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Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast.

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Speaker 1: I'm Tracy Alloway.

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Speaker 2: And I'm Joe Whysnal So Joe.

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Speaker 1: The big story in markets up until relatively recently has

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Speaker 1: been the bond sell off, Like quite a dramatic sell

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Speaker 1: off across the fixed income space.

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Speaker 2: Yeah, really over like I guess this is the last

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Speaker 2: couple months. So the yield today, well, we can sort

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Speaker 2: of talk about the bond market up until today, but

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Speaker 2: you know, we had been like in the threes and

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Speaker 2: the fours and then we got us almost besides four

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Speaker 2: point nine percent on the tenure, I've had a little

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Speaker 2: bit of a pullback. We're recording this October tenth, but

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Speaker 2: we are very high by any recent standard.

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Speaker 1: Yeah, it is not lost on me that we are

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Speaker 1: recording our bond sell off episode on the day when

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Speaker 1: treasuries are recording their best one day performance since I

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Speaker 1: think March of last year. But you know, we're trying,

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Speaker 1: We're trying. But you're right. The recent bond market itself,

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Speaker 1: it was one of those times when you see a

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Speaker 1: lot of superlatives around, a lot of like highest yields

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Speaker 1: since two thousand and seven, a lot of talk of

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Speaker 1: standard deviation moves when we try to start calculating, you know,

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Speaker 1: how many trading days it would normal trading days it

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Speaker 1: would take to get moves of this size. But the

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Speaker 1: interesting thing about this whole dynamic is it's not really

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Speaker 1: clear what the proximate cause of the sell off is.

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Speaker 1: So you have a lot of people blaming you know,

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Speaker 1: the recent FOMC meeting when they release the dot plot

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Speaker 1: showing higher for longer. You have some people blaming oil.

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Speaker 1: You have people talking about supply. Some people are looking

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Speaker 1: at more technical aspects. You have some people blaming the

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Speaker 1: term premium, which I find absolutely hilarious because to me,

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Speaker 1: a higher term premium is like a symptom of the

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Speaker 1: sell off, not the actual driver of it. But anyway,

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Speaker 1: all of this means we really need to try to

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Speaker 1: get into the weeds of what is happening here and

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Speaker 1: what it might mean for the wider market.

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Speaker 2: Right because even if okay, maybe last Friday, right after

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Speaker 2: their jobs report, when we got that very brief spike,

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Speaker 2: maybe that was the peak. Who knows. But I do

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Speaker 2: think it's important to try to disambiguate these things because,

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Speaker 2: as you said, like I guess it's one of those

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Speaker 2: things when there's a lot of explanations for something, none

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Speaker 2: of them are like very satisfying, Like a lot of

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Speaker 2: deficit talk lately, but it's like what, like, Yeah, what

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Speaker 2: did we all do? I think we knew that the

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Speaker 2: deficit was really big for a long time. Is that

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Speaker 2: recent FED meeting? But again, okay, like the twenty twenty

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Speaker 2: four dods came up a little bit, but does that

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Speaker 2: really outrageous four point nine percent on the tenure? Nothing

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Speaker 2: is quite satisfying as to what happened and why we're

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Speaker 2: at this sort of like new.

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Speaker 1: Level exactly well put. So today I am very pleased

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Speaker 1: to say we do, in fact have the perfect guest.

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Speaker 1: We're going to be speaking to a bond analyst. I've

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Speaker 1: been a fan of his research for a long time.

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Speaker 1: He used to work with one of our other favorite

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Speaker 1: All Thoughts guests, Josh Younger. We're going to be speaking

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Speaker 1: with Jay Berry. He is the co head of US

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Speaker 1: and stret strategy at JP Morgan. We're going to be

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Speaker 1: trying to get a handle on what might be driving

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Speaker 1: the moves in bonds, but also how you go about

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Speaker 1: as an analyst trying to disaggregate all these different factors.

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Speaker 1: So I'm very excited. Jay, Thank you so much for

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Speaker 1: coming on our thoughts.

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Speaker 3: Tracy, thanks so much for having me really appreciat being here.

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Speaker 1: So I guess maybe just to begin with, I mean

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Speaker 1: the simple question what is driving the sella, We'll start

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Speaker 1: there and then we can try to dig into different pieces.

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Speaker 3: Well, I mean, Joj just said there's a whole host

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Speaker 3: of reasons that have been bantered about and that maybe

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Speaker 3: none of them are all satisfying. But I really think

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Speaker 3: it's the confluence of a number of different factors here.

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Speaker 3: So I mean an aggregate, Now we're off the highs

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Speaker 3: and yield, as you said, but we're still about one

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Speaker 3: hundred basis points higher than we were in the middle

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Speaker 3: of the summer. And to me, it's like, what's changed

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Speaker 3: over that period? And I think the early part of

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Speaker 3: the move you could say was definitively a story about

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Speaker 3: the US economy and fundamentals, because I look back at

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Speaker 3: where we were very early in the summer and where

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Speaker 3: we are right now, and over that period, we increased

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Speaker 3: our second half growth expectations at JP Morgan by about

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Speaker 3: two and a half percentage points from like the mildest

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Speaker 3: of recessions. If you can call it that to looking

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Speaker 3: for above trend growth the second half of this year,

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Speaker 3: and that's like a meaningful driver I think of the

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Speaker 3: move and long term rates because it's given us more

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Speaker 3: confidence that the recession may be a bit further off.

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Speaker 3: But it's also helped sort of anchor FED expectations at

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Speaker 3: higher levels as well. So, you know, we haven't really

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Speaker 3: changed the expected peak in the FED funds rate since

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Speaker 3: the early part of the summer, but we pushed out

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Speaker 3: the timing and we've pushed it out from you know,

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Speaker 3: at that time thinking it was going to happen around now,

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Speaker 3: to sort of pushing it out to the early part

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Speaker 3: of next year. But then the more powerful influence is

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Speaker 3: that we've disinverted that money market curb a bit, and

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Speaker 3: that you know, early in the summer, we were pricing

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Speaker 3: about one hundred and fifty bases points of cuts for

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Speaker 3: twenty twenty four. Now we're pricing in still cuts, but

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Speaker 3: we've taken out about forty percent of that. So I

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Speaker 3: think the first part was fundamental, but then I think

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Speaker 3: the drivers began to shift, and more recently since September,

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Speaker 3: you know, FED and growth expectations have been pretty stable,

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Speaker 3: but inflation expectation has been rising, and we like to

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Speaker 3: get five year ahead, five year inflation expectations from the

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Speaker 3: tips market, from the inflation link treasury market, and those

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Speaker 3: break even expectations have gone higher by about twenty five

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Speaker 3: basis points over the past six weeks.

