Stocks were relatively quiet as investors await Fed chair Pal's speech at Jackson Hole that's set to take place on Friday. Markets will be closely watching to see if Pal sticks with his hawkish tone. Our next guest says market watchers are too bearish on growth and too worried about inflation.Joining us now is Eric Freriedman, US Bank Chief Investment Officer. Eric, it's great to have you on. Let's start right there.Why do you think that's the case. >> Yeah, Morgan, great to see you. I think really two thin ...

Because it is time for the bond report. It is time for the aforementioned Rick Santelli. Rick, you just heard Steve Leeman comment about the Fed and bond market.What say you. I say that the short end of the market is probably going to get a rate cut or two before the end of the year and that indeed will help. But let's put it in the bigger context.What everybody's really thinking about here. Do you think credit cards that are in the mid 20s, 25%, how much are they going to come down. Housing.Housing is prob ...

For more on today's CPI print, associate general head of US rate strategy Subra Roja is here on set. Subadra, great to see you. What did you make of today's action.I know you're you're not on the equity side of it, but to see markets rally uh to record highs and to see not too much happening in the bond market in terms of by the end of the day. What did you make of it all. So to me the you know if you came into this report thinking that goods inflation is going to show up or sorry tariffs are going to show ...

Mark, does CPI matter. CPI really matters today. As you know, Guy, I quite often provide context that you shouldn't read too much into one print.But I think if CPI clearly beats today and it doesn't necessarily matter whether that comes to the headline or the core. But if the set of data is overall clearly strong, I think it can really wreak havoc in markets. I think it disrupts both stocks and bonds, and that's because it'll simultaneously disrupt two important narratives at the moment in markets.One is it ...

Market Trends & Industry Dynamics - Bond market is expected to experience potentially significant movements upon the release of the July jobs report [1]

Market Sentiment & Monetary Policy - The market, including the stock and bond markets, appears largely unconcerned with current political rhetoric and potential policy changes [4][6] - The volatility index is at a level not seen in a long time, suggesting market complacency [4] - The CME Fed funds tracker implies only about a 40% chance of a further 25 basis points rate cut in September [5] - There is a disconnect between the indices and individual company reports, suggesting a potential correction [6] - Monetary policy may take a backseat in the near future [6] Interest Rates & Debt - The bond market has been relatively complacent despite uncertainties surrounding the Fed and increasing debt issuance [7] - The White House desires lower rates to reduce funding costs, envying the Biden administration's lower debt funding costs [8][9] - The zero interest rate policy is over, and funding at the short end of the curve may not be attractive [10] - A 50 basis points cut on $15.5 trillion of refinancing would only save about $75 billion in interest expense [11] - Lowering the Fed rate may not necessarily impact the long end of the curve or housing costs [13][14] Economic Outlook - The US economy is resilient, with unemployment near record lows and GDP tracking around pre-pandemic levels [3] - The market uptrend has been generally unabated since November 22, with the NASDAQ up almost 37% from April 8 lows [18][19]

Trade & Tariff Policy - The administration suggests that most trading partners could face tariff rates between 15% and 20% [1] - The country faces an urgent national emergency due to massive trade deficits, cumulatively around $18 trillion over several decades, representing a transfer of wealth, factories, and jobs abroad [2] - The US has collected approximately $100 billion in tariffs, marking a record for a single fiscal year [4] - The US is collecting $18 billion in tariffs from China alone on fentanyl [5] - A 35% tariff threat is being considered for Canada, but it is not yet applied under the USMCA agreement [7][8] - The administration is considering a potential 200% tariff on pharmaceuticals, possibly with a delay of over a year to allow supply chains to reorient [12] - Section 232 tariffs aim to strengthen the defense, manufacturing, and health industrial bases [13] Economic Impact & Fiscal Policy - The administration believes that combined with tariff revenues, the "big, beautiful bill" will turn a $2 to $3 trillion deficit into a $2 to $3 trillion surplus [16] - The Congressional Budget Office (CBO) forecasts a 18% rate of economic growth, which the administration considers too low [18] - Increasing the growth rate by 1% could raise a couple of trillion dollars, potentially leading to neutrality in the debt [19] - A 50 basis point increase in interest rates by the Federal Reserve (FED) could lead to a 025% to 05% reduction in GDP growth, resulting in 500000 to 750000 fewer jobs [22][23] - A half-point increase on short-term debt could add a couple of hundred billion dollars to the debt over ten years [24] Monetary Policy & Federal Reserve - There is an argument that the Federal Reserve is at least 50 basis points above where it should be, suggesting a need for lower rates [22] - The bond market may perceive Jerome Powell as ineffective due to his actions [27] - The Federal Reserve (FED) chair should have taken action to address fiscal policy concerns, similar to William McChesney Martin's approach during the Vietnam War [31][32]

