What The Bond Selloff Means For Your Wallet & Simplifying Finance For Your Family

Bloomberg Intelligence

The episode explores the profound shifts in the global financial landscape, focusing on the end of the zero-interest-rate era and its impact on

Key takeaways

• 10-year Treasury yields have climbed to 5.16%, levels not seen since 2007.
• The era of zero interest rates (ZIRP) and quantitative easing is structurally over, moving markets toward a higher real interest rate environment.
• Mexico's homicide rate has seen a 51% reduction over the past two years due to new security strategies.
• Wealth creation in America is increasingly driven by ownership of local service businesses like HVAC or dental practices rather than tech entrepreneurship.
• Norway remains a top global retirement destination due to its robust social safety net and sovereign wealth fund.

Main topics

• Bond market volatility and interest rate regimes
• US-Mexico bilateral relations and trade
• Personal finance and the housing market

Notable quotes

The days of zero interest rates are long gone.

Conclusion

Investors must adapt to a structural shift toward higher yields and mo

Transcript preview

Speaker 8 (0:02) Bloomberg Audio Studios. Podcasts. Radio. News. Bloomberg Speaker 3 (0:07) Money. Speaker 1 (0:12) This is the Bloomberg Money Podcast. I'm Tom Keen with Scarlett Fu. Join us each week for a smart look at the forces shaping your financial life on personal finance, on retirement, and wealth management. We will explore how people are earning, investing, and building wealth. We are live Fridays at noon Eastern on Bloomberg Television. Subscribe to the podcast wherever you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App. Speaker 1 (0:55) Good noon, everyone. Bloomberg Money here. Scarlett Fuentonke, thank you for being with us. What an odd, what an exhausting week we have had here with the traffic. You went cross town. Did it take 20 minutes or an hour? I Speaker 2 (1:07) had to get out. I had to walk. I mean, I had Speaker 1 (1:09) to wait behind barricades. It's just... Junior's pro at that, Miles Miller, record five different taxi cabs. Oh Speaker 2 (1:16) my gosh. Speaker 1 (1:16) To get over to the Deutsche Speaker 2 (1:18) Bank Center. Speaker 1 (1:18) How much did that whole thing cost? it was i don't know like reto gregory's keeper of the mx is the only one who knows that information it's a really twisted and special bloomberg money today but we have to go to it the back end of the show taylor swift will join us oh Speaker 2 (1:32) that's a good how was their new Speaker 1 (1:34) single that's Speaker 2 (1:34) a good that's what's Speaker 1 (1:35) breaking that's the zeitgeist right now that's how people are Speaker 2 (1:37) spending their money we've Speaker 1 (1:39) got a great great show for you jeffrey rosenberg holds on the fort at blackrock really good out of carnegie mellon and tepper institute jeff rosenberg The high yields. Forget about the math. What does it mean for your personal finance, your retirement, your wealth management? And Speaker 2 (1:53) we've got Barry Ritholtz. He's founder and chairman of Ritholtz Wealth Management. He's host of Masters in Business on Bloomberg Radio. He's going to talk about how wealth is actually created in America. And hint, it involves taking risks. Speaker 1 (2:06) Stop the show. His book is phenomenal. What's the name Speaker 2 (2:09) of Speaker 1 (2:09) it? How Not. How Not to Screw Up. That's the name of the book. It's done really well, deserves to be. We're thrilled to have Barry with us, given the tumult that we've seen this week. Data check, Scarlett's going to go across assets. I've got the stock data check for you here. And Friday, it was a nice uptick, I think more than a normal August Friday. We're into the market now with the Dow up 356 points. To me, the story's a VIX, which goes against surging dollar, surging interest rates, surging into the weekend. What do you do with your 401 ? I have no idea. Speaker 2 (2:41) Big question mark. All right. Speaking of surging interest rates, yields on the 10-year are at the highest since 2007. You can see they're 5.16%. The five-year yield is trading above 5%. We're going to get into bonds a little bit later on. Stocks are set to close out the week with a modest gain. The dollar is somewhat weaker. And look at that. Oil prices down 2 % for the week, but it doesn't feel like it. Speaker 1 (3:02) Audible Loftus. We're going to do an audible here with a remote camera here. Get over here. I got to fix my bow tie. That's the first thing. There