Episode summary
The Yield Curve and Shipping Risks | Bloomberg Surveillance
Bloomberg Surveillance
· · 30 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Cam Harvey, Kate Luft, John Kartsonas, Jack Devine
Summary
The conversation centered on why long-term rates and real yields have risen, with one guest arguing that the 10-year Treasury’s move is less about inflation fears and more about stronger expected real growth. He said the 2% Fed inflation target is arbitrary and that breakeven inflation has stayed around 2.36%, implying the rate move reflects higher expected real economic growth rather than a new inflation problem.
The discussion then shifted to investing and banking. One guest argued that “growth” and “value” are often misunderstood categories, and that investors should focus on growth fundamentals like sales and R&D rather than buying expensive, low-growth names just because they sit inside a value index. Another guest described a retail banking strategy built around relationship banking, simpler pricing, and incentives for clients to consolidate deposits and investments rather than chase the highest headline rate.
The latter part of the episode focused on shipping and geopolitics. A shipping fund manager said freight costs tied to the Strait of Hormuz, the Red Sea, the Suez Canal and other chokepoints are far too high to be sustainable and are now showing up in refined product prices more than crude. A former intelligence official added that geopolitical risk remains real, AI will speed up intelligence work, and the key challenge is not collecting information but interpreting it and acting on it correctly.
Key takeaways
- One guest argued the rise in the 10-year yield reflects higher expected real growth, not higher expected inflation.
- Breakeven inflation was described as around 2.36%, which the guest used to argue the Fed’s 2% target is not the market’s anchor.
- The guest on investing said expensive low-growth stocks are a poor fit for both value and growth investors.
- The retail-banking guest said clients want simplicity, transparency, and relationship banking, not just headline yield.
- The shipping manager said freight costs through Middle East chokepoints are unsustainably high and are pushing up refined-product prices.
- The intelligence discussion emphasized that AI will accelerate operations, but human judgment still matters most in decision-making.
Notable quotes
“the rate that we're seeing today is not abnormal. What was abnormal was when the rate was 1%”
“the increase in rates that we're experiencing is not due to expected inflation”
“The reason that rates are going up is because of higher expected real economic growth”
“if you're expensive you're growth and and what we do is just focus on growth”
“this is definitely unprecedented and that's I'm not saying that lightly”
How the episode opens
Bloomberg Audio Studios podcasts radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m.
Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Kiml Harvey is stick professor at the Fuka School of Business, Duke University.
All sorts of abilities. I love how he was at Chicago and he did what the brave do. He went over to the Stockholm School really of economics which is a whole
Okay — Different twisted view to get perspective. He's also an adviser to Duke football as well 4 and0 Paul Swerini of Duke with Professor Harvey. — Cam thanks so much for joining us here today. I you know a lot of folks cam on Global Wall Street they've never seen interest rates at these levels before and I'm sure none of your students have either here frame out what this interest rate environment what does it mean for this economy what does it mean for these markets
Yeah I think that um people are generally misinterpreting what's going on so number one um the rate uh the yield on the 10ear is statistically uh the highest as we've seen in 25 years. But you need to keep the context in mind that during the past 25 years, we've had these extraordinary events like the global financial crisis and co that drove the rate down to unusually low levels. And where we are right now is about average if you look at a longer history.
And you're correct that many people have not seen rates this high. But you need to have a historical perspective that the rate that we're seeing today is not abnormal. What was abnormal was when the rate was 1%, people getting mortgages at 2 or 3%.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- yield curve
- ten-year yields
- relationship banking
- etf activity
- shipping risks
Companies and tickers mentioned
- C
- Citigroup
- Breakwave Partners
- The Arkin Group
Watch the episode
Watch “The Yield Curve and Shipping Risks | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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