April 9, 2025 • 14 mins
It’s been a rollercoaster of a week for global markets. As President Trump goes back and forth about the size and scope of his tariffs, Bloomberg is watching one market especially closely: bonds. US Treasuries are widely seen as one of the world’s safest assets, especially in periods of financial volatility. But will they hold?
On today’s episode of the Big Take DC, hosts Sarah Holder and Saleha Mohsin sit down with Bloomberg chief correspondent Liz Capo McCormick to unpack a week of sharp selloffs in the bond market, and how the swings could impact mortgage rates and student loans.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Just a few hours ago,
as of this taping, President Trump announced increased tariffs of
one hundred and twenty five percent on China and a
ninety day pause on tariffs for dozens of other countries.
It's the latest in what has been a whiplash kind
(00:23):
of week. Last Wednesday, the President introduced tariffs on all
US imports, with higher levies on some of its largest
trading partners. The announcement sent markets into chaos, and through
it all, Bloomberg has been watching the movement in one
market especially closely, the bond market. US treasuries have long
been considered a safe haven, a place to put money
(00:46):
in times of economic turmoil, but in the days before
Trump's reversal, investors started dumping them.
Speaker 2 (00:53):
This is a historic week for the treasury market.
Speaker 3 (00:56):
Those long annals have risen some fifty basis points just
Monday alone.
Speaker 1 (01:01):
That sent yields surging by the most we've seen since
the start of the pandemic, and higher yields can affect
everything from auto loans to student loans and mortgage rates.
Some of the pressure subsided earlier today treasury auction results
were announced showing strong demand for ten year debt, and
then came the tariff news. Here's President Trump speaking outside
(01:24):
the White House this afternoon.
Speaker 2 (01:26):
No, I was watching the bond market.
Speaker 4 (01:28):
That bond market is very tricky.
Speaker 2 (01:29):
I was watching it.
Speaker 4 (01:30):
But if you look at it now, it's.
Speaker 3 (01:33):
Beautiful.
Speaker 5 (01:34):
The bond market right now is beautiful.
Speaker 1 (01:37):
But yeah, I saw last night where people are getting
a little queasy, but treasuries aren't out of the woods yet.
And on Wednesday, just hours before Trump's announcement of the
ninety day pause, Bloomberg Chief correspondent Liz cap o' McCormick
told me, a closer look at the bond market has
made one thing clear that right now nothing is clear.
Speaker 3 (02:00):
Registration is giving what some people say, mixed messages.
Speaker 2 (02:02):
There's not a lot of clarity.
Speaker 3 (02:04):
There's so much uncertainty that we're just not sure. It's
almost coming too fast and furious and unclear, and the
market can't process at all.
Speaker 1 (02:14):
This is the Big Take DC podcast from Bloomberg News.
I'm Sarah Holder. Today on the show, my co host
Sealia Moson and I sat down with Liz to unpack
the US bond markets reaction to President Trump's trade war
what's going on and what it all means for the
US economy and its position on the world stage. I
(02:38):
am fortunate to be joined not by one expert, but
by two experts, Salaiya Mosen and Liz Capo McCormick. Welcome
to you both. We've seen an immense amount of volatility
in the markets over the past few weeks, overnight and
throughout the day today, and one of the biggest storylines
has been the bond market. Can you just walk us
through the selloff in US treasuries.
Speaker 3 (03:00):
Yeah, it's been really kind of an incredible sell off.
Speaker 2 (03:04):
Let's take a backdrop of.
Speaker 3 (03:05):
Kind of like bond math one point zero or portfolio
allocation one point zero. In the sense of bond selling
off in and of itself is not a terrible thing.
Speaker 2 (03:15):
Always.
Speaker 3 (03:15):
What's kind of jarring in this case is that bonds
are usually seen as a hedge against risky assets because
they're the world safe haven security. If you're worried about
equity markets selling off, which we've seen a lot since
the April second tariff announcement details from President Trump, usually
you'll go to something not just cash, but the safety
(03:36):
of US treasury, so their prices will go up, yields.
Speaker 4 (03:39):
Will go down.
Speaker 3 (03:40):
Makes you feel good that you're at least diversified and
you're in a sense hedged against some of the risk.
