00:00With JGB yields surging, Kay, is global fixed income losing its anchor?
00:04So, gosh, it does feel like the bond vigilantes are back. And so I wouldn't say that we're losing
00:09the anchor, but I would say that global term premium is back in focus. And that's exactly
00:14right. We'd had a little bit of a modest sell-off, as you noted and Mike noted. Race are really
00:20back
00:20to where they were a year ago. This is not that excessive of a move. We're back to where we
00:25were
00:25when we had concerns about tariffs on Liberation Day. But what's really happened overnight and into
00:31today is real concerns about the UK, about global term premium, et cetera. And I think if you look
00:37at the move we've had this morning, it's been more real yield driven, not inflation. Prior to today,
00:44the concern has been about the inflation on CPI, PPI. Today, of course, we've got crude gas prices
00:50up a little bit higher, but we're not seeing that flow through into inflation expectations.
00:54It's more of a global term premium, which one could make an argument here that the U.S. doesn't
00:59have to be dragged up to that level. So I wonder, now that we're seeing the, not panic, but the
01:06concern seep into equities, we have equities lower today, retreating from record highs, but still
01:11the direction is down. Ed, are we seeing a repricing of the entire real interest rate environment?
01:17A little bit. I think the picture that's coming into focus for me is one in which monetary policy
01:24in the front end is a little bit too relaxed. And therefore, you're starting to see that bleed
01:29into high real rates across the curve. You're starting to see that bleed into a little bit more
01:33inflation compensation further out. That's much more pronounced in places like Europe and the UK for
01:39obvious reasons. But the whole complex is lifting higher in part because central banks haven't really
01:45acted. They've created a permission structure for higher rates. They haven't really acted on them yet. And I think
01:50we'll see that change in the course of the summer.
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