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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: This is a Bloomberg Business Flash and John Zucker Bloomberg

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Speaker 1: Business Flash being brought to you by Interactive Brokers and

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Speaker 1: m E Group and Futures Ahead the market open on

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Speaker 1: Wall Street, lower but often worst levels of the session.

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Speaker 1: SMP futures right now down just eight points. That's either

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Speaker 1: clined of four tens of or percent. The down futures

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Speaker 1: down sixty that's down three tents and as they can

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Speaker 1: even many futures right now sixteen points lower, that's down

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Speaker 1: about four tents. UH. The you're a one fourteen twenty

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Speaker 1: nine seeing some weakening of the dollar. UH that is

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Speaker 1: up a two tents of a percent right now, the

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Speaker 1: end one oh six seventy five, that's strengthening up about

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Speaker 1: the half a percent the more this morning, the ten

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Speaker 1: year yield one seventy sixty. We've seen some rises in

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Speaker 1: the tenure Treasury. But it looks like that is a

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Speaker 1: leveled off of somewhat this morning, and we checked the

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Speaker 1: markets for you every fifteen minutes during the trading day

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Speaker 1: right here on Bloomberg, Mike and Top, John Tucker, thank

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Speaker 1: you so much. John Riding at r d Q Economics

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Speaker 1: has just sent out one of those blistering research notes

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Speaker 1: I've seen from him in years. He says the gloom

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Speaker 1: and unemployment is flat out wrong, and he seems to

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Speaker 1: be right because the yield market agrees with Mr. Writing

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Speaker 1: one point seven zero is a higher yield off a

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Speaker 1: one sixty number with a lousy revision. R d Q Economics,

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Speaker 1: we expect a job creation this year to average a

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Speaker 1: hundred and seventy five thousand per month, in the unemployment

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Speaker 1: rate to fall below four and a half percent. We

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Speaker 1: still hold to those forecasts. He looks at wage growth

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Speaker 1: is labor income proxy hours times wage right up four

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Speaker 1: point seven youre over here. That's a big number. That's

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Speaker 1: an important note from writing into Quadros at rd Q Economics.

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Speaker 1: Right now, we need to talk to somebody about three

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Speaker 1: standard deviation moves. That can only mean Robert Sinch of

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Speaker 1: Amer's pierpoint Bob we saw last week euro it was

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Speaker 1: this week euro move almost three standard deviations. We've seen

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Speaker 1: Yen Movi. These are brutal, treche like moves. What did

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Speaker 1: those brutal moves signal about the global system, particularly after

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Speaker 1: week non farm payroll growth? Good morning guys. Well, you

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Speaker 1: know when I when I think it really signals, is

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Speaker 1: that there's some some forces other than the normal cyclical

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Speaker 1: movements driving these barn exchange markets, whether it's a reallocation

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Speaker 1: of reserves, whether it's this new initiative by the Treasury

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Speaker 1: to designate certain certain currencies as under a monitoring system. Now,

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Speaker 1: so they're not manipulators, but they're being mode whatever it is. Um.

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Speaker 1: I think what's interesting is that that a lot of

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Speaker 1: these moves have not been driven by the normal cyclical

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Speaker 1: forces in the Muhamma Hilarian wrote an article about this also,

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Speaker 1: so so clearly there's some things going on in the

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Speaker 1: global financial system that are different than normal. And what

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Speaker 1: it may be actually is the fact that that without

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Speaker 1: a lot of global cross border capital flow, we're beginning

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Speaker 1: to see the old reliable current account balance is becoming

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Speaker 1: an important factor in driving currency. Mike I just put

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Speaker 1: out a lumined radio plus the tenure yield. It is

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Speaker 1: truly a remarkable chart, Mike, I don't think I've ever

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Speaker 1: seen that off a job's report. I mean, that's a

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Speaker 1: huge six uh down down five. That's an eleven basis

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Speaker 1: points swing in the tenure in less than an hour.

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Speaker 1: What's interesting, Well, I mean five, funds futures are up

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Speaker 1: to a four percent chance, but it's still down from

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Speaker 1: ten percent. So bob uh, there's not only a disconnect

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Speaker 1: between the Fed and the markets, is a disconnect between

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Speaker 1: the treasury market and the Fed funds futures market. At

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Speaker 1: this point about where the Central Bank might go? Yeah,

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Speaker 1: you know, I think these wage numbers we've been we've

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Speaker 1: been talking for for a couple of years now that

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Speaker 1: employment has been stronger, but wage numbers have not been increasing.