What's been jarring in the last couple of days is
we have still had mostly problems with stocks.
Speaker 2 (03:51):
Stock prices going down.
Speaker 3 (03:52):
People are concerned uncertainty about the tariff policy, et cetera,
and how it may affect the economy. But bond yields
started to rise, which that is like a few people
who are long termer said to me, this is bizarre.
Speaker 2 (04:05):
You know, it doesn't make sense. It's counter trend.
Speaker 4 (04:08):
Oh, what's going on.
Speaker 3 (04:09):
My bonds are supposed to be doing well now when
stocks are going down.
Speaker 4 (04:13):
So that, I would say, is the biggest backdrop that.
Speaker 3 (04:16):
This is concerning, And also that we've kind of lived
through this episode.
Speaker 2 (04:20):
Kind of thing before.
Speaker 3 (04:21):
In March twenty twenty, during the wars of the pandemic,
we had some periods where again it seemed like something's broken.
Treasure yields are going up, bond prices are going down.
Speaker 2 (04:31):
When stocks are going down.
Speaker 3 (04:33):
So I would say that's a big backdrop to why
people are alarmed.
Speaker 5 (04:36):
So we've seen Treasure Secretary Scott Bessett downplay what's going
on in treasuries right now. Is that messaging that we
heard from him enough to suage people's fears.
Speaker 3 (04:46):
I think some people feel, like, like one investor said
to me, like I appreciate his optimism, but it's not helping.
But I think overall, it's not just to Scott Besson,
it's the whole administration that they feel like we need
clarity at least because we still feel there's a lot
of uncertainty of the path forward.
Speaker 1 (05:03):
Liz, you had mentioned that US treasuries are often seen
as the safe haven for investors during an economic crisis
or periods of volatility. If American treasuries and the US
dollar are not currently seen as the safe investment, where
might investors turn. How could this sell off undermine the
US's position in the global economic order?
Speaker 3 (05:25):
Number One, the dollar was kind of a safe haven,
but as we know, the dollar has weakened as well,
so some people thought, oh, that would be the way
to go, you know, just bet on a strong dollar.
Speaker 2 (05:35):
That hasn't panned out either.
Speaker 3 (05:37):
But what's important too, in a backdrop that I didn't
mention earlier, is there are many who feel like, maybe
now I have some alternatives to buying treasuries. In Europe,
they are going to do, you know, a large swath
of more issuance of debts, so the more German boons
to be purchased, people feel they have alternatives.
Speaker 2 (05:56):
The Bank of Japan is.
Speaker 3 (05:57):
After as we know, many many years of having ultra
low rates, slowly moving them up, so people feel like
our yields are still higher, but there may be attractive
yields abroad. There may be more debt to buy sovereign
debt abroad, So there's a bit of like maybe there's
some alternatives, especially if you're feeling like there's just so
much volatility. It's not just the actual level of treasury
(06:21):
yields in the price, it's the extreme volatility that's very
hard for people to digest. I was looking on our
Bloomberg terminals that the tenure yield has gone up like
over sixty basis points, you know, from the intra day
lows to highs in the last couple of days. I mean,
that's just a very massive move in. Again what's supposed
to be the safe haven. Of course, ten years is
(06:42):
a lot of maturity, so it never just stays still
too long. Like the very very front end or you know,
overnight rates. But I think that's the problem. So I think, yeah,
there are some feeling that maybe there's alternatives. People say
to me the whisper talk that maybe part of the
retaliation from China is that they will be selling some
of their treasuries, or there will be let's say, at
(07:02):
the least less willing to buy treasuries, you know, add
to their holdings of treasuries.
Speaker 4 (07:07):
That's concerning to people in the market.
Speaker 3 (07:09):
So I think it's just this, all these things together
have made people feel like, you know, maybe treasuries aren't
my favorite safe haven for now.
Speaker 5 (07:18):
One key component of Besence economic strategy has been to
target the tenure yield as a way to bring down
borrowing costs for consumers. How will the surging yields now
undermine that goal?
Speaker 4 (07:34):
Well, let's just talk to the lay person.
Speaker 3 (07:36):
I don't like to give my age, but say, my
oldest daughter is in her late twenties.
