It is office highs, but still a. 5 . Not too Much Movement in the dollar index. Just a little weaker before the fomc today. He 10year yield lets get a deeper dive into the market action. Standing by we have k. D. Lang. Katie playing. Hase dollar weakness become a proxy for risk appetite. It is once again weakening signals it is not entirely a risk off day. We are seeing it in equities. Even if crude is office to touch. On the subject of the fed and yields, something the market is paying close attention to for that decision in about an hours commentary on yield curve control. There has been a dramatic steepening of the curve in recent weeks. We have seen some flattening coming in. We are sitting at 115 basis points, the steepest it has been in about three years. We will see if the fed does anything to change that narrative. It is tech that is outperforming at the moment. The s p 500 Information Technology sector is higher for the fourth day in a row, up 5 over that time period even though the broader s p has fallen in the last two sessions. Even tesla, propelling the nasdaq 100. That stock is trading about 1000 for the First Time Ever on optimism about semitruck production. I want to talk about some laggards. That is travel. Investors have been pouring into travel stocks recently. What led them to the incredible rally we have seen. They are continuing to come off. Touations are beginning stretch and it cannot be maintained for much longer. About half of the 10 worst performers of the s p 500 today are travel stock. Thank you for that comprehensive you. The fomc decision is just under an hour. The fed is likely to project to raise rates only can 2022 at the very earliest. We will get the first economic forecast. That is probably the more interesting part of todays meeting. The forecast will be the first since before the coronavirus. Lets go to Tiffany Wilding for more on what to expect. Tiffany, lets get the yield curve control question of the way. Askedalmost likely to be afterwards about it. Globally say well he said . What will he say . Tiffany the fed will likely not announce a yield curve targeting type of regime today. We think there is a high likelihood they do moving forward. The reason is ultimately the fed wants to keep financial conditions easy. A way to do that is depend down yields. We think it will focus on the front end of the curve. The will look to go out to two to three year sector to implement that policy. Is to keep financial conditions easy. One reason by they probably will not do it is because they are looking for more certainty around the forecast, which they are hoping to get in september. I think there are details i have not worked out yet. Yield curve control inherently is better for datebased forward guidance. I will not list rates until a certain date. I think the fed would not prefer to do that. They would link it to inflation or an implement rate outcomes. They are trying to figure out how do we effectively communicate yield curve targeting but also linking into our forecast . As they start to figure out those communication details, that is when they are mark konta both with announcing it. That is what that is when they are more comfortable with announcing it. Vonnie how do they bring that back now . Are we any clearer on what is going to happen . Tiffany i think we are. We have all been watching the higher frequency data we can get our hands on. This is dated we could get on a weekly or daily basis. It is suggesting we entered in february or after february and march. We probably emerged from the recession. The highfrequency suggested in may things were bottoming and recovering a bit. I think that will make the fed feel more comfortable. We can get for good measure of how far of a decline we get in the economy. Now the question is how much of the recovery will begin moving forward. Kiss enough for the fed to feel more comfortable putting out there forecast. One of the more interesting things will be everybody is focused on the right path forecast. We think they are on hold throughout the forecast horizon. They will be hiking beyond 2022. Ot will also be important. There will be some views from the fed that longerterm scars from the crisis will impact growth and Interest Rates over the long run. Dot come downha as well. Vonnie based on what news you have been saying and easing financial conditions, he points out its been 75 trading days since financial conditions turned restrictive in the financial channel has been prepared repaired. Do you agree with that . Tiffany i do. One question i get frequently is our forecast for growth the contract this year. We think it will be down a little over 6 this year. The equity market and broader financial conditions have recovered quite quickly. People ask me is that a disconnect between the forecast. I dont think it is paradoxically. What happened is the fed has done a very good job at reacting to the crisis happening in markets in midmarch and soothing the crisis. The fed wants to try to get financial conditions as easy as it feasibly can to improve the growth outlook. If you really think about equities and broader markets as a tool the fed is trying to use to improve the outlook, it makes complete sense we are where we are. The fed wants to maintain easier financial conditions. Maybe they want them easier because we are back to where we were precrisis. There has been a big shock. David i want to ask vonnie i went to ask about inflation. Ors areor invest worried about inflation possibly down the line. At 2023. Looking 2025 potentially. What is the pimco view on inflation . The data this morning showing deflation, but that will not last. Think the longerterm risks on inflation, both have increased. I think there are certain some risk of upside inflation. I think upside inflation comes if you have fiscal dominance of monetary policy. It is not