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Speaker 2: Wait, this is the five year five year forward break even?

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Speaker 2: Is that the exactly the thing that you like to

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Speaker 2: look at. And I'll bring that up on my terminal

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Speaker 2: while you're talking about it, So I understand, Okay, growth

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Speaker 2: has picked up or versus expectation, certainly compared to the

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Speaker 2: beginning of the year, when, as you say, like almost

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Speaker 2: everyone expected recession. Now we're at above trend growth. Maybe

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Speaker 2: it don't moderate, et cetera. What is the link between

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Speaker 2: that and thirty year yields or the long end of

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Speaker 2: the curve, Because of course I get it the short end.

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Speaker 2: It's very easy to draw a very bright line between

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Speaker 2: short term rate expectations and the two year bond or whatever.

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Speaker 2: But then when you get further out, it's like, Okay,

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Speaker 2: why does the growth picking up in Q four of

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Speaker 2: twenty twenty three effect that people are going to pay

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Speaker 2: for a bond that matures in the twenty fifties or whatever.

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Speaker 3: No, I think there's still some sensitivity of policy that

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Speaker 3: sort of reverberates through the term structure, and the sensitivity

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Speaker 3: may decline the further act to go, but it's still there.

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Speaker 3: So just for a number, you know, every one hundred

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Speaker 3: basis point change in FED policy expectations three to six

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Speaker 3: month forward tends to sort of change long term meals

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Speaker 3: by about forty to forty five basis points. And similarly,

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Speaker 3: like every change in year ahead growth expectations tends to

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Speaker 3: move long term meals by five to ten basis points.

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Speaker 3: So yeah, the further you go out the term structure,

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Speaker 3: the more I think idiosyncratic it becomes. But there still

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Speaker 3: is sensitivity to what's happening to the underlying economy and

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Speaker 3: what's happening with FED policy. So I think it's still there,

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Speaker 3: just with a lower sensitivity than at the very short end.

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Speaker 1: How do you actually go about, as a strategist sort

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Speaker 1: of decomposing the different moves into different factors or drivers.

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Speaker 1: And I know that you have at JP Morgan, for instance,

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Speaker 1: this fair value model of where you think Treasury should

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Speaker 1: be trading. And I think last week you were saying

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Speaker 1: that you thought that yields had overshot fair value, which

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Speaker 1: you know, I'm guessing you didn't expect what happened over

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Speaker 1: the weekend in Israel to actually happen, But it seems

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Speaker 1: to have been quite precient because we have seen yields

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Speaker 1: come down a little bit. But how are you actually

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Speaker 1: analyzing the different drivers of a move in rates?

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Speaker 3: Yeah, so you've talked about the fair value model. I

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Speaker 3: think that's a key input to what we do because

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Speaker 3: we try to identify empirically what have been the largest

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Speaker 3: drivers of yields over time, and we can look back

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Speaker 3: over windows of five or ten or fifteen years, and

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Speaker 3: we've got a host of factors that are sort of

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Speaker 3: always consistently in the framework. And we talked about FED policy, growth,

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Speaker 3: and inflation expectations being the three key drivers, like the triumvirate,

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Speaker 3: so to speak, and then other factors which at various

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Speaker 3: points over the last you know, ten to fifteen years,

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Speaker 3: have been important and less important. I mean, there was

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Speaker 3: a time when with policy rates at zero and negative

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Speaker 3: territory globally, we had the share of the bond universe

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Speaker 3: that was trading it a negative yield globally because policy

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Speaker 3: rates being anchored at very low levels helped anchor US

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Speaker 3: rates lower and that was important but less important right now.

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Speaker 3: So that starts, and you know, if we have a

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Speaker 3: sort of center universe about where we think fed policy,

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Speaker 3: growth and inflation are headed, that's a starting point. And

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Speaker 3: you're right, like when we adjusted for those factors, there

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Speaker 3: was a point last week where it looked like we

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Speaker 3: were trading about thirty five or forty basis points too high,

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Speaker 3: where you know, you're talking about standard deviations. Before that

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Speaker 3: was something like a two and a half standard deviation

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Speaker 3: move relative to fair value in our framework, and one

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Speaker 3: which we hadn't seen since this time last fall, after

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Speaker 3: the uk LDI.

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Speaker 1: Crist Right, which was the other big bond sell off.

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Speaker 3: And really since the spring of twenty twenty two. So

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Speaker 3: I think, you know, we take notice of that because

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Speaker 3: it's hard to say, you know, I think we've all

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Speaker 3: been pretty humble to the fact that the economy has

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Speaker 3: been resilient. It's been tough to call, but we have

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Speaker 3: to have something that sort of centers like where should

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Speaker 3: rates be and how far have they gone? And this

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Speaker 3: was at least a flag to us that they'd gone

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Speaker 3: too far.

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Speaker 1: You mentioned sort of factors driving the US Treasury price

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Speaker 1: and how those have evolved over time. Can you spell

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Speaker 1: that out in a little bit more detail, Like I

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Speaker 1: would be very curious to hear more about what is

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Speaker 1: driving moves now versus say, maybe pre twenty twenty.

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Speaker 3: Yeah, I mean, I think you know pre twenty twenty.

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Speaker 3: We just briefly talked about one of those factors, low

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Speaker 3: and negative policy rates elsewhere meant that even as the

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Speaker 3: US was increasing rates during the twenty fifteen through twenty

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Speaker 3: eighteen cycle, that was something that helped anchor long term

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Speaker 3: yields at lower levels. And you could see the influence

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Speaker 3: there when you talk about the hedge dyel pickup for

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Speaker 3: US bonds for versus most foreign currency pairs, and that

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Speaker 3: has since of course eroded because basically ever made every

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Speaker 3: major develop market central bank has been increasing policy rates

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Speaker 3: at a rate. And the last of which that's out

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Speaker 3: there the Bank of Japan, we think at some point

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Speaker 3: will completely lose its YCC band and well at some

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Speaker 3: point exit negative interest rate policy next year. So that

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Speaker 3: was an important factor which we now don't have as

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Speaker 3: a factor in the model.

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Speaker 2: The Bank of Japan. It was like about a month

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Speaker 2: and a half ago or two months ago, like sometime

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Speaker 2: in August. I forget that because I have to admit,

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Speaker 2: like all these Bank of Japan had lines about whether

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Speaker 2: they're going to like keep the ten years er or whatever,

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Speaker 2: like they all sort of blur. But there was like

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Speaker 2: some news that happened. It was something the Bank of

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Speaker 2: Japan that like changed the entire tenor of the market

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Speaker 2: all at once. Can you remind me of what I'm

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Speaker 2: like forgetting here.

