November CPI 'didn't satisfy us', says market researcher Jim Bianco

? (Anchor) 00:00.350

for the potential market impact here at home let's bring in market forecaster jim bianco bianca research jim great to have you with us there's a lot to discuss but in terms of the CPI print this has not in your mind put to bed the concerns about inflation going higher

Jim Bianco (President) 00:14.790

yeah that this number was a statistical mess they assumed that rents in the united states were effectively zero for the month of october they surveyed the second half of the month because the government was shut down so when you see things like apparel falling and airline

Jim Bianco (President) 00:31.190

tickets going down that's because they picked up black friday sales they didn't pick up any of the pricing before black friday and so there's a lot of questions that have to be answered because of the unique circumstance of it being the first number after a shutdown and so you

Jim Bianco (President) 00:44.710

saw this in the market that the ten year yield which should have looked at this number as being very bullish was down one basis point after this number was released

? (Anchor) 00:54.910

so you have this so so you have maybe the underlying belief that the fed will have to keep rates higher than maybe what the markets are anticipating at this pricing in and then you have the impact of the boj and their rates high so basically lifting globally rates i mean how do

? (Anchor) 01:11.110

you see this playing out into twenty twenty six

Jim Bianco (President) 01:14.070

well two things first of all you're right the the bank of japan is giving a meeting for us in the united states overnight there's a ninety five percent chance they're going to raise rates to the highest level in thirty years their ten year note is on the verge of going above two

Jim Bianco (President) 01:27.710

percent for the highest for the first time and also thirty years too what's driving this they've got the highest inflate they have more inflation than the united states for the first time since the nineteen seventies and you're seeing this with all of the central banks and

Jim Bianco (President) 01:42.230

around the developed world the only central banks that are expected to cut rates in twenty six are the US and the UK the ECB the bank of japan the swiss national bank the even the bank of china are all expected to either hold or raise rates next year why because inflation is

Jim Bianco (President) 01:59.830

elevated everywhere in the developed world except maybe a little bit in china but then they've got some their their own special circumstances but inflation is still a problem

Tim (Anchor) 02:09.350

so hey jim it's tim i i i agree and i know folks are actually happy to see some inflation in japan for the first time in three decades you know be careful what you wish for i'm just curious really your view on the technical side of this because i do think also there are a lot of

Tim (Anchor) 02:25.190

japanese investors it's not that they're gonna stop buying US treasuries and it's not that there's obviously still not a differential that that would be favoring on the US ten years but there's no question that japanese insurance funds have been major buyers of treasuries and

Tim (Anchor) 02:37.630

their markets a lot more interesting right now does this impact the long end of our curve

Jim Bianco (President) 02:42.430

it can the japanese are the largest foreign buyer in the world china is number two actually china is number three now the UK is number two and so you're talking about the largest buyer now looking at their home market and saying you know what we don't have zero rates anymore

Jim Bianco (President) 02:58.990

like they did for twenty years we've got a competitive rate you're right the US still has four percent ten year notes they have just under two so we have a bet of a higher yield but that spread is narrowing and we'll probably continue to narrow because the bank of japan when

Jim Bianco (President) 03:15.030

they raise rates tonight are going to signal they're going to keep doing it in twenty twenty six so that narrowing will continue to drive japanese money back home and that will be a loss of a big buyer over time gradually for the united states