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Speaker 1: This is the FED decides. On Bloomberg Television, on Bloomberg Radio,

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Speaker 1: Tom King, Jonathan Fair, Lisa A Bram West John Off

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Speaker 1: Today and really I've got to just go straight to

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Speaker 1: the markets. What the FED said is we don't have

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Speaker 1: any decisions about any further rate hikes. What the market

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Speaker 1: heard is you're done, and you could see a rally

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Speaker 1: in bonds. You're here seeing irrally in stocks.

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Speaker 2: Tom.

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Speaker 1: That caught my attention at a time when the FED

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Speaker 1: is trying to parse through nuance and the market only

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Speaker 1: here's one thing.

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Speaker 3: The most are so correlated and so abrupt, including Oil

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Speaker 3: West Texas Intermedia almost getting down to a seventy nine handle,

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Speaker 3: which the chairman alluded to in the final question on

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Speaker 3: the war in the Eastern Mediterranean. But in the bond market, Lisa,

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Speaker 3: what's so important here is these moves are so large.

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Speaker 3: I have to go to a standard deviation analysis. Conventional

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Speaker 3: financial TV doesn't capture the magnitude of the vote. You're seeing.

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Speaker 3: David Rosenberg, always brilliant out of Toronto, I know, making

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Speaker 3: clear this is a FED that is done. And yet

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Speaker 3: the singular point was Leastman of CNBC and McKee of Bloomberg,

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Speaker 3: where he stopped in the middle of his conversation to say,

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Speaker 3: we stand ready to be hawkish against this entire arc

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Speaker 3: of we're done.

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Speaker 1: Q whether or not they've lost some credibility because he

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Speaker 1: could say, we're prepared to hike again. We've made no decisions.

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Speaker 1: We're going to have a consensus on the Federal Reserve.

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Speaker 1: The market again really is starting to price out further

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Speaker 1: rate hikes more materially. I will just say this in

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Speaker 1: terms of whether the market is doing the work for them.

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Speaker 1: He speculated that it was really persistent changes in financial conditions,

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Speaker 1: and it's too soon to say everything was hedged. Everything

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Speaker 1: was going back to the notes, Everything was very rode.

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Speaker 1: He did as much as he could, as little as possible.

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Speaker 3: Yeah, I'll go with that. And I like the idea

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Speaker 3: that everything was hedged in the sense of we didn't

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Speaker 3: near data dependency much, which surprised me. I thought we'd say, Okay,

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Speaker 3: the jobs report, maybe we finally see a crap in

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Speaker 3: an economy coming off four point x percent real GDP.

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Speaker 3: I think that this was taken by the markets, which

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Speaker 3: is really what I would focus on. The diwop two

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Speaker 3: hundred and fifty points one point six percent move Nasdaq

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Speaker 3: at one hundred and seventeen basis points of soft landing

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Speaker 3: in the ten year yield. The market is speaking volumes.

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Speaker 1: They loved what they hurt, and this is going to

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Speaker 1: of course be due to revision with time, and we've

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Speaker 1: known that the knee jerk reaction is not always the

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Speaker 1: one that sticks. But tom to me the fact that

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Speaker 1: the market is jumping on this and that earlier in

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Speaker 1: the day you saw yields tick lower because their funding announcement,

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Speaker 1: then even lower, particularly on the long end, after economic

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Speaker 1: data that came in weaker than expected, and then Chair

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Speaker 1: Powell coming in and pushing them that much further lower

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Speaker 1: as people expect them to be done.

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Speaker 3: Yeah, it's going to be interesting to see this, say least,

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Speaker 3: We'll continue to monitor markets, and we have a stellar

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Speaker 3: group of people to drive the conversation forward. Let's drive

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Speaker 3: the conversation forward right now. Almost quoting off Star Wars,

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Speaker 3: he was very far, very far away. A question from

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Speaker 3: Michael McKee. Let us listen to the chairman here on

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Speaker 3: what is out there.

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Speaker 4: We're going meeting my meeting. We're asking ourselves whether we've

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Speaker 4: achieved a stance of policy that is sufficiently restrictive to

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Speaker 4: bring inflation down to two percent over time. That's the

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Speaker 4: question we're asking. We're looking at the full range of

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Speaker 4: economic data, including financial conditions and all of those things

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Speaker 4: that we look at, and then we're you know, we've

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Speaker 4: come very far with this rate hiking cycle, very far.