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Speaker 3: Yeah, Joe. In late July, the Bank of Japan basically

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Speaker 3: allowed jgbs in the tenure sector to try trade even

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Speaker 3: wider around it's sort of plus or minus fifty basis

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Speaker 3: point target and effectively kind of gave you notice that

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Speaker 3: at some point it was getting closer to completely removing

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Speaker 3: that Y series.

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Speaker 2: They're having their highest inflation in years too.

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Speaker 3: Right exactly, Okay, exactly, So, I mean I think on

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Speaker 3: a partial basis, you can argue that was a catalyst

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Speaker 3: as well.

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Speaker 2: Can you talk about when you talk about these foreign buyers,

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Speaker 2: as you say this sort of like price in sensitive

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Speaker 2: demand from a foreign sector, the disappearance of these price

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Speaker 2: in sensitive foreign buyers, how much does that affect rates

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Speaker 2: versus say, just like rates volatility.

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Speaker 1: By the way. This is why I really wanted to

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Speaker 1: get Jay on for this podcast, because he wrote a

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Speaker 1: great note about a year ago basically talking about the

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Speaker 1: retreat of price and sensitive buyers in the form of

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Speaker 1: foreign central banks and the FED as well as it

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Speaker 1: was winding down its balance sheet. I think I wrote

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Speaker 1: it up under the headline JP Morgan is worried about

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Speaker 1: who's going to buy all the bonds and at the

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Speaker 1: time it got a lot of pushback. But fast forward

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Speaker 1: a year and again it seems like you were broadly

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Speaker 1: directionally correct.

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Speaker 3: No, I think it's an important driver over a longer

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Speaker 3: period of time. Like it's hard to say, and Tracy,

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Speaker 3: you said this before, like whether it's the proximate cause

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Speaker 3: of the selloff, but I think in the background, it's

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Speaker 3: something that's contributing to what's going on because to us

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Speaker 3: at JP Morgan, you know, we look at three sets

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Speaker 3: of buyers who have been the main price in sensitive

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Speaker 3: sources of demand for the better part of the past

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Speaker 3: two decades at various points. And you talk about the

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Speaker 3: foreign demand story, I mean, we know that FX reserves

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Speaker 3: peaked about seven or eight years ago. The dollars share

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Speaker 3: of those reserves have been coming down. But there's a

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Speaker 3: point in time at the beginning of the century where

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Speaker 3: FX reserves were growing so rapidly and the share of

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Speaker 3: those reserves held in dollars were so rapidly that the

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Speaker 3: deposit of that savings into the US, I think was

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Speaker 3: something that kept long term rates low. And your remember

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Speaker 3: chair green Span talking about this and the conundrum in

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Speaker 3: two thousand and five about why long term rates were

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Speaker 3: not rising even as the FED was tightening. So that's

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Speaker 3: a key driver right there, and we look at it.

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Speaker 3: FX reserves we don't really expect to grow appreciably from here,

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Speaker 3: and we're not in the d dollarization camp, but the

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Speaker 3: dollar share of those reserves have been on a downward

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Speaker 3: trend as central banks globally have been diversifying. So it's

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Speaker 3: just saying that if that was a tailwind for rates

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Speaker 3: for the better part of the first half of this,

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Speaker 3: you know, last twenty years, it's not there the second one.

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Speaker 3: And this was more local or the US banks where

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Speaker 3: they bought about three quarters of a trillion of treasuries

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Speaker 3: over twenty twenty and twenty twenty one when supply was heavy,

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Speaker 3: largely due to the fact that deposit growth at strip

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Speaker 3: loan growth. And now we know deposits have stopped coming

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Speaker 3: down like they did in the spring, but they're not growing.

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Speaker 3: And I think one would think even as deposit growth

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Speaker 3: picks up, that banks, after what's happened here, might generally

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Speaker 3: speaking bias their purchase is shorter along the yield curve,

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Speaker 3: which with less duration risk. And then the final piece

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Speaker 3: of the puzzle is the FED. And I think we

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Speaker 3: lose this that even though we're coming to the end

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Speaker 3: to the FED policy rate tightening cycle, or we think

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Speaker 3: it's actually concluded, balance sheet policies operating in the background,

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Speaker 3: And just as the boj JO was really important at

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Speaker 3: the end of July, I think chair pals comments at

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Speaker 3: the July press conference were is equally important because a

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Speaker 3: reporter asked him about whether the FED could continue to

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Speaker 3: do QT while it actually lowers interest rates as inflation

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Speaker 3: comes down next year, and he made the point that

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Speaker 3: you'd be normalizing both the policy levers may be in opposition,

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Speaker 3: but you're normalizing the balance sheet as you're normalizing rates.

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Speaker 3: And I think the extended runway for QT matters because

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Speaker 3: we found over a longer period of time the FED

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Speaker 3: stock of holdings matters for yield levels and as that

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Speaker 3: unwind that should slowly keep long term rates anchored at

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Speaker 3: higher levels and re steep and yielders.

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Speaker 1: So you have these longer term factors I guess happening

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Speaker 1: in the background the retreat of these three groups of

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Speaker 1: price insensitive buyers. Just going back to some of the

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Speaker 1: short term catalysts here. You know, you mentioned term premium

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Speaker 1: in the intro. Term premium is one of those concepts.

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Speaker 1: I feel like it gets bandied around quite a lot.

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Speaker 1: Not everyone quite understands what it means, but also there

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Speaker 1: is no consensus, like.

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Speaker 2: Myself, but you're not. I'm about to learn something that

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Speaker 2: I've always been want to.

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Speaker 1: But see you're missing out, Joe, because you should just

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Speaker 1: start saying term premium. Just blame everything on the term

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Speaker 1: premium and just use it as a scapegoat for any

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Speaker 1: like any move that you don't agree with or that

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Speaker 1: you are on the wrong side of. That's how most

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Speaker 1: people seem to use it. But okay, maybe just to

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Speaker 1: begin with, what is the term premium and what has

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Speaker 1: happened to it in recent weeks?

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Speaker 3: Yeah, so the term premium in you're right, is nebulous

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Speaker 3: term I think is the extra compensation required for investors

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Speaker 3: to buy longer duration assets.

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Speaker 1: That is a perfect definition that I'm pretty sure I

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Speaker 1: have used in my own copy before.

