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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Blue Big Day BAQ podcast. Good morning,

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Speaker 2: It's Wednesday, the third of September. I'm Caroline Hepkat in

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Speaker 2: London and.

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Speaker 1: I'm Stephen Carolin Brussels. Coming up today, The US and

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Speaker 1: Japan joined the global bond sell off as markets extract

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Speaker 1: higher returns for long dated government debt.

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Speaker 2: China's Gee says the country will never be intimidated as

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Speaker 2: he is joined by the leaders of Russia and North

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Speaker 2: Korea for once in a decade military parade.

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Speaker 1: Plus confronting paralysis at home. The Polish President's White House

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Speaker 1: meeting with Donald Trump threatens to be overshadowed by political

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Speaker 1: tensions in Warsaw.

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

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Speaker 1: Growing concerns over government debt, burdens and public spending are

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Speaker 1: helping to drive a sell off in global bond markets.

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Speaker 3: Yield on thirty year.

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Speaker 1: US treasuries rose close to five percent, as Japanese long

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Speaker 1: dated bond yields also rose. The moves track yesterday's declines

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Speaker 1: in longer maturity European bonds and come as an avalanche

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Speaker 1: of new corporate debt enters the market.

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Speaker 3: Across the globe.

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Speaker 1: Borrowers issued at least ninety billion dollars worth of investment

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Speaker 1: grade debt in one of the busiest weeks of the year.

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Speaker 1: Mark Cranfield is Bloomberg's Markets Live strategist.

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Speaker 4: What's developing here is that you increasingly here governments around

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Speaker 4: the world they want to spend more money. Thissquid deficits

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Speaker 4: are likely to worsen, and investors read that as meaning

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Speaker 4: there's going to be more long bond issues wherever you

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Speaker 4: are in the in the GTA in space.

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Speaker 1: Mark Cranfield speaking there as traders contend with a range

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Speaker 1: of concerns from key economic data and US tariffs to

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Speaker 1: the assault on FED independence.

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Speaker 2: Now, the global selloff broke records here in the UK,

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Speaker 2: with long dated guilt yields hitting a level not seen

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Speaker 2: since nineteen ninety eight. Government bonds and the pounds sold

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Speaker 2: off together in the route in a sign of feign

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Speaker 2: investors wavering confidence in Kirstarma's government. Stubbornly high inflation and

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Speaker 2: extremely tight government spending plans make Britain vulnerable to the

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Speaker 2: moves in the global bond market. Also, Bloomberg's CHFUK economist

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Speaker 2: Dan Hansen says that the rising yields bring further problems.

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Speaker 5: I think if you run it at the back of

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Speaker 5: the envelope, it takes about eight billion away, So she

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Speaker 5: had ten billion of headroom. All else equal, imagine the

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Speaker 5: whole world is unchanged apart from this moving guilt yields,

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Speaker 5: she would have two billion of headrooms. Because so you

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Speaker 5: wipe out nearly all the headroom just based on the

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Speaker 5: moving guilt yields. Of course that doesn't take accounts of

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Speaker 5: the policy u turns that we've had, and also of

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Speaker 5: course the potential for the OBR to downgrade its outlook.

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Speaker 2: For Dan Hansen Boomberg's CFUK economists, the global macroeconomic picture

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Speaker 2: means that Chancellor Rachel Reeves would be wise to build

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Speaker 2: a bigger fiscal buffer against volatility. Many expect the Labour

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Speaker 2: Chancellor will now need to raise taxes in her upcoming

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Speaker 2: autumn budget to meet her fiscal rules.

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Speaker 1: US Treasury Secretary Scott Bessant has said to be planning

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Speaker 1: to start interviewing candidates this Friday to replace Jerown Powell

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Speaker 1: as Federal Reserve chair. According to The Wall Street Journal,

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Speaker 1: Besson will talk to candidates either in person or by

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Speaker 1: video conference with eleven people in the running for the role.

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Speaker 1: Robert Kaplan, vice chairman of Gulbyn Sachson, former Dallas FED president,

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Speaker 1: says it's to be expected.

