00:13:17 · Tom Keene, Kristina Campmany, Paul Sweeney, Kristina Campmany, S6
[00:13:17] S3: Were you in college at Villanova with Jalen? [00:13:20] S0: I wish I could say I was. He's a number of years younger than me. But we have cheered him on. [00:13:26] S1: They're just over in Rome? Yes. [00:13:29] S0: Yes, they were. [00:13:29] S3: Did that work out? Did you go? [00:13:31] S0: We did not end up going. [00:13:32] S9: I was actually in Rome with a Villanova crew in May. But I feel like with the marathon and Halloween and the little kids, stayed stateside this time. [00:13:42] S3: We're dying on yield this morning. [00:13:44] S6: What an honor to go from Priya Misra to you, Ira Jersey, coming up. later with Tony Crescenzi as well. As I said, in this blur that we're all in, what will you write about or think about through the weekend on Yield? [00:13:58] S9: Well, it's interesting because we were even saying coming in today, like... It's payroll Friday. [00:14:03] S1: I completely forgot. [00:14:04] S9: And you're like, the market is most not focused on payrolls. And again, that's a big number. Those are big revisions. Even if you look at the three-month, I was looking, there are three-month moving average now for payrolls is 119. The six-month is only 73%. There's sort of like big gaps, but I don't think that's where the market's focused at all. I mean, it's been such a roller coaster week between elections and changes in oil prices and what's going on in the Middle East and obviously equity markets and AI. [00:14:33] S0: And it's just this confluence.
00:14:33 · Kristina Campmany, Kristina Campmany, Paul Sweeney
[00:14:33] S0: And it's just this confluence. [00:14:34] S9: Everyone's like, where are we and what is the driving path forward? And it feels like there's a lot of like fear and agita in the market for sure. [00:14:42] S1: How did the debt markets change? perform over the last few days? Because even during all this craziness, Meta came to market again with your bond offering. So, I mean, how's the bond market these days? [00:14:54] S0: We've actually, again, we sold off. [00:14:57] S9: I mean, it's been a drift to higher yields across the board across the curve across the globe all year. And we kind of got the peak five or six weeks ago. And for five or six weeks, we've retraced 40, 50 basis points kind of in every point across the curve. It feels a bit overdone. I think some of that was positioning. I think some of that, again, is this fear about AI. But I'm not sure that the underlying has changed so much. We also, I think, are still grappling with this Fed that's doesn't want to have forward guidance from the chair, but the rest of the committee is giving forward guidance, and we have very different messaging meeting to meeting. I think there are people out there that think there are real recession fears and this is the end of AI. [00:15:43] S0: We're a little skeptical of that. [00:15:44] S9: I think the base case is still that the Fed is going to go in December. [00:15:48] S0: And if you didn't get that. [00:15:49] S9: Communication ahead of the last inflation prints, you would have expected them to go in October as well.
00:15:49 · Kristina Campmany, Paul Sweeney, Tom Keene, Kristina Campmany
[00:15:49] S9: Communication ahead of the last inflation prints, you would have expected them to go in October as well. [00:15:58] S1: All right. So, again, the Fed probably is going to do what it does in markets pricing in certainly one for December, maybe one or two more for next year. But, again, I kind of go back to all the craziness this week about AI and about what it means for AI. Again, Meta just came out with this mega euro bond offering. So it kind of feels like the market. [00:16:18] S3: Did you buy it? [00:16:20] S9: We have been a bit cautious on some of the hyperscaler issuance, so we were not involved. But I think the market is also grappling with there are these massive CapEx numbers out to 27, 28, 29. [00:16:34] S0: And so I think. [00:16:35] S9: It's a question of does this blue sweep, does that change the speed of all of this buildup? [00:16:42] S0: Does it change that? [00:16:43] S3: I love that. It's about the speed. It's about the first and second derivatives. [00:16:47] S0: I think it is. [00:16:48] S9: I mean, we have had just exponential growth. And CapEx has been what has driven U.S. growth this year, right? That's not a deniable thing. It has been in the driver's seat. But I think people are still credit spreads have moved but are still tight by historical standards. I think People are being choosy and they know that because of this pipeline, there's a lot more to come. [00:17:15] S0: But I mean, deals are still being taken down for sure. [00:17:17] S3: Absolutely.
