June 25, 2025 • 16 mins
Stocks in Asia opened on a cautious note as the Israel-Iran truce appeared to hold and Federal Reserve Chair Jerome Powell gave balanced comments on prospects for rate cuts. Late Tuesday in the States, President Donald Trump appeared to undermine years of US sanctions on Iran, giving its biggest customer China the green light to carry on buying its oil as he seeks to bolster a ceasefire with Israel. We discuss Beijing's role in what now appears to be a subdued conflict with Jenni Marsh, Greater China Eco-Gov Team Leader for Bloomberg News.
Plus - Treasury yields and a gauge of the dollar steadied. The benchmark 10-year yield shed five basis points in the previous session as Fed Chair Powell said "many paths are possible" for monetary policy. We look at the US central bank's path ahead with JoAnne Bianco, Partner and Senior Investment Strategist at BondBloxx Investment Management.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:10):
Welcome to the Debreak Asia Podcast. I'm Doug Chrisner. Israel
and Iran appear to be honoring a ceasefire broker by
President Trump Lake Monday, despite some early reporting of violations
on both sides. Earlier in the day, President Trump issued
some harsh criticism to both countries.
Speaker 3 (00:28):
We basically have two countries that have been fighting so
long and so hard that they don't know what the
sayre doing.
Speaker 2 (00:35):
You understand that President Trump speaking there as he traveled
to the Hague for this week's NATO summit. We also
heard in the last session from FED Schaer J. Powell.
He began two days of congressional testimony on Tuesday, and
he repeated that he's not in a hurry to cut
interest rates. In a moment or two, we'll take a
look at the Fed's path with Joeanne Bianco, senior investment
(00:57):
strategist at bond Blocks. But we begin this morning with geopolitics.
Israel and Iran have spent the better part of the
past two weeks exchanging strikes, and in the process, the
US was drawn into this conflict. The situation highlights the
role of another power player though China. Joining me now
is Jenny Marsh. Jenny is Greater China Eco GUV team
(01:19):
leader for Bloomberg News, and she joins us from our
studios in Hong Kong. It's always a pleasure to benefit
from your perspective. And as long as we're talking about geopolitics,
let's talk about what's going on between the US, Israel,
and Iran. Now, after the strikes, the recent strikes by
the US government on Iranian nuclear facilities, Beijing issued a
(01:41):
strong condemnation and basically called it a violation of the
UN Charter and of international law. I'm wondering whether or
not China may have played a role in this. Do
you have a sense of that.
Speaker 4 (01:54):
My sense is it China very much will be remembered
for sitting on the sidelines. You know, Like they issued
this very strong statement condemning the US, and they talked
about how America was sort of blowing up, you know,
the international system for sort of maintaining order I the
US led you know, UN framework for resolving conflicts. And
(02:18):
before the US strikes, you know, she and Putin had
got on the phone and sort of worked out this
four point plan for peace. But really for China, they
kind of left it at diplomacy, and I don't think,
you know, they were particularly effective in what they were messaging.
We know that Wangyi spoke to both the Israeli and
(02:39):
the Uranian foreign ministers, so there was some sort of
attempt at sort of back channeling. But essentially, you know, Tehran,
you know, China was one of Tehran's sort of strongest partners,
and when it came to its darkest hour, China really
didn't do much apart from call for peace.
Speaker 2 (02:55):
Is it pretty much a selfish move that boils down
to crude oil? Is that really what this is about?
This relationship?
Speaker 4 (03:03):
I think this relationship is about the US, and I
think one of the reasons I say that is, yes,
China is one of the places that will buy sanctioned
Iranian oil. It's a very very slim percentage of China's
oil supplies, about ten percent, and they can easily source
this oil from other places. And I think, you know,
there's a couple of practical reasons why these sort of
(03:26):
it's mainly sort of these teapot refineries in northern China
that take this oil. It's much cheaper. But also I
think the Chinese government tolerates it because they are vehemently
opposed to the US sanctions regime, and so they they
let this go as a way of sort of defying
the US sanctions regime, which is something they and Russia
and Iran are all united in opposing. But I think
(03:49):
the broader relationship with Iran has been about sort of
finding partners that it will join hands with Beijing and
challenge the US of world order. And I think you
can see that through you know, she has ushered Iran
into the Bricks Group of Emerging Markets, which is this
block that it's expanding with India and South Africa and
Brazil as sort of a kind of a rival framework
(04:12):
to the G twenty. It also welcomed Iran in the
last couple of years into the Shanghai Cooperation Organization, which
is another sort of grouping that it's expanding, which has
more of a security flavor. But when it comes to
sort of trade with Iran, I mean the trade is
very very isn't significant, you know, it doesn't sell much
(04:33):
to Iran. Actually, trade with Iran actually fell off in
the first four months of this year. It was down
about twenty percent, and the broader Middle Eastern region, from
my bottom road perspective, is more important to Beijing. So
I think really this was sort of, you know, a
partnership of convenience, and for China was always about finding
partners that will stand hands join hands with it to
(04:55):
stand against the US.