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Speaker 6: Jpeal's term as chairman ends in May, and so it

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Speaker 6: makes sense that they should start the interview process. I

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Speaker 6: think the main thing for the leader, the next leader

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Speaker 6: of the Fed has to be somebody who has strong

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Speaker 6: grounding in economics and can make independent judgments about the economy.

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Speaker 1: Robert Caplan, speaking there to Bloomberg as Federal Reserve Governor.

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Speaker 1: Lisa Cook's lawyer blasted President Donald Trump's move to oust

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Speaker 1: her as being based on nothing more than cut and

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Speaker 1: paced allegations of mortgage fraud made in social media posts.

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Speaker 1: In a flurry of court filings, Cook's attorney doubled down

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Speaker 1: on our givens he presented at a hearing last week,

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Speaker 1: saying Trump lacked valid grounds to fire Cook for cause.

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Speaker 7: Now.

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Speaker 2: President Jijingping has been showcasing China's growing military firepower. At

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Speaker 2: a once in a decade parade in Channaman Square. She

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Speaker 2: appeared alongside Russia's Vladimir Putin and North Korea's Kim John Un,

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Speaker 2: the first time the three leaders have done so publicly.

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Speaker 2: It's a signal that they are willing to coordinate more

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Speaker 2: openly in challenging the US led global order. The event

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Speaker 2: hosted by China marks eighty years since Japan's defeat in

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Speaker 2: World War Two. Jijingping says his country remains unshaken by threats.

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Speaker 7: The Chinese nation is the gree nation that is never

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Speaker 7: intimidated by any bullies.

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Speaker 3: Sung here and always values independence. Ahead in the.

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Speaker 7: Past, and faced with critical struggles and evil, laisha and darkness,

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Speaker 7: progress and reaction, the Chinese peach.

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Speaker 3: Will be together to defy the enemy.

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Speaker 2: The Chinese person speaking there via a translator. The prade

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Speaker 2: is part of the Communist Party's broader effort to fan

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Speaker 2: nationalistic sentiment on veil new weapons, and display Beijing's diplomatic influence.

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Speaker 1: Jane Street made more trading revenue in the second quarter

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Speaker 1: than any Wall Street bank in history, Bloomberg has learned

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Speaker 1: to The firm neted ten point one billion dollars in

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Speaker 1: trading revenue. That's more than double the size of the

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Speaker 1: firm's revenue in the same quarter last year and beats

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Speaker 1: all of Wall Street's biggest banks. Bloomberg's James Wilcock has more.

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Speaker 8: Jane Street has emerged from relative obscurity as a market

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Speaker 8: making giant in finance. Together with Scissadel and Hudson River Trading,

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Speaker 8: the firm has provided liquidity at ultra fast electronic speeds

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Speaker 8: and turned it into a thirty billion dollar industry to

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Speaker 8: three companies pull in similar amounts to some of Wall

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Speaker 8: Street's biggest trading desks. But the banks would argue that,

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Speaker 8: unlike the newcomers, they have to abide by Post two

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Speaker 8: thousand and eight regulation which stops them from making riskier bets.

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Speaker 8: Jane Street's ten billion dollars windfold this quarter was recorded

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Speaker 8: before in these regulators launched a crackdown on the firm

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Speaker 8: in London, James Wilcock, Bloomberg Radio.

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Speaker 2: A US federal judge ruled yesterday that Alphabet's Google does

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Speaker 2: not have to sell its popular Chrome web browser. However,

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Speaker 2: the firm will be required to share online search data

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Speaker 2: with rivals and can no longer dictate that device makers

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Speaker 2: take all its apps to access the Google Play Store

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Speaker 2: on Android. Global head of Tech research at Bloomberg Intelligence,

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Speaker 2: Man Deep Singh, says the decision was unexpected.

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Speaker 9: It is surprising because Judd Meta was in favor of

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Speaker 9: divesting Chrome, which is the key asset here that everyone

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Speaker 9: is looking at, and in this case, I think the

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Speaker 9: ruling clearly states that they're not required two dives Chrome.

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Speaker 9: At the same time, there won't be any exclusive contracts,

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Speaker 9: so that means the Google Apple thing won't be at

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Speaker 9: least allowed anymore.

