody. >>> good morning investigating the insurrectio

tom: mike doing a great job in boston. i would point out the revised month over month came out 10.7%. i am sorry. i have to revise away the retail gloom as we get better data. michael mckee, what a joy. i love what you did with neel kashkari in the last days. now you have the lovely mathematician from cleveland loretta mester. michael: yes we do. we would like to welcome the cleveland fed bank president loretta mester. thank you for joining us on this beautiful morning in boston. looks like the narrative the american people will be recovering more quickly than everybody anticipated might not be correct. they are still spending money but not at an increasing pace. pres. mester: i think this is probably what we should expect. we have pent-up demand coming back. vaccinations have been distributed more widely. that is strong demand. we also have supply issues affecting the economy and the interplay between demand and supply is what we are seeing in some of the data, whether it be today's retail sales report for the labor marke