Losing to 84. 29, the main thing keeping yields at this elevated level is that concern that the fed will keep rates for higher for longer. My gut is the fed raises one more time. Why not, it is built into the market and the question is how quickly think can they cut and it certainly will not happen before the second half of next year. My fear is that this ticks around for longer than the market expects that this ticks around for longer than the market expects. Matt Abigail Doolittle has more on this unprecedented rise in bond yields. Abigail it is incredible and the idea that we can see more mark for more height from the fed, i wouldnt be surprised if there is more than that and the question for cutting, i dont see how that comes into play given the fact that the fed has not talked about that as all. At all. Taking a look at yields, look at that huge backup. This is a big upside down world between the two year and the other parts of the curve. That two year yield above 5 and really paving the way for the rest of the curve to go higher and we have had some big names talking about the idea that the 10 year yield is going to go back 5 and some people have been floating double digit numbers, on a tactical chart perspective technical chart perspective, i cannot get to a doubledigit but you can get to 9 quickly. This backup is extraordinary. This is probably one of the few times, if the only time in history, that you can say the year yield. This is the two year yield and the backup is 2. 59 . A narrow spread and it shows you how tight things were coming out of the pandemic and now with the fed hiking, hiking, hiking,e have a massive move in yields. As what this means for credit and junk credit and bonds hit to some degree and if we take a look at jnk, on the year, it is down slightly but you can see this trend is broken and just suggesting this trend could come. Over the last two years, we are down 20 so that junk bond market is in the bill very gilt market it is in the bear market. There is all kindsf ideas and the fed is the main one but there are other things to take a look at including the yen, as it goes lower, the bloomberg dollar index, you can see the spread, this is yen weakness, people borrow it and they turn it into other assets. You cant see gdp is lot. It is really highyield, it is the only place that you see any gains year to date, whether it is global highyield, whether it is european highyield or u. S. Corporate highyield, nowhere else other than chinese aggregates do you see gains year to date. Bloombergs allocate bloombergs Abigail Doolittle. Thank you. Liz mccormick joins us now on this run up any we have seen and this runup in yields we have seen. They continue to get higher and higher. What do you think is going on, the bond vigilante is back . I was saying to someone earlier, lets not use that title because it brings its own issues sometimes but i would say in the sense that the Bond Investors are saying, we, and some conversation and there is too much risk especially in the long end of the treasury market to park our money with you if you dont get more yield, compensation. That comes from a lot of what abigail said, they will labor market remains strong. Adp wish was off today and we have a plethora bond supply from the u. S. Government that has darted to pick up and will continue to pick up well into next year and we have the deficit in the fed getting out of the Bond Building business. I heard ray dalio on tv with you saying inflation will stay sticky around 3. 5 and that adds to you when a higher yield at the long end of the market and it is coming together. Matt do you have any sense that some of this at least is driven by the fact that we are looking at 1. 5 trillion deficits . Clearly, congress is in no place to do anything about that. We are looking at a 33 trillion debt marching a lot quicker than anyone expected to maybe 50 trillion by the end of the decade . That is terrifying. Do bond markets think in these big picture terms . Liz i think so. In years past, maybe i had been the one writing about deficits and people say chill out but now i think the dynamics have changed. The trajectory is top troublesome plus, we have talked about the issue, usually you get such deficit situation in a recession and the government is trying to help us get out that and now we do have growth. It is snowing but we have growth and we had the speaker of the house ousted. We got a temporary deal so we did not have a government shutdown. There is nothing on the radar from washington politicians right now for cuts and in spending, raises in taxes. The fed breaking their policy rate to 822 year high, 2a22 your hide, to a 22 year high. They have to pay up more and more to service the debt so i think the treasury Market Investors globally have taken notice and you brought up the boj, rates are brought have gotten higher. There are better options. Matt thanks so much for joining us, Liz Mccormick talking to us about the right situation and lets bring in Wells Fargo Bank macro strategist eric nelson to talk about his take on this. What do you think is behind the drive higher and can yields go higher from here . Erik you have to keep in mind the move is almost entirely in real yields so it is not necessarily sticky and traced inflation where people want to get protected from the move, we are seeing the opposite. There are couple things going on. Part of the issue, we broke key technical levels, we are in this sea of unknown levels. What is the right price for rstar . No one has a great idea and another problem is talking to investors, a lot of them are happy to miss the first 1520 basis points of rally. Of a rally as opposed to getting caught up and catching the following knife. We havent had that catalyst yet. It could be the jobs number