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Speaker 3: Who nailed this the very far of it was William

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Speaker 3: Dudley out of Berkeley for years of course at Golden

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Speaker 3: Sachs and the former New York Federal Reserve President, huge

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Speaker 3: value at Bloomberg Economics and a senior advisor in economics

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Speaker 3: for all of Bloomberg. Bill Dudley, you and I were

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Speaker 3: in the lofty, cool climbs of Marrakesh a few weeks ago.

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Speaker 3: Is the international community confronted a unique American experiment, a

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Speaker 3: dynamic fiscal inducement, a fiscal stimulus?

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Speaker 5: To where we are now?

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Speaker 3: Your essay in the last two hours for Bloomberg makes

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Speaker 3: clear you have immense concern that the Fed, given the

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Speaker 3: cards dealt, could get this wrong. What did the chairman

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Speaker 3: not address in this press conference.

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Speaker 6: I think that he's quite confident that policy is restrictive

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Speaker 6: enough to slow the ecomedy down. And I think the

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Speaker 6: fact that we just had a growth quarter about nearly

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Speaker 6: five percent calls that a little bit into question. Also

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Speaker 6: to the notion that financial conditions are truly tight to

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Speaker 6: enough to slow the coming down, I think is also

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Speaker 6: pretty questionable because if you look at most financial conditioning indexes,

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Speaker 6: the CHIAP, the biggest impulse towards restraint really happened last year,

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Speaker 6: not right now. So I think that, you know, maybe

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Speaker 6: they have done enough, maybe they haven't. But I think

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Speaker 6: the reason why markets are hearing this so confidently is

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Speaker 6: he he feels very confident that FED has done a lot.

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Speaker 6: It feels policy is restrictive, and so I think, you know,

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Speaker 6: the market is taking away the notion that he thinks

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Speaker 6: he's done. And obviously, you know that depends on how

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Speaker 6: the economy of allso has to inflation, what happens to

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Speaker 6: the labor market. And another thing that the market is

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Speaker 6: taking a lot of a positive signal from is he

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Speaker 6: talked about how all these pandemic effects are washing out

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Speaker 6: now in a good way. So labor market is becoming

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Speaker 6: much more in balance, labor force growth is picked up.

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Speaker 6: It's a very benign story about how this stall played out.

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Speaker 6: It's basically a story where the FED really hasn't had

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Speaker 6: to do that much to bring inflation down, and the

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Speaker 6: FED basically is saying we don't think we're going to

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Speaker 6: have to do much more from here.

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Speaker 1: Char Powell also didn't seem to think that there was

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Speaker 1: any casualty in pausing, letting time go on, and then

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Speaker 1: restarting rate hikes. He said that that wasn't problematic at all.

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Speaker 1: Do you disagree.

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Speaker 6: Obviously, if it turns out that they need to do more,

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Speaker 6: they're probably going to have to do more than just

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Speaker 6: one quarter point move. You know, if you've taken a

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Speaker 6: break for let's say six months, and the evidence accumulates

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Speaker 6: that Madre policy is not as tight as you think

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Speaker 6: it is, and inflation expectations are starting to become un anchored,

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Speaker 6: labor markets not loosening, wages are stuck at four and

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Speaker 6: a half percent, then it's unlikely that one quarter point

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Speaker 6: move is going to be sufficient to do the job.

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Speaker 6: So I think it's either zero or multiple rate hikes.

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Speaker 1: Which is the reason why I probably some people are

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Speaker 1: looking at this like yourself and saying they could be

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Speaker 1: on the brink of an error. There was a question

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Speaker 1: about how financial conditions really played into the Fed's decision

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Speaker 1: whether higher yields were doing their work. He had some

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Speaker 1: nuance around this, talking about a sustained move higher. Take

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Speaker 1: a listen to Chair Powell speaking on the issue.

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Speaker 4: Persistent changes in broader financial conditions can have implications for

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Speaker 4: the path of monetary policy. In this case, the title

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Speaker 4: financial conditions we're seeing from higher long term rates, but

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Speaker 4: also from other sources like the stronger dollar and lower

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Speaker 4: equity prices could matter for future rate decisions. With financial conditions,

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Speaker 4: we're looking for persistent changes that are material.