Speaker 2 (04:57):
So to that point, maybe China is not so reliant
on Irani and crude oil. I get the fact that
they're only going to import let's say ten percent, but
the Strait of Hormuze, I would imagine, is perhaps more critical.
And if there were a way for Beijing to become
influential in dialing down a lot of this tension just
(05:18):
so that the conflict didn't extend into the strait, is
that part of the thinking here as well.
Speaker 4 (05:24):
Yeah, so I think the Strait of Homus is definitely
a different story in a much, much, sort of more
alarming concern for China. About forty five percent of its
oil shipments that come through that straight and China is
the country that is most dependent on the oil coming
through that waterway globally, so yeah, massive exposure there. That
(05:47):
being said, China has been stockpiling on oil. So if
the wars a crisis that closed the straight for you know,
a short period of time, it wouldn't feel the immediate impact,
but in the long term, absolutely doesn't want this conflict spiral.
And I think that was the message from the four
point plan that she put forward. He talked about like
not wanting this to expand, and when they're condemning the US,
(06:09):
they were saying, you know, the US is fanning the
flames of war and would be to blame essentially if
this did become a broader conflict. I think the problem
for China is like, how can it affect or what
is it willing to do to stop it from becoming
a broader conflict, And the answer is not very much.
You know, China doesn't like to get its hands dirty
(06:30):
in foreign conflicts. It definitely doesn't go anywhere near the
US play because these sort of far away wars and
military operations, and even with Russia, which it has a
much stronger trade relationship and sort of interdependency with Russia
has now overtaken Saudi as the top supplier of crude
oil to China. Even when Puutine went to war in Ukraine,
(06:51):
she was very careful not to do anything they would
invite US sanctions so yes, he stepped up economic support
and diplomatic support, and then there was there's some controversy
about sort of you know, the dual use items that
have been shipped but never only to direct you know,
military support that would cross these red lines in America
and Europe laid out very clearly, you know, and I
(07:12):
think China is a country you have to remember that
has no formal allies by design, you know, and its
self interest will always be it's sort of north star
of what it does when these kind of conflicts break out.
Speaker 2 (07:26):
Do we want to include North Korea even at the fringe?
Speaker 4 (07:29):
Yeah, North Korea is the closest that China does have
to an ally, and obviously in the nineteen fifties it
did go to war for the North Koreans, but it's
still today. I mean, it doesn't want North Korea to
have nuclear weapons. China has a non proliferation policy, you know,
and ties between she and Kim have been sort of
(07:52):
entering this frostier period over recent years, and we've seen
then North Korea become closer to Putin and actually the
North Koreans being the one that did offer Russia substantial
support as the war in Ukraine sort of ground on
into its sort of fourth year.
Speaker 2 (08:07):
What is the degree of anti American feeling right now
in China? Not just because of what we're describing here
in terms of Israel Iran, but I'm thinking of whether
it's Taiwan, whether it's the US China trade war. Give
me a sense of the degree to which people in
China are feeling very anti American.