U.S. Fiscal Situation & Debt Concerns - The U.S federal budget is on an unsustainable path, potentially leading to rapid financial instability if spending issues are not addressed [1] - America's borrowing levels are currently the same size as the entire economy and are expected to skyrocket [2] - There is a greater than 50% chance of experiencing a financial trauma related to the deficit or debt levels within three years if the issues are not addressed [11] - The U.S is expected to spend nearly $1 trillion on interest payments this year due to soaring debt and higher rates [24] - The Congressional Budget Office (CBO) expects net interest costs in 2025 to surpass spending on Medicare, Medicaid, and national defense [24] - The cost to service the U.S debt is expected to be 18% of total tax revenue this year, compared to less than 10% in 2022 [25] Potential Consequences & Risks - Unsustainable fiscal policy could lead to a collapse in fixed income and bond markets within 20 years [8][9] - The U.S may resort to printing money to cover its debt, potentially leading to inflation [10] - Rising borrowing costs could negatively affect the health and growth of the U.S economy [23][24] - Unchecked debt levels risk leaving a weaker economy to future generations [30] International Implications - International holdings of U.S treasuries were near a record $9 trillion in April [40] - China, while one of the largest foreign holders of U.S treasuries, has been steadily reducing its holdings [39][40] - Japan holds more than $1 trillion worth of U.S debt, the most of any foreign country [42]

UK Economic & Political Uncertainty - Keir Starmer's initial reluctance to support Rachel Reeves raises questions about internal party dynamics and potential leadership challenges [1][2] - Speculation suggests a possible change in Chancellor of the Exchequer, potentially impacting market confidence and government stability [3] - The government's backtracking on proposed welfare changes reveals a £5 billion fiscal hole, hindering economic growth and tax cut promises [5] Market Reaction & Fiscal Policy - The UK market faces potential instability, reminiscent of the "Liz Truss" era, with concerns over unfunded tax cuts and bond market reactions [4][6] - Rachel Reeves' credibility with the bond market is crucial; her departure could trigger increased speculation and market volatility [7][8] - The ability to grow the UK economy and avoid tax increases is uncertain, given the government's recent policy setbacks [5][6] Budget & Economic Outlook - The upcoming budget, to be presented by either Rachel Reeves or a new Chancellor, faces significant challenges in achieving economic growth without raising taxes [6] - Failure to pass proposed changes raises concerns about the government's ability to manage the economy and fulfill its promises [5][6] - The UK is in a "waiting period," with close attention on key figures and their potential impact on economic policy [4][5]

Core Viewpoint - The bond market is experiencing low yield fluctuations, with the 10-year government bond yield around 1.65%, and analysts expect further declines, potentially reaching 1.4% or lower by the end of 2025 [1][2][3]. Group 1: Current Market Conditions - As of April 29, the interbank bond market shows slight fluctuations in yields, with the 10-year government bond yield down 2 basis points to 1.62% [2]. - The current market is characterized by a lack of significant new information, leading to a stable yield environment [2]. - Over 60% of investors anticipate a clear easing of monetary policy in the second quarter of this year, with expectations for potential rate cuts [2][3]. Group 2: Future Expectations - Most investors believe the 10-year government bond yield could reach a low of 1.5% or lower by the end of 2025, with 46% expecting it to hit 1.5%, and 19% predicting it could go as low as 1.4% [3]. - Analysts suggest that upcoming economic data, such as manufacturing PMI, could serve as catalysts for market movements [4]. Group 3: Investment Strategies - The prevailing strategy among investors is to adopt a "buy on dips" approach, focusing on long-duration bonds while maintaining liquidity [5][6]. - There is a notable shift towards a more optimistic outlook among investors, with an increase in those favoring longer-duration strategies [5]. - Credit bonds are viewed as having better relative value in the current environment, with recommendations to focus on high-grade issuers and specific bond types [6].