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Speaker 1: Bill Dudley, from your vantage point, does this give any

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Speaker 1: clarity as to how the Fed is counting yields in

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Speaker 1: their picture of what restrictive really looks like?

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Speaker 6: Well, I think I agree with him that persistence is

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Speaker 6: what matters. I mean, bonials go up for a week

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Speaker 6: or two and then come right back down. That's not

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Speaker 6: going to presert much restraint on the economy. You know,

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Speaker 6: one problem I think that Chairman has at this point

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Speaker 6: is by talking to the markets in a sort of

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Speaker 6: supportive way, stocks rally, bonial's fall, that's loosening financial conditions,

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Speaker 6: and so that's removing some of the restraint that was

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Speaker 6: creating some impetus for not tightening laundry policy further, the.

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Speaker 3: Harder the matter to me, Bill, and I don't want

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Speaker 3: to turn this into Dale Jorgenson's through three ratio course,

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Speaker 3: and Juliet Coronado has been brilliant on this as well.

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Speaker 3: So let's listen to doctor Coronado and doctor Dudley, Folks,

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Speaker 3: and Bill Dudley said, barring unexpectedly fast productivity growth, there

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Speaker 3: seems to be almost a hope and prayer Bill Dudley,

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Speaker 3: that this time is different and instantly we have a

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Speaker 3: new elevated productivity. Do you see any signal of this

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Speaker 3: in post pandemic America.

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Speaker 6: I think it's really too soon to make any decisions

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Speaker 6: about protivty at all. Protivy growth took a real hit

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Speaker 6: during the pandemic, and then it picked up as we reopened.

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Speaker 6: What the trend is at this point is very, very uncertain.

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Speaker 6: And you noticed that Chapaul did not talk about protin

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Speaker 6: growth at that trend changing. What he talked about was

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Speaker 6: a labor force growth had picked up a lot because

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Speaker 6: labor ports, participation on you know, adult workers have climbed

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Speaker 6: a lot, and immigration I picked up. He saw that

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Speaker 6: as a positive supply side surprise. But I don't think

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Speaker 6: that the FED, or or Eye for that matter, think

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Speaker 6: that there is a pro to vy growth miracle right

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Speaker 6: around the corner.

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Speaker 3: Bill Dudley's Wednesday, We're going to a job's report on Friday.

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Speaker 3: Let's go back to Dudley and mckelviy, Gold and Sex

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Speaker 3: a few years ago. What's an appropriate non firm payroll statistic?

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Speaker 3: Not on Friday, but say three month moving average out

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Speaker 3: where you can say all clear. And finally, we have

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Speaker 3: a labor economy settling down? Is it sub one hundred thousand?

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Speaker 6: Yeah, it's probably in that ballpark. I mean, as pure

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Speaker 6: Paul said, we are getting a surgeon liver force this year,

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Speaker 6: but I think he also expects that that will peter

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Speaker 6: out over time, and then you're just stuck with the

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Speaker 6: growth rate of the working age population, which is probably

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Speaker 6: only growing in about a half a percent a year,

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Speaker 6: and so that's consistent with payroll gains of maybe one

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Speaker 6: hundred thousand a months or even a little bit less.

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Speaker 6: So I think that eventually the FED needs to bring

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Speaker 6: payroll growth below one hundred thousand if they're going to

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Speaker 6: generate enough slack in the labor market to bring wage

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Speaker 6: inflation down to levels consistent with two percent inflation.

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Speaker 1: Given the volatility that we've seen in the bond market, Bill,

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Speaker 1: how concerned are you about a real blowback on Friday

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Speaker 1: should we get a job report that comes in materially

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Speaker 1: hotter than expected and we continue to see those upsides

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Speaker 1: surprises that you say may post the biggest risk.

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Speaker 6: Well, I personally would not put too much attention on

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Speaker 6: any one given economic release at this point because the

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Speaker 6: Fed is basically said we are patient now, and so

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Speaker 6: one economic report is not going to change their thinking.