Speaker 4 (08:28):
I think that is a really interesting question, and it
hasn't been as prominent as you might have thought, sort
of broadly towards American people. The Minecraft movie came out
in China and did pretty well, and we've seen other
sort of examples of sort of American soft power being
powerful even though the US and China are locked in
this trade war. I almost wonder if the Chinese people
(08:51):
sort of are able to separate Trump and you know,
the aberration or you know that is Trump from the
average American people. There was people talking about, you know,
how foolish Run had been to sort of trust the US, saying,
you know, the US came in to negotiate, then it's
ally hit Iran, and then the US hit Iran. You know,
(09:11):
the Iranians were falls for ever trusting America, so there
was a lot of that kind of sentiment. But I
think actually the Chinese people sort of it is not
this sort of like horizon nationalism. And I think that
is partly because the Chinese government has learned from the
first time around the first Trade War, you had this
wolf warrior policy that really stoked up a lot of
bad feeling. Then you had sort of people like huci
(09:33):
Jin the old the former editor in chief of the
Global Times, who were allowed to sort of really run
wild on social media. You know, when Nancy Pelosi was
flying into Taiwan, he was posting things about, you know,
perhaps shooting down you know, the jet as she came in,
which obviously just was a step too far. And I
think this time the nationalist voices on social media and
(09:55):
state media have been tampered down because the government doesn't
want it to get out of control to a point
where they are not the ones managing the narrative.
Speaker 2 (10:03):
Jenny, it's always a pleasure. Thank you so very much,
Jenny Marsh. There she is Bloomberg Greater China ECOGOV team leader,
joining us from our studios in Hong Kong here on
the Daybreak Asia podcast. Welcome Back, to the Daybreak Asia
podcast time Doug Krisner. So, tensions in the Middle East
(10:26):
seem to have eased, at least for the moment. Israel
and Iran appear to be honoring their ceasefire agreement. At
the same time, during the last session, we had constructive
comments from Fetcher J. Powell on rate cuts. Here's Powell.
Speaker 3 (10:40):
Despite elevated uncertainty, the economy is in a solid position overall.
A wide set of indicators suggests that the conditions in
the labor market are broadly in balanced and consistent with
maximum employment. The effects of tariffs will depend, among other things,
on their ultimate level for the time being, where we
are well positioned to wait to learn more about the
likely course of the economy before consider or any adjustments
(11:00):
to our policy stance.
Speaker 2 (11:02):
SO yields were down across the treasury curve. The two year,
in fact, closed at its lowest yield since May, and
money markets are fully pricing in two Fed rate cuts
by the end of the year. For a closer look
now at the fixed income space, I'm joined by Joanne Bianco,
senior investment strategist at Bond Blocks Investment Management. Joanne, thank
you so very much for joining us. So, based on
(11:24):
what you heard today from the FED chairman, what is
your outlook for the point at which we get the
first rate cut.
Speaker 1 (11:31):
Well, first of all, thank you for having me. Happy
to be here, and I think that the FED will
want to see more progress on inflation or just even
that inflation is contained instead of eventually surging from tariffs.
Speaker 2 (11:50):
So do you think that July could be the first
cut or is that too soon?
Speaker 1 (11:55):
I still feel like that's too soon, but I think
September is more likely. That's certainly what the markets think
as well.
Speaker 2 (12:02):
So you feel pretty comfortable with the inflation story right now,
irrespective of the fact that I don't think we have
enough clarity on the impact that tariffs are having on prices.
Speaker 1 (12:13):
Actually, yeah, I don't know that I necessarily feel comfortable
about where inflation may go. I do think that there
is a lot of uncertainty. But you know, if there
is this path where we don't see a surge that
is sustained in inflation, then that gives the FED room
to cut rates. But you know it could go the
(12:35):
other way too.
Speaker 2 (12:36):
What do you feel about the labor market and the
indicators that you're seeing on that front.
Speaker 1 (12:40):
Yeah, I mean, they're definitely softer, but they haven't weakened materially.
So I think with respect to the labor market, if
the FED we're going to act based upon the labor market,
they'd want to see it materially weaken from here before
that would be their reason for cutwights.
Speaker 2 (12:59):
So do you think that the FED has got it
right in terms of how prudent policymakers are being Save
a couple of comments that we have had recently, I'm
thinking of Michelle Bowman and Chris Waller, who are advocating
for a cut as soon as July, but the majority
of voices that we have heard from who sit at
the FED seem to be a little bit more prudent.
(13:20):
Do you think that's the right tone?
Speaker 1 (13:22):
Yeah, and I think it reflects the continued resiliency of
the US economy. It does give the FED a little
bit more time before they act.
Speaker 2 (13:32):
So how are you deploying money in the bond market
these days?