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Speaker 3: Just made sure I googled it before. But I think

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Speaker 3: there's a number of ways to look at it, and

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Speaker 3: I think we can start and just talk about our

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Speaker 3: fair value framework, and I think we can say everything

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Speaker 3: outside of these fundamental drivers, one might possibly attribute to

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Speaker 3: term premium that in the absence of being able to

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Speaker 3: explain with growth and inflation and FED policy expectations, that

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Speaker 3: that's a driver. There. There's also a series of very

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Speaker 3: widely watched academic models. There's the ACM model from the

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Speaker 3: New York Fed, the kim Wright model that the Federal

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Speaker 3: Reserve Board in DC watches, which are a series of

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Speaker 3: I think no arbitrage term structure models which are kind

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Speaker 3: of mean reverting in nature, and those were sitting relatively

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Speaker 3: low until recently, and they actually would attribute most of

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Speaker 3: the sell off over the past six weeks to term premium.

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Speaker 3: I think we've done a paper on this, and we

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Speaker 3: think that there's some idiosyncrasies with the way that these

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Speaker 3: models are constructed because they are sampled over a period

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Speaker 3: of declining rates that they attribute a lot more to

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Speaker 3: changes in policy expectations than term premium. So it turns

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Speaker 3: they can be less sort of influential or less I

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Speaker 3: think insightful. They're still very valuable, just less inciseful at

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Speaker 3: these turns. And then there's finally more empirical ways to

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Speaker 3: measure it too, because there's survey based measures of where

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Speaker 3: economists expect policy rates to be, like the survey professional forecasters, yeah,

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Speaker 3: and the survey of primary dealers, where you can observe

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Speaker 3: where economists think policy rates will be over the next

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Speaker 3: five to ten years, and you can compare them to

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Speaker 3: ten year rates to get a sense of the extra

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Speaker 3: compensation that's required.

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Speaker 2: Right, So this is the key, right, because the basic

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Speaker 2: idea is a long rate is just a series of

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Speaker 2: overnight rates, and so that gap, if you have some

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Speaker 2: estimate of where the overnight rates are going to be

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Speaker 2: over the next ten years, then you look at the

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Speaker 2: yeld them. Theoretically, that gap is the turn.

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Speaker 3: The term premier.

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Speaker 2: Exactly Can you talk about sentiment? And you know that

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Speaker 2: strikes me tracy that we were recording this basically literally

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Speaker 2: a month after we interviewed the bond King Bill grows,

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Speaker 2: in which he said he doesn't own any bonds, and

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Speaker 2: so it really strikes me that is like, well, people

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Speaker 2: hate bonds right now, like people really hate them, and

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Speaker 2: everyone like in that month since we talked about first

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Speaker 2: of all, when we had that conversation, the ten years

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Speaker 2: closer to four point two percent, So very timely call.

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Speaker 2: But you know, in that month, I do not recall

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Speaker 2: there's so much talk about the deficit. There's so much

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Speaker 2: talk about what at all of these dates, higher inflation

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Speaker 2: higher for longer we can't get it under control? Like

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Speaker 2: how do you measure sentiment and how much does that

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Speaker 2: drive some of these moves.

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Speaker 3: I'm glad you asked that, Joe, because I think it

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Speaker 3: can be really influential over shorter periods of time, say

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Speaker 3: four to six weeks. So there's a host of metrics

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Speaker 3: that we like to watch from the CFTC's data on

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Speaker 3: sort of speculative positioning in interest rate futures, some more

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Speaker 3: empirical models that sort of track the performance of hedge

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Speaker 3: funds and asset managers. But my favorite ends very close

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Speaker 3: to my heart because it's been something I've been working

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Speaker 3: with for like more than two decades, is our weekly

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Speaker 3: JP Morgan Treasury Client Survey. It's a bit of a

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Speaker 3: misnomer because it's really our duration survey of the aggregate

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Speaker 3: exposure of our rates franchise, and every week we ask

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Speaker 3: the same number of clients in our franchise whether they're long,

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Speaker 3: neutral or short duration, either outright or relative to bench mark.

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Speaker 3: And we've found that when that measure sort of moves

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Speaker 3: very sharply away from average levels, it can have a

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Speaker 3: mean revert effect on yield the opposite direction. So you

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Speaker 3: talk about sentiment, I think everyone through the spring and

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Speaker 3: summer was trying to handicap when the FED would be

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Speaker 3: done raising rates, thinking the next move is going on hold,

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Speaker 3: which would be the precursor to rates moving lower. And

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Speaker 3: our survey back in July and August was as long

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Speaker 3: as it had been in over a decade, and it

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Speaker 3: gave you a signal that over the next five to

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Speaker 3: six weeks there could be some risk that rates move

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Speaker 3: higher on a systematic basis, and that's what we've had

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Speaker 3: now walk that forward in our latest survey, which is

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Speaker 3: about a week old right now, is back at its

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Speaker 3: most neutral level since April. So I get the sense

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Speaker 3: that perhaps part of this move over and above the

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Speaker 3: fundamentals could be investors reassessing those duration positions as we've

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Speaker 3: priced higher for longer. Where you talk about the supply

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Speaker 3: of dynamic here at work, maybe that's in the background

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Speaker 3: against the backdrop of large deficits. But I think sentiment

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Speaker 3: is a really large driver over shorter periods of time.

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Speaker 1: So two questions on that. One, there has in this

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Speaker 1: argument that as yields go up and prices go down,

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Speaker 1: you are going to see some maybe buy the dip

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Speaker 1: buyers start to come in and support the market. So

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Speaker 1: one would you expect that to happen? And then two

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Speaker 1: on the duration portion of it, like how much appetite

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Speaker 1: is there for duration structurally in the financial system nowadays?

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Speaker 1: And I guess a simpler way of asking that is

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Speaker 1: why buy a bond at all? Especially at a time

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Speaker 1: you know what I understand, Maybe you're a pension fund

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Speaker 1: and you have long liabilities and you're trying to match

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Speaker 1: them or something like that. But on the other hand,

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Speaker 1: you do have the FED really taking a harsh look

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Speaker 1: or a harsher look at duration risk, telling banks big

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Speaker 1: buyers of bonds, as we were discussing earlier, that they

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Speaker 1: are going to be looking at interest rate exposure and

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Speaker 1: things like that. So what is the attraction of bonds

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Speaker 1: at all in the current market now?

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Speaker 3: I think that's a great question, And I mean, bonds

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Speaker 3: are an investment alternative that are viable for the first

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Speaker 3: time in fifteen or sixteen years here right. I mean

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Speaker 3: you talked about it about the opening treasurey yields hitting

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Speaker 3: you know, PREGFC highs.

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Speaker 2: Across the curve.

