00:00What we saw earlier this week, would you call it a yippee treasury market? Would you call it
00:04something that's showing false lines underneath the surface? And is it a longer term issue given
00:09that it was really sparked by fiscal concerns out of Japan? Sure. So great question. I think
00:13it was a bunch of cross currents. So we've had this, you know, I guess lingering concern
00:18around Fed independence. So who's the next Fed chair, you know, the entire DOJ issue. I think
00:24that's lingering in the background. And then you had the Japan move. Global rates are highly
00:28correlated. So the fact that Japanese bond deals, I mean, I didn't think in my career I would see
00:33the, you know, essentially a 30 basis point move in the long end. We had that. And then that tends
00:39to spark a rise in term premium globally. So I think, you know, you have this Fed independence
00:43issue. Then you have the sell America issue along with Japan. I think it was the sort of perfect
00:48storm. And the market is a little less liquid. You know, risk appetite with all of the geopolitical
00:53risks out there, with the fact that there's this concern around, you know, how much risk premiums
00:57should be. I think the market essentially panic. So was it yippee? Absolutely. I think
01:02in the last couple of days, we've had a bunch of sort of comforting, you know, signs. So
01:09we've had the Japan bond market. That's what I've been watching. We haven't been getting
01:12a whole lot of sleep because essentially that, you know, we've noticed that there's some stability
01:16there. Those Japanese bond JGB markets are calming down. I don't think we're entirely out
01:21of the woods, though. So we'll be watching that. We have the BOJ meeting on Friday.
01:25So, you know, but I think some calm there, you know, and the fact that we've had a lot
01:30of corporate bond supply in the U.S., we're continuing to see demand there. And the fundamentals,
01:35you know, I think, you know, when you have all this, these sort of technical cross currents,
01:38you look at the fundamentals, the fundamentals are still, we're in a strong, resilient U.S.
01:43economy. Inflation is still heading lower. We're in this low fire, low hire economy. And
01:48so, you know, I think, and the Fed independence issue, I think, you know, it's something we're
01:52going to have to grapple with. But I listen to the Supreme Court. I listen to the Senate.
01:56I even hear this from the administration. Everyone wants an independent, credible Fed.
02:01Yes. So I would say, you know, we're using these as opportunities. When you get this Yippee
02:06bond market, I think that's an opportunity to take on duration risk, keep the credit risk in
02:11there, because as long as the fundamentals are strong, we still like credit. But I think duration,
02:15that's where there's an opportunity.
02:16That's where there's an opportunity.
Comments