00:00Do you think the action in the long end of the yield curve has presented a real fundamental problem
00:04for not just the Fed chair, but also this Treasury secretary and the bond market itself?
00:09I think that's right. And you can see some hints of that in the yen intervention and the way that
00:13was structured, again, to preserve some of that foreign demand across the curve. I think the
00:20reality is when you take a step back, we've put a lot of premium into the long end of that
00:25curve.
00:26Some of it is inflation uncertainty. Some of it is supply related to the fiscal deficit.
00:31And then some of it is growth because growth has surprised us to the upside as well. I think it's
00:35impossible to disentangle that cleanly. But the end result is there doesn't seem to be a break
00:41on that move higher at the moment. So we're getting this alphabet offering and we'll get
00:45the actual tranche sizes. It's a 10 tranche bond sale. We'll understand exactly how much is being
00:49issued at the long end of the yield curve. And we'll get that to you as the data comes out.
00:53I'm
00:53just curious, though, how much do you see the move up in the long end of the yield curve as
00:58being
00:58directly a consequence of the lack of reaction function that we're getting from Kevin Walsh and
01:03some of the credibility issues versus just the supply and demand dynamic and the elements that
01:08you're talking about? Yeah, it definitely doesn't help, right? It's one factor. We ran that experiment
01:14around the FOMC press conference. We saw that premium going to the long end of the curve, which was
01:19quite unusual. We saw the curve steepen and the dollar and risk assets sell off, which was a way
01:24of markets telling us it's not just an inflation issue, it's an uncertainty issue that's being
01:30punted into into the long end of the curve. Early days, right, because we're just a couple of months
01:35months in, but definitely off on the wrong foot.
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