Speaker 1 (13:36):
Well, you know, fixed income has been performing very well
in the first half of the year. It's definitely the
income generation from fixed income and the higher yields that
investors are getting in a lot of different segments within
fixed income have been very nice for investors and have
(13:59):
pushed volatility that they might have experienced otherwise if they
had more equities in their portfolios. So we're seeing a
lot of interest in our suite of our different suites
of fixed income ETFs from those very same type of
clients that want to want want the income, but don't
(14:22):
want the return volatility.
Speaker 2 (14:24):
So, if I were to look at putting money to
work in the bond market, irrespective of an ETF, is
there a point in the curve that you favor right now?
Speaker 1 (14:33):
Well, in terms of the treasure yield curve, we're both
constructive on the short to intermediate part of the curve.
We still think that the long end of the curve,
you know, is just more volatile in terms of returns
and maybe too volatile for some investors. So we think
you get you great income from the middle part of
(14:55):
the curve with less return volatility.
Speaker 2 (14:58):
So your resistance to money to work at the long end,
I'm wondering whether that has to do with the uncertainty
around inflation or are you concerned a little bit about
the deficit story when it comes to federal spending.
Speaker 1 (15:10):
Yeah, it could actually be both of those reasons.
Speaker 2 (15:15):
Is there one that predominates in your mind.
Speaker 1 (15:17):
I think in the near term for US, it's really
been more about the inflation story. Longer term it would
be the deficit story.
Speaker 2 (15:28):
I'm curious as to whether or not you're looking offshore
at let's say, fixed income markets in Asia or in Europe.
Are there opportunities on those fronts.
Speaker 1 (15:37):
Yeah, well, we've definitely seen opportunities because we have an
ETF the Tiggers XMD, and it's short to intermediate term
US dollar denominated emerging market stat and that's been like
one of the best performers in our in our fun
lineup this year because you've seen, you know, there's less
(15:59):
interest read sensitivity, but there's like strong yields there and
there's been spread tightening in a number of the sovereigns.
So it's been like a great place for investors.
Speaker 2 (16:13):
Joanne, we'll leave it there, Thank you so very much.
Joanne Bianco there, senior investment strategist at Bondblock's Investment Management,
joining us here on the Daybreak Asia podcast. Thanks for
listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.
Each weekday, we look at the story shaping markets finance
(16:33):
and geopolitics in the Asia Pacific. You can find us
on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere
else you listen. Join us again tomorrow for insight on
the market moves from Hong Kong to Singapore and Australia.
I'm Doug Chrisner, and this is Bloomberg
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:10):
Welcome to the Debreak Asia Podcast. I'm Doug Chrisner. Israel
and Iran appear to be honoring a ceasefire broker by
President Trump Lake Monday, despite some early reporting of violations
on both sides. Earlier in the day, President Trump issued
some harsh criticism to both countries.
Speaker 3 (00:28):
We basically have two countries that have been fighting so
long and so hard that they don't know what the
sayre doing.
Speaker 2 (00:35):
You understand that President Trump speaking there as he traveled
to the Hague for this week's NATO summit. We also
heard in the last session from FED Schaer J. Powell.
He began two days of congressional testimony on Tuesday, and
he repeated that he's not in a hurry to cut
interest rates. In a moment or two, we'll take a
look at the Fed's path with Joeanne Bianco, senior investment
(00:57):
strategist at bond Blocks. But we begin this morning with geopolitics.
Israel and Iran have spent the better part of the
past two weeks exchanging strikes, and in the process, the
US was drawn into this conflict. The situation highlights the
role of another power player though China. Joining me now
is Jenny Marsh. Jenny is Greater China Eco GUV team
(01:19):
leader for Bloomberg News, and she joins us from our
studios in Hong Kong. It's always a pleasure to benefit
from your perspective. And as long as we're talking about geopolitics,
let's talk about what's going on between the US, Israel,
and Iran. Now, after the strikes, the recent strikes by
the US government on Iranian nuclear facilities, Beijing issued a
(01:41):
strong condemnation and basically called it a violation of the
UN Charter and of international law. I'm wondering whether or
not China may have played a role in this. Do
you have a sense of that.