we go. Nikki Waller with us today running all of our personal finance, just doing a superb job of timely stories. There are Miles Miller is with us to say he's a senior reporter doesn't even describe. He covers all sorts of things. His Speaker 2 (3:22) handle Speaker 1 (3:22) on this great metropolitan five borough, New York City, and also down to Washington. as well. Can you bring the camera over here? I mean, could you look at Carol Masters notes? What do you think this is like? We don't have any notes. I know I'm a note and a paper girl. What are you and Tim doing this afternoon? What Speaker 8 (3:40) are we doing? We're gonna do a little bit of China. We're gonna be talking a little bit about Cuba. Still staying with the UN. I feel like it's been such a I Speaker 1 (3:47) agree in Eric Martin's Marco Rubio story, Bloomberg Businessweek, world class. on the secretary. Yeah, Speaker 2 (3:53) he's been covering national politics, national security. Let's Speaker 1 (3:56) jump into it right now. Nikki Waller with us on personal finance here. I have no idea how you start your Monday morning meeting given the present chaos. Is your world turned upside down? Speaker 8 (4:07) No, our world is very curious about what's going on in our week. actually started over the weekend because when we saw those mortgage rates last week, we sent reporters out to open houses around the country. And we talked to sellers and we talked, we couldn't find any buyers, but we talked to sellers and we talked to realtors about exactly how stalled things feel. Is price Speaker 1 (4:27) moving? Speaker 8 (4:28) Prices are moving down. People are having, sellers are having to cut their prices a lot. We talked to one guy who had to cut his price. Twice, more than six figures in 10 days. The first was when he had an open house and only two people came. The second was after the Fed raised rates last week. Speaker 2 (4:44) And it goes back to the volatility that we've seen in bond markets, Carol, and people talking about how we're in this new era. The days of zero interest rates are long gone. It Speaker 8 (4:52) is a new era. Bring up the bond boards here at Bloomberg, and all of a sudden you're seeing 5 % all along the curve. And what's interesting, you think about U.S. Treasuries, really the global bellwether, right? So whether it's the impact on consumers, on corporations, on governments. Like, this is a game changer. We keep saying, though, it's not like the late 70s, early 80s when you were seeing, you know, rates up in the teens. But nonetheless, it has an impact. And for a generation who's never seen something like this, it's a big deal. Speaker 2 (5:17) Absolutely. Let's bring in Miles Miller to all of this, because here we are in New York City and we had the U.N. General Assembly week. There are a lot of people walking around. There's a lot of wealth. Wait, the U.N. was happening this week? I know. In case you didn't notice, I know that you covered the city and the security and all that. This week started off with a lot of lot of flight chaos, right? We had the flights halted at all of New York City airports. It's going to probably end with a nor'easter storm. So people are having a hard time getting in and out of the city to attend to all of New York City's offerings, including diplomacy. Speaker 6 (5:47) Yeah, this was quite a crazy week in New York, right? It wasn't just the UN General Assembly. Of course, the Metropolitan Opera came back. The New York City Ballet came, and I went to opening night for the ballet. It was quite a crazy week to get around town. But yes, it began with all those travel troubles. Of course, New Jersey Transit involved a line cut that went to TRACON, which operates all of air traffic control. And because of that, world leaders were delayed getting in. They fixed that, and then we've got all the traffic tie-ups. And then we've got Benjamin Netanyahu in town giving his big speech, fighting with Mayor Mamdani. It was quite a week for diplomacy and also getting around. Speaker 1 (6:27) We've undersold it. You've had four Emmy Awards. You've grounded out in the five boroughs in New York City. Why are we moving to Philadelphia? I mean, it's just as simple as that. Wealth management. Personal finance, it's not working in Boston. It's not working in New York City. Speaker 6 (6:44) Yeah, you know, Philadelphia, whenever you look at, you know, and I worked in Philly. I worked at WTXF there, which is the Fox station. Spent a good amount of my career covering South Jersey. It makes sense, right? Because it's so much cheaper to live