David Westin discussed on Balance of Power


I'm David Westin just a few minutes from now the U. S. treasures to do something it has not done in thirty four years is going to issue some bonds that mature in twenty years take us through the significance of this will go on Michael cookies of course our chief economics and policy correspondent so Mike why is this such a big deal well in part because there's nothing else going on today so the bond market has this to focus on but again it hasn't traded hasn't auctions rather since nineteen eighty six so there's sort of uniqueness to that as well the question is whether this is going to be well received especially given the fact that the treasury is issuing so many bonds over the next couple of years to pay for the deficit do people want them in the twenty year tenor a lot of people say that maybe they do because the thirty year bond remember was interrupted from two thousand one to two thousand six so there aren't really a lot of off the run thirties in the twenty years space right now that would have climbed down from the original thirty year issuance and so if you're looking for that kind of duration particularly if you're a retirement fund manager and you need a twenty year duration you probably would be happy to have this the question is do enough other people wanted to make a deep and liquid market into the treasury to keep issuing it the treasury secretary Steven Mnuchin said they'd like to keep issuing not only twenties but much more the long and because obviously with interest rates so low and the test is it so I they've got to pay a lot of interest costs of rates go up this is a look at my age you understand explain it it may help the trading of these bonds a little bit smoother out of it at the same time address the bigger issue about that demand for US treasuries period because there's just I think it is and it's it's one of the three trillion dollars this quarter something like that they're gonna issue it's really extraordinary and yet the there it seems to be no indication people are getting cold feet yeah it's very strange it by the book you should expect the yields to rise at this point because we're looking at so much insurance and you have to pay people to take them but no at this point the rest of the world wants U. S. treasuries and so do many Americans now that may be in part because everybody's thinking they've got to save so much but you expect more on that at the shorter end you also expect portfolio managers to be taking a thirties because a lot of people retiring but it is an anomaly in a lot of people think that at some point we're going to pay a price in higher yields we just don't know where that is so you get all these people saying well and then T. is right nobody knows of MMT is right either it's just that right now we got enough buyers so a little over an hour of an hour to get the minutes from the FOMC meeting there were about three weeks old but you're you got something much more current because you're gonna get to talk with our Kaplan Dallas fed president coming up that it's just about twenty minutes right now here on Bloomberg so give us a sense of what you really want to hear from Robert Kaplan well we want to know how the economy is faring in various districts around the country as they get ready to re open this is gonna be a story of a lot of different states a lot of different cities and how they proceed through re opening and how anxious people are to get back out and spend money and resume economic activity will companies re open wheel restaurants re open those are the interesting questions and I'll be interested to see what rob has to say about the Dallas district yesterday we talked with the Eric Rosengren from Boston and he said he thinks that they may be going a little quickly even though the Boston district is one of the slowest moving at this point he's worried this is going to be a very long slow recovery you can take a listen here I think they're very much hoping the they'll be a pick up in the second half the year I think in GDP terms there will be a pick up I also think though that unfortunately the labor markets are still going to be pretty weak so in a talk I gave today I highlighted that by the end of the year I expect the unemployment rate to still be in double digits so it's probably going to be significantly down from where we are right now so that was the view from Boston will see the view from Texas is the same J. Powell sort of said the same thing yesterday David that Eric Rosengren said one last question negative rates bill Huizenga interested apparent that is not the fed is not made made that pretty clear and you've noticed that the markets is now priced out negative rates maybe they're starting to believe the fed with a say so how about that okay thanks so much for Michael McKee it's always great to have Mike with us and once again you want to stay tuned because about twenty minutes.

Coming up next