00:00 Speaker A
for more on today’s action, let’s welcome now John Velis, BNY Melon FX and Global Macro Strategist, and he’s joined, of course, by Simeon Hayman, ProShares Global Investment Strategist as well. Welcome both of you guys to the show. John, I’ll start with you. No, as Jared was saying, he described this as sort of a a reprieve, I think he said the market’s taken. Look at, you know, the broad gauge is down about two tenths of a percent. 10-year held steady, John, at four, three, three. Just looking at the dollar, it was firmer. The VIX has tumbled. What do you make of what you’re seeing?
00:41 John Velis
Pretty much a holding pattern today. We haven’t had a lot of news. There was the news about the Chinese Boeing orders as we came in in the morning, but that seemed to have been fully incorporated in the opening price. So, really not much. What we’re looking at is treasury yields and they’ve they’ve held in pretty well this time. And that’s encouraging. Um, so I think it’s we’re waiting for the next shoe to drop, and this is a headline-driven market, and today was sort of absent of headlines.
01:08 Speaker A
What, when you tell your clients, do you try to gauge out what comes next? Do you feel like you can say with any certainty what comes next?
01:15 John Velis
Oh, no. We’re we’re in the preparedness business, not the prediction business these days. And, you know, lots of things can happen sort of out of the blue, um, or, you know, via a tweet or via a Truth Social post or via a quote or something that happens overnight in Asia. So, um, what we’re really looking at is treasury yields staying in. We don’t want to see them get get unanchored and get away from them. And, of course, one thing that probably was overlooked, but I referred to yesterday, the New York Fed 10-year inflation expectations didn’t go up particularly very much, which is a contrast to what we saw in the University of Michigan data. And that’s really important for the Fed. We’ve got Chair Powell tomorrow. Is he going to talk about the need to keep those expectations anchored and therefore kind of give a slightly hawkish tone to his remarks? And I think we’ll all be waiting for 1:30 for that.
02:12 Speaker A
I know you’re not in the prediction business, John, but I’m going to ask you to make a prediction. The 10-year, you see what ahead? Range-bound, or or what are you telling clients?
02:22 John Velis
Yeah, we see it range-bound. I mean, we still have a lot of fiscal issues to get through, and that’s, you talked about it earlier in the lead into the to the program, and I think that’s one of the things that’s on our mind. We have data that no one else has. We’re the largest custodian in the world. We have 52 trillion dollars of assets under custody. We can see every day the flows in and out of the treasury market, and we’ve seen foreigners selling in the last five of the last seven days, really since April 3rd, which was a big buy day after Liberation Day was announced. There was a risk-off move and safe haven buying. We’ve seen foreign investors, cross-border investors selling out of treasuries. So we’re a little concerned that the yields won’t go down further from here, and if we get continued and even accelerating cross-border selling, then we’re worried that yields could go higher. But we’re not really predicting that. We’re just watching the data and taking a cue from that.