about the fiscal stimulus we implemented when the economy needs it, when we are filling a whole. When wes congress do are back to more normal conditions and does the fed accommodate that . If you have continued accommodation, we can have higher inflationary outcomes. That is a risk. I think there is another more sinister issue at play here. That is that this crisis, although the recession will be relatively quick compared to the last recession, this crisis will probably have some longerterm scars. We think it will exacerbate trends towards income inequality, towards the savings glut, towards large firm dominance. All those things have been linked to lower productivity growth and lower real neutral Interest Rates. All that is to say it is going to be more difficult for the fed to ease or provide the accommodation the economy needs if there is another negative shock. That will make it even harder for the fed to reach its longterm inflation target over the mediumterm. That is the big Downside Risk here. We would save those risks have increased on both sides of the distribution. Vonnie thank you so much for your time today. 50 minutes left before the fomc decision. Tiffany wilding of pimco. Lets get to the first word news with mark compton. Floyds brother told the house panel he is tired of the pain. He testified before the House Judiciary Committee as lawmakers consider legislation to change policing practices in the United States. Mr. Floyd called on lawmakers to make it stop and make sure his brothers killing lisa positive change. The Republican National committee may move part of its august convention to jacksonville, florida. The rnc has not been able to reach an agreement with the city of charlotte, North Carolina over the scope of safety precautions. North Carolina Governor Roy Cooper says his state could not agree to demands for a full Convention Due to social distancing requirements. President trump tweeted, force the gop to find a new location. He definitelysays needs fiscal stimulus to rebound from the coronavirus pandemic. Speaking before the Senate Small Business and entrepreneurship committee, secretary mnuchin said the next package needs to be targeted at industries and Small Businesses having the most difficulty reopening. President trump said he will ask congress to pass more economic stimulus, including a payroll tax cut. The oecd warns the Global Economy will slump six a. 6 this year because of coronavirus. If there is a second wave, it could fall 7. 6 . They warned withdrawing support for businesses and workers now could make the economic and social damage even worse. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Vonnie this is bloomberg markets. Simon Property Group terminated is 3. 6 billion bid to buy tom and centers. They said they did not mitigate the fallout from the pandemic. Long bring in natalie whos been following the story since it broke this morning. Mergerhuge verdure that will go away. Does simon have the right to do this . Natalie this is a really big development. Simon right now is going to the courts to see if the courts will declare taubman made some decisions or acted in a way that was ok for simon to back away from the deal. The way the deal is now is they dont have a clear outlet or termination fee to back out. Given all the dynamics we have seen with retailers and covid impacting sales and mall owners across the country, the price he agreed on in february is a lot sharesthan what taubman are trading at these days. This is a last resort for simon to go to the court to see if this is a way out. Whether or not the courts will agree with their arguments remains to be seen. Many analysts i have spoken to alieve this is actually tactic by simon to try to get taubman to renegotiate the price of the deal as another way to move forward. All that remains to be seen as to whether or not the arguments will be validated by the courts. David 39 . E taubman down an did not makem cuts in expenditures when the pandemic hit. Will say we don not want to do this without simons permission. Without be a defense . Do you know what that defense would be . Natalie i dont have clarity for what the defense would be. One analyst said it is likely taubman will file for the courts to immediately get simon to continue one with what they had agreed upon. Simon is arguing that taubman failed tax properly and the feltmic and materially losses way more than any of its peers. Its a hard argument to prove. I dont think it is clear whether or not there are facts behind the argument. Bman did instances tau not announce a headcount or Employee Salary deductions. Small cuts to their operating expenditures. These are all things i think most of us in the public are not aware of yet. Taubman did not report due to all these confidential negotiations happening over the past few months. Vonnie thanks to natalie wong. Taubman down 31 since the beginning of march. As new jersey begins to areening, Community Banks preparing to baltimore borrowers. The chairman with and ceo of ocean bridge initial in new jersey. Financial in new jersey. This is bloomberg. Vonnie this is bloomberg markets. Governor phil murphy lifting stayathome orders this week, opening more of the garden state. It should be welcome news for nextest guest guest. At 1. 