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Speaker 1: Good morning. It's Friday, the twenty eighth of July in London.

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Speaker 1: This is the Bloomberg Daybreak you at podcast. I'm Caroline Hepki.

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Speaker 2: And I'm Stephen Carroll. Coming up today, the Bank of

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Speaker 2: Japan titans monetary policy as Governor Wada makes a surprise

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Speaker 2: change to yield curve control.

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Speaker 1: Christine Legarde's sinking feeling, the European Central Bank turns more

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Speaker 1: downbeat on growth after hiking rates for a ninth time.

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Speaker 2: And more news from nat West earnings out today after

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Speaker 2: the bank has lost two top executives to political scandal.

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Speaker 2: Let's start with a und up of our top stories.

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Speaker 2: The Bank of Japan has changed its yield curve controlled

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Speaker 2: and a surprise move that center markets swinging. The Center

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Speaker 2: Bank kept its target for tenure yields at zero, but

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Speaker 2: expanded the range that yields can move up to one percent.

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Speaker 2: Bloomberg's David English explains.

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Speaker 3: They're broadening the playground.

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Speaker 2: They're lowering the floor on jgb's They're still maintaining point

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Speaker 2: five percent, but they're saying that's not a strict target

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Speaker 2: anymore at this one, and that Bloomberg's David English, their

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Speaker 2: former Bank of Japan Assistant Governor Kasuwa MoMA told Bloomberg

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Speaker 2: he saw the change as a minor tweak.

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Speaker 4: My sense is that the hidden motivation for the BOJ

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Speaker 4: most important tree is the exchange rate, because too a

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Speaker 4: stringent conduct of the aerocob control could invite undesirable weekly

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Speaker 4: in the end going forward, as a bug doesn't want

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Speaker 4: to repeat the same mistake just record nasty year. So

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Speaker 4: I think the BOJA is much more flexible this year

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Speaker 4: in terms of the conduct of marketing aerocub control to

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Speaker 4: mitigate any possible wrong message to the encourage market.

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Speaker 2: I'm adding that a lot now depends on what Governor

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Speaker 2: Awada says in his upcoming press conference and how these

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Speaker 2: new controls will be enforced.

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Speaker 1: Christine Legard sees a fading economic outlook for the year area.

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Speaker 1: The European Central Bank raised rates yesterday for the ninth

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Speaker 1: time in a row, but policymakers are increasingly worried about

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Speaker 1: the impact the hikes are having on both.

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Speaker 5: The neo term economic outlook for the euro Area has deteriorated,

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Speaker 5: owing largely to weaker domestic demand. High inflation and tighter

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Speaker 5: financing conditions are dumpening spending. This is weighing especially on

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Speaker 5: manufacturing output, which is also being held down by weak

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Speaker 5: external demand.

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Speaker 1: The ECB president Christine Legand a report this week from

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Speaker 1: the Central Bank showed demand for loans from companies also

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Speaker 1: plunged by the most on record in the second quarter.

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Speaker 2: Here in the UK, nowst as reporting results today for

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Speaker 2: the first half of twenty twenty three, but the numbers

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Speaker 2: will play second fiddle to the ongoing political wrangling. After

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Speaker 2: losing their CEO on Wednesday. Yesterday, NatWest said the head

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Speaker 2: of its COOT subsidiary, Peter Flavel, is also stepping down

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Speaker 2: over the closure of Nigel Farage's account. He's the latest

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Speaker 2: senior figure to leave as the bank tries to address

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Speaker 2: the scandal around closures.

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Speaker 1: Sellers are increasingly offering price cuts attempt UK home buyers,

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Speaker 1: a sign that the housing correction continues. Bloomberg's un Parts

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Speaker 1: reports the.

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Speaker 6: Number of people contacting estate agents about buying a property

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Speaker 6: in the UK has fallen by almost a fifth in

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Speaker 6: the last two months. That's according to data from property

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Speaker 6: website Zoopla. That's putting downward pressure on the market. Almost

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Speaker 6: seven percent of sellers reduce their asking price in July,

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Speaker 6: with higher mortgage rates to pressing demand and as households

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Speaker 6: deal with rampant inflation. Bloomberg Economics is now forecasting a

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Speaker 6: ten percent drop in house prices from last year's peak.