Speaker 2 (07:40):
She's engaged.
Speaker 3 (07:41):
They're going to buy a house, and she keeps saying
to me, mom, mortgage rates were supposed to go down.
Speaker 2 (07:46):
What's happening, you know?
Speaker 3 (07:48):
And that's before we had this massive move and they
hadn't gone down too much even with the Federal Reserve
cutting rates. So now if this sharp move and treasury
yields keep going higher, that can filter in to settings
of mortgage rates and different things like that. And also
people have to borrow money for different things projects of
the house. So the thed is the base for all
(08:10):
kind of the base rates, but higher long term rates
can filter into the economy. It can also tighten financial
conditions overall. It just makes it more difficult to do
what you wanted to.
Speaker 2 (08:21):
Do if you don't have cash on hand.
Speaker 3 (08:23):
So I think that's why Scott Besson smartly has said
if we lower ten year yields, it will support the
economy writ large, and of course then the reverse is
true too. If they keep going higher, that's the negative
for the economy.
Speaker 1 (08:35):
Coming up more of my conversation with Silia Mosen and
Liz Capo McCormick. We talk about what the federal government
can be doing to stabilize markets, from the Federal Reserve
to the executive branch. Let's talk about the Federal rest
(09:00):
They have this dual mandate. They've got to keep inflation
and check and keep unemployment down. How are they navigating
this moment.
Speaker 3 (09:08):
Yeah, I mean the FED, you know, has their dual mandates,
and they have what they call their blunt tool interest rates,
you know, lowering them or raising them. But they do
have an arsenal which they've been vary astute at using
in the past during different crisises and things. Other tools
like they can buy bonds called quantitative easing right QE
(09:29):
that can support the market but kind of taking some
of these bonds out, helping to bring yields down.
Speaker 4 (09:34):
They also have special kind.
Speaker 3 (09:36):
Of programs where they can support the banking system. They
can support different areas of the economy, kind of like
when we had the issues with the regional banking crisis.
Speaker 2 (09:46):
There are there.
Speaker 3 (09:47):
Even some ways that they can ease regulation temporarily that
would make it more attractive for these banks and dealers
to hold treasuries, which if we feel like the market's
getting overwhelmed a little, that helped during the pandemic crisis.
Speaker 4 (10:01):
So they have a lot of tools.
Speaker 3 (10:02):
I think for now, given that both mandates, like Chairman
Powell has said, we're kind of in a good place.
They noted that terrorifts were higher than they expected, which
economists say will lower growth, but also raise inflation. So
the FED is kind of closely monitoring both of its mandates.
So I don't think they want to do anything on
that front. And people in the market aren't screaming Fed
(10:23):
jump in today. But I think it's assuring to the
market to know that the FED has these tools.
Speaker 2 (10:29):
They've done it in the past.
Speaker 3 (10:30):
If things start not functioning well, the market does kind
of look to the FED to kind of step in.
Speaker 5 (10:36):
It sounds like the Federal Reserve at least some key
officials are signaling that maybe it's worth waiting before jumping in. Right,
the economy going into this was in a strong position,
although inflation was still a concern. Is that the consensus
amongst the investor community that you speak to.
Speaker 4 (10:55):
What's interesting is in I always say, traders do what
they do.
Speaker 3 (10:58):
You have the kind of let's say, money market traders,
derivative traders who have leaned into aggressively price in that
the FED will cut rates maybe four times this year,
so a whole percentage point.
Speaker 4 (11:11):
So I don't know.
Speaker 3 (11:13):
I kind of think these traders have a way of
getting over their skis a little because Chairman Pal kind
of like an investor said to me, kind of through
cold water on that Friday. To your point of saying,
we're okay to wait, It's going to be interesting what
moves first, whether things get worse and the Fed sounds
like they may do something on rates, whether they're worried
about growth, et cetera, or if the market kind of
(11:35):
dials that back a little. Some of these traders are
pricing in, like, hey, the Fed, eventually this economy is
going to really creater, they'll have to come in. Let's
just talk about that side of the mandid. But inflation,
as we said, is also a concern. So I think
the market realizes they're in a sticky spot.