Speaker 4 (01:54):
My sense is it China very much will be remembered
for sitting on the sidelines. You know, Like they issued
this very strong statement condemning the US, and they talked
about how America was sort of blowing up, you know,
the international system for sort of maintaining order I the
US led you know, UN framework for resolving conflicts. And
(02:18):
before the US strikes, you know, she and Putin had
got on the phone and sort of worked out this
four point plan for peace. But really for China, they
kind of left it at diplomacy, and I don't think,
you know, they were particularly effective in what they were messaging.
We know that Wangyi spoke to both the Israeli and
(02:39):
the Uranian foreign ministers, so there was some sort of
attempt at sort of back channeling. But essentially, you know, Tehran,
you know, China was one of Tehran's sort of strongest partners,
and when it came to its darkest hour, China really
didn't do much apart from call for peace.
Speaker 2 (02:55):
Is it pretty much a selfish move that boils down
to crude oil? Is that really what this is about?
This relationship?
Speaker 4 (03:03):
I think this relationship is about the US, and I
think one of the reasons I say that is, yes,
China is one of the places that will buy sanctioned
Iranian oil. It's a very very slim percentage of China's
oil supplies, about ten percent, and they can easily source
this oil from other places. And I think, you know,
there's a couple of practical reasons why these sort of
(03:26):
it's mainly sort of these teapot refineries in northern China
that take this oil. It's much cheaper. But also I
think the Chinese government tolerates it because they are vehemently
opposed to the US sanctions regime, and so they they
let this go as a way of sort of defying
the US sanctions regime, which is something they and Russia
and Iran are all united in opposing. But I think
(03:49):
the broader relationship with Iran has been about sort of
finding partners that it will join hands with Beijing and
challenge the US of world order. And I think you
can see that through you know, she has ushered Iran
into the Bricks Group of Emerging Markets, which is this
block that it's expanding with India and South Africa and
Brazil as sort of a kind of a rival framework
(04:12):
to the G twenty. It also welcomed Iran in the
last couple of years into the Shanghai Cooperation Organization, which
is another sort of grouping that it's expanding, which has
more of a security flavor. But when it comes to
sort of trade with Iran, I mean the trade is
very very isn't significant, you know, it doesn't sell much
(04:33):
to Iran. Actually, trade with Iran actually fell off in
the first four months of this year. It was down
about twenty percent, and the broader Middle Eastern region, from
my bottom road perspective, is more important to Beijing. So
I think really this was sort of, you know, a
partnership of convenience, and for China was always about finding
partners that will stand hands join hands with it to
(04:55):
stand against the US.
Speaker 2 (04:57):
So to that point, maybe China is not so reliant
on Irani and crude oil. I get the fact that
they're only going to import let's say ten percent, but
the Strait of Hormuze, I would imagine, is perhaps more critical.
And if there were a way for Beijing to become
influential in dialing down a lot of this tension just
(05:18):
so that the conflict didn't extend into the strait, is
that part of the thinking here as well.
Speaker 4 (05:24):
Yeah, so I think the Strait of Homus is definitely
a different story in a much, much, sort of more
alarming concern for China. About forty five percent of its
oil shipments that come through that straight and China is
the country that is most dependent on the oil coming
through that waterway globally, so yeah, massive exposure there. That
(05:47):
being said, China has been stockpiling on oil. So if
the wars a crisis that closed the straight for you know,
a short period of time, it wouldn't feel the immediate impact,
but in the long term, absolutely doesn't want this conflict spiral.
And I think that was the message from the four
point plan that she put forward. He talked about like
not wanting this to expand, and when they're condemning the US,
(06:09):
they were saying, you know, the US is fanning the
flames of war and would be to blame essentially if
this did become a broader conflict. I think the problem
for China is like, how can it affect or what
is it willing to do to stop it from becoming
a broader conflict, And the answer is not very much.
You know, China doesn't like to get its hands dirty
(06:30):
in foreign conflicts. It definitely doesn't go anywhere near the
US play because these sort of far away wars and
military operations, and even with Russia, which it has a
much stronger trade relationship and sort of interdependency with Russia
has now overtaken Saudi as the top supplier of crude
oil to China. Even when Puutine went to war in Ukraine,
(06:51):
she was very careful not to do anything they would
invite US sanctions so yes, he stepped up economic support
and diplomatic support, and then there was there's some controversy
about sort of you know, the dual use items that
have been shipped but never only to direct you know,
military support that would cross these red lines in America
and Europe laid out very clearly, you know, and I
(07:12):
think China is a country you have to remember that
has no formal allies by design, you know, and its
self interest will always be it's sort of north star
of what it does when these kind of conflicts break out.