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Speaker 2: Bloomberg's man Deep sing there. In a statement, Google praise

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Speaker 2: the judgment for recognizing how AI has changed the search industry,

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Speaker 2: but said that the company continues to disagree with an

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Speaker 2: earlier ruling that it monopolizes online search.

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Speaker 1: The UK government is planning to ban under sixteens from

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Speaker 1: buying energy drinks, citing health concerns with the soft drinks industry.

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Speaker 1: Same manufacturers have already taken steps to self regulate remberks.

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Speaker 1: Tea Adabaio has the story.

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Speaker 10: Drinks including Red Bull, Monster and Prime will soon be

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Speaker 10: off limits for under sixteens in shops, restaurants and online

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Speaker 10: in England. The new law will build on existing voluntary

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Speaker 10: bands in place at most supermarkets and excludes lower caffeine

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Speaker 10: soft drinks like diet coke, coffee or tea. A twelve

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Speaker 10: week consultation period on the legislation will now begin gathering

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Speaker 10: evidence from health experts as well as retailers and manufacturers.

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Speaker 10: Energy drink sales have soared in recent years. Red Bulls

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Speaker 10: revenues grew seventeen percent last year, mainly driven by increased

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Speaker 10: UK distribution with seventy five thousand new points of sale.

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Speaker 10: Research from the British Medical Journal shows up to a

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Speaker 10: third of British children consuming one energy drink every week.

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Speaker 10: Northern Ireland, Scotland and Wales are also considering a similar

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Speaker 10: ban for under sixteens in London.

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Speaker 3: Tea Adabayo Bloomberg Radio.

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Speaker 2: So those are top stories for you this morning. No,

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Speaker 2: I don't have a Red Bull to hand, just a

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Speaker 2: cup of tea, but let me uptake you on the

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Speaker 2: markets this morning. In terms of the bond slide that

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Speaker 2: we've seen globally, Japan has joined that, so too has Australia.

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Speaker 2: Looking at those thirty year yields. So jgb's curtly trading

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Speaker 2: at three twenty six are up by three and a

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Speaker 2: half basis points this morning five nineteen, so six base

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Speaker 2: this points half for example, for the Aussie yield this

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Speaker 2: as we saw treasuries and guilds both slump on Tuesday.

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Speaker 2: That really means a sour note to the start of

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Speaker 2: September for stocks, although stop futures actually for Europe are

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Speaker 2: positive this morning.

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Speaker 3: Will that really last?

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Speaker 2: Given the the all country World indexes currently down two

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Speaker 2: tenths of one percent, the MASCI Asia Pacific index also

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Speaker 2: slumping eight tenths of one percent. The dollar is stronger,

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Speaker 2: the pound and the euro are softer this morning, and

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Speaker 2: gold continues up at ten the one percent. Those are

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Speaker 2: the markets.

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Speaker 1: In a moment, we'll have analysis of the global bond

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Speaker 1: market moves, plus why the Polish president's White House visitors

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Speaker 1: highlighting political tensions at home. But another story that we've

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Speaker 1: been reading this morning about the efforts that defense firms

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Speaker 1: are making to try and recruit the latest top graduates.

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Speaker 2: What did companies give you when you were looking for

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Speaker 2: a graduate job? Do you remember sobbing, I'm enjoying pen

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Speaker 2: there's there are no jobs. Then there's no jobs now

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Speaker 2: oh yeah, okay, that's true. Well listen for Rhiemetel, the

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Speaker 2: German defense company. It's a bit cheeky, really packet of

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Speaker 2: condoms with the tagline safety counts always and everywhere.

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Speaker 3: I mean number one.

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Speaker 2: Yes, I am surprised that companies are still recruiting in person,

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Speaker 2: it seems with these sorts of gimmicks. But it also

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Speaker 2: just shows how far defense companies are trying to recast

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Speaker 2: their public image and crucially to attract you a younger

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Speaker 2: workers now. Bloombos, Chloe Malay and Aaron Kirchfield have been

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Speaker 2: writing about this. There is so much money that's going

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Speaker 2: to be poured into defense and the defense industry. We

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Speaker 2: know they've been speaking to companies like Hensold, to Leonardo,

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Speaker 2: to Babcock, BAE Systems, because they're all scaling up recruitment.