Speaker 5 (11:53):
As you know, I've covered various parts of the Treasure
Department for a while now together and you longer than
I have. The key thing to remember is that a
Treasure secretary in a moment of crisis often has to
take big, bold action. Former Treasure Secretary Hank Paulson from
the George W. Bush administration famously knelt before Nancy Pelosi
inside the White House for help to get relief passed
(12:16):
during the two thousand and eight financial crisis, and we've
seen similar actions from other secretaries subsequently doing things to
ultimately try to calm investors. Is this Beson's moment? Can
he do the same now?
Speaker 3 (12:31):
You know it. Did speak to an investor who kind
of brought up some of that precedents to me as well,
and said, they're really hoping that Scott Besson will push hard.
Whether we know it it's in the public sphere or not,
they're hoping Scott Besson is making clear to President Trump that,
you know, especially the treasury market, if things keep unraveling,
that there's risk that things sees up and it bleeds
(12:53):
into the economy. So I think that's what people say
to me, like, Okay, for now, he's not saying that much.
That's giving us com but we hope in the room
what we don't hear that he's really making clear how
important all this is. I mean, it's the kind of
thing that my mother who's old, will say, what is
going on? I saw on PBS News that the tenure
yield is at five percent. You know, it starts to
(13:14):
get the like regular person worried, and that's not good
for consumer confidence and in those types of things.
Speaker 1 (13:21):
Well, thank you so much, Liz. We really appreciate you
making sense of this crazy moment. For markets.
Speaker 2 (13:27):
Thanks for having me.
Speaker 1 (13:31):
This is The Big Take DC from Bloomberg News. I'm
Sarah Holder on Today with my co host Seleiah Mosen.
This episode was produced by Julia Press, with assistants from
Rachel Lewis Krisky, David Fox, and Alex Tie. It was
edited by Aaron Edwards and Boris Corby. It was factaxed
by Adriannatapia and mixed and sound designed by Alex Sugia.
(13:52):
Our senior producer is Naomi Shaven. Our senior editor is
Elizabeth Ponso. Our deputy executive producer is Julia Weaver. Our
executive producer sir is Nicole Beemster. Bor Sage Bauman is
Bloomberg's head of Podcasts. If you liked this episode, make
sure to subscribe and review The Big Take DC wherever
you listen to podcasts. It helps people find the show.
(14:13):
Thanks so much for listening. We'll be back tomorrow.
Bloomberg Audio Studios, podcasts, radio news. Just a few hours ago,
as of this taping, President Trump announced increased tariffs of
one hundred and twenty five percent on China and a
ninety day pause on tariffs for dozens of other countries.
It's the latest in what has been a whiplash kind
(00:23):
of week. Last Wednesday, the President introduced tariffs on all
US imports, with higher levies on some of its largest
trading partners. The announcement sent markets into chaos, and through
it all, Bloomberg has been watching the movement in one
market especially closely, the bond market. US treasuries have long
been considered a safe haven, a place to put money
(00:46):
in times of economic turmoil, but in the days before
Trump's reversal, investors started dumping them.
Speaker 2 (00:53):
This is a historic week for the treasury market.
Speaker 3 (00:56):
Those long annals have risen some fifty basis points just
Monday alone.
Speaker 1 (01:01):
That sent yields surging by the most we've seen since
the start of the pandemic, and higher yields can affect
everything from auto loans to student loans and mortgage rates.
Some of the pressure subsided earlier today treasury auction results
were announced showing strong demand for ten year debt, and
then came the tariff news. Here's President Trump speaking outside
(01:24):
the White House this afternoon.
Speaker 2 (01:26):
No, I was watching the bond market.
Speaker 4 (01:28):
That bond market is very tricky.
Speaker 2 (01:29):
I was watching it.
Speaker 4 (01:30):
But if you look at it now, it's.
Speaker 3 (01:33):
Beautiful.
Speaker 5 (01:34):
The bond market right now is beautiful.
Speaker 1 (01:37):
But yeah, I saw last night where people are getting
a little queasy, but treasuries aren't out of the woods yet.
And on Wednesday, just hours before Trump's announcement of the
ninety day pause, Bloomberg Chief correspondent Liz cap o' McCormick
told me, a closer look at the bond market has
made one thing clear that right now nothing is clear.
