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Speaker 1: Good morning. It's Wenesday, the first of November here in London.

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Speaker 1: This is the Public Day bake At podcast. I'm Caroline Hepkit.

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Speaker 2: And I'm Stephen Carroll. Coming up today. Dozens are killed

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Speaker 2: as Israeli air strikes target a Gaza refugee camp, which

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Speaker 2: the military says was a Hammas stronghold.

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Speaker 1: In other news, anticipating a Hawkish hold, Wall Street expects

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Speaker 1: a second consecutive pause from the Federal Reserve, with attention

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Speaker 1: also on the US deficit.

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Speaker 2: Plus Sunak's thick of It moment. The UK COVID inquiry

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Speaker 2: exposes the chaos that was inside Downing Street.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: Israel's military hit a refugee camp in Gaza with a

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Speaker 2: series of air strikes, with television footage showing dozens of

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Speaker 2: people killed. Israel Defense Forces spokesperson Daniel Hagari says it

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Speaker 2: was targeting Hamas and killed a senior leader in the organization.

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Speaker 3: Tonight, we eliminated the murderous terrorist, Ibrahim Biari. Biari is

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Speaker 3: the main combat leader in the northern Gaza strip since

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Speaker 3: the IDF forces entered Gaza. He also had a part

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Speaker 3: in the massacre on October seventh. During his assassination, many

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Speaker 3: terrorists were killed, terrorists who stayed with him in the

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Speaker 3: building and in the underground area below the buildings.

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Speaker 2: The targeting of our FuG campus total concerns about the

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Speaker 2: mounting death toll from weeks of fighting. United Nations Secretary

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Speaker 2: General Antonio Guterres reiterating a call for an immediate humanitarian ceasefire.

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Speaker 2: Bolivia severed diplomatic relations of Israel on Tuesday, accusing it

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Speaker 2: of carrying out crimes against humanity.

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Speaker 1: US Secutive State Anthony Blinken will also return to Israel

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Speaker 1: this Friday. America's top diplomat told the US Senate it

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Speaker 1: is too soon to call for a ceasefire.

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Speaker 4: When it comes to a ceasefire in this moment, you're

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Speaker 4: exactly right. That would simply consolidate what Hamas has been

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Speaker 4: able to do and allow it to remain where it

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Speaker 4: is and potentially repeat what it did another day, and

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Speaker 4: that's not tolerable.

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Speaker 1: Lincoln also drew connections between the war in Ukraine and Israel,

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Speaker 1: calling the conflicts quote one fight. President Joe Biden's top

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Speaker 1: national security officials oppose separating arms aid for Israel from Ukraine.

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Speaker 1: A group of hardline House Republicans have said that they

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Speaker 1: want to rush age to Israel but delay or reject

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Speaker 1: more weapons for Ukraine in its fight against Russia's invasion.

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Speaker 2: Federal Reserve officials meet today, with markets anticipating that interest

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Speaker 2: rates will remain unchanged. The Central Bank is poised to

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Speaker 2: hold for a second straight meeting while keeping it's tightening bias.

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Speaker 2: QI Research CEO and chief strategist Danielle DiMartino Booth says

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Speaker 2: she will be listening to the tone of the press

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Speaker 2: conference from Jerome Powell.

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Speaker 5: If you look back at all of history, once we

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Speaker 5: get a double pause, the Fed does tend to be finished.

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Speaker 5: But we're going to want to look at j Powell's

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Speaker 5: body language. Is she going to be I'm saying.

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Speaker 6: I am.

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Speaker 5: We're going to be higher for longer and that's that.

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Speaker 5: And don't expect any rate cuts in twenty twenty four.

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Speaker 5: We're going to find out when he's at the podium.

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Speaker 5: And I think that it was that level of resoluteness

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Speaker 5: last FOMC meeting that really started to set a panic

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Speaker 5: into the market. This guy's serious type of thinking.

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Speaker 2: Booth added the other thing that she's looking at as

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Speaker 2: any mention of financial conditions. The other event drawing attention

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Speaker 2: today is the US Treasuries refinancing announcement later which we'll

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Speaker 2: look at the US government's borrowing needs.

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Speaker 1: Now. Betting on political and economic events has returned as

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Speaker 1: the top performing strategy for hedge funds in the third

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Speaker 1: quarter of the year. That's after a dismal performance for

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Speaker 1: macro trades in the first six months of twenty twenty three.

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Speaker 1: Data from Sitko says that asset weighted returns for macro

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Speaker 1: funds surpassed three percent in the three months to the

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Speaker 1: end of September. Now that's compared to small losses registered

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Speaker 1: by multi strategy and equities funds in the same period.

