We have seen some push pull here. Some of that weakness still russellg with the was 2000. 8 . 10year yields continuing to rise. Breaking out of what was earlier 82month trading range between 54 and 78 basis points. Now, incredible the break and we have seen the last two days. Further weakness in the bloomberg dollar index. We are back to weakness that we have not seen since march 11. You wonder how much of that is the feds continued stimulus into the markets. I want to talk about the data that make up this morning. U. S. Jobless data showed continuing claims failed to decline again and instead rose above the forecast of 20 million, to 21. 5 million. The market is reacting to the news as a cast doubt on the hopes of a strong economic rebound. For more, we are joined by nela richardson, edward jones senior strategist. This is one of the first times for the market that it is reacting to the poor Economic Data. Been in your opinion, has driving the weakness of today after what has been a significant rally the last few days . Nela hi, taylor. Great to be with you. I think the market has bucketed data into tw all caps, temporary and permanent. As we see jobless claims spike to unprecedented levels, they still remain in terms of the market you in that temporary bucket. As the economy is expected to recover in the second half of the year, many of those workers are likely to be hired or find new jobs. A shift in that bucket from temporary to permanent changes the market view on the data quite significantly. Losses persist past what the market is currently anticipating, that could throw some cold water on the rally. On the longerterm view that this is a quick bounceback from what will be a terrible second quarter, in terms of the Economic Data. Taylor given the backdrop of the Economic Data we are seeing, are we in a new bull market, or are we in a really big bear market rally . Nela that is the key question. Where does one start, where does . Ne end i think that will be driven over the next few weeks by more information on the outlook for the economy and for corporate earnings. I think there are some big blind spots in the rally right now, one of them being corporate earnings. Many of these firms have withdrawn their guidance for 2020. We expect pullbacks in the midst of this rally. Investors should prepare because there is so much uncertainty going into the second half of the year, particularly if there is a second wave of infections. A lot still to be determined whether this rally we have seen, which is incredible, persists well into the second half of the year. Taylor what has also been incredible is part of the rotation we have seen the past few days, despite the pullback today, out of growth, back into value. We saw that in financials yesterday. Today, we are seeing that again today. See that trend continuing, is that something that you are looking at, that momentum trade, the shift that we are seeing . Nela the last two weeks, we have been heartened by the broadening of the rally. This was started by a handful of , teflon stocks in terms of their immunity to the covid lockdown. The more we can get out of that market concentration and broaden financials,trials, maybe even into cyclicals, that is going to be a very good read in terms of the sustainability of the rally. I think it is still too early to tell. We are going to see that play out. If we reopen as expect it, if the underlying risk in the economy, the pandemic, if we continue to see laura cases. Taylor you have a background as an economist. I want to fold that in here as well. Are you surprised at the strength of the housing market, some of the housing data we have gotten this week . Nela i am actually not. If anything, on a personal level, people understand the value of a home. Many of us are working from home. Crises,seen in other natural disasters, housing emerges pretty strongly. Housing has nela. i lost i think we are having some connectivity issues. You thes, thanks to richardson of edward jones. I want to get an update on what else is making news in the business world. For that, we go to Mark Crumpton. Straightwas the ninth night of protests over the death of george floyd, an africanamerican man killed while in Police Custody in minneapolis. Most of the events were peaceful. Mayors and governors are largely per missing dismissing President Trumps calls for an increased police response. Today in minneapolis, there will be the first of a series of memorials honoring mr. Floyd. The centers for Disease Control and prevention is developing a check for seasonal influenza and covid19 infections at the same time. The illnesses have similar symptoms. Say the testals would be helpful during flu season to determine whether patients are contracting the seasonal flu or if there is a new wave of coronavirus infections. New york city may be able to reopen Outdoor Dining next month. Mayor de blasio is preparing for reopening phase one and anticipates reaching phase two in july. He said today restaurants are a key part of new york citys economy. Olympic officials are trying to figure out what next summers games will look like in the wake of the pandemic. According to local reports, japan is considering various options to scale back the olympics, including limiting spectators and reducing the size of ceremonies. Thepandemic forced postponement of the gains from this year to 2021. