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For more on the latest moves, let's welcome in Steve Lately, BlackRock's global co-head of Bond ETFs. Steve, it is good to see you. It has been a, a wild week, Steve. It's only Wednesday, which is impressive. Uh, let's start big picture, Steve. I'm just curious, you know, what are you telling clients? I'm sure you've been getting a lot of calls this week, Steve. What has been your guidance?

Yeah, I think, I think we're advising in a very similar way what you know, others are, which is remain calm. The volatility is going to happen in these markets. We were in a period of trending markets for a while. We were very sort of sideways in rates, as an example, for the longest time. Started drifting down, and then the jobs report kicked us lower by a fair amount. Now we're having some somewhat of a correction to that. You know, the weaker 10-year auction got us pushing back up towards 4%. I don't think fundamentally anything is really changed with the view on the Fed starting to cut rates in September. We can debate about 25 or 50, is it two or three, etcetera, etcetera. But I think that the consensus is still pretty much pricing that in. So, you know, again, we're advising investors just to remain calm and just sort of manage through this volatility. We've got some more data coming, so that will give us a little bit more of a clear picture in the next couple months.

Yeah, we have to wait a little bit for it, though, at least not this week in terms of the biggest data. Can you talk to me a little bit more about this bond sale that we saw today? Did draw weaker demand that had been expected. And I wonder, it didn't, we didn't see a meaningful change in that 10-year chart, by the way, when we got that. But we did start to see stocks come down around the same time. Was that sort of a catalyst for what's going on today?

Well, as you mentioned at the beginning of the broadcast, there's a lot of things that are driving this volatility right now. You mentioned the Yen carry trade. This, you know, little bit of an overshoot, perhaps in yields moving lower, and then potentially just repricing. It's hard to say exactly what the linkage is with equities. I mean, the correlations did come back the way they were supposed to when you did get that weak jobs report, so I wouldn't read too much into this. But we expect yields to, you know, continue to be more or less in this range, maybe moving lower as the Fed starts to cut. But I think, you know, we've been advising people all year to take a hard look at the bond market with a view that it could potentially reprice lower. And you know, we did see that from mid-fours down to where we are now. So we'll see where we go once the Fed does kick off their cycle perhaps as early as September. And it'll be very important to see what their communication is around that. That will be key.

You know, Steve, you mentioned the Fed. I just want to press on that for a second because this week, and certainly on Monday, there were all of a sudden more calls, Steve, more chatter. Well, maybe there has to be an emergency intermeeting cut. I will say, though, we spoke to Mohamed El-Erian on the show this week. He was very skeptical of such an emergency action there. He just thought if the Fed did that, it would just, he thinks, signal panic to investors. But I would love to get your take as well on that.

Yeah, I think their bar is probably fairly high for that. You would have to have more disruption and more extreme levels of volatility to, you know, to really start that conversation in a serious way, and it would have to be accompanied by some data that would show that things are turning very significantly. So yeah, I would agree, the bar is probably fairly high for that. And our flows haven't really shown that much of a view that things are deteriorating that rapidly. Yes, you know, you've had a sell off in equities, obviously, you have had outflows, and you have had even some profit taking in bonds, but we don't really see anything pronounced yet.

And so, Steve, is it your view that there will be a recession?

Well, I don't think, you know, base case, I think we probably, I mean, obviously, the with policy being as restrictive as it is, there's always a risk of that. But I don't know that we tilted into a likelihood of that. Certainly, you know, people could argue that the probability of that may have increased with some of this weakening data. But again, you have folks on the other side who will point to various aspects of the data. I read some report that was talking about how the hurricane and weather in Texas may have influenced the jobs report, etcetera, etcetera. So I do think we need some more corroborating data points to really get a beat on whether we're tipping into higher recession odds going forward.