in Philadelphia. Your money goes so much farther. And there are people who get on that Amtrak and pay for that 12-trip ticket or, you know, get that multi-trip ticket. It just makes more sense. Speaker 2 (7:07) Nikki, this reminds me of a story that your team wrote about how the marker of financial success in America has really shifted. Once upon a time, it was buying a home, but that's no longer the case. Speaker 8 (7:18) Yeah, you can say the American dream is being redefined for a lot of people. And it is less about following those traditional milestones that we're talking about and more about actually enjoying your life right here and now. Even if you have a down payment, the carrying costs of a home are hard or the rates are high, as we're talking about. And prices, while their individual prices are coming down, they're not coming down broadly. And actually, I'm not sure we all want that. Speaker 1 (7:42) What's your sense within what you and Tim are doing of how many people have missed this bull market? And I'm not talking about fancy Jeff Rosenberg math. I'm talking about just because of caution or gloom. or poverty here. They just can't make the bills. They miss this bull market. We Speaker 8 (7:59) talk about this a lot. And obviously, you go back to Peter Atwater at William & Mary and talking about the K-shaped economy. I mean, not everybody's in the financial market. There are folks that are still really struggling. Look at consumer sentiment. You know, we see strong retail numbers, but consumer sentiment is down and gas prices are up. We saw diesel hit a record high. I mean, these are things where there are lots of families struggling. I'm amazed at even the amount of conversations we have in the newsroom where folks that you would think are doing fairly well and they're saying, I feel pinched. I'm making decisions. So I think there's many stories to tell when it comes to this economy and it plays out politically. Yeah. How much did you pay Speaker 2 (8:35) for gas when you went to the pump? Oh, I'm sorry. You don't do that. I don't do Speaker 1 (8:39) that. I'm above it all. It's not good. I mean, Miles is in the trenches on this. And there's a lot of people. I mean, diesel, you go New York City, diesel doesn't matter. Sit on 59th Street and count the diesel trucks that go by. The Speaker 6 (8:52) diesel costs are insane. I mean, I gas up probably twice or three times a week. two cars right now trying to get down to one that's a different story for a different day but you know we can extend but Speaker 1 (9:03) the Speaker 6 (9:05) um but but to fill up the yukon is insane that is probably 80 to fill up so i always do half a tank it's just easiest to do half a tank um because you know i i don't know i don't want to pay and you know we talk about this a lot like we're going a lot of concerts this this summer going to concerts and events i'm like Affirm and Klarna look really good for young people because, as you were saying, they want to have good experiences. So how do you make those experiences? That's brilliant. Speaker 1 (9:32) Are those platforms successful? Speaker 8 (9:34) Yeah, they're really successful. People are using them for exactly what Mike Miles is talking about. They're using them for Knicks tickets. They're using them for Taylor Swift. They're also, though, more often using them for everyday expenses. This is now becoming a rotating line of credit for a lot of people to get by. Speaker 8 (9:53) Well, I love the story that you guys have about finance maxing strategies, how you have this whole generation who are trying to figure out how to save money. So it's the buy now, pay later. They're moving in with their families again. I mean, all these different things that they are doing, sharing, streaming, subscriptions, like these things that they are doing to kind of save money. Yeah, and at the same time, they are investing. I mean, you look at Gen Z, they are more heavily invested in retirement and their 401ks than their forebears. Speaker 1 (10:19) Can I go political here? Bloomberg Money, why not? We got Miles with us today. Yeah, go for it. How's the mayor doing? Mayor's Speaker 6 (10:24) having a great week. He really is. Mr. Netanyahu is pounding him at the UN. But he's masterful at the way that he handles this situation with Trump. He knows he's going to have this negative interaction with Netanyahu being here. It has his biggest ally, Trump, in the backyard of Archibald Gracie's mansion, a mansion that he knows that Trump loves and has been to in the past. Trump is waging war against the media. He