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Speaker 3: You know, aggregate fixed income yields for like an aggregate

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Speaker 3: fixed income bond in next are probably still close to

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Speaker 3: six percent right now, and so I think that's a

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00:20:12,000 --> 00:20:16,080
Speaker 3: viable investment alternative just for a broadly diversified portfolio. So

440
00:20:16,160 --> 00:20:18,399
Speaker 3: I think that means there's probably a pool of asset

441
00:20:18,400 --> 00:20:21,240
Speaker 3: managers that could have demand for bonds over time. But

442
00:20:21,520 --> 00:20:23,560
Speaker 3: I think that's only one piece of the puzzle because

443
00:20:23,600 --> 00:20:25,880
Speaker 3: it takes, you know, a very attractive yield level, which

444
00:20:25,880 --> 00:20:29,440
Speaker 3: we've got, but also it takes sort of more stable returns.

445
00:20:29,800 --> 00:20:31,800
Speaker 3: And you started to see that at the beginning of

446
00:20:31,800 --> 00:20:35,879
Speaker 3: the year when yields started to stabilize, infunds inflows excuse me,

447
00:20:35,920 --> 00:20:38,800
Speaker 3: into bond funds started to accelerate, but that sort of

448
00:20:38,840 --> 00:20:42,000
Speaker 3: petered back when volatility began to pick up, and because

449
00:20:42,000 --> 00:20:45,120
Speaker 3: now year to date we've got fixed income returns negative

450
00:20:45,119 --> 00:20:47,720
Speaker 3: for the third consecutive year. So perversely, I think it's

451
00:20:47,720 --> 00:20:49,639
Speaker 3: a little bit of like a chicken and egg. You

452
00:20:49,680 --> 00:20:52,480
Speaker 3: need the attractive yields, but you need stable returns as well,

453
00:20:52,560 --> 00:20:54,720
Speaker 3: and we haven't gotten that yet with the speed of

454
00:20:54,760 --> 00:20:57,760
Speaker 3: the backup, but it's been talked about a lot. I mean,

455
00:20:57,800 --> 00:21:00,240
Speaker 3: you look at the money and Government and Treasury Money

456
00:21:00,240 --> 00:21:02,280
Speaker 3: Market Fund. It's over four and a half trillion dollars,

457
00:21:02,760 --> 00:21:06,439
Speaker 3: and that obviously increased as bank deposits were falling earlier

458
00:21:06,520 --> 00:21:09,040
Speaker 3: this year. But I think there's reasons to think that

459
00:21:09,080 --> 00:21:11,360
Speaker 3: as yelled stabilize and you consider the fed on hold,

460
00:21:11,359 --> 00:21:14,440
Speaker 3: there's room for that money to extend out along the curve.

461
00:21:14,800 --> 00:21:17,800
Speaker 3: So that's one big buyer right there. I think the

462
00:21:17,880 --> 00:21:19,680
Speaker 3: others that we've looked to in the past are the

463
00:21:19,760 --> 00:21:23,000
Speaker 3: US Pension Fund Community Defined Benefit in Nature, and that's

464
00:21:23,000 --> 00:21:25,440
Speaker 3: a three and a half trillion dollar universe an AUM.

465
00:21:25,680 --> 00:21:28,480
Speaker 3: Their funded ratios are above one hundred percent, really sustainably

466
00:21:28,520 --> 00:21:31,200
Speaker 3: for the first time since the financial crisis, and their

467
00:21:31,200 --> 00:21:33,720
Speaker 3: fixed income ACID allocation has been rising for the past

468
00:21:33,760 --> 00:21:36,280
Speaker 3: decade plus I think they had an existential moment back

469
00:21:36,320 --> 00:21:40,440
Speaker 3: in twenty eleven twelve, when funded ratios were well under

470
00:21:40,480 --> 00:21:43,239
Speaker 3: one hundred percent and their fixed income ACID allocation was

471
00:21:43,600 --> 00:21:46,480
Speaker 3: only something like thirty five percent for managing a longer

472
00:21:46,560 --> 00:21:50,000
Speaker 3: duration liability. But it's now over fifty percent, and one

473
00:21:50,000 --> 00:21:52,360
Speaker 3: would think that there's probably more room for demand there.

474
00:21:52,359 --> 00:21:54,720
Speaker 3: But again, I think the nature and speed of these

475
00:21:54,760 --> 00:21:57,760
Speaker 3: moves mean that most active investors who have I think

476
00:21:57,800 --> 00:22:00,879
Speaker 3: more leniency before they add duration are sitting back waiting

477
00:22:00,880 --> 00:22:02,000
Speaker 3: to see sort of vowel receid.

478
00:22:02,080 --> 00:22:06,040
Speaker 1: First, that's interesting that the upside of this violent bond

479
00:22:06,080 --> 00:22:08,359
Speaker 1: sell off might be pension funds being sort of fully

480
00:22:08,359 --> 00:22:10,679
Speaker 1: funded for the first time in a long time. But

481
00:22:10,840 --> 00:22:13,280
Speaker 1: on that note, so one thing you often hear in

482
00:22:13,320 --> 00:22:17,720
Speaker 1: the bond community is that drawdowns don't necessarily matter. Or

483
00:22:17,800 --> 00:22:20,399
Speaker 1: you know, prices are going down, but these are marked

484
00:22:20,400 --> 00:22:23,600
Speaker 1: to market moves, and you know your yield is going

485
00:22:23,680 --> 00:22:25,240
Speaker 1: up at the same time, and so what does it

486
00:22:25,320 --> 00:22:27,800
Speaker 1: matter if the mark to market is going down because

487
00:22:27,800 --> 00:22:30,680
Speaker 1: eventually you would expect to get all your money back

488
00:22:30,800 --> 00:22:34,879
Speaker 1: from the US Treasury. Is that a viable claim? Or

489
00:22:35,000 --> 00:22:37,720
Speaker 1: you know, is it possible for everyone to look through

490
00:22:38,000 --> 00:22:40,720
Speaker 1: these violent moves, or I guess another way of asking

491
00:22:40,760 --> 00:22:43,879
Speaker 1: it is at what point do these become more of

492
00:22:43,920 --> 00:22:45,399
Speaker 1: an issue?

493
00:22:45,720 --> 00:22:48,280
Speaker 3: So I think you should be able to look through them.

494
00:22:48,320 --> 00:22:51,720
Speaker 3: But for more active managers who are managing versus a benchmark,

495
00:22:52,160 --> 00:22:54,119
Speaker 3: I mean, we can look at series of returns on

496
00:22:54,160 --> 00:22:56,239
Speaker 3: a weekly or a monthly basis and see how those

497
00:22:56,320 --> 00:22:58,560
Speaker 3: various funds are doing relative to their peers. So I

498
00:22:58,560 --> 00:23:02,000
Speaker 3: think you know there is some psychology to not deviate

499
00:23:02,040 --> 00:23:05,119
Speaker 3: too far away from more average excess returns are headed.

