00:00selling bonds yeah i mean we were selling sovereign bonds since many months but i think we are
00:05at a pivotal level right now not surprisingly uh it's it's it's focusing on a sovereign issue
00:12i mean it's not spreading to the corporate bond market as of today but i mean it's a signal that
00:18the market is sending to i mean government that probably uh surging ai spending high inflation
00:25and the situation between iran and and and and the us as well as as this inflation around and and
00:32and
00:32raising raising deficits surging deficits is probably becoming an issue at least for the
00:37sovereign right you said it's the moment it's not spreading into the corporate bond market
00:43but does what happens in the sovereign government bond market stay in the sovereign government
00:47bond market i it has to impact other assets i mean for the moment it's focused on the sovereign
00:52bond market on sovereign bond markets and we don't we do not see the spreads of the corporate
00:57uh raising much i mean the the the part of spread when you're buying a bond that five percent is
01:04really
01:04really thin and it's not spreading right now but the reality is that if you have higher level of interest
01:09rate for a long time you will have an effect also on on on on equities that's that's that's the
01:15reality
01:16and especially the one which are highly indebted i mean even even hyperscaler if you look at hyperscaler
01:21they just announced more than seven seven hundred fifty billion spending which is quite equivalent
01:27to the cash flows they will generate this year so they will have no liquidity room for buybacks
01:33and i mean i mean they will need definitely to to to issue debt okay so it can weigh on
01:40those
01:41businesses even though they're not maybe highly indebted even if they're taking on debt maybe not
01:45highly indebted but it weighs on them because they don't do buybacks is that how this
01:49is that these two stories come together yeah absolutely and i think it's a question of time
01:53same as inflation i mean inflation is not an issue as soon or raising all the price as soon as
01:59it's
01:59only a question of time and it's taking a few months to resolve and i mean this rate the formula
02:04and so
02:05on if we have a spike in in in sovereign rates for a couple of months it won't be an
02:10issue because we're
02:11not in the deflationary situation we're not in a recession i mean consumer are still consuming
02:15so you have the other side which can compensate for higher rates for a certain period of time but
02:19definitely if it's higher for longer you will have an effect at the end of the day on equity market
02:24okay and how so how high should we expect treasury yields to go in this context then nicolas i mean
02:28we're at 4.6 percent on the u.s ten year if we get to something like five well is
02:34that likely and
02:34what kind of impact does that maybe just a psychological level have on the markets yeah we won't be surprised
02:41to see the the ten years at five percent uh that was our central scenario i mean back uh end
02:47of last
02:47year uh we were uh i mean betting on the on the steepening of the yield curve now we are
02:53seeing a
02:54more parallel shift around all the curve and it's probably also uh putting pressure on on steven wire
03:00over the short term but i mean i would be surprised to see five percent and i mean if we
03:05have a higher
03:06inflation and if the growth stays steady it won't be an issue over the short term would you buy at
03:12five
03:12percent no not yet no i mean we may have short-term spikes that's not unusual to see short-term
03:21spikes
03:21and probably we'll start looking at five percent but we probably won't buy it at five percent depending
03:26on all the other externalities i mean we have a lot of uncertainty around the market and i mean normally
03:31market hate uncertainty they decided to skip it out and to focus on their certainties which are
03:37earnings growth and and and capex from my first killer and to but i mean they are around we are
03:44surrounded of uncertainty so it's not the trigger of the five percent which will let us buy the the
03:50treasuries at that stage
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