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Speaker 1: Increased volatility in August and September, along with a clearer

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Speaker 1: outlook on interest rates, helped to boost the performance of

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Speaker 1: macro funds.

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Speaker 2: We Work plans to file for bankruptcy as early as

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Speaker 2: next week, according to a report in The Wall Street Journal.

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Speaker 2: The company symbolized the venture capital boom, reaching a valuation

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Speaker 2: of forty seven billion dollars. A botched IPO and changing

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Speaker 2: business environment now sees the company missing interest payments in

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Speaker 2: early October. A spokesperson for the company said it would

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Speaker 2: not comment on speculation.

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Speaker 1: Now, a former UK government advisor has reopened debates about

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Speaker 1: the Conservative government's handling of the COVID pandemic, which caused

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Speaker 1: more than two hundred and thirty one thousand deaths in Britain.

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Speaker 1: Prime Minister Ishisunak has pitched himself as a clean break

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Speaker 1: from previous administrations, but Dominic Cummings explosive evidence to the

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Speaker 1: official COVID nineteen inquiry laid the blame with ministers who

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Speaker 1: he called morons and far more offensive words.

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Speaker 7: I think I was reflecting at widespread view amongst our

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Speaker 7: competent people at the center of time about the colabor

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Speaker 7: of a lot of senior people who are dealing with

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Speaker 7: this crisis extremely badly.

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Speaker 1: Like Cummings, both Tunak and Boris Johnson will have to

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Speaker 1: take questions from the inquiry. It threatens to derail the

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Speaker 1: prime minister ahead of a coming general election. We want

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Speaker 1: to bring you up to date with the latest developments

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Speaker 1: in the Middle East. The U s Sectory of State

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Speaker 1: is to travel back to Israel after dozens of people

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Speaker 1: were reported killed and injured in Israel's air strikes on

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Speaker 1: a refugee camp in Gaza. Blueberg's Paul Wallace, who leads

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Speaker 1: our Middle East Economics and government coverage, joins us. Now,

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Speaker 1: good morning, Paul. Let's start with the events in the

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Speaker 1: Jabalayah refugee camp. What do we know about what happened?

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Speaker 8: Hi, Caroline, Well, yes, this is another very controversial air

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Speaker 8: strike or explosion that's taking place. With this one, Israel

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Speaker 8: has admitted that it was responsible. It says that it

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Speaker 8: was targeting a Hamas training center, training center that apparently

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Speaker 8: was used in in the militant militant groups October the

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Speaker 8: seventh attacks. Israel says that the explosion or their strike

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Speaker 8: caused damage to nearby buildings, including including some in this

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Speaker 8: in this refugee camp. So we don't know the death total,

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Speaker 8: but Palestinian official than the Hamastan territory is saying that

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Speaker 8: it amounts to tens and perhaps over fifty.

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Speaker 6: So this is something that is further.

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Speaker 8: Sort of inflaming tensions in in the broader Middle East

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Speaker 8: and the UAE, Kappa and Sally Arabia have all strong

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Speaker 8: strongly condemned the strike by Israel and reiterated calls for

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Speaker 8: an immediate ceasefire in Gaza.

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Speaker 2: Well, that's pay in Gaza for the moment, Poul. It

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Speaker 2: looks like the Rafa border crossing into Egypt may be

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Speaker 2: opened to allow some wounded Palestinians to leave the territory.

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Speaker 8: Yes, so Hamas has said very early this morning that

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Speaker 8: some wounded Palestinians will be allowed to cross into Egypt

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Speaker 8: for treatment at Egyptian hospitals. UMAs is also saying that

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Speaker 8: some foreign nationals will.

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Speaker 6: Be allowed to leave the enclave.

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Speaker 8: It gave a list of mostly Angio workers, and that

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Speaker 8: list included foreigners in dual nationals some places like Australia

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Speaker 8: and Indonesia. No US citizens on that, and I believe

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Speaker 8: no European citizens either have. There's still there's still some

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Speaker 8: Western diplomats are saying that this might not happen today.

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Speaker 8: They are saying that there's been so much talk about

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Speaker 8: this about allowing foreigners out of the last three weeks,

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Speaker 8: and then it's always broke down at the last minute.

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Speaker 6: So seeing is believing on that front.

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Speaker 8: But Hamas is saying that that will or should be

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Speaker 8: able to happen as soon as today.

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Speaker 1: Let's go then to the diplomatic efforts now, because Anthony

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Speaker 1: blinkn is meant to be going back to the Middle

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Speaker 1: East later this week. What do you think we should

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Speaker 1: expect from that trip.