500
00:23:05,400 --> 00:23:08,480
Speaker 3: And I think that's important because excess returns over and

501
00:23:08,480 --> 00:23:11,240
Speaker 3: above index, which index being negative for the last three years.

502
00:23:11,480 --> 00:23:13,920
Speaker 3: Excess returns for the asset manager community have been, on

503
00:23:14,240 --> 00:23:16,480
Speaker 3: the average pretty challenging the last couple of years, so

504
00:23:16,520 --> 00:23:19,159
Speaker 3: I think there is a degree of sensitivity there. So

505
00:23:19,200 --> 00:23:21,400
Speaker 3: I think that's sort of an impactful story there, which

506
00:23:21,440 --> 00:23:24,879
Speaker 3: means that there is some sort of psychology, particularly as

507
00:23:24,880 --> 00:23:27,280
Speaker 3: the fundamentals are shifting, to kind of neutralize your positions

508
00:23:27,280 --> 00:23:28,800
Speaker 3: more quickly, even though you may be able to look

509
00:23:28,840 --> 00:23:31,360
Speaker 3: through it. And then there's a separate story about flows,

510
00:23:31,480 --> 00:23:34,200
Speaker 3: which is over and above the existing stock of aum

511
00:23:34,240 --> 00:23:37,359
Speaker 3: you've got that you probably need to see returns stabilize

512
00:23:37,400 --> 00:23:40,880
Speaker 3: before you see incremental inflows from investors out of money

513
00:23:40,880 --> 00:23:42,920
Speaker 3: market funds or out of other asset classes into fixed

514
00:23:42,920 --> 00:23:43,560
Speaker 3: income as well.

515
00:23:44,320 --> 00:23:46,240
Speaker 2: Can we talk a little bit more about supply. I

516
00:23:46,240 --> 00:23:48,960
Speaker 2: mean we talked about the demand or the lack of

517
00:23:48,960 --> 00:23:52,159
Speaker 2: the price and sensitive demand. It really feels to me

518
00:23:52,400 --> 00:23:55,640
Speaker 2: like awareness of deficit. People always talk about deficits and

519
00:23:55,960 --> 00:23:58,639
Speaker 2: high deficits, but it really feels to me like focus

520
00:23:58,760 --> 00:24:02,320
Speaker 2: on deficits in the last month or so reached some

521
00:24:02,480 --> 00:24:04,840
Speaker 2: like fever pitch when you talk to clients. Did you

522
00:24:04,920 --> 00:24:07,440
Speaker 2: notice that as well, like just a lot of conversation

523
00:24:07,480 --> 00:24:09,520
Speaker 2: about deficits, Joe, I.

524
00:24:09,440 --> 00:24:12,479
Speaker 3: Haven't had as many conversations about deficits and treasury supply

525
00:24:12,880 --> 00:24:14,960
Speaker 3: over my I think most of my career as versus

526
00:24:14,960 --> 00:24:16,879
Speaker 3: what I've had the last couple of months. Well, it's

527
00:24:16,920 --> 00:24:17,680
Speaker 3: hit a fever.

528
00:24:17,560 --> 00:24:21,000
Speaker 2: Pitch, And so how do you think about deficits as

529
00:24:21,040 --> 00:24:24,520
Speaker 2: a driver or like decomposed like supply the supply side

530
00:24:24,840 --> 00:24:27,480
Speaker 2: when you talk to like attributing aspects of this right move?

531
00:24:27,600 --> 00:24:30,080
Speaker 3: Yeah, I mean, I think supply matters in the context

532
00:24:30,080 --> 00:24:32,320
Speaker 3: of that demand that we're just talking about, And there's

533
00:24:32,359 --> 00:24:35,399
Speaker 3: a big shift that's happening. But to your point, I

534
00:24:35,440 --> 00:24:38,400
Speaker 3: haven't learned anything incrementally new over the past six weeks

535
00:24:38,480 --> 00:24:40,920
Speaker 3: or so that I didn't know a few months ago.

536
00:24:41,040 --> 00:24:43,920
Speaker 3: And I think we've known that deficits over the next

537
00:24:43,920 --> 00:24:46,120
Speaker 3: ten years are expected to be wide for some time,

538
00:24:46,640 --> 00:24:48,720
Speaker 3: and maybe you can say incrementally the last couple of months,

539
00:24:48,760 --> 00:24:52,280
Speaker 3: because yields have risen, the expectations over inter six spents

540
00:24:52,280 --> 00:24:55,040
Speaker 3: at the federal level are higher, thus even adding to

541
00:24:55,080 --> 00:24:58,560
Speaker 3: that pressure. But I think people look at the Treasury's

542
00:24:58,600 --> 00:25:01,040
Speaker 3: quarterly refunding announcement on all August first as being a

543
00:25:01,080 --> 00:25:04,240
Speaker 3: seminal driver there where the Treasury made and announced a

544
00:25:04,280 --> 00:25:06,960
Speaker 3: series of pretty large increases to coupon auction size, is

545
00:25:07,000 --> 00:25:10,959
Speaker 3: the first since the pandemic era, and sort of foreshadow

546
00:25:11,080 --> 00:25:13,320
Speaker 3: to the bond community that these were likely to continue

547
00:25:13,320 --> 00:25:15,760
Speaker 3: for a number of quarters at a time. That's been

548
00:25:15,760 --> 00:25:18,120
Speaker 3: on our minds for some time, Like our issuance forecast

549
00:25:18,119 --> 00:25:20,320
Speaker 3: for some time, I've been calling for a pretty sharply

550
00:25:20,640 --> 00:25:21,440
Speaker 3: so like anyone.

551
00:25:21,160 --> 00:25:23,600
Speaker 2: Who was plugged in saw that some of these coming.

552
00:25:24,200 --> 00:25:26,080
Speaker 3: But I think maybe the fact that it was like,

553
00:25:26,400 --> 00:25:28,280
Speaker 3: you know, the whites of the Treasury's eyes and actually

554
00:25:28,320 --> 00:25:31,199
Speaker 3: seeing it mattered, but it's large, and I think we

555
00:25:31,240 --> 00:25:34,080
Speaker 3: think coupon issuance and treasuries is going to double next

556
00:25:34,160 --> 00:25:37,159
Speaker 3: year from this year. And in duration terms, you know,

557
00:25:37,160 --> 00:25:39,240
Speaker 3: we think we're running about two point three trillion and

558
00:25:39,240 --> 00:25:42,399
Speaker 3: ten year treasury equivalents this year. We're probably going to

559
00:25:42,440 --> 00:25:44,680
Speaker 3: issue about three trillion and ten year equivalents next year.