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Speaker 1: Well, it's an interesting thought as well about how people

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Speaker 1: are perceiving these industries too. You know, a lot of

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Speaker 1: people would have, for whatever moral and ethical arguments, not

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Speaker 1: wanted to work for a defense company. But now in

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Speaker 1: the current age, people feel like they're getting involved in

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Speaker 1: protecting their societies, protecting the things that they hold deer

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Speaker 1: and as a result, it's an attraction to the refresher

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Speaker 1: where is in the past and people might have argued

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Speaker 1: that I've put them off.

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Speaker 2: Yeah, Look, there's a million people in the industry apparently

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Speaker 2: are in twenty twenty three, but there may be three

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Speaker 2: quarters of a million more jobs required. But it's not

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Speaker 2: just gimmicks. I mean there are other pergs and of

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Speaker 2: course actually the industry apparently does pay very well.

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Speaker 3: So a story that we are tracking.

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Speaker 2: We will put a link to that writeup in our

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Speaker 2: show notes for you.

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Speaker 3: Well, that's turned two.

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Speaker 1: The global barns sell off now continuing today, A long

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Speaker 1: day to debt in Japan and elsewhere our markets live.

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Speaker 1: Executive editor Mark god More is with us for more.

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Speaker 1: Mark put this in context for us, how significant is

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Speaker 1: this sell.

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Speaker 2: Off on bonds?

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Speaker 3: So far?

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Speaker 7: It's been relatively steady and not overly dramatic or panicked,

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Speaker 7: but it's very significant in terms of that it's ongoing

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Speaker 7: and there's no sign on the horizon that's going to

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Speaker 7: improve anytime soon. In front, we expect stress to increase

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Speaker 7: significantly into year end. And many of these bond market

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Speaker 7: yields of the long and you take France, Japan, UK

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Speaker 7: multi year highs, a US not quite a multi year

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Speaker 7: highs yet and the thirty year but it mean are

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Speaker 7: pretty close to it. So you know, those that fiscally

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Speaker 7: fraught four I think are very vulnerable to the significant.

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Speaker 3: Work sell offs. And I think this is going to

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Speaker 3: be the big theme for the last few months.

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Speaker 9: Of the year.

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Speaker 2: Have you been watching the Fantastic four fiscally fraud to four?

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Speaker 2: I like that description. I've just decided right now I'm

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Speaker 2: got to coin that. So you've got to start spreading

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Speaker 2: a week go yeah, fantastic four.

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Speaker 3: Okay.

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Speaker 2: How does the US economic data play into this? I mean,

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Speaker 2: we had a week ism report only yesterday.

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Speaker 3: Yeah. So each of those countries I name have idiosyncratic stories.

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Speaker 7: I think they all have fiscal concerns about, you know,

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Speaker 7: whether governments are taking their debt loads seriously, but they

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Speaker 7: all have varying degrees of inflation concern. The US one's

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Speaker 7: a little bit interesting because you know that the new

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Speaker 7: narrative in the US is that, hey, growth holding up okay,

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Speaker 7: and yet the Fed's being pressured to cut rate, so

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Speaker 7: you're going to get easing monetary policy into a reaccelerating economy,

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Speaker 7: is the current native narrative. So that means like inflation

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Speaker 7: will take off again, and I think that's the big

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Speaker 7: concern in the US.

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Speaker 3: So for the US it's a slightly weird one.

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Speaker 7: It's a little bit different others where they're they're trading

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Speaker 7: more of a stagflation narrative.

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Speaker 3: US was trading that I think this week.

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Speaker 7: Ironically enough, it's if there's very strong data this week

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Speaker 7: that it might be most panicked for the bond markets,

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Speaker 7: whereas for some other countries it's not that way around.

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Speaker 1: So I get the impression you don't see the UK

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Speaker 1: as being a particular outlier with a lot of attention

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Speaker 1: paid to those headlines. Yesterday, the thirty year yield it

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Speaker 1: got to the highest since the nineteen ninety eight.