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Speaker 6: It's only accumulation of evidence to suggests that policy is

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Speaker 6: not sufficiently restricted to do the job, which will cause

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Speaker 6: the FED to start to tighten Entrey Pauls again, So

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Speaker 6: I think we need to maybe downplay any single report

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Speaker 6: at this point. It's going to take an accumulation of

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Speaker 6: evidence for the FED to decide that they need to

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Speaker 6: do more on Luntary Pauls.

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Speaker 3: Bill Dudley, thank you so much, greatly, greatly appreciated this morning, folks.

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Speaker 3: I'll send out the essay across all my social heres

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Speaker 3: op ed is really must read some really good writing

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Speaker 3: just in the last twenty four hours from a number

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Speaker 3: of people within the zeitgeist. I need to do a

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Speaker 3: market check here because this is an historic move. They say,

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Speaker 3: I'm going to be as quick as I can only

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Speaker 3: says you go to Michael McKee. The Dow up two

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Speaker 3: hundred and fifty eight points, heading towards a one percent lift.

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Speaker 3: I got a one percent lift, SMP five one hundred

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Speaker 3: up solid forty seven points, Nasdaq one hundred on fire

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Speaker 3: up one point seven percent. That into Apple earnings tomorrow

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Speaker 3: at Lisa, I should point out tenure yield eighteen basis

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Speaker 3: points modest move as well, and the real yield Lisa

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Speaker 3: craters two point five oh percent after my first glass

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Speaker 3: of tang this morning, and we are down sixteen basis

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Speaker 3: points on the inflation of just a yield. The operative word, folks,

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Speaker 3: is never. I don't think I've ever seen that.

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Speaker 1: It has been a pretty significant move and continues to

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Speaker 1: be as the session grows older. Let's check back in

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Speaker 1: with our own Michael McKee, who is in the room

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Speaker 1: in Washington, DC. Mike, do you think the FED would

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Speaker 1: be disappointed to see the market's reaction to Fed shair

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Speaker 1: j Palace press conference?

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Speaker 2: Not disappointed in that sense, clearly, If we continue to

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Speaker 2: see this kind of drop in yields, it's going to

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Speaker 2: take some of that market pressure off of the economy,

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Speaker 2: and the FED sort of goes backwards a little bit.

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Speaker 2: But I don't think they are counting on the markets

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Speaker 2: being tight for a long time to completely do their

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Speaker 2: job for them, because, as you mentioned just a moment ago,

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Speaker 2: if you get a blowout number on Friday, then everybody's

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Speaker 2: going to reverse. I think the takeaway here is that

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Speaker 2: the FED would like to be done, or at least

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Speaker 2: at peak, and switch to the idea of how long,

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Speaker 2: but they can't be sure yet. And I think the

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Speaker 2: analogy I would use is the FED chairman is Potter

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Speaker 2: Stewart at this point, the former Supreme Court justice who

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Speaker 2: said that he could not define pornography, but he knew

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Speaker 2: it when he sees it. At this point, the FED

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Speaker 2: can't define what sufficiently tight.

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Speaker 1: Is, but meeting by meeting, they.

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Speaker 5: Will decide what they see.

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Speaker 2: So you kind of throw out the dot plot, which

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Speaker 2: is what I was getting at with my question sem

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Speaker 2: The markets can't predict anymore what the FED is going

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Speaker 2: to do. They have to go into every meeting trying

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Speaker 2: to assess what the FED will think about conditions at

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Speaker 2: the time rather than some sort of objective data release.

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Speaker 3: Mike McKee and your tenure back to Arthur Burns, you

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Speaker 3: were young buck there with Arthur Burns a few years ago.

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Speaker 3: Have you ever seen a FED working away from theory,

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Speaker 3: away from the orthodox They seem to be literally as

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Speaker 3: you and Steve Lesman alluded to, making it up meeting

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Speaker 3: to meeting.

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Speaker 2: Yeah, I mean orthodoxy changes obviously, and the time from

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Speaker 2: Burns to green Span it changed quite a bit. And

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Speaker 2: it's still a FED truism that the inflation is kind

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Speaker 2: of the key to everything. But they don't know what's

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Speaker 2: going on. The models don't work or haven't worked coming

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Speaker 2: out of the pandemic. It's all something new. So they

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Speaker 2: are doing their best to try to figure out what's

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Speaker 2: going on without using some of the history based models

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Speaker 2: and previous outcomes that they would have had to use

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Speaker 2: in the past. And this will in gender a lot

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Speaker 2: of rewrites of monetary policy. Thinking, I'm sure.