Speaker 2 (07:26):
Do we want to include North Korea even at the fringe?
Speaker 4 (07:29):
Yeah, North Korea is the closest that China does have
to an ally, and obviously in the nineteen fifties it
did go to war for the North Koreans, but it's
still today. I mean, it doesn't want North Korea to
have nuclear weapons. China has a non proliferation policy, you know,
and ties between she and Kim have been sort of
(07:52):
entering this frostier period over recent years, and we've seen
then North Korea become closer to Putin and actually the
North Koreans being the one that did offer Russia substantial
support as the war in Ukraine sort of ground on
into its sort of fourth year.
Speaker 2 (08:07):
What is the degree of anti American feeling right now
in China? Not just because of what we're describing here
in terms of Israel Iran, but I'm thinking of whether
it's Taiwan, whether it's the US China trade war. Give
me a sense of the degree to which people in
China are feeling very anti American.
Speaker 4 (08:28):
I think that is a really interesting question, and it
hasn't been as prominent as you might have thought, sort
of broadly towards American people. The Minecraft movie came out
in China and did pretty well, and we've seen other
sort of examples of sort of American soft power being
powerful even though the US and China are locked in
this trade war. I almost wonder if the Chinese people
(08:51):
sort of are able to separate Trump and you know,
the aberration or you know that is Trump from the
average American people. There was people talking about, you know,
how foolish Run had been to sort of trust the US, saying,
you know, the US came in to negotiate, then it's
ally hit Iran, and then the US hit Iran. You know,
(09:11):
the Iranians were falls for ever trusting America, so there
was a lot of that kind of sentiment. But I
think actually the Chinese people sort of it is not
this sort of like horizon nationalism. And I think that
is partly because the Chinese government has learned from the
first time around the first Trade War, you had this
wolf warrior policy that really stoked up a lot of
bad feeling. Then you had sort of people like huci
(09:33):
Jin the old the former editor in chief of the
Global Times, who were allowed to sort of really run
wild on social media. You know, when Nancy Pelosi was
flying into Taiwan, he was posting things about, you know,
perhaps shooting down you know, the jet as she came in,
which obviously just was a step too far. And I
think this time the nationalist voices on social media and
(09:55):
state media have been tampered down because the government doesn't
want it to get out of control to a point
where they are not the ones managing the narrative.
Speaker 2 (10:03):
Jenny, it's always a pleasure. Thank you so very much,
Jenny Marsh. There she is Bloomberg Greater China ECOGOV team leader,
joining us from our studios in Hong Kong here on
the Daybreak Asia podcast. Welcome Back, to the Daybreak Asia
podcast time Doug Krisner. So, tensions in the Middle East
(10:26):
seem to have eased, at least for the moment. Israel
and Iran appear to be honoring their ceasefire agreement. At
the same time, during the last session, we had constructive
comments from Fetcher J. Powell on rate cuts. Here's Powell.
Speaker 3 (10:40):
Despite elevated uncertainty, the economy is in a solid position overall.
A wide set of indicators suggests that the conditions in
the labor market are broadly in balanced and consistent with
maximum employment. The effects of tariffs will depend, among other things,
on their ultimate level for the time being, where we
are well positioned to wait to learn more about the
likely course of the economy before consider or any adjustments
(11:00):
to our policy stance.
Speaker 2 (11:02):
SO yields were down across the treasury curve. The two year,
in fact, closed at its lowest yield since May, and
money markets are fully pricing in two Fed rate cuts
by the end of the year. For a closer look
now at the fixed income space, I'm joined by Joanne Bianco,
senior investment strategist at Bond Blocks Investment Management. Joanne, thank
you so very much for joining us. So, based on
(11:24):
what you heard today from the FED chairman, what is
your outlook for the point at which we get the
first rate cut.
Speaker 1 (11:31):
Well, first of all, thank you for having me. Happy
to be here, and I think that the FED will
want to see more progress on inflation or just even
that inflation is contained instead of eventually surging from tariffs.