6 billion exposure because of coronavirus. Christopher, thank you for joining. Exposure isllion in a little concerning at the beginning of a pandemic. How do you feel the bank is exposed now and what is the most challenging part of that exposure . Istopher underreported when we reported those numbers in march it was too industries we thought would have the most exposure and the most sensitivity to what is going on with the pandemic. The actual number of borrowers has been lower. That is certainly a welcome news. It is nice to see the Public Health crisis is moving along and getting better. We are starting to see the reopening. The reopening is stronger than we would have anticipated. People what do you mean are able to pay back the loans faster . Christopher we have seen a couple of things. We track our debit card spends. Are they spending money every day . During the death of the pandemic their spending was off on a dollar basis about 18 . They are now spending on a dollar basis more than that they were spending precovid, great news to see the consumer back and spending. In terms of loan repayments, we were early to the market and one of the first to offer forbearance programs to customers. The first customers had that 90day mark, our initial forbearance period. The consumer loans are ahead of the commercial loans. The consumer basis, we have almost 50 of those loans coming off a deferral and going straight back into repayment terms. That is great to see. David vonnie what will people be doing with commercial loans outstanding they cannot repay and are getting any relief from insurance policies or elsewhere. Christopher you cant get blood from a stone. You have to work with your clients and be supportive. That is why we went into this forbearance methodology. We continue to work with them. We are eager to see businesses reopen and understand how the cash flows may have changed. We have a variety of tools available. In some cases we can recast the loan or extend the forbearance period. Restaurants are just starting to reopening suite. We need to give them time. We had a parallel experience with hurricane sandy. We offered a lot of forbearance. The vast majority of strong borrowers came back and able to pay. And that crisis are forbearance loans had net charge of just 1. 2 . That is quite low. Mortgage applications showed an increase of 9. 3 after several down readings. What do you anticipate in terms of real estate loans . Christopher we are seeing two worlds. We operate in the open markets in new york and philadelphia. We operate in suburban markets throughout new jersey. In the suburban markets the Residential Real Estate markets are on fire. Stronger than we have seen in years. It is based on a lack of inventory. Most counties inventories are down 35 . I think for a variety of reasons people are making decisions for the wenches rates but also the availability of homes and making different life choices. We are youre on your comps running 10 to 50 higher in terms of price. We are seeing bidding wars like we have not seen in years on top of your properties. The Housing Market is very strong right now. Whether that will keep up will depend on how the next few months play out. Vonnie there was a lot of speculation the regionals would survive or be gobbled up. What is your thinking on regional banking space . Christopher i would say the sector is extorted nearly strong. Capital levels are very high. Banks areajority of left in a good position to weather the storm. Weathering the storm, the same pressures that were around before the storm are going to be accelerated. That is a move to digital, to technology across the board, compliance, efficiency. The Interest Rate environment is punishing for banks right now. Those pressures will contribute to accelerated m a activity. But not yet. We need to get to the forbearance periods, understand how portfolios perform. Whether it is like this year or throughout 2021 you will see a strong m a marketing Community Banks and regional banks. Vonnie thank you so much for the update and best of luck to the state of new jersey and everywhere you do business. Thanks to christopher maher. Christopher good to see you. Vonnie coming up, the latest on the feds emergency lending facilities. Oxfords chiefth u. S. Economic economist. We are counting down to the next fomc decision will be expect a few data. The market really waiting for that, and some questions on things like the yield curve control. This is bloomberg. Mark i am mark crumpton. The police chief of minneapoliss promising reform after the death of george floyd. She said today the department will withdraw from Police Union Contract talks. The contract needs to be restructured to provide more transparency and flexibility. The review will look at matters such as Critical Incident protocols, use of force, and disciplinary protocols. In florida, the number of new coronavirus cases continues to climb. State Health Officials reported more than 67,000 cases in total, up more than 2 from a day earlier. Within 2700 floridians have died. The state begin a phase reopening on may 4. China is offering workers at some state run companies the option to begin ocular do with two vaccines currently being developed. Bloomberg learned employees intending to travel overseas for work can volunteer to be vaccinated. The shots are being developed by China National biotec group, cn farm subsidiary of sino group. Of eu cable signs copper mice to reach a pretrade agreement. He says u. K. Will crash out of the european Single Market on january 1 unless the British Government scales back opposition to key eu demands. Those include the blocks insistence that any deal included fishing rights, fair competition, and dispute settlement. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Vonnie from bloomberg World Headquarters in new york, i am vonnie quinn. We are just under 30 minutes from the fomc Rate Decision. We will speak with kathy and the cohead of global bonds. Lets get a quick look at the markets now. Today. Much movement the s p erasing its decline. Still down about 20 . The nasdaq is still down by about. 2 . The thing is doing well today. Its a knife in your yield the dollar index weakening more. Adjusting the feds emergency lending facilities front and center of todays press conference, and questions on yield curve control and more, and u. S. Lawmakers in the business facility to the Federal Reserve to expand its main