friday, certainly possible in adp is not a great signal one way or the other in terms of its reliability so i think we will have to wait for that number. Matt if you get a strong jobs number and continue to see this low unemployment, erik, i think that is more i mission for the fed to raise rates and it has already been priced in the market, you do you expect it to go in november . Erik the key message from powells last press conference was the use of the work carefully, which was used around 15 times. The notion that the fed wants to see above trend growth, to actually keep, i am not sure they will see that and if you see a 250 number on jobs, that probably calls for a hike but there is enough for a lack of ace a consensus that 175 wont drive a fed hike especially if the employment rate keeps taking ticking off. Matt how much do you think this bond market selloff is a reaction to spending that looks out of control . You can kind of understand running 3 trillion deficits during the pandemic. We cut it down to 1. 4 choi in dollars last year 1. 4 choi in dollars last year 1. 4 trillion last year. Erik what is funny about this narrative and this move, me and others have been making this argument, we are watching for risk premia, turn premia. We had a regime shift in inflation and deficits. All these horses have been in place for a wild and for whatever races all these deficits have been in place for a while and for whatever reason we have seen a complete opposite, hard to know exactly why it flipped but i do think that all these forces are in place and we are still bullish on bonds. We think at these levels you should want to be scaling in to both tips and two normals. To nominals. It is difficult to sit here and go all in when we are in limbo from a technical perspective but we are bullish on u. S. Fixed income. Matt thanks so much for joining us, Wells Fargo Bank macro factors eric nelson talking to us about the runup in yields and we are awaiting President Biden who is set to discuss his plan to cancel more than 9 billion in student debt loans. He will discuss the ousting of Kevin Mccarthy as this weaker of the house and we will discuss the state of d. C. Aswell as our next guest. This is bloomberg. Matt this is member market and i am mat iller and we are still awaiting President Biden and he is going to nunce his plan 9 billion in student debt loans. He made discuss the ouster of Kevin Mccarthy as speaker of the house. We will start with that, eight republicans voted to throw out mccarthy and all of the democrats voted to throw him out and it looks like the democrats are punishing Kevin Mccarthy for being bipartisan and receiving reaching across the aisle and making a deal and they know they will get someone in his place who will not make a deal. The government will be shut down next time . You said it well. There is something to be said. There is no clarity as to who will be the next speaker of the house and we know that the majority leader Steve Scalise will run and we know jim jordan will run. It will take some time and there will probably be a number of lengthy votes that we have to live through but most importantly for me and our clients, it is hard to believe that they will use this time wisely to advance all of the spending bills they want to advance a we can finally get to the negotiating table and craft a deal to fund the government behind the november 17 deadline and that is the deadline we should care about because without a deal before then, the governmenwill shut down and we know what happens. Matt is there any hope that there will be an adult in the room that will slow down what has to be described as one way spending at the federal level here because the only people who seem to be able to do anything about it, which shutdown the government and listen and lets listen to President Biden. Pres. Biden i will be very brief. The house, will now organize and select a new speaker and i know it will take time but i will remind everyone, we have a lot of work to do and the American People expect us to get it done and the argument we reached was about what comes next. We had an agreement over the weekend. Funds for government another 40 days and we cannot and should not be faced with the 11th hour decision with brinksmanship that threatens to shut down the government. We know what we have to do and we have to get it done in a timely fashion and we need to change the poisonous atmosphere in washington. We have strong disagreements but we need to stop seeing each other as enemies and we need to talk and listen to one another. We can do that. I have joined with the minority were were talking minority leader hakeem jeffries. We are prepared to do it as well. For the good of the American People and twice in the last six months, both houses came together on a bipartisan basis. Once to while we should never have been in that situation in the first place, i am grateful that leaders on both sides came together including former Speaker Mccarthy to do the right thing and turning to Student Debt Relief. When i ran for president , i vowed to stakes fix our broken Student Loan Program because while a College Degree is the ticket to be better life, that ticket has become expensive. Americans have been saddled with unsustainable debt. Since my administration as quickly as possible, that starts with making sure the existing system works. And the way it was supposed to work or student borrowers work for student borrowers, we fix what was called the Public ServiceLoan Forgiveness Program which was designed to make school teachers, firefighters and over and other Public Service can get there other Public Servants can get Student Loans paid. That program had been in place for nearly 15 years and because o red tape, only 7000 borrowers had been helped. Today, thanks