560
00:25:44,680 --> 00:25:47,719
Speaker 3: So it's a thirty five percent increase in duration supply

561
00:25:47,840 --> 00:25:50,400
Speaker 3: into next year. And I think it matters because deficits

562
00:25:50,400 --> 00:25:52,840
Speaker 3: as a share of GDP are larger now with the

563
00:25:52,880 --> 00:25:55,760
Speaker 3: economy sitting above trend and growth and the unemployment rates

564
00:25:55,760 --> 00:25:57,480
Speaker 3: sitting well below four percent, that I think just in

565
00:25:57,520 --> 00:26:00,160
Speaker 3: the background there's concerns that when there's a downturn, how

566
00:26:00,160 --> 00:26:01,200
Speaker 3: big will these deficits be.

567
00:26:01,400 --> 00:26:05,320
Speaker 1: Yeah, So we are recording this on October tenth, and

568
00:26:05,680 --> 00:26:08,800
Speaker 1: the benchmark yield on the ten year treasury is down

569
00:26:08,840 --> 00:26:10,640
Speaker 1: from I think it was like four point eight seven

570
00:26:10,680 --> 00:26:13,320
Speaker 1: percent last week. It's now at four point six percent,

571
00:26:13,640 --> 00:26:16,240
Speaker 1: partly because of this flight to safety that we've seen.

572
00:26:17,320 --> 00:26:19,960
Speaker 1: Pulling it all together, you know, we talked about the

573
00:26:20,080 --> 00:26:23,919
Speaker 1: long term factors here, including the decline of price and

574
00:26:24,000 --> 00:26:28,240
Speaker 1: sensitive buyers booming supply some of the short term technicals.

575
00:26:28,560 --> 00:26:31,600
Speaker 1: What's your outlook going into twenty twenty four? And I

576
00:26:31,640 --> 00:26:35,400
Speaker 1: guess I don't mean to sound mean or incredulous when

577
00:26:35,440 --> 00:26:37,720
Speaker 1: I say this, but like, how can you have any

578
00:26:37,920 --> 00:26:41,400
Speaker 1: certainty at this point about what's going to happen when

579
00:26:41,480 --> 00:26:43,679
Speaker 1: what we've seen for the past year is this continued

580
00:26:43,720 --> 00:26:45,480
Speaker 1: defiance of expectations.

581
00:26:45,760 --> 00:26:45,800
Speaker 2: No.

582
00:26:45,920 --> 00:26:47,679
Speaker 3: I think there's a lot of humility there, because if

583
00:26:47,680 --> 00:26:49,920
Speaker 3: we had sat here, you know, nine to ten months

584
00:26:49,920 --> 00:26:51,960
Speaker 3: ago and talked about the outlet for twenty twenty three,

585
00:26:52,160 --> 00:26:53,919
Speaker 3: we would not have pegged ten yere yield sitting at

586
00:26:53,960 --> 00:26:56,439
Speaker 3: four sixty two like they are right now. But as

587
00:26:56,440 --> 00:26:58,639
Speaker 3: I think ahead and I look into the end of

588
00:26:58,640 --> 00:27:02,560
Speaker 3: this year in twenty twenty four, let's think about the economy,

589
00:27:02,640 --> 00:27:05,520
Speaker 3: and again we're not in the recessionary camp, but we

590
00:27:05,560 --> 00:27:09,439
Speaker 3: see and we forecast growth moving below trend under the

591
00:27:09,440 --> 00:27:12,120
Speaker 3: weight of the shift in policy rates that we've had,

592
00:27:12,359 --> 00:27:16,000
Speaker 3: but also because there's other incremental factors with higher energy prices,

593
00:27:16,359 --> 00:27:19,320
Speaker 3: with the beginning of student loan repayments. Coming back to

594
00:27:19,400 --> 00:27:21,679
Speaker 3: think that growth will be slower next year than it

595
00:27:21,760 --> 00:27:25,479
Speaker 3: was this year. We think FED policy is likely at

596
00:27:25,480 --> 00:27:28,240
Speaker 3: a standing point with respect to policy rates that it's

597
00:27:28,280 --> 00:27:31,560
Speaker 3: on hold, which is typically something over a longer period

598
00:27:31,600 --> 00:27:34,800
Speaker 3: of time that's been supportive of yields stabilizing. And we

599
00:27:34,840 --> 00:27:38,560
Speaker 3: think inflation is coming down, but coming down very slowly.

600
00:27:38,640 --> 00:27:41,200
Speaker 3: So we've had a very strong disinflationary impulse the last

601
00:27:41,240 --> 00:27:44,679
Speaker 3: three months. We think that's probably past its peak, and

602
00:27:44,720 --> 00:27:47,560
Speaker 3: that the journey from three percent annualize inflation to two

603
00:27:47,560 --> 00:27:50,280
Speaker 3: percent is going to take some time. So the Fed's

604
00:27:50,320 --> 00:27:53,480
Speaker 3: probably done tightening, but we think the fed's also on

605
00:27:53,520 --> 00:27:55,560
Speaker 3: hold for the next ten or eleven months or so,

606
00:27:56,160 --> 00:27:59,240
Speaker 3: all the while QT is still going on in the background.

607
00:27:59,640 --> 00:28:02,200
Speaker 3: So I think we can historically go back and look

608
00:28:02,200 --> 00:28:04,640
Speaker 3: at the end of FED tightening periods as being very

609
00:28:04,680 --> 00:28:07,439
Speaker 3: positive for yields peaking and coming back down. But I

610
00:28:07,440 --> 00:28:09,600
Speaker 3: think these are the reasons a FED on hold for

611
00:28:09,680 --> 00:28:12,800
Speaker 3: longer while balance sheet policy is still kind of sitting

612
00:28:12,880 --> 00:28:15,040
Speaker 3: in the background working, and not just in the US

613
00:28:15,080 --> 00:28:17,760
Speaker 3: but globally too, because the ECB and the Bank of

614
00:28:17,760 --> 00:28:19,480
Speaker 3: England are doing QT, and one would think that the

615
00:28:19,520 --> 00:28:22,159
Speaker 3: Bank of Japan might have to defend its purchases or

616
00:28:22,160 --> 00:28:24,880
Speaker 3: its YCC target less forcedly as well. This is something

617
00:28:24,920 --> 00:28:27,160
Speaker 3: that's going to keep rates elevated for a longer period

618
00:28:27,200 --> 00:28:29,840
Speaker 3: of time versus what we've seen in prior FED on

619
00:28:29,920 --> 00:28:33,000
Speaker 3: hold periods, particularly when inflation remains above the FEDS two

620
00:28:33,000 --> 00:28:35,720
Speaker 3: percent targets. So we see scope if there's some mean

621
00:28:35,800 --> 00:28:38,520
Speaker 3: reversion here back to our model fair value for rates

622
00:28:38,560 --> 00:28:41,280
Speaker 3: to fall about thirty basis points. But beyond that, I

623
00:28:41,280 --> 00:28:43,080
Speaker 3: think it's a struggle to think that yields will be

624
00:28:43,200 --> 00:28:45,760
Speaker 3: much lower if the FEDS on hold. But QT is

625
00:28:45,800 --> 00:28:48,200
Speaker 3: going on and inflation is coming down, but we're past

626
00:28:48,240 --> 00:28:50,280
Speaker 3: the peak of the disinflationary impulse that we've had.