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs. The ecb intensifying its response of the coronavirus by increasing its Bond Purchasing Program and extending it until june of 2021. Speaking following that decision, president Christine Lagarde weighed in on the balance of risks to the downside. The latest Economic Indicators and survey results confirm a sharp retraction of the euro area economy and rapidly deteriorating labor market conditions. Information from surveys, highfrequency indicators, and incoming hard data all point to a further significant contraction of real gdp in the second quarter. On the basis of current and headlineices for oil, inflation is likely to decline somewhat further over the coming months, and to remain subdued until the end of the year. It was necessary to increase the size. I can assure you there was unanimous view in the governing council that action had to be taken in the face of the inflation outlook and given our mandate of price stability, action had to be taken. Want to go to scarlet fu to contextualize the ecbs surprise move. Are you surprised by the magnitude of moves you are seeing in some of those peripheral bond yields . Scarlet it did with the ecb intended. Certainly bigger than the consensus estimate. Low as 250ates of as billion euros. The reason the ecb went so big it is because the outlook is so grim. The central bank lowered its forecast for growth and inflation. There is a need to fight disinflation rather than inflation. They have room in their Balance Sheet compared to other central banks. In 2008, they is, were not aggressive enough. Perhaps they learned your lesson their lesson. You mentioned the bond yields in italy and greece, they did come down. We also saw euro you raise its early loss and extend its rally to an eighth straight day, now around 4 since may 25. A little bit counterintuitive that expanding qe would give the euro a boost because that is usually a negative currency move. European stocks are getting a tailwind from the idea that fiscal policy makers are starting to step up. We saw that in germany with Angela Merkel getting the government to agree to a stimulus package. France is moving as well. This massive 750 billion euro stimulus plan as well that has not yet been agreed to, but in principle, sounds like it is moving in the right direction. The ecb is watching the euro carefully. Strengthen,ues to watch for Christine Lagarde to take a page out of Mario Draghis book and jawbone the euro lower. Taylor you will be leading our euro coverage a. We are getting a lot of comments about yield curve control. What are we waiting to hear about that . The fed already has nine lending programs that it introduced to fend off the pandemic affects on the economy. You can argue it does not need to launch any more programs at the moment. Financial conditions have made a vshaped recovery for the most part. Been clear about not going to negative Interest Rates. But the Federal Reserve is thinking ahead, and it is never too early to start debating the merits of perhaps new measures. Yield curve control is appealing. Instead of setting the target for the overnight lending rate, and letting the market set the rest, the fed would target a longterm rate, thereby keeping rates lowered to stimulate the economy, support businesses and consumers. In world war ii, the federal spente did just this, and not as money as it could have. Then already went down course of negative Interest Rates and is now doing yield curve control. The fed would probably target , ratheror fiveyear than what japan does, the 10year. According to bank of america, the fed will likely wait for the balance of the economy to reopen, so investors can digest that. Investors want to see yields, more significantly before they embark on any kind of yield curve control. Taylor make sure to tune into that coverage next wednesday. Coming up next, we will have more on possible yield control action out of the fed with john silvia, dynamic Economic Strategy founder. Taylor this is bloomberg markets. Im taylor riggs. Lets get to kailey leinz with a market update. Red,y stocks are in the the s p 500 is lower for the first day in five. 6 ,asdaq 100 is lower by even though it touched a record high intraday earlier in the session. Investors pressing pause after so far, so fast. They dont seem to be totally giving up on that recovery narrative. You are seeing a continued cyclical tilt to the equity market. The financials are higher today, industrials. They are posting gains even with the Broader Market in the red. One Industry Group that is outperforming today, that is airlines. Among the top performers in the s p 500. American airlines higher by 25 today. The company is lifting its on ans for july by 74 earlier than expected pick up on demand. By doublefting peers digits as well. I want to mention the dollar. It is weaker for a sixth day in a row. That is the worst losing streak for the bloomberg dollar spot index since september of 2017. Investors seem to be looking at an economic recovery means demand for the greenback has fallen off a cliff. The saying goes for treasuries. If we look at yields, the 10year yield is higher for a fourth day in a row. Now at its highest since march 26, at 81 basis points. Day for pretty much every asset class. Taylor that is a cross asset check if i have ever seen one. Thank you. Federal reserve officials are unlikely to signal any new moves enabl that they will meet next month. Economistsalf of surveyed by bloomberg say they anticipate the fed will set target yields for certain maturities of treasury securities. Joining us to discuss is dynamic Economic Strategy founder john silvia. I know that you came out of retirement just to join me on the topic of yield curve control, so thank