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Speaker 1: We got a little bit of the opposite here. Employment

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Speaker 1: growth is slowed a little bit, uh, and yet wages

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Speaker 1: are picking up. Now, what can explain that? What can

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Speaker 1: explain that is we're running out of workers. And this

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Speaker 1: is something my colleagues the Stanley has been focusing on,

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Speaker 1: is that it's suffered to get employment growth when you're

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Speaker 1: running out of qualified labor, and so a slow, slight

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Speaker 1: slow down in in in employment growth with higher wages

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Speaker 1: is consistent with a very tight labor market. I think

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Speaker 1: that's maybe what the long end of the yield curve

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Speaker 1: is focusing on, whereas the short end of the curve

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Speaker 1: is thinking that this kind of data is going to

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Speaker 1: keep the Fed from making a move in June. So actually,

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Speaker 1: I think it's it's it's fairly consistent that an end

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Speaker 1: armament in which the FED may not move but wage

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Speaker 1: pressures are picking up would give us a steeper yield curve.

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Speaker 1: And that's that's what we're seeing here today. Well, interesting,

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Speaker 1: anytime we were talking with Bill Gross about tips heields,

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Speaker 1: there were nine basis points before the move. Now tenure

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Speaker 1: tips are at So I guess, Bob, the market is

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Speaker 1: sniffing inflation out there. It's it's certainly it's certainly not

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Speaker 1: not the inhaling disinflation or deflation the way it had

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Speaker 1: been for the last couple of years. And I think

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Speaker 1: with the with energy prices up, a lot of headline

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Speaker 1: prices will start to catch up the core inflation. I

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Speaker 1: actually think the most important set of reports going into

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Speaker 1: the June f O MC is going to be the

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Speaker 1: core inflation reports. We've seen core inflation picking up, its

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Speaker 1: slowed a bit in the March round of data. I

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Speaker 1: think the May reports on core inflation, and we heard

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Speaker 1: a little bit of this at a President Catholic from

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Speaker 1: the Dallas Fed just I think that's going to be

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Speaker 1: important for the FED decision process coming in June. Well,

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Speaker 1: the core I don't have in front of me, folks,

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Speaker 1: but I'm gonna put core at two point two percent

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Speaker 1: year over year CPI CORE and May sevente. May seventeenth

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Speaker 1: is when I was looking at Michael was cheating. Uh,

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Speaker 1: that's when we see it. Help us with that. I

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Speaker 1: thought two percent was our bound. Bob says core c

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Speaker 1: p I is above where we want it to be.

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Speaker 1: Is that possible? Uh, it is possible. If you look

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Speaker 1: at the core pc just later, it's around one six

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Speaker 1: And if you look at other measures of core inflation

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Speaker 1: from the Cleveland and Dallas Feds are in the one

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Speaker 1: eight two percent range. So we're kind of clustered between,

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Speaker 1: you know, one point six and two point two percent,

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Speaker 1: which is getting close to that two level. And I

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Speaker 1: think if we see a little bit of a rebound

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Speaker 1: in the year over year numbers. Um. I think that's

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Speaker 1: going to be important for the FED. They've seen wage

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Speaker 1: growth pick up a little bit, They've seen the core

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Speaker 1: inflation numbers pick up a little bit. And again I

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Speaker 1: think some of the slow down of employment is that

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Speaker 1: literally they just are having difficulties finding qualified workers to

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Speaker 1: fill jobs. Bob, since, thank you. It's a very interesting

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Speaker 1: market reaction to the Fed. As usual, people who have

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Speaker 1: money at risk are drilling down and finding what they

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Speaker 1: think the most important number is, as Bob says, it's

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Speaker 1: the wage number. In this report. What we try to

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Speaker 1: do is keep a conversation going. But Mike and I

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Speaker 1: are always glued to equities, bonds, currencies, commodities with a

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Speaker 1: respect for what markets say and what they do, and

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Speaker 1: the doing is simple. We have seen i'm quickly a

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Speaker 1: ten eleven basis point massive swing in the tenure yield

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Speaker 1: off the Job's report. Most interesting stay with us Bloomberg Surveillance.

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Speaker 1: We are kind of down to the opening bell, brought

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