00:00The twist flattened we saw yesterday, just for a moment, where yields were up at the front end and down
00:04at the long end.
00:05It felt like we were really starting to reprice growth lower. Where do you think we are now?
00:10Yeah, I think that's right, Jonathan. I mean, you have a situation here in the bond market where we've essentially
00:15taken out
00:17three 25 basis point rate cuts from market expectations over the next 12 months.
00:22And you see that show up mostly in the short end, as you noted.
00:26But there's been a little bit of upward pressure in the long end, too.
00:29I mean, you know, 430 on the 10 years, almost exactly the average over the course of the last three
00:35years.
00:35So it's nothing to get super alarmed about. But markets definitely have priced out the Fed easing that was expected
00:43just a few months ago.
00:44And the Fed basically confirmed that this week. Mike, how would you describe this shock?
00:48A growth shock, inflation shock, stagflation shock? What would you call it?
00:52This is, Jonathan, a textbook supply side shock.
00:57So it temporarily will raise inflation.
01:00Temporarily, you take a hit to real growth, real income.
01:04And what do you do if you're a central bank, the Federal Reserve?
01:08Well, higher inflation would tell you to raise rates.
01:10Lower growth would tell you to cut rates.
01:12So maybe you just don't do much.
01:14So maybe you just don't do much.
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