00:00Just your initial reaction to the news from Moody's over the weekend. Yeah it really wasn't a big surprise as you indicated earlier they had them on negative watch they're following S&P and Fitch as as I watched the negotiations over the tax bill or the budget bill I thought oh well we're not getting anywhere we need to go to get our house in order so not a big surprise but it does bring forward all the issues that you've been talking
00:29about that we're not on a path to sustainability something we need to address but Congress doesn't seem willing to address. I feel like every couple years we talk about the bond vigilantes grabbing their pitchforks and getting ready to go out there and pick it and it never actually has any staying power because other people say actually what you don't want we love how close are we to the bond vigilantes getting the upper hand and really shaping the narrative here. Yeah I've never been a big fan of the bond vigilante story because I remember the 80s and it was more about
00:59inflation than it was about the budget but that being said in 1985 we got sequestration which actually did help get the budget back in order. How close are we? I don't think that we're looking at a stampede out of treasuries but I do think that when you combine the whole policy mix we have tariffs, a lower dollar that goes with that, and this sort of deglobalization trend, then you get a steady march higher in long
01:29term yields because you're discouraging inflow of capital, capital that we need. So I think that we just continue to see a steady climb in yields from here until something changes. Either the economy gets a lot weaker and we look at more Fed rate cuts or we get some sort of fiscal deal that actually makes sense.
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