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All right -- treasury yields falling to a two week low off the Fed Chairman Ben -- that the feds take a plans.
They're not set in stone joining us now former fed analyst Eric Stein now co director of global fixed income and portfolio manager at Eaton Vance and so.
Hey Eric thanks for joining us what we know that treasurys sold off in the second quarter thanks so this.
Fed tape -- talk what are you expecting for the current quarter.
Well thanks for having actually you know I figure after the chairman's testimony today following his speech up here in Cambridge.
Last week I think treasures will be range -- if anything maybe in the short term.
-- will be lower volatility certainly will be hired -- it was a year to go but also do Paula come down a little bit more we saw on May and June.
So -- not -- advocating to get the heck out because you know expecting these interest rates to rise anytime soon at least.
Correct -- from a longer term perspective certainly interest rates are too low.
You know we've -- -- let's take a long term approach and how we invest I don't think treasures are great value all but right now I think if anything with some of the weakness we're seeing in the economy.
Yields could be stay where they -- even fall that.
You also I was waiting in notes Eric you say that certain segments in the emerging world.
Stopped to look attractive for where in particular.
Via a country like Philippine -- all emerging market countries really got beat up particularly at the end of the day after the chairman's testimony on May 22 throughout June.
Everything got -- kind of got pain with a broad brush but a country like Philippines where there was seven point 8%.
GDP growth in the first quarter current account surplus.
A good -- -- we think that's an attractive place to be invested how do you play that how does the average investigated on the Philippines.
Well it's hard for the average investor to do it so of course I would recommend -- buyer you can -- it's global macro under a lot of our other funds but.
The way we invest in me is we -- local -- -- we've by non deliverable forward contracts so it is tough for the average investor to buy.
A currency like the Philippine peso -- the Sri Lankan -- but you know because we have a 24 hours 24/7 training that's we can do that here.
Very give let's look at some of the other areas of fixed income -- about mortgage backed securities I know that.
Basically the government.
Well the Fed is certainly big -- of these but.
Who you know the rising mortgage interest rates certainly have being painful but other any opportunities in that particular area me and yes.
Why it's -- MBS spreads are now certainly it more attractive levels and they were a year or two ago.
Obviously there's some dislocations in the kind of generic TBA part of the mortgage market because the Fed is buying up so much of the supply.
Well but there's still values in certain parts of the mortgage back market.
Well you know we didn't get tennis specialty the -- seasoned mortgage -- market.
We think there's value there there's value in some inverse IL I'll mortgage backed securities so -- they're starting -- segments of value -- certain parts of the mortgage backed market.
I got to ask you about the many Muni bonds we know the retail investors they -- they get tax exemption to come with those -- -- We -- You know the fundamentals improve your putting -- -- but overall we seeing any improvement.
I I think broadly speaking you're certainly state and local government finances are in better shape than they -- a couple years ago better shape than a lot of people worried about.
As we've seen some states get their fiscal house in order you're gonna have areas like Detroit or other.
You know municipalities pop up on the radar but broadly speaking on the finances of states and local governments are better than they were a couple years ago and you know is certainly that some people -- feared.
You know you mentioned range bound on these treasuries there are analysts out there that say let the yield on the ten year note could come back down -- around.
2.2 percent this year essentially because -- -- -- markets just over reacted to all the tapering -- would you agree with those thoughts.
In the short term it's certainly tough to say exactly where they're going but if the economic data continues to be weak and we continue see inflation print on the low side.
I wouldn't be surprised to see yields get down to that range around around to -- the 2.3 -- point 4% so -- 220 -- in the middle there.
Eric Stein of Eaton Vance thank you so much for joining us talk about fixing -- we appreciate it.
Thanks for having me.
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