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00:00We have this Treasury sell off rates going higher. We had Paulon the Hill. We had people talk about inflation but still no signs of it actually happening. But from your perspective lasttwo days of testimony what would you say is the most important thing you learned or maybe the market learned about the currentstance of Fed strategy. For me this is really like an opportunity or the moment forPowell to really solidify the new reaction function. He's educating lawmakers. This is the first appearance on the Hillsince they announced their new reaction function. About what that means. And it's also a message to the markets a reminder tothe markets. Yep. This is a different reaction function. We're gonna be reacting differently. We're holding the line. We'rewaiting till we see actual inflation. We're not going to be preemptive. You guys can guess. But I want to see the absoluteproof in the pudding before we recalibrate policy. So I think it's been just it's not a new message is what he's been saying.But we're at an inflection point. The markets now seeing a turning point in the economy and wanting to front run that andalso trying to guess what the Fed is going to do. Applying an old reaction function and towns just reminding us you know it'sa new reaction. We'll talk about that inflection point here because I hear a lot of economists sort of celebrating or atleast sort of they're more embracing more embracing of this new sort of trajectory that the Fed seems to be on. You talk to alot of market participants especially particularly some of the old school ones. And they look as they say look price stability.That's your function. Focus on that. And basically the message that we've been hearing from the and most of the other Fedmembers here is that that really isn't our function anymore. Am I missing something. Oh no no no. I would say let me let merecast that. OK. The market is guessing there's going to be inflation and we've seen a reflation in some commodity prices.You just mentioned oil's back but it was a year ago. That's that's not inflation. That just means it's a return to a morenormal price. That doesn't mean it's going to keep rising at the same rate.And there's been a real normalization in yields and inflation expectations and commodity prices that reflect the prospectivehealth of the economy. That is perfectly consistent with price stability. That doesn't mean again that we're going to keeprising at the same rate. And in actual consumer inflation we really haven't seen much that's worrisome at all. In fact we'vebeen running very low. And so I think that they in fact have a deeper commitment toprice stability. And what they're not going to do which is what the market is doing right now is guessing about the future andsetting policy accordingly. They're saying we've been wrong so many times. The market has to we had the same narrative comingout of the great financial crisis and we were wrong. You didn't have that narrative but some people in the market did and it waswrong. And if you look like just a year ago we had a really robust labor market. Right. Very robust labor market lowunemployment rate broad based gains for low wage workers. And yet we didn't really have a lot of wage inflation. And wecertainly didn't have a lot of consumer price inflation.

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Normalization in Yields, Commodities Reflect Recovery: Julia Coronado

Treasuries tumbled anew, lifting 30-year yields the most in almost two months, as corporate hedging and trend-following quant funds added fuel to the selloff that’s driven global debt to its worst annual start in years. Julia Coronado, president and founder of Macropolicy Perspectives, speaks with Bloomberg's Caroline Hyde, Romaine Bostick and Joe Weisenthal on "What'd You Miss?" about rates and Fed policy. (Source: Bloomberg)

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