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Speaker 1: Going down the road just to sum this all up,

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Speaker 1: is strategically patient, the news sufficiently restrictive.

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Speaker 2: I saw that comment and I think it is. It

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Speaker 2: sums it up pretty well. They are going to be

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Speaker 2: patient they're going to have to have a good reason

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Speaker 2: to do whatever, whether it's cutting rates, raising rates, they

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Speaker 2: will not have to have a good reason to just

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Speaker 2: leave rates where they are.

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Speaker 5: They could just go with the economy as they see it.

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Speaker 1: Michael McKee, thank you, and wonderful question. As always, strategically

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Speaker 1: are you strategically patient?

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Speaker 3: Last night at nine pm?

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Speaker 1: I was not absolutely with the sugar highs, etc. But

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Speaker 1: this to me really highlights what they're saying. And then

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Speaker 1: you put the stock chart and you put the bond

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Speaker 1: chart next to it, and you hear what the bond

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Speaker 1: market is hearing. Just want to point this out to

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Speaker 1: your yields four point ninety three percent, getting close to

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Speaker 1: crossing that threshold into the four point ninety. No, it's

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Speaker 1: a bouncing around, but just highlights what a massive move

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Speaker 1: we've seen on the front end.

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Speaker 3: Massive is definement by the pros folks, and we welcome

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Speaker 3: all of you not part of global Wall Street. People

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Speaker 3: look at this strange phrase standard deviation, and all you

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Speaker 3: need to know is you look back twenty days, forty days, whatever,

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Speaker 3: twenty weeks and you try to figure out how much

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Speaker 3: have we moved off the center trend. Jeffrey Rosenberg of

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Speaker 3: Blackrock knows we've seen a standard deviation move. He is

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Speaker 3: with their systematic multi strategy fund. Oh, I can see

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Speaker 3: you in the classroom as a freshman at Carnegie Melon

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Speaker 3: Jeff Rosenberg going, what in God's name is standard deviation?

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Speaker 1: Did we get a jump condition today?

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Speaker 3: Jeff Rosenberg towards a less restrictive FED well.

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Speaker 7: As Lisa pointed out earlier, there's a lot of data

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Speaker 7: coming out today, and so parsing out the reaction from

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Speaker 7: the Fed versus the earlier you know, kind of main

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Speaker 7: event behind the Treasury refunding is a little bit tricky,

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Speaker 7: but I would highlight that the main differentiation is really

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Speaker 7: the reaction in the front end of the curve, right

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Speaker 7: from the refunding announcement.

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Speaker 5: That was really the back end.

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Speaker 7: As Lisa highlighted, a little bit of the weaker data

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Speaker 7: on pmis also helping the back end rally, But the

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Speaker 7: Fed market.

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Speaker 5: Reaction was really in the front end.

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Speaker 7: So I think, Powell, you want to look at the statement,

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Speaker 7: and you want to look at the opening to the

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Speaker 7: press conference. That's what they intended to say versus what

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Speaker 7: the market interpreted from the Q and A.

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Speaker 5: What they intended to say was to try to be balanced.

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Speaker 7: Resiliency on economic growth implies we need to stay tight,

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Speaker 7: maybe do one more against the tightening of financial conditions,

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Speaker 7: which implies maybe.

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Speaker 5: We've done enough. That's what they were hoping to say.

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Speaker 7: Clearly, what the market saw was a preference for the

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Speaker 7: worry of tightening financial conditions where at sufficiently restricted we

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Speaker 7: can be done, and so you price out a little

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Speaker 7: bit of probability for the next hike. That's the market reaction,

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Speaker 7: as you went over in the earlier segment with Dudley.

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Speaker 7: You know, it remains to be seen. The data will

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Speaker 7: dictate that. But certainly to your question, Tom big reaction,

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Speaker 7: I think a lot more of that standard deviation move

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Speaker 7: has to do with the refunding earlier a little bit

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Speaker 7: coming out of this press comp How do.