Speaker 3 (02:00):
Registration is giving what some people say, mixed messages.
Speaker 2 (02:02):
There's not a lot of clarity.
Speaker 3 (02:04):
There's so much uncertainty that we're just not sure. It's
almost coming too fast and furious and unclear, and the
market can't process at all.
Speaker 1 (02:14):
This is the Big Take DC podcast from Bloomberg News.
I'm Sarah Holder. Today on the show, my co host
Sealia Moson and I sat down with Liz to unpack
the US bond markets reaction to President Trump's trade war
what's going on and what it all means for the
US economy and its position on the world stage. I
(02:38):
am fortunate to be joined not by one expert, but
by two experts, Salaiya Mosen and Liz Capo McCormick. Welcome
to you both. We've seen an immense amount of volatility
in the markets over the past few weeks, overnight and
throughout the day today, and one of the biggest storylines
has been the bond market. Can you just walk us
through the selloff in US treasuries.
Speaker 3 (03:00):
Yeah, it's been really kind of an incredible sell off.
Speaker 2 (03:04):
Let's take a backdrop of.
Speaker 3 (03:05):
Kind of like bond math one point zero or portfolio
allocation one point zero. In the sense of bond selling
off in and of itself is not a terrible thing.
Speaker 2 (03:15):
Always.
Speaker 3 (03:15):
What's kind of jarring in this case is that bonds
are usually seen as a hedge against risky assets because
they're the world safe haven security. If you're worried about
equity markets selling off, which we've seen a lot since
the April second tariff announcement details from President Trump, usually
you'll go to something not just cash, but the safety
(03:36):
of US treasury, so their prices will go up, yields.
Speaker 4 (03:39):
Will go down.
Speaker 3 (03:40):
Makes you feel good that you're at least diversified and
you're in a sense hedged against some of the risk.
What's been jarring in the last couple of days is
we have still had mostly problems with stocks.
Speaker 2 (03:51):
Stock prices going down.
Speaker 3 (03:52):
People are concerned uncertainty about the tariff policy, et cetera,
and how it may affect the economy. But bond yields
started to rise, which that is like a few people
who are long termer said to me, this is bizarre.
Speaker 2 (04:05):
You know, it doesn't make sense. It's counter trend.
Speaker 4 (04:08):
Oh, what's going on.
Speaker 3 (04:09):
My bonds are supposed to be doing well now when
stocks are going down.
Speaker 4 (04:13):
So that, I would say, is the biggest backdrop that.
Speaker 3 (04:16):
This is concerning, And also that we've kind of lived
through this episode.
Speaker 2 (04:20):
Kind of thing before.
Speaker 3 (04:21):
In March twenty twenty, during the wars of the pandemic,
we had some periods where again it seemed like something's broken.
Treasure yields are going up, bond prices are going down.
Speaker 2 (04:31):
When stocks are going down.
Speaker 3 (04:33):
So I would say that's a big backdrop to why
people are alarmed.
Speaker 5 (04:36):
So we've seen Treasure Secretary Scott Bessett downplay what's going
on in treasuries right now. Is that messaging that we
heard from him enough to suage people's fears.
Speaker 3 (04:46):
I think some people feel, like, like one investor said
to me, like I appreciate his optimism, but it's not helping.
But I think overall, it's not just to Scott Besson,
it's the whole administration that they feel like we need
clarity at least because we still feel there's a lot
of uncertainty of the path forward.
Speaker 1 (05:03):
Liz, you had mentioned that US treasuries are often seen
as the safe haven for investors during an economic crisis
or periods of volatility. If American treasuries and the US
dollar are not currently seen as the safe investment, where
might investors turn. How could this sell off undermine the
US's position in the global economic order?
Speaker 3 (05:25):
Number One, the dollar was kind of a safe haven,
but as we know, the dollar has weakened as well,
so some people thought, oh, that would be the way
to go, you know, just bet on a strong dollar.
Speaker 2 (05:35):
That hasn't panned out either.
Speaker 3 (05:37):
But what's important too, in a backdrop that I didn't
mention earlier, is there are many who feel like, maybe
now I have some alternatives to buying treasuries. In Europe,
they are going to do, you know, a large swath
of more issuance of debts, so the more German boons
to be purchased, people feel they have alternatives.