you. Yield curve control look like to you . Mentionedd scarlet earlier, before the break, the treasury and the fed had agreed in the 1950s, that the fed would not be targeting Interest Rates as a way of financing economic activity. Basically, i would say there are two fundamental problems. I am opposed to the yield curve control approach. The yield curve provides information, in terms of what is the opportunity for an investor today, as opposed to buying a threemonth, twoyear treasury note to buy a 5, 10 year. The future is uncertain. As you gave verisign. You need to compensate people for the risk of unifying the bonds or investing in the bonds over time. There is a risk of higher or lower inflation, differences in economic growth. As we saw with sovereign bond yields, there is a certain sovereign risk with respect to those rates. Im opposed to the yield curve control, i dont like the idea of the fed dictating what does Interest Rates will be because those rates are probably unlikely to be consistent with what the opportunity cost is for investors going forward. Taylor some of that opportunity cost is cost of capital. Do if you are under inflating or control of that cost of capital . What does that mean for future investment . John very good point, taylor. Right now, the concept is the fed will keep Interest Rates low. Ok. The twoyear, fiveyear, maybe even a 10year are kept relatively low compared to whatever benchmark you want to consider. May happenvestment now but you are bringing forward that investment and you are probably not discounting the opportunity cost, or the risks going forward, 3, 5, 10 years out. It is a little bit of a stimulus now to keep Interest Rates low, but those low Interest Rates do not really reflect the real cost of capital over time. Taylor going out on the long mentioned,curve, you if you are controlling, not letting the markets dictate future opportunities for growth, Inflation Expectations, which we often look at by looking at the long end of the curve if the fed is manipulating that to some extent, how does the market view what could be future Inflation Expectations . John indeed. Lets say the fed were to keep Interest Rates low. Think that a fed that is attempting to reflate the economy and get back to a target of 2 , 2. 25 , and you know they target 10year treasury at 0. 7 , that means the real return is a negative going forward. That will really consent a lot of people to not buy those treasuries, and in fact, by default, the fed could be buying more of those treasuries in an attempt to keep those Interest Rates arbitrarily low. I think its a dangerous situation. Taylor tomorrow is jobs day. What is the single most important data point you are looking at tomorrow . John for most investors, what you want to see is the employment population ratio. Is that employment as a share of the population starting to move up . The number of people unemployed will be significant, but unemployment is a lagging economic indicator. I want to see where we are in terms of employed people going forward. I would look at the employment population ratio. Taylor as we approach tomorrow, next week, you mentioned the 10year at 70 basis points, what is fair value for a 10year, 30year at this moment . Mentioned, i like the idea that the 10year rates are moving up. That is a positive sign there are expectations, once again with the yield curve, that growth and inflation will be picking up in the future. For me, looking at what i think the 10year might see in six months, a year, i think one point 5 to 2 is a reasonable number. Taylor our thanks as always to john silvia. Coming up, shaking alliance. Being rattledare by members not keeping their promises. We will speak to ellen wald of the Atlantic Council. This as markets continue to deteriorate. This is bloomberg. Mark im Mark Crumpton with bloomberg first word news. The meeting is expected to be tense as mr. Trump sees his political standing eroding in key battleground states. Presumptive democratic nominee joe biden is up by a whole 11 Percentage Points nationally, 52 to 41 . Whole tied inbe a texas, a reliably republican state, that President Trump cannot afford to lose. The next round of economic stimulus for pandemic really could be as much as 1 trillion. Trump Administration Officials have delayed talks that were scheduled for this week. More than 40 Million People have lost jobs since states again restricting public activities in march. Say thefficials coronavirus pandemic is raising risks of other diseases as it disrupts Childhood Immunization programs. The United Nations and the International Red cross say at least 80 million children under the age of one are at risk of diseases like measles, diphtheria, and polio, and say the worlds poorest countries are being hit the hardest. Iran has read a you veteran held since 2018. Daysel white was released after the u. S. Deported and iranian scientist. A scientist was accused of trying to steal Research Secrets from case western reserve university. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Amanda live from toronto, im amanda lang. From bloomberg World Headquarters in new york, i am taylor riggs. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. Oil drops as opec unity is threatened by a longrunning feud over compliance with production cutbacks. We speak to ellen wald of the Atlantic Council. Tech Companies Respond to protests. From virtual walkouts at facebook to snapchat pulling the president from its discoverer feed, we will discuss the response from Silicon Valley to the killing of george floyd