ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

That is some of the chatter that perhaps we're in a bond bubble, the signs are here that it's going to burst, where do you sit in terms of that?

JON MACKAY, SENIOR FIXED INCOME STRATEGIST, MORGAN STANLEY WEALTH MANAGEMENT (ENGLISH) SAYING:

Sure, well I wouldn't- I'd take issue with the word bubble because bubbles do burst eventually. I would refer to it more as a balloon. You've obviously had this great run for 30 plus years, Treasury yields basically moving down and obviously the Fed conducting numerous quantitative easing programs, has pushed yields down further, slower growth, risk aversion, things like that, and that's got to end at some point; no one's going to continue buying Treasury yields at 1.5% to 1.8%. So we saw a little bit of a knee-jerk reaction at the beginning of the year based in large part, we think, on resolution of the fiscal cliff. All they've done, the politicians in Washington has pushed the fiscal cliff out further or created new cliffs for themselves. So we think it's going to be very short-lived. But over the long run, to your original question, we do think that that balloon will gradually deflate. But it will deflate in a very, very measured, slow fashion.

ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

What would make you change your view on treasuries? I mean, what has to happen to really change this equation where we actually see some yields that are far more decent than where they are now?

JON MACKAY, SENIOR FIXED INCOME STRATEGIST, MORGAN STANLEY WEALTH MANAGEMENT (ENGLISH) SAYING:

Sure. A lot of things could occur but we think they're unlikely to occur. So you'd have to have resolution of the debt ceiling, you'd have to have a resolution of the sequestration process, which is beginning at the beginning of March. You have to have resolution of the continuing resolution which means we could go into a government shutdown at the end of March, you'd have to have better growth in Europe, you'd have to have better growth here, you'd have to have better unemployment numbers-

ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

It's nirvana, right?

JON MACKAY, SENIOR FIXED INCOME STRATEGIST, MORGAN STANLEY WEALTH MANAGEMENT (ENGLISH) SAYING:

It's a lot of good things happening which just it could occur, never say never, but seems reasonably unlikely. I mean, one outside risk here is that you do get a couple of those things happening sort of half way. We get resolution of the debt ceiling. We get movement towards a deficit reduction plan - which isn't good for the economy because it means less spending and higher taxes - but it removes uncertainty. So maybe growth assets start to pick up steam, companies start to spend more, hire more, et cetera; inflation expectations pick up and maybe get a kneejerk reaction of yields moving up quickly. But that would make treasuries more attractive at least relative to where they are now. So I think worst case scenario, you get a quick run-up, and everyone looks around and says, whoa, 10-year Treasury looks a lot better today than it did three months, six months ago. Maybe it's time to stop buying again.