00:00Has the Treasury done enough? Do you expect them to do enough to get yields lower?
00:03No. I mean, what have they done? I mean, they told you, you saw what happened with yields last week.
00:07I mean, basically, they went down by 10 bips for a day and went back to right where they are.
00:11I think, first of all, the sizes that you're talking are minuscule.
00:15You know, $64 billion a year. I mean, you've got to put this into context.
00:20When we were doing QE, you're doing $120 billion a month, right?
00:24So we're talking about small percentages.
00:25They're still issuing like $100 billion of debt and then buying back $2 or $4.
00:30These are really small numbers. It's more symbolic than anything.
00:33And the thing with the TGA rumors, right?
00:35If they're going to use the TGA and draw that down, what does that mean the next time we have
00:38a debt ceiling issue?
00:40If you have less buffer at that point, the market's going to be more worried.
00:43And so you're going to put a bigger premium into the term premium.
00:46That was clearly a story that was leaked to try and influence financial markets.
00:50I've got no idea how much they draw down the general account.
00:53I don't think anyone really knows. Maybe $100, $200 billion over what period.
00:56I still don't know.
00:57And at some point, you'd have to refill it and use T-bills to do so at some point.
01:01Is it significant to you that that story was even out there in the last 24 hours?
01:05Well, I think it's a lot of job learning.
01:07What can we do to sort of signal to the market that we care about this with actually not really
01:12doing anything?
01:13And I think this is another example of that.
01:15And so I think Druckenmiller is right.
01:18I mean, this is all very temporary.
01:19The market's going to perceive it temporary.
01:21And six months from now, they're going to look back and say this didn't really have an effect unless they
01:26really ramp things up, which would be a big change.
01:28Dan, is there a risk in the ramping things up that we go full on emerging market?
01:32We do yield curve control.
01:33We crush the dollar.
01:34We ignore CPI.
01:35Run it hot and try to grow our way out of the deficit.
01:38I mean, incrementally, that's obviously the direction that we've been going with all of the sort of policy.
01:44And I think that's what the issue that you're dealing with is the market doesn't really like that, right?
01:51And so your bond vigilantes are back for the first time in decades.
01:55And on top of that, you have bond vigilantes, you have AI vigilantes.
01:58I mean, it's a tough time with the amount of supply that's coming to market.
02:02Yields are going higher.
02:03And I think we are just in a higher for longer yield environment.
02:06But the good thing, though, I think as we get to the back half of the year, given how much
02:10yields have run,
02:11I think there's a decent chance that yields will actually come back down, presuming that, you know,
02:16the Hormuz at some point starts straight up, Hormuz starts to open up.
02:19If you don't get that, then I think it's like anybody's game.
02:21We could bust through 5%.
02:23I mean, the inflation data has been cooperating.
02:25They just have started to look weaker.
02:26You think that that's just temporary then?
02:28I think the biggest swing factor with inflation in the near term is going to be what happens with oil
02:33prices, right?
02:34And so we don't know what that's going to look like.
02:36But if oil prices stay close to $90 for another month or two, I think inflation will start to come
02:42back, move higher,
02:43and then the Fed's going to have to start hiking rates at some point.
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