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Speaker 7: So the UK's got the highest thirty year yields those

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Speaker 7: four so nominal terms, it is the most undistressed the moment,

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Speaker 7: the one probably most it's most highest thirty year yields

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Speaker 7: and the biggest change from a few years ago. So yeah,

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Speaker 7: UK it probably is at the forefront of stress. But

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Speaker 7: there's many different ways of looking in it. I think

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Speaker 7: if you look at the term premium in the market,

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Speaker 7: you know it's the Japanese bond market.

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Speaker 3: But again that's a bit.

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Speaker 7: More I said, there's al slightly adly syncratic the ownership

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Speaker 7: situation in Japan were so much are domestically owned, and

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Speaker 7: makes it a little bit more insulative. But so yeah,

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Speaker 7: I think if I had to pick one that's probably

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Speaker 7: at the forefront, I would say it's the UK. It

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Speaker 7: might be surpassed by France soon enough, but I think

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Speaker 7: Europe is at the forefront of this right now, not

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Speaker 7: the US of Japan out Well, you.

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Speaker 2: Did mention that it could get more pressure towards the

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Speaker 2: end of the year. September is traditionally weak in terms

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Speaker 2: of the month for bonds. Should we be expecting more

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Speaker 2: difficult times in the weeks ahead?

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Speaker 3: What would propel that?

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Speaker 7: Yeah, I mean, look, the first catalyst is the French

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Speaker 7: political risk, you know, which is I need to start

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Speaker 7: in next week, So that's the next big catalyst. And

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Speaker 7: I said Francis is rapidly catching up to potentially take

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Speaker 7: over from UK as being at the forefront of pain.

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Speaker 7: But none of these countries seem to have very clear

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Speaker 7: solutions to the stress at the moment, so it's just

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Speaker 7: kind of building any you know, at some point, and

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Speaker 7: I don't know that the ultimate catalyst will be. It

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Speaker 7: might be an internal markets one is there's going to

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Speaker 7: be just a binary tipping moment where the losses just

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Speaker 7: start getting so much they start spiraling. And because it's

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Speaker 7: a global situation, that's very worrying. Normally, if you've got

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Speaker 7: one country and pressure, then essentially, if you've got enough

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Speaker 7: for sell off, there's enough money to be.

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Speaker 3: Elsewhere to kind of pour in.

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Speaker 7: But if every kind of market is sell off at once,

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Speaker 7: and all these long end kind of natural buyers, all

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Speaker 7: these pension funds, real money funds, if they're all experienced

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Speaker 7: in large market to market losses, then no one's there

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Speaker 7: to buy the dips. So I don't know what that

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Speaker 7: the final tipping point is, but everything is a worrying

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Speaker 7: catalyst in the months ahead.

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Speaker 3: The most The next one to look at is probably fronts.

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Speaker 1: Okay, Mark Cogmoor, our Market's live executive editor, Thank.

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Speaker 2: You, stay with us. More from Bloomberg Day baqube coming

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Speaker 2: up after this. Now to Poland. The Polish President is

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Speaker 2: meeting Donald Trump in the White House later today. Karl

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Speaker 2: Novrotsky's trip comes at a time when there's increasing political

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Speaker 2: paralysis in Warsaw that's being driven by tensions between the

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Speaker 2: president and the government led by Donald Tusk. Skolimowski leads

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Speaker 2: our team covering Eastern and Central Europe, and he joins

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Speaker 2: us now from Warsaw for more good to speak to

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Speaker 2: how are these political tensions then hurting policy making?

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Speaker 3: Firstly in Poland. Good morning.