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Speaker 1: You play this then, Jeff, if you think that the

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Speaker 1: market is reading way too much into what Jay Powell said,

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Speaker 1: which is trying to stick close to the script, although

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Speaker 1: perhaps giving a different tone than people thought of, do

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Speaker 1: you then sell to your notes and wait for them

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Speaker 1: for yields to go back up, for them to cheapen

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Speaker 1: and buy them back.

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Speaker 7: Well, you know, I think it's less a question about

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Speaker 7: selling the two year note. Now, I think given the

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Speaker 7: pricing and given the data that we have that Powell

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Speaker 7: refer to two more inflation prints, two more labor prints,

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Speaker 7: and what Dudley was just hinting at, You know, are

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Speaker 7: we really seeing the degree of tightness. The degree is

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Speaker 7: sufficiently restrictive given the trajectory of growth that we just

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Speaker 7: came off of. Obviously no one expects that to persist.

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Speaker 7: But the risk there is that you're not pricing enough

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Speaker 7: of the possibility of another hike, and so maybe you

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Speaker 7: hold off on adding twoes for me at these levels.

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Speaker 3: And jeffrom while you said at black Rock and I

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Speaker 3: understand there's an index play here, but there's some active

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Speaker 3: management and you're watching everybody else in the game.

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Speaker 5: What's the bet of.

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Speaker 3: The market right now? Is the bet that we're going

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Speaker 3: to get this fed done in a more dubvish, less

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Speaker 3: restrictive tone, or is a bet, hey, we're scared stiff

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Speaker 3: and we may move higher.

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Speaker 7: Well, I mean, you have a number, you have a

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Speaker 7: couple of different cross currents on there.

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Speaker 6: You know.

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Speaker 7: Obviously there's been a lot of talk about movement into

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Speaker 7: the long end, movement of retail flows buying the long end.

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Speaker 7: That's very much kind of we're we're at or close

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Speaker 7: to the end, and we're going back to the old

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Speaker 7: playbook that you know, once the FED is done tightening,

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Speaker 7: then you get a big rally.

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Speaker 5: I think I think you.

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Speaker 7: Got to be a little bit cautious about we're just

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Speaker 7: simply going back to the old playbook, but certainly, you

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Speaker 7: know there's a degree of that in the market. And

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Speaker 7: then the other really big kind of consensus story is

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Speaker 7: around the steepness of the curve, that the curve is

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Speaker 7: just way too inverted, that you need to see normalization

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Speaker 7: of the curve, all the factors around that. You know,

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Speaker 7: the refunding was a little bit of that. That that

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Speaker 7: kicked in post the August refunding announcement Japan and the

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Speaker 7: news on the boj and yield curve coroll, you know,

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Speaker 7: deficit financing.

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Speaker 5: There's a litany of list but there's a.

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Speaker 7: Very popular positioning around the steepening, and I think the

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Speaker 7: reaction to the refunding earlier today really reflects that very

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Speaker 7: crowded steepening position that exacerbates that standard deviation move that

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Speaker 7: we saw earlier.

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Speaker 3: Je If I want to go full circle to where

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Speaker 3: Lisa and I were early this morning. Folks, we've been

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Speaker 3: livecence two am this morning. It's really, you know, you know,

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Speaker 3: quite something, And Jeff, it's about the commercial banking system

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Speaker 3: of America, which the chairman alluded to maybe a little

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Speaker 3: bit and maybe not enough for my taste. Can we

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Speaker 3: get a bond market that heals to take those bond

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Speaker 3: losses and drift them away into twenty twenty five where

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Speaker 3: things can even get better if we don't get a

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Speaker 3: massive bond move, but just enough of a bond move.

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Speaker 3: Is there really the strategy here?

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Speaker 7: No, And you did hear that question. It was probably

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Speaker 7: one of the few questions on that topic. I mean,

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Speaker 7: this is a historic move in terms of interest rates.

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Speaker 7: So you know, even if you get a modest kind

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Speaker 7: of cut in interest rates that the bond market in

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Speaker 7: the second half of twenty twenty four is anticipating, that's

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Speaker 7: nowhere near enough to kind of unwind the unrealized losses

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Speaker 7: that you're talking about from this historic move from zero

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Speaker 7: to five.

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Speaker 5: So that's really about.

