So many folks I talked to Jessica are saying what he has done and what he may do next is not working and will not work.

Uh, well, the markets are agreeing with that. If we look at even when Yellen did a version of this, not the same, you know, we moved issuance from the back end of the curve and put it more on the front end of the curve so there weren't buybacks. But that did not have the response that we were looking for. And the same has happened when Bessen made the announcement. Initially, yes, we had yields come off, but they rose again. And I think that goes to the importance of the power that bond markets and yields have

even if the Fed lowers interest rates or whatever they do with interest rates, the bond market is going to react due to incoming data, and that's something that we have to be cognizant of. So right now, we really have these competing ends on both ends of the curve. We've got fiscal policy on the long end of the curve, looking to adjust that, but with large deficits, we see this bare steepening or classic bare steepening on the front end of the curve, that's going to react more to inflation and more spending

generally leads to more inflation. There's inflation that's happening within AI, maybe that's going to subside with energy. We will find out tomorrow morning with PCE. But then on top of that, we are waiting to understand Kevin Warsch, the man of few words, so perhaps he'll give us some communication. And later on the debt financing that's happening with artificial intelligence and now we're competing for demand within both of those markets. So it's a really big equation that all

goes together and there's some harmony to to to really put that puzzle together, but I think it's certainly not working because of the market action. He hasn't done the buybacks yet, but to your point, the market is forward looking and that is inclusive of the bond market.

Peter, if this is not if this plan by Secretary, if this is not working and uh like Jessica mentioned and a lot of folks that I talked to, it it hasn't worked, uh what is the the day of reckoning for the economy? Does that happen this year? What does that even look like?

Well I think the day of reckoning will come when investors decide that the government is just issuing too much debt and they're not willing to hold it at the current rates. That is unclear when it will happen. But what I would say is that right now the fundamentals are pushing towards higher long yields. I like to think of rates as being determined by the balance of savings and investment in the economy. Investment is expanding because of the AI boom, savings is contracting because

A, the government is dissaving by running a huge budget deficit. And B, the household sector has one of the lowest savings rates in history because of the wealth effect from the rising stock market inducing people to spend more. In that sort of environment, it's going to be very, very difficult to bring down bond yields in a meaningful way.