Speaker 2 (05:56):
The Bank of Japan is.
Speaker 3 (05:57):
After as we know, many many years of having ultra
low rates, slowly moving them up, so people feel like
our yields are still higher, but there may be attractive
yields abroad. There may be more debt to buy sovereign
debt abroad, So there's a bit of like maybe there's
some alternatives, especially if you're feeling like there's just so
much volatility. It's not just the actual level of treasury
(06:21):
yields in the price, it's the extreme volatility that's very
hard for people to digest. I was looking on our
Bloomberg terminals that the tenure yield has gone up like
over sixty basis points, you know, from the intra day
lows to highs in the last couple of days. I mean,
that's just a very massive move in. Again what's supposed
to be the safe haven. Of course, ten years is
(06:42):
a lot of maturity, so it never just stays still
too long. Like the very very front end or you know,
overnight rates. But I think that's the problem. So I think, yeah,
there are some feeling that maybe there's alternatives. People say
to me the whisper talk that maybe part of the
retaliation from China is that they will be selling some
of their treasuries, or there will be let's say, at
(07:02):
the least less willing to buy treasuries, you know, add
to their holdings of treasuries.
Speaker 4 (07:07):
That's concerning to people in the market.
Speaker 3 (07:09):
So I think it's just this, all these things together
have made people feel like, you know, maybe treasuries aren't
my favorite safe haven for now.
Speaker 5 (07:18):
One key component of Besence economic strategy has been to
target the tenure yield as a way to bring down
borrowing costs for consumers. How will the surging yields now
undermine that goal?
Speaker 4 (07:34):
Well, let's just talk to the lay person.
Speaker 3 (07:36):
I don't like to give my age, but say, my
oldest daughter is in her late twenties.
Speaker 2 (07:40):
She's engaged.
Speaker 3 (07:41):
They're going to buy a house, and she keeps saying
to me, mom, mortgage rates were supposed to go down.
Speaker 2 (07:46):
What's happening, you know?
Speaker 3 (07:48):
And that's before we had this massive move and they
hadn't gone down too much even with the Federal Reserve
cutting rates. So now if this sharp move and treasury
yields keep going higher, that can filter in to settings
of mortgage rates and different things like that. And also
people have to borrow money for different things projects of
the house. So the thed is the base for all
(08:10):
kind of the base rates, but higher long term rates
can filter into the economy. It can also tighten financial
conditions overall. It just makes it more difficult to do
what you wanted to.
Speaker 2 (08:21):
Do if you don't have cash on hand.
Speaker 3 (08:23):
So I think that's why Scott Besson smartly has said
if we lower ten year yields, it will support the
economy writ large, and of course then the reverse is
true too. If they keep going higher, that's the negative
for the economy.
Speaker 1 (08:35):
Coming up more of my conversation with Silia Mosen and
Liz Capo McCormick. We talk about what the federal government
can be doing to stabilize markets, from the Federal Reserve
to the executive branch. Let's talk about the Federal rest
(09:00):
They have this dual mandate. They've got to keep inflation
and check and keep unemployment down. How are they navigating
this moment.
Speaker 3 (09:08):
Yeah, I mean the FED, you know, has their dual mandates,
and they have what they call their blunt tool interest rates,
you know, lowering them or raising them. But they do
have an arsenal which they've been vary astute at using
in the past during different crisises and things. Other tools
like they can buy bonds called quantitative easing right QE
(09:29):
that can support the market but kind of taking some
of these bonds out, helping to bring yields down.
Speaker 4 (09:34):
They also have special kind.
Speaker 3 (09:36):
Of programs where they can support the banking system. They
can support different areas of the economy, kind of like
when we had the issues with the regional banking crisis.
Speaker 2 (09:46):
There are there.
Speaker 3 (09:47):
Even some ways that they can ease regulation temporarily that
would make it more attractive for these banks and dealers
to hold treasuries, which if we feel like the market's
getting overwhelmed a little, that helped during the pandemic crisis.
Speaker 4 (10:01):
So they have a lot of tools.
Speaker 3 (10:02):
I think for now, given that both mandates, like Chairman
Powell has said, we're kind of in a good place.