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Speaker 6: The asking price cuts aren't impacting everyone equally, though, with

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Speaker 6: pricier properties, especially those in the South, losing value at

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Speaker 6: the fastest pace. In London, immune pots Bloomberg Daybreak.

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Speaker 2: Europe, next to the more corporate results standard Chartered boosted

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Speaker 2: profits by twenty seven percent in the second quarter. The

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Speaker 2: Asia focused lender reported pre tax profits of one point

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Speaker 2: six billion dollars, blasting past the analyst estimates by two

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Speaker 2: hundred million dollars. Bank has been a watched takeover target

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Speaker 2: since Bloomberg reporter that first Abu Dhabi Bank had explored

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Speaker 2: a potential bid for the company at the start.

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Speaker 1: Of the year. Those are a few of today's top

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Speaker 1: stories for you in another busy day in earnings to

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Speaker 1: think about. But this story has caught a lot of

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Speaker 1: people's attention. Cities going to track UK office attendance basically

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Speaker 1: to try to figure out who the hybrid holdouts are. Yeah,

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Speaker 1: sounds a bit more serious when it comes from work

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Speaker 1: from home or try to stamp it out.

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Speaker 2: Yeah, this is something that city had announced they were

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Speaker 2: going to be doing for their staff, but the memo

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Speaker 2: went out with details yesterday to their staff in the UK,

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Speaker 2: saying that one swipe per day per location will be

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Speaker 2: captured and the focus of the reports will be employees

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Speaker 2: with consistent office absences, those who flout the rules, which

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Speaker 2: will be to spend at least three days a week

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Speaker 2: in the office, those they could flace, discipline, reaction from

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Speaker 2: bonus adjustments, even as far as termination.

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Speaker 1: Yeah. Absolutely, it's certainly sounding very specific, isn't it now

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Speaker 1: that work from home is out of favor. Let's think

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Speaker 1: though about today's big moves from the Bank of Japan

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Speaker 1: also to adjust yield curve control. Shall we the first

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Speaker 1: surprise move under Governor Kazu Awada, Well, surprise, let's discuss that.

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Speaker 1: Our Chief rates correspondent Garfield Reynolds joins us now with

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Speaker 1: the details. Good morning, girlfield, Good have you on the program.

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Speaker 1: The Bank of Japan is calling this flexibility in yield

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Speaker 1: curve control. But what do today's changes mean actually in practice?

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Speaker 7: Well, the tomish that we have to wait for further

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Speaker 7: explanation from Governor Luaida when it gives a presser, which

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Speaker 7: won't be for the two hours or so. Now the

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Speaker 7: BOJ has adjusted the way it looks effectively at yield

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Speaker 7: curve control to say, right, zero point five percent is

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Speaker 7: still the top of the range laid down, but that

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Speaker 7: that top is now sort of a reference rate rather

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Speaker 7: than being a hard cap. The hard cap is at

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Speaker 7: one percent, and they will offer to buy an unlimited

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Speaker 7: the amount of ten year bonds at one percent yields

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Speaker 7: every day to make sure that that hard cap could

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Speaker 7: never be bridged. They will also, however, retain the capacity to,

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Speaker 7: as they put it, quote nimbly conduct market operations end quote,

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Speaker 7: should yields be anywhere between zero point five percent and

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Speaker 7: one percent. So they seem to want to guide to

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Speaker 7: some extent where yields go within that new range, and

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Speaker 7: how that's going to work, how they decided whether it

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Speaker 7: means they will step in any time they think yields

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Speaker 7: are moving too sharply higher or inappropriately higher. It kind

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Speaker 7: of becomes more akin to what we've seen on occasions

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Speaker 7: with currency market intervention from Japan, when it's decided that

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Speaker 7: the end was getting too weak or was getting two

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Speaker 7: week too fast. So that's adding a lot of uncertainty

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Speaker 7: about what this is going to mean, and like I said,

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Speaker 7: there's a lot of attention on what Uwaida is going

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Speaker 7: to say in his press conference.

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Speaker 2: Yes, so more detail to come on this. The markets, though,

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Speaker 2: have been reacting the end website around this decision. Take

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Speaker 2: us through what we've been seeing in terms of market reaction.