Speaker 2 (11:50):
So do you think that July could be the first
cut or is that too soon?
Speaker 1 (11:55):
I still feel like that's too soon, but I think
September is more likely. That's certainly what the markets think
as well.
Speaker 2 (12:02):
So you feel pretty comfortable with the inflation story right now,
irrespective of the fact that I don't think we have
enough clarity on the impact that tariffs are having on prices.
Speaker 1 (12:13):
Actually, yeah, I don't know that I necessarily feel comfortable
about where inflation may go. I do think that there
is a lot of uncertainty. But you know, if there
is this path where we don't see a surge that
is sustained in inflation, then that gives the FED room
to cut rates. But you know it could go the
(12:35):
other way too.
Speaker 2 (12:36):
What do you feel about the labor market and the
indicators that you're seeing on that front.
Speaker 1 (12:40):
Yeah, I mean, they're definitely softer, but they haven't weakened materially.
So I think with respect to the labor market, if
the FED we're going to act based upon the labor market,
they'd want to see it materially weaken from here before
that would be their reason for cutwights.
Speaker 2 (12:59):
So do you think that the FED has got it
right in terms of how prudent policymakers are being Save
a couple of comments that we have had recently, I'm
thinking of Michelle Bowman and Chris Waller, who are advocating
for a cut as soon as July, but the majority
of voices that we have heard from who sit at
the FED seem to be a little bit more prudent.
(13:20):
Do you think that's the right tone?
Speaker 1 (13:22):
Yeah, and I think it reflects the continued resiliency of
the US economy. It does give the FED a little
bit more time before they act.
Speaker 2 (13:32):
So how are you deploying money in the bond market
these days?
Speaker 1 (13:36):
Well, you know, fixed income has been performing very well
in the first half of the year. It's definitely the
income generation from fixed income and the higher yields that
investors are getting in a lot of different segments within
fixed income have been very nice for investors and have
(13:59):
pushed volatility that they might have experienced otherwise if they
had more equities in their portfolios. So we're seeing a
lot of interest in our suite of our different suites
of fixed income ETFs from those very same type of
clients that want to want want the income, but don't
(14:22):
want the return volatility.
Speaker 2 (14:24):
So, if I were to look at putting money to
work in the bond market, irrespective of an ETF, is
there a point in the curve that you favor right now?
Speaker 1 (14:33):
Well, in terms of the treasure yield curve, we're both
constructive on the short to intermediate part of the curve.
We still think that the long end of the curve,
you know, is just more volatile in terms of returns
and maybe too volatile for some investors. So we think
you get you great income from the middle part of
(14:55):
the curve with less return volatility.
Speaker 2 (14:58):
So your resistance to money to work at the long end,
I'm wondering whether that has to do with the uncertainty
around inflation or are you concerned a little bit about
the deficit story when it comes to federal spending.
Speaker 1 (15:10):
Yeah, it could actually be both of those reasons.
Speaker 2 (15:15):
Is there one that predominates in your mind.
Speaker 1 (15:17):
I think in the near term for US, it's really
been more about the inflation story. Longer term it would
be the deficit story.
Speaker 2 (15:28):
I'm curious as to whether or not you're looking offshore
at let's say, fixed income markets in Asia or in Europe.
Are there opportunities on those fronts.
Speaker 1 (15:37):
Yeah, well, we've definitely seen opportunities because we have an
ETF the Tiggers XMD, and it's short to intermediate term
US dollar denominated emerging market stat and that's been like
one of the best performers in our in our fun
lineup this year because you've seen, you know, there's less
(15:59):
interest read sensitivity, but there's like strong yields there and
there's been spread tightening in a number of the sovereigns.
So it's been like a great place for investors.
Speaker 2 (16:13):
Joanne, we'll leave it there, Thank you so very much.
Joanne Bianco there, senior investment strategist at Bondblock's Investment Management,
joining us here on the Daybreak Asia podcast. Thanks for
listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.
Each weekday, we look at the story shaping markets finance
(16:33):
and geopolitics in the Asia Pacific. You can find us
on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere
else you listen. Join us again tomorrow for insight on
the market moves from Hong Kong to Singapore and Australia.
I'm Doug Chrisner, and this is Bloomberg
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