They noted that terrorifts were higher than they expected, which
economists say will lower growth, but also raise inflation. So
the FED is kind of closely monitoring both of its mandates.
So I don't think they want to do anything on
that front. And people in the market aren't screaming Fed
(10:23):
jump in today. But I think it's assuring to the
market to know that the FED has these tools.
Speaker 2 (10:29):
They've done it in the past.
Speaker 3 (10:30):
If things start not functioning well, the market does kind
of look to the FED to kind of step in.
Speaker 5 (10:36):
It sounds like the Federal Reserve at least some key
officials are signaling that maybe it's worth waiting before jumping in. Right,
the economy going into this was in a strong position,
although inflation was still a concern. Is that the consensus
amongst the investor community that you speak to.
Speaker 4 (10:55):
What's interesting is in I always say, traders do what
they do.
Speaker 3 (10:58):
You have the kind of let's say, money market traders,
derivative traders who have leaned into aggressively price in that
the FED will cut rates maybe four times this year,
so a whole percentage point.
Speaker 4 (11:11):
So I don't know.
Speaker 3 (11:13):
I kind of think these traders have a way of
getting over their skis a little because Chairman Pal kind
of like an investor said to me, kind of through
cold water on that Friday. To your point of saying,
we're okay to wait, It's going to be interesting what
moves first, whether things get worse and the Fed sounds
like they may do something on rates, whether they're worried
about growth, et cetera, or if the market kind of
(11:35):
dials that back a little. Some of these traders are
pricing in, like, hey, the Fed, eventually this economy is
going to really creater, they'll have to come in. Let's
just talk about that side of the mandid. But inflation,
as we said, is also a concern. So I think
the market realizes they're in a sticky spot.
Speaker 5 (11:53):
As you know, I've covered various parts of the Treasure
Department for a while now together and you longer than
I have. The key thing to remember is that a
Treasure secretary in a moment of crisis often has to
take big, bold action. Former Treasure Secretary Hank Paulson from
the George W. Bush administration famously knelt before Nancy Pelosi
inside the White House for help to get relief passed
(12:16):
during the two thousand and eight financial crisis, and we've
seen similar actions from other secretaries subsequently doing things to
ultimately try to calm investors. Is this Beson's moment? Can
he do the same now?
Speaker 3 (12:31):
You know it. Did speak to an investor who kind
of brought up some of that precedents to me as well,
and said, they're really hoping that Scott Besson will push hard.
Whether we know it it's in the public sphere or not,
they're hoping Scott Besson is making clear to President Trump that,
you know, especially the treasury market, if things keep unraveling,
that there's risk that things sees up and it bleeds
(12:53):
into the economy. So I think that's what people say
to me, like, Okay, for now, he's not saying that much.
That's giving us com but we hope in the room
what we don't hear that he's really making clear how
important all this is. I mean, it's the kind of
thing that my mother who's old, will say, what is
going on? I saw on PBS News that the tenure
yield is at five percent. You know, it starts to
(13:14):
get the like regular person worried, and that's not good
for consumer confidence and in those types of things.
Speaker 1 (13:21):
Well, thank you so much, Liz. We really appreciate you
making sense of this crazy moment. For markets.
Speaker 2 (13:27):
Thanks for having me.
Speaker 1 (13:31):
This is The Big Take DC from Bloomberg News. I'm
Sarah Holder on Today with my co host Seleiah Mosen.
This episode was produced by Julia Press, with assistants from
Rachel Lewis Krisky, David Fox, and Alex Tie. It was
edited by Aaron Edwards and Boris Corby. It was factaxed
by Adriannatapia and mixed and sound designed by Alex Sugia.
(13:52):
Our senior producer is Naomi Shaven. Our senior editor is
Elizabeth Ponso. Our deputy executive producer is Julia Weaver. Our
executive producer sir is Nicole Beemster. Bor Sage Bauman is
Bloomberg's head of Podcasts. If you liked this episode, make
sure to subscribe and review The Big Take DC wherever
you listen to podcasts. It helps people find the show.
(14:13):
Thanks so much for listening. We'll be back tomorrow.
Hosts And Creators
Sarah Holder
Saleha Mohsin
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