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Russell Investments CIO of fixed income Jeff Hussey on the economic impact of rising national debt.
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We think tanks and then RNC featuring the debt clock our national debt as you know getting close to that sixteen trillion dollar mark every day.
There it is there's our clock at least.
And it's because -- focus for the Republican National Convention as we've been reporting but -- soaring deficit drag down our struggling economy.
Joining me to discuss this is Jeff -- Russell investments chief investment officer of fixed income Jeff -- happy.
-- -- -- -- Good to be -- I know that the European sovereign debt crisis and the Fed are huge -- -- but why doesn't the bond market seem to care about the ballooning national debt.
I think the bond market does care the the real.
Fundamental issues that the bond market cares about -- inflation and right now inflation is 2%.
You've also got some very strong technicals from a flight to safety dead so people are just clamoring for for some safety.
And that includes the European markets set includes Asian investors so you see pretty big safety bid.
He also see Central Bank buying I think that's a distorting the market a little bit in terms of where real.
Right real -- -- zeroed in on the market is distorted.
Is it going to become real for lack -- better way to characterize it.
In a quick -- are we gonna see -- catalyst to send rates spiking which could be real damaging for the broader economy right.
You know I think down yields should be our central forecast as yields go up to 225 a year from now that's not far from 160 where -- ten year yields are at today.
So that's our forecast certainly if we get more certainty around the fiscal cliff around when elections are around Europe.
I mean we do see yields going up at once more certainty.
Is.
Revealed in the marketplace SEC this is a bond bubble about to burst where we'll have painful ripple effects.
Really trying to hone in on how well.
You know bond bubbles -- bubbles are hard to identify I would say that.
We are not -- bond bubble but we certainly do have.
Distorted market -- -- 2550.
Basis points.
As a result of people looking for safety and as result of Central Bank behind so.
-- a disordered massively no but as a distorted a bit as a result of those factors.
Yes I would say itself I think this is fascinating stuff Jeff has -- thank you so much for your analysis.
