Bloomberg Surveillance TV: August 25th, 2026

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Jonathan Ferro** (0:11)
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro, along with Lisa Abramowitz and Annmarie Hordern. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9 a.m. Eastern.
Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app. We begin this hour with stocks higher and bond yields lower as criticism builds against Treasury Secretary Scott Besson's buyback plans. Billionaire investor Stanley Druckenmiller writing in the journal this morning, the government's defending prices against fundamentals always lose. Let the bond market speak. George Goncalves of MBFG joins us now for more. George, good morning.

**George Goncalves** (0:54)
Good to be on.

**Jonathan Ferro** (0:54)
Do you agree with Stanley Druckenmiller this morning?

**George Goncalves** (0:57)
I look at the bond market and market forces should always kind of dictate where things had and I think that is the right sort of course of action. But this is complicated. This is this is going to be a story that we're going to have and we've had for years. We're going to have this into this election, into the twenty twenty eight election, into twenty thirty. Like our deficits are not getting any better. And yeah, this is a time to kind of reflect on it. It's not just the Treasury, right? This is a this is a government wide issue. We're spending too much.

**Jonathan Ferro** (1:21)
You can't find fundamentals. Seems to be the takeaway. And that's the argument so many people have made. Five twenty on thirties. Is that the right clearing price? Do you just need to go higher than that?

**George Goncalves** (1:29)
Look, I mean, there's there's like a lot of different arguments about like, what do rates reflect ultimately? And that you could say there's a fiscal term premium. There's a lot going on within like the composition of real rates are very high.
But if you think about inflation, expectations are actually relatively contained. And that's the part that's really interesting to me. We're commanding a higher real cost of capital, which is, you know, that's the that's the clearing price. It's the real rate that matters more. It's a function of the AI spending. So that's almost a quasi government infrastructure spending that's competing now. We have competition for capital, which we have not had for 20, 30 years. Sovereigns have not had to deal with a public, a private sector that's competing for just as much capital as they are. And you combine all the things and you're like, what is, what do rates really reflect? And they reflect that we do have a nominal issue. Our nominal growth is high because of the fiscal connection. It's not about fiscal term premium.
What's going to be interesting is will the Fed ever come out and call that out? Will Kevin Orrish say that we have a fiscal issue that's driving the inflation side? It's not the private sector really, a little bit from the private sector, but this is largely government spending.

**Lisa Abramowicz** (2:36)
My guess is he won't say that, particularly on Friday. I'm just going to throw out there and go out on a limb. I do think it's notable though how much Neil Cascari and others have said the 30 year yield is fine. Where it is right now is totally normal with respect to where growth rates are and other benchmark yields are. Ultimately, it isn't constraining the economy in an undue way. So why should the Fed care at all? What do you make of those arguments?

**George Goncalves** (2:58)
We're trying to think about what can happen on Friday. Ultimately, the Fed in the 1978 version of its mandate does have this third mandate, which is stable long-term rates. If you really look at it closely, it's price stability, full employment, and stable long-term rates. Do you argue these are stable long-term rates? Are they volatile? Are they too high? I think any conversation around that on Friday could be market moving. If Kevin Warsh comes out and says, look, we're watching the back end of the curve, I think that's interesting.

**Lisa Abramowicz** (3:29)
The fact that people are even speculating about this is the reason why the dollar has fallen out of bed in the past couple of weeks, the reason why Bitcoin seems to be flying, and the reason why people are all buying gold once more. I just wonder, to what degree do you pile into that, and to what degree do you think that the debasement fear is overblown at this point? Because we haven't heard from Kevin Warsh, and frankly, the Stan Druckenmillers are kind of his whisperers out there saying, maybe not so fast, guys.