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Speaker 7: A long term story of repairing capital and dealing with

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Speaker 7: those issues within the banking system that if you kind

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Speaker 7: of repair the funding concerns and that was what the

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Speaker 7: bank term funding question was referring to. Then maybe that

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Speaker 7: doesn't become a crisis moment, but it still becomes kind

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Speaker 7: of a longer term drag in terms of capital repair

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Speaker 7: that even a small rally is is anticipated in the

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Speaker 7: bond market pricing for twenty twenty four isn't going to

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Speaker 7: be sufficient to repair.

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Speaker 1: Jeff, you talked about positioning, and I want to go

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Speaker 1: there because a lot of people are saying short squeeze,

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Speaker 1: This is a positioning squeeze, and we've been hearing that

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Speaker 1: a lot. How much is levered funds that have come

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Speaker 1: into the treasury market. How much is that what's underpinning

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Speaker 1: some of the incredible volatility that we've seen over recent weeks.

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Speaker 7: Well, you know, that's a tough one to sort of

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Speaker 7: pin it on leverage. You know, there's a lot of

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Speaker 7: drivers to that volatility into that uncertainty. You know, positioning

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Speaker 7: and crowded positioning exacerbates those moves, and that can be levered,

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Speaker 7: it can be unlevered. It can be just asset managers

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Speaker 7: who favor particular positions.

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Speaker 1: I don't mean to interrupt to Jeff, but there's a

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Speaker 1: difference between real money investors who are making a long

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Speaker 1: term vet on treasuries and people who are fast positioning

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Speaker 1: trying to make a trade. Or is the market right

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Speaker 1: now being determined by the trading types not by the

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Speaker 1: real money.

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Speaker 7: I mean in short term reactions, absolutely, right, leverage is

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Speaker 7: going to exacerbate reactions to price movements. So I think

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Speaker 7: it's really about you know, decoupling, and you said it earlier.

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Speaker 7: You know, the near term reaction isn't always to any

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Speaker 7: data point where whether we're talking about the press conference

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Speaker 7: or on Friday to payroll or CPI, that near term

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Speaker 7: move yes, that's going to be dictated by algos, it's

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Speaker 7: going to be dictated soon by AI. It's going to

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Speaker 7: be dictated by the levered positions and crowded positioning.

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Speaker 5: But let's separate that.

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Speaker 7: From kind of the longer run impact of the fundamental signaling.

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Speaker 7: And as you mentioned earlier, you know, you can have

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Speaker 7: the near term reaction and then a day later or

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Speaker 7: two days later, you know, it's a very different trend

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Speaker 7: as we parse the totality of the data. But certainly

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Speaker 7: very short term price reactions are going to be driven

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Speaker 7: by those levered factors.

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Speaker 1: Jeff Rosenberg, thank you so much. As always for your

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Speaker 1: comment on this incredibly important day. It was supposed to

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Speaker 1: be a snoozefest. It was not absolutely certainly a live

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Speaker 1: induction into it wasn't either because the refunding announcement as

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Speaker 1: well as some of the economic data. But really what

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Speaker 1: we are seeing is a market coalescing around the idea

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Speaker 1: for now that the Fed is done with rate hikes

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Speaker 1: for this cycle.

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Speaker 3: And this is completely outside left field, but I guess

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Speaker 3: it's stay tuned for Bloomberg in Asia and what Yvonne

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Speaker 3: Man will lead with its six seven eight pm as well.

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Speaker 3: If you get a market like this in the West,

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Speaker 3: if you get this, joy to the world. Is this

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Speaker 3: the moment where the Bank of Japan can slide in

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Speaker 3: and do something constructively about their busted theory?

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Speaker 1: Little EDATORI light, well blinker, I'm sorry they had to

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00:23:43,280 --> 00:23:47,159
Speaker 1: go there, well blank If you miss it, subscribe the

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00:23:47,200 --> 00:23:50,720
Speaker 1: Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you

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00:23:50,760 --> 00:23:54,160
Speaker 1: get your podcasts. Listen live every weekday starting at seven

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00:23:54,200 --> 00:23:57,879
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00:23:58,000 --> 00:24:00,920
Speaker 1: and the Bloomberg Business app. You can watch us live

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00:24:01,000 --> 00:24:04,720
Speaker 1: on Bloomberg television, and always on the Bloomberg Terminal. Thanks

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Speaker 1: for listening. I'm Lisa Abramowitz, and this is Bloomberg