627
00:28:50,560 --> 00:28:53,720
Speaker 1: Yeah, this was kind of Austin Goolsby's point as well,

628
00:28:53,760 --> 00:28:55,640
Speaker 1: that you know, even a hold is kind of a

629
00:28:55,680 --> 00:28:59,160
Speaker 1: continued tightening of financial conditions. Ja Berry, thank you so

630
00:28:59,240 --> 00:29:01,560
Speaker 1: much for coming on thoughts. Appreciate you doing this at

631
00:29:01,640 --> 00:29:02,800
Speaker 1: relatively short notice.

632
00:29:02,840 --> 00:29:03,960
Speaker 3: Tracy, Jeff, thanks a lot.

633
00:29:03,800 --> 00:29:05,200
Speaker 2: For having me. Yeah, thank you so much.

634
00:29:05,200 --> 00:29:19,840
Speaker 1: That was great, So, Joe, I thought that was a

635
00:29:19,880 --> 00:29:23,959
Speaker 1: really good overview of all these different factors going into

636
00:29:24,120 --> 00:29:26,080
Speaker 1: the sell off at the moment, and it does seem

637
00:29:26,160 --> 00:29:30,000
Speaker 1: kind of complicated, and there is still this overarching question

638
00:29:30,120 --> 00:29:33,880
Speaker 1: I think over the timing in the past two weeks

639
00:29:33,920 --> 00:29:36,800
Speaker 1: and like, yes, the dots move slightly higher, but was

640
00:29:36,840 --> 00:29:40,800
Speaker 1: that really enough to spark like this big, almost historic

641
00:29:41,080 --> 00:29:44,360
Speaker 1: sell off that we've seen in bonds. I think to

642
00:29:44,480 --> 00:29:46,840
Speaker 1: Jay's point, it does feel like there are some more

643
00:29:46,920 --> 00:29:49,000
Speaker 1: technical aspects that might be driving it.

644
00:29:49,640 --> 00:29:51,520
Speaker 2: You know, there were a couple of things that stood

645
00:29:51,520 --> 00:29:54,840
Speaker 2: out to those technical points, like his observation about sentiment

646
00:29:55,080 --> 00:29:58,040
Speaker 2: and the fact that you know, up until basically July,

647
00:29:58,360 --> 00:30:01,840
Speaker 2: up until maybe July August, everyone was thinking like, oh,

648
00:30:01,880 --> 00:30:03,800
Speaker 2: the peak was in, you know, inflation is going to

649
00:30:03,840 --> 00:30:05,360
Speaker 2: come down, and so there was just this sort of

650
00:30:05,400 --> 00:30:09,120
Speaker 2: long treasury bid. Is interesting that you know, you sort

651
00:30:09,160 --> 00:30:11,520
Speaker 2: of confirmed my hunch that there's just been this like

652
00:30:11,640 --> 00:30:14,280
Speaker 2: real big pickup in like deficit talk the way we

653
00:30:14,360 --> 00:30:17,400
Speaker 2: haven't seen in a while. Anyway, I really I've found

654
00:30:17,440 --> 00:30:18,840
Speaker 2: that to be a very helpful conversation.

655
00:30:19,000 --> 00:30:21,120
Speaker 1: Yeah, it's kind of funny to think that, like everyone

656
00:30:21,200 --> 00:30:24,120
Speaker 1: woke up on like October fifth and decided to become

657
00:30:24,120 --> 00:30:26,480
Speaker 1: a bond vigilante, but they didn't, like, they didn't feel

658
00:30:26,480 --> 00:30:28,120
Speaker 1: like that a month or two ago.

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00:30:28,400 --> 00:30:30,840
Speaker 2: I mean, we knew like about the trillions and deficits

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00:30:30,960 --> 00:30:33,000
Speaker 2: for you know, as far as the eye can see,

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00:30:33,040 --> 00:30:35,080
Speaker 2: but it does. You know, it is weird, right. There

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00:30:35,120 --> 00:30:38,840
Speaker 2: hasn't been a ton of new information between you know whatever.

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00:30:38,920 --> 00:30:42,160
Speaker 2: That recent peak was on Friday and a month before.

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00:30:42,640 --> 00:30:44,600
Speaker 2: But I do think it was sort of like that

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00:30:44,800 --> 00:30:47,720
Speaker 2: month basically between our Bill Gross interview and now. It's

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Speaker 2: just the amount of negativity and in the intensity of

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00:30:50,360 --> 00:30:52,400
Speaker 2: hatred towards Bond it just seemed to get wild.

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Speaker 1: The Bond King called it, yeah, all right, shall we

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Speaker 1: leave it there?

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Speaker 2: Let's leave it there.

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Speaker 1: This has been another episode of the ad Thoughts podcast.

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00:30:59,760 --> 00:31:02,960
Speaker 1: I'm Tracy Alloway. You can follow me at Tracy Alloway and.

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00:31:02,920 --> 00:31:05,640
Speaker 2: I'm Joe Wisenthal. You can follow me at the Stalwart.

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00:31:05,840 --> 00:31:09,160
Speaker 2: Follow our producers Carmen Rodriguez at Carmen Arman and dash

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00:31:09,160 --> 00:31:11,880
Speaker 2: El Bennett at Dashbot. And thank you to our producer

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00:31:11,920 --> 00:31:15,040
Speaker 2: Moses Ondam. For more Odd Lots content, go to Bloomberg

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Speaker 2: dot com slash odd Lots, where we post transcripts. We

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Speaker 2: have a blog and a newsletter and you can chat

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00:31:20,600 --> 00:31:23,360
Speaker 2: with fellow fans twenty four to seven in our discord

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Speaker 2: Discord dot gg slash.

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Speaker 1: Outlines and if you enjoy odd Lots, if you like it,

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00:31:28,840 --> 00:31:32,120
Speaker 1: when we delve into the technical aspects of the treasury market.

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Speaker 1: Then please leave us a positive review on your favorite

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Speaker 1: podcast platform. Thanks for listening, Stood in the