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Speaker 7: Garfield, Well, the initial market reaction was almost as though

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Speaker 7: wondering whether somebody somewhere had misread your unlimited bond buys

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Speaker 7: at one percent to be unlimited bonbuys at zero point

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Speaker 7: five percent. Because the initial reaction looked as though was

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Speaker 7: being taken as a dubbish move, that left things kind

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Speaker 7: of where they were. The yen dropped, it went to

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Speaker 7: as weak as one hundred and forty one per US dollar.

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Speaker 7: That and you know, JGB futures took back some of

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Speaker 7: their earlier declines. We had treasury yields falling, we had

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Speaker 7: Australian bond yields pairing some of their increase. So that

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Speaker 7: was also like, oh, this looks like it's being taken

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Speaker 7: as dubbish. And there was plenty of chatter of m

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Speaker 7: live chat room and elsewhere about well, but doesn't this

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Speaker 7: actually mean that bond yields can go that much higher.

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Speaker 7: Markets fairly rapidly moved to that conclusion as well, So

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Speaker 7: we had the end is now up to zero point

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Speaker 7: seven percent at one stage it got one percent stronger

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Speaker 7: on the day. We've got JGB ten year JGB yields

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Speaker 7: now up eleven basis points on the day to zero

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Speaker 7: point five to seven five percent. That's the highest they've

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Speaker 7: been since back in September twenty fourteen, which was before

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Speaker 7: Corona's second Berzuka when he expanded his initial quite the

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Speaker 7: easy program, and well before they haven't brought in yield

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Speaker 7: curve control. So the ultimate interpretation is that this is

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Speaker 7: a hawkish bent. This is taking us towards an end

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Speaker 7: to girth control and end to extraordinarily easy monetary policy

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Speaker 7: in Japan. We'll see what markets think once Uwaider actually

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Speaker 7: stepped up to the microphone.

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Speaker 5: Yeah.

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Speaker 1: Absolutely, But on the idea whether it was a surprise

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Speaker 1: or not, Garfield, I mean, surely this was inevitable. We

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Speaker 1: were sort of talking about it, We've been talking about

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Speaker 1: it all year, and whether, for example, the latest inflation

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Speaker 1: figures just made it inevitable, It's always inevitable.

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Speaker 7: That the bj would have to come out of its

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Speaker 7: ultra easy settings. After all, back two years ago when

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Speaker 7: everybody was at the zero bound and had been buying bonds,

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Speaker 7: it was kind of inevidentle then that at some stage

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Speaker 7: central banks would be forced to move away from those settings.

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Speaker 7: The difficulty, it's all hissing how they do that and

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Speaker 7: how much volatility is created now. Going into this meeting,

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Speaker 7: even sort of a week out, people had been thinking

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Speaker 7: that the BHA was going to continue to be softly softly,

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Speaker 7: that Uweida was going to stick to his mantra of

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Speaker 7: being a gradualist and avoiding springing surprises. He was originally

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Speaker 7: missed a forward guidance. Forward guidance was something he was

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Speaker 7: very strong on from the early days of his career

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Speaker 7: in central banking and economics. So the level of confusion

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Speaker 7: that he's created, the apparent lack of a strong forward

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Speaker 7: guidance is what he's done that has been a surprise.

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Speaker 7: And even we had the report overnight from the nick

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Speaker 7: A about the idea that the BOJ would discuss tweaking

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Speaker 7: yield cirk control, this has turned out to be a

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Speaker 7: bit more of its weak than even that was flagging

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Speaker 7: and that helps to do that's playing the extreme moves

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Speaker 7: that have come once people started to wrap their heads

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Speaker 7: around what this looks like.

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Speaker 2: Meaning all right, Garfield, thank you very much, Achie rates

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Speaker 2: correspondent Garfield ronalds with the details of that. We will

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Speaker 2: bring you news from the Bank of Japan press conference

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Speaker 2: taking place at seven thirty am London time. You can

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Speaker 2: watch it on your terminal Live go or on the

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Speaker 2: Tea Live blog as well. Up next, zeroing in and

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Speaker 2: Women Held to a Higher Standard.

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Speaker 6: Now the Paper Review on blue Bird Daybreak Europe.

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Speaker 1: The news you need to know from today's papers, mostly

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Speaker 1: Anne Garen's take us through this morning's headlines. Let's start

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Speaker 1: with the Telegraph and this story public must be spared

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Speaker 1: huge burden of net zero, says Tony Blair.