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Speaker 11: Indeed, so we will have Karl Lavrotski in Washington today

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Speaker 11: and the trip is very significant. Navrotsky won presidential election,

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Speaker 11: which was a shock for the establishment here. What we

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Speaker 11: have to remember is that this election was critical for

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Speaker 11: the government of Donald Tusk. He came to power in

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Speaker 11: twenty twenty three. It was a huge success for sort

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Speaker 11: of pro EU forces in Poland and ended period of

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Speaker 11: eight years of populist rule. And the hope was that

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Speaker 11: in this election, the presidential election, the government will have

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Speaker 11: an ally at the presidential palace to work together to

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Speaker 11: sign bills reverse some of the policies that the previous

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Speaker 11: nationalist government had in place. Instead, they got a nationalist

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Speaker 11: or pro opposition and candidate who also is pretty new

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Speaker 11: to politics. And the main concern for the government here

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Speaker 11: when we speak specifically about the domestic policies, is that

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Speaker 11: we've already seen that Navrotski when he came to power,

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Speaker 11: he vetoed already seven bills. One of the bills includes

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Speaker 11: expansion of the wind farms, for example, And we've been

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Speaker 11: hearing and we've been writing this in a story as

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Speaker 11: well from from some of the government officials that they

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Speaker 11: are growing worried that if you have a situation where

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Speaker 11: there is really no clarity on policy, this may spook investors.

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Speaker 11: And Poland has been growing very rapidly. It's been really

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Speaker 11: an economic success, but it also has a has a

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Speaker 11: huge deficit, and that also needs cooperation between the president

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Speaker 11: and the government. And here again Navarrotski has said he's

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Speaker 11: going to veto any bills that would raise raise taxes.

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Speaker 11: So purely under the domestic front, it's it's a very

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Speaker 11: tricky situation for the government and they just don't have

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Speaker 11: someone that they could work with in the presidential palace.

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Speaker 1: So Nevrosky endorsed by the MAGA movement in the US,

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Speaker 1: what will he be hoping for from today's white eyed visits.

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Speaker 11: So Nevrosky, Yeah, it was quite a significant situation where

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Speaker 11: Trump literally came out and endorsed him before the election.

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Speaker 11: I don't think it's it's pretty unprecedented. We know that

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Speaker 11: what he's trying to get and here he seems to

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Speaker 11: be aligned with the government is making sure that Trump

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Speaker 11: since since the US administration is reviewing it's it's true

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Speaker 11: posture in Europe, make sure that US doesn't pull troops

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Speaker 11: from Europe and especially from Poland. Poland currently hosts around

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Speaker 11: ten thousand troops which have been deployed here after the

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Speaker 11: start of the fullskin invasion.

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Speaker 3: So that's one that point. Number one.

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Speaker 11: Another thing is support for Ukraine. And here we have

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Speaker 11: again the situation where the government is speaking when one

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Speaker 11: voice and the president with another. The government is pure

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Speaker 11: is very much aligned with you, They're very much supportive

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Speaker 11: for Ukraine. We're not clear about about where Abrotski stands

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Speaker 11: here because he's against you membership for Ukraine, also for NATO.

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Speaker 11: So here we really don't know how far he's going

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Speaker 11: to take that message that the government really wants him

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Speaker 11: to take to the White House.

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Speaker 2: Indeed, so then what are we expecting from the White

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Speaker 2: House meeting today? As you say in Avolotski endorsed by

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Speaker 2: the MAGA movement, what might emerge?

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Speaker 11: Yeah, what's It's really interesting what happened before the visit itself,

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Speaker 11: because usually the way it works is that president receives

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Speaker 11: certain instructions or government statement that he takes to to

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Speaker 11: to meetings like that one, and you know, just to

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Speaker 11: give you a sense of the paralysis that happened or

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Speaker 11: kind of the sense of the of the of the

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Speaker 11: route that we have here is that that instruction, which

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Speaker 11: you know is a documented pretty secret, has been leaked.

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Speaker 11: So for example, the government warned Neverowsky not to discuss

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Speaker 11: certain aspects such as, for example, tax on internet companies,

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Speaker 11: and and you know, the the question here is whether

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Speaker 11: Navrowski is going to, given that he's so close to Trump,

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Speaker 11: is going to just go in line with Trump and

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Speaker 11: and pretty much and accept with whatever he wants, or

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Speaker 11: he's going to work with the government and and sort

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Speaker 11: of work with its policies. But the key thing that,

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Speaker 11: as I mentioned, the key thing is is troops. And

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Speaker 11: and here probably Neverasky will will will work together with

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Speaker 11: the government. The question is will he actually deliver this

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Speaker 11: strong message of support for Ukraine.

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