to reforms, more than 700,000 borrowers have their debts forgiven. I spoke with tonya and chad, a married couple in their 50s who worked in public high schools in milwaukee for years they paid 800 a month toward their Student Loans and that meant they cannot put any money away for retirement and things to fix his we may for the Debt Relief Program for people in Public Service, the remaining balance of forgiven. Tonya said, the amount of relief this gives us is endocrine is indescribable. They can finally save us save for retirement. If you have an undergraduate loan, after 20 years of straight paying, whatever is left in your loan is forgiven after 20 years. Because of administrative failures, some people who did pay their loans for 20 years or more did not get the debt relief they arent. Earned. We fixed that and make sure they get every single my administration has approved an additional 9 billion of relief for 120,000 in that program 41 20,000 borrowers and eight relief for 120,000 borrowers in that program. This relief is lifechanging for individuals and their families. It is good for the economy, by frame americans from the burden of student debts, they can get their lives in order. This matters and matters for daily lives. The latest progress builds on other steps we have taken. We made the largest increase in pell grants over the last decae, helping students and families making less than 60,000 a year get to college. Before i took office, student borrowers had paid no more than 10 of their Discretionary Income on a monthly basis if they wanted to do it that way. Under my administrations plan, which was called safe plan, it reduced it to 5 for undergraduate borrowers. It is the most generous repayment program. Ever. One no one will have to pay more than 5 under their Discretionary Income to repay their loans. You can sign up for the safe plan at studentaid. Gov save. Remember, if you keep up your payments after 20 years, whatever is left of those loans is forgiven. We are still not been. Last year, i announced a major proposal for Student Debt Relief. We are on the verge of providing more than 40 million americans from ripple lease from the student debt and the money was literally about to go out the door but republican elected official stepped up and sued us and the Supreme Court sided with them. That was about to change your lives and i said at the time, i believe the courts decision to strike down the student Debt Relief Program is wrong but i promised i would not give up and since then, my magician has been pursuing a different approach, the Higher Education act. This satellite dish this act allows the secretary of education to compromise and waive and release loans. They identify specific challenges that borrowers face in the Current System so we can move forward with a new rule to address the changes. For many borrowers who made payments for many years, because of interest, they are more than they originally borrowed. My administration is doing everything it can to deliver Student Debt Relief to as many as we can as fast as we can this is in contrast to House Republicans to help block the previous debt relief plan annually shutdown the government over the extreme demands, plan and help to shut down the government over the extreme plants the mens the extreme demands. It was designed to help Business Owners who lost money which is legitimate, because of the pandemic. Members of congress got ov hundreds of thousands of dollars in order because they lost their businesses lost money. It was a worthy program. Some of the same elected republicans and members of congress were strongly opposed giving relief to students, and gave hundreds of thousands of dollars for themselves to keep their businesses owner open. The hypocrisy of this i find stunning and i supported that program and i support the student debt program. My administration will continue to use every tool at our next disposal to help ease student debt. So americans can freely achieve their dreams. It is good for the economy and country and it will change their lives. Thank you very much. Mr. President. Speaker mccarthy said the two you of you havent spoken directly at a longtime. Why is that . Pres. Biden we had two agreements. I assumed he was working i knew he was working with the democrats in the house and senate. It was not for me if you want to talk to me, i am available. The idea that i was going to somehow convince mccarthy to change his view was not reasonable. Does the disarray of capitol ll affect your where you bet you wont deliver at eight that the u. S. Promised to ukraine . It does not worry me and i know there are majority of people in the house and senate who have said they support funding ukraine. I will be announcing a major speech i will make on the issue and why it is important fote United States and our allies to keep our commitment. Are you concerned about the rest of your domestic Foreign Policy initiatives bei n peril because of what we saw yesterday, the dysfunction and chaos in congress on the house i does that concern you on the house side, does that concern you . The dysfunction always concerns me and the programs we argued over, we passed bipartisanly. I am not concerned that they will try to undo them although there will be some, i am sure. There are half a dozen or more of extreme maga republicans who oud like to eliminate almost everything i have done but i dont think it will get there. If i may, with additional withoutaitional funding, how long will the u. S. Be able to support you. Support ukraine . You can support ukraine in the next there are other means way where we may be able to find funding for that but i will not get into that now. Have you promised president zelenskyy during his visit in the white house that you would provide the