00:17:17 · Tom Keene, Paul Sweeney, Kristina Campmany, Kristina Campmany, Claudia Sahm, Stephanie Roth
[00:17:17] S3: Absolutely. [00:17:18] S1: Focus this week here was on U.S. domestic elections. You guys think globally. So what's your non-U.S. call these days? [00:17:27] S0: So I think FX is a little trickier. When we take a step back, we. [00:17:34] S9: Still are a bit more negative, the dollar. But that has been a bit challenging. You haven't had participation from Asia. I think that is, or dollar Asia. And I think you need to see dollar Asia resume lower. So the likes of the yen finally participating and strengthening. Corona coming back to the table. Some of those to see a broader FX rally, weaker dollar. [00:17:58] S5: Okay. [00:18:01] S9: And then globally, again, we still say we've rallied now 40, 50 basis points in the U.S. The rally has been driven by the– or has been led by the U.S. [00:18:10] S0: More than the rest of the world. [00:18:11] S9: So we do still think that there's value in some– we think Europe has probably more value. It's a kind of weaker underlying growth system. [00:18:20] S0: And– In EMs, too. I mean, Brazil, obviously. Was that only this week? [00:18:25] S10: I know. [00:18:25] S9: The second round election, maybe that was last week. [00:18:27] S0: I don't know. It's been a whirlwind. It's been nuts. October was a long month. [00:18:35] S3: Rob Waldner of Invesco wore a bow tie. Oh, yeah? I'm sorry. [00:18:41] S0: He had to match your style.
00:18:41 · Kristina Campmany, S6, Kristina Campmany, Tom Keene, Paul Sweeney
[00:18:41] S0: He had to match your style. [00:18:43] S6: It was amazing. Rob Waldner driving all the research at Invesco. So let's summarize this for mere mortals. I mean, you and Paul are like pro-discussion. In this uproar, if I have fear of missing out in the Kristina Campmany world, am I buying credit? That's a Paul Sweeney question. Am I extending duration? How do I express fear of missing out Because to me, what no one's looking for is price up, yield down. [00:19:13] S0: Yeah, so it's funny. [00:19:14] S9: Our latest big right on our whiteboard in the office says less FOMO. So we're not doing fear of missing out. But I think a global fixed income portfolio still makes sense. We don't have to just be concentrated in the U.S. We're coming off. 10, 15 years of U.S. exceptionalism, we still think there's a case for. Global fixed income. [00:19:35] S3: Can you buy French paper? [00:19:37] S0: Not before the election, no. There's no need. We need to be wise about our choices. I think, again. I love harassing her. [00:19:46] S3: Thank you, Cy, for that question. [00:19:48] S1: It was very rude. [00:19:49] S0: We have another. [00:19:49] S9: six months before the election in France. I think it will be noisy. Will there be opportunities to play? Yes. Are European government spreads exceptionally tight? Absolutely. [00:20:00] S3: So what that comment was is so Rob Waldner hears her say that, so she gets a junket. to Paris to do research, Bob. [00:20:10] S1: Post-election, absolutely. [00:20:11] S0: I'm heading to Atlanta next week. Don't get me in trouble.
00:20:11 · Kristina Campmany, Paul Sweeney, Tom Keene, Kristina Campmany, S6
[00:20:11] S0: I'm heading to Atlanta next week. Don't get me in trouble. [00:20:14] S1: Kristina, in your portfolio, how do you guard against... AI concentration here, because it's not just owning an Invesco bond or something, but boy, if you own a utility bond in Virginia, that might be. [00:20:26] S3: Yeah. Yeah. [00:20:27] S9: It really, again, I think it goes back to that has been the driving story and the driving force of the U S economy this year. So it has been, it's been utilities. It's been the chips. It's been the hyperscalers. It, It feeds into all of these things. We have been, and you guys know this from our conversations, a bit more cautious of our three levers, FX credit, foreign exchange credit, or rates. We've been the most cautious on credit just because of how historically. Tight we are. I think that still kind of remains our bias. I think- There's still not really a case that you need to extend out the curve to duration yet. [00:21:03] S6: One question from Stephanie Roth. People are like, let's get to Stephanie. I'm like, okay, I got one more to Kristina here this morning. I can't emphasize enough the hysteria around hedge funds, bonds. [00:21:16] S3: What is it? [00:21:16] S6: Coreweave? Yeah. [00:21:19] S3: It's like a 16%, 15% yield or whatever. [00:21:22] S6: How should our listeners and viewers separate the noise of AI garbage paper from the real world of capturing a coupon? Look, I think.