00:01Scott Bessand has tried many different ways to bring rates lower, long yields rates lower in the United States.
00:08Is his latest attempt going to be successful?
00:13Morning, Guy. I think that short term, you can say with some confidence that, yes, the market has taken this
00:20relatively positively.
00:22We had a pretty decent move at the back end of the yield curve yesterday.
00:26The Bloomberg bond index for U.S. Treasury is due in 20 years and more. Had its best single day
00:30since February last year.
00:32So certainly he's got a little bit of short term momentum. I think those off the run bonds that he's
00:37targeting also narrowed a little bit.
00:39So the liquidity there was improved somewhat. Citigroup is saying, you know, this is a top for yields. We should
00:45be comfortable from there.
00:46But I think that the growing consensus or the bigger consensus within the market is there still needs to be
00:52more if you really want to keep a lid on yields coming through longer term.
00:56The U.S. is running this big budget deficit, 6% as some estimates.
01:00If it doesn't at some point take more measures to actually get spending under control and to bring down that
01:06debt load or at least keep it contained,
01:09then the pressure for higher bond yields is just going to continue to bubble up.
01:16If the pressure for bond yields to go higher continues, does that mean your other feed throughs to other markets
01:22like a weaker dollar, like the bid you've seen in other bond markets, is that set to be finite as
01:28well?
01:32So I think that as long as the yields are contained to a certain extent, then you might find that
01:40the pressure squeeze out in other ways, if I can answer it that way.
01:43So in a story we have looking at what the implications might be for the U.S. dollar, one of
01:48the people we spoke to called it a sacrificial lamb, which I quite like.
01:52The idea that if you are going to keep a lid on yields and do more to try to achieve
01:56that without actually addressing the root causes,
01:59then what you're going to see is instead that expressed through a weaker dollar.
02:02And indeed, that's another thing that we saw during the last sort of session where we saw not only other
02:08currencies, particularly things like the Korean one, really bursting high, but also gold and Bitcoin getting a bid again.
02:15Yeah, and the dollar falling below its 200-day moving average yesterday.
02:20Paul, just briefly reflecting what's happening in Korea, what do you make from your position in the region of the
02:26action we're seeing from the likes of Samsung and SK Hynix to maybe put a floor under their stocks with
02:31these buybacks?
02:34Yeah, so it's a really interesting development to buy back almost as much as they raised in the U.S.
02:39It's certainly giving them a little bit more support in the markets, and it's just the volatility in those Korean
02:46stocks is extreme at the very best of times, or worst of times, depending on which way you look at
02:53it.
02:53I think they've got that extra credit from the strength of the Korean one, so that's lending people a little
02:57bit more confidence, and you see overseas investors putting more money into Korean stocks as well now.
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