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Speaker 3: Yes, indeed, Caroline So the former Prime Minister really is

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Speaker 3: making the point that the UK can play its part

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Speaker 3: in the find against climate change, but its efforts could

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Speaker 3: be overshadowed by countries such as China. Blair also warns

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Speaker 3: against asking the public to do this massive amount of work,

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Speaker 3: saying Britain's net zero efforts cannot solve global warming alone.

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Speaker 3: He's making the point that this is a global issue,

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Speaker 3: something we all need to work together on. Now. His

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Speaker 3: tone of caution really comes after we know that Labor

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Speaker 3: and the Conservatives are now debating this transition to net

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Speaker 3: zero and I feel that was really sparked and I

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Speaker 3: think a lot of the papers do too, by the

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Speaker 3: Tory by election where in Uxbridge, and that was all

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Speaker 3: over the fact that Labor failed to win the seat,

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Speaker 3: and that was blamed widely on the backlash against ULEZ,

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Speaker 3: which is this low emission zone that's been introduced by

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Speaker 3: the London mayor. He's trying to make it expand to

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Speaker 3: Greater London and Caroline really a lot of backlash over

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Speaker 3: this in Greater London. And in an interview with The

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Speaker 3: New Statesman magazine on July the eighteenth, Tony Blair said

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Speaker 3: something this is what he quoted. Don't ask us to

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Speaker 3: do a huge amount when frankly, whatever we do in

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Speaker 3: Britain is not really going to impact climate change. But

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Speaker 3: it is important to say he still thinks this is

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Speaker 3: a number one issue for our generation. He makes it

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Speaker 3: clear he supports Britain's twenty fifteen net zero emissions, but

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Speaker 3: it's just also saying the global effort needs to be there.

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Speaker 2: Okay, let's go to Fat of Times next Leanne and

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Speaker 2: it's reporting that three of the UK's largest lenders have

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Speaker 2: cut mortgage rates.

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Speaker 3: Yes, indeed, so the changes actually reflect the better than

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Speaker 3: expected June inflation figures and the growing competition as demand

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Speaker 3: for home loans really does fall. So three of the

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Speaker 3: largest lenders also a few several ones announced cuts to

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Speaker 3: their mortgage rates yesterday and the moves find nationwide Barclays

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Speaker 3: and TSB really follow on from the decision by HSBC,

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Speaker 3: which said a little bit earlier in the week. We

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Speaker 3: know the base rate is still at a fifteen year

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Speaker 3: high of five percent, but that bigger than expected drop

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Speaker 3: in June inflation helping to stabilize the markets, allowing banks

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Speaker 3: to reduce funding costs. But some analysts also say the

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Speaker 3: reduction in the cost of home loans reflects the impact

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Speaker 3: of the slowing housing market. So there we are these

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Speaker 3: two really key bits to that story. But as we

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Speaker 3: see largest lenders cutting mortgage rates.

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Speaker 1: And then just lastly, this opinion piece in the Guardian

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Speaker 1: was Alison Rose held to a higher standard because she's

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Speaker 1: a woman.

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Speaker 3: Oh Caroline, this is a really interesting read and we've

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Speaker 3: been discussing it.

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Speaker 2: So.

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Speaker 3: Anne Frank is a chief executive of the Chartered Management Institute.

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Speaker 3: She is the author of this opinion piece, and she

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Speaker 3: asked some really important questions and she makes the point

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Speaker 3: that other bank bosses, the likes of Jazz Staley Ross McEwen,

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Speaker 3: have faced much more serious accusations, but they haven't actually

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Speaker 3: suffered the same political backlasher Alison Rose has faced. The

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Speaker 3: opinion article makes the point Rose, yes, she made a

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Speaker 3: serious error of judgment in discussing the former UKUPS leader

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Speaker 3: case with a journalist, but rather than allowing any due process,

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Speaker 3: she was Alston. And I think this is interesting because

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Speaker 3: Anne says, you know, she's worried about the message this

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Speaker 3: is sending to women, Caroline looking for a seat at

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Speaker 3: the top table, and if it is a subtle hint

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Speaker 3: of sexism, and she's saying it's not just happening in

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Speaker 3: the financial sector.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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