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Speaker 8: Yes, so he's meant to be going to Israel on

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Speaker 8: Friday and other countries in the regions for some Arab

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Speaker 8: Arab states. I think he's he's going to very much

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Speaker 8: rearfirm his support for Israel. Certainly in public, it's likely

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Speaker 8: he's going to continue putting pressure on the Israelis to

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Speaker 8: allow more aid into into Gaza and probably also press

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Speaker 8: them on what.

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Speaker 6: Their end goal is for the territory.

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Speaker 8: We know that in private, the US is very much

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Speaker 8: putting or questioning Israel's military establishment and its government to

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Speaker 8: find out what exactly it planned to do with Gaza's governance.

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Speaker 8: It seems clear that Israel does not want to run

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Speaker 8: the church for itself.

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Speaker 6: It's it's all but.

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Speaker 8: Ruled that out or already given how difficult and unpopular

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Speaker 8: that would be. But it's not Israel, then who. And

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Speaker 8: I think the Americans want Israel to really start planning

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Speaker 8: for Gaza's future once all the strikes and the ground

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Speaker 8: offensive is over. But it seems from our reporting that

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Speaker 8: both Americans and these Raelis do not really have a

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Speaker 8: clear plan at all. There's a vague talk of some

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Speaker 8: kind of third party from the Arab world or perhaps

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Speaker 8: the United Nations and stepping into to run the territory

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Speaker 8: in some form. But as I said, this is all

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Speaker 8: very theoretical at the moment, and it seems like ideas

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Speaker 8: are just being suggested with no clear idea what the

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Speaker 8: what the what the main plan is?

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Speaker 2: Of course, Yeah, there's a situation very very uncertain, but

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Speaker 2: interesting to see those reports around the idea of the

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Speaker 2: US and Israel considering a peacekeeping force for Gaza in

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Speaker 2: the future as well. This Paul, as, we've been learning

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Speaker 2: that the US is sending more troops to the Middle

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Speaker 2: EA's not to Israel, but when we're thinking about the

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Speaker 2: broader regional implications of the Israel Hamas conflict and the

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Speaker 2: US reinforcing it's troops stationed in the region.

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Speaker 8: Yeah, and that's been a big, big topic since the

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Speaker 8: October seventh attacks by Hamas, and the US has sent

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Speaker 8: two aircraft carrier groups to the Eastern Mediterranean. It's barked

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Speaker 8: up as presence of marines there, and both the Israelis

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Speaker 8: and the US do not really want boots on.

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Speaker 6: The ground in Israel.

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Speaker 8: That's something they both want to avoid, and so far

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Speaker 8: there's no suggestion that will happen. It's very likely that

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Speaker 8: they are, you know, at the moment, almost on a

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Speaker 8: permanent basis, you know, senior US offices in the country

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Speaker 8: to help with the US Israeli military coordination, but not

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Speaker 8: we're not talking boots on the ground. US military bases

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Speaker 8: in Syria and Iraq have come under pretty let's say,

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Speaker 8: intent drone a missile attacks since October the seventh. Those

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Speaker 8: strikes have picked up. So far, they don't seem to

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Speaker 8: have caused too much in the damage and haven't caused

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Speaker 8: much in the way of they haven't caused many casualties,

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Speaker 8: but that is certainly something the US.

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Speaker 6: Is worried about.

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Speaker 1: Okay, Paul, thank you so much for being with us

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Speaker 1: this morning. Bloomberg's Paul Wallace, who leads our Middle East

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Speaker 1: government and economics coverage, joining us this morning just to

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Speaker 1: bring us the latest developments when it comes to Israel

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Speaker 1: hamas well.

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Speaker 2: Let's turn to other news now and the decision from

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Speaker 2: the Federal Reserve due later on. The US Central Bank

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Speaker 2: expected to hold interest rates at their highest level in

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Speaker 2: twenty two years. For a second meeting, while leaving the

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Speaker 2: door open for another potential hike. As soon as December,

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Speaker 2: Bloomberg television anchor critic gave it is with us in

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Speaker 2: studio for more Good morning to you, Critty. So what

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Speaker 2: pau is widely expected at this meeting. So it's the

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Speaker 2: language being used by Jerome pal that'll be most in

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Speaker 2: focus later on.

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Speaker 9: Yeah, I think we're going to get a little bit

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Speaker 9: dejevous from the last meeting, which is kind of a

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Speaker 9: hawkish pause maybe on the cards here. And I think

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Speaker 9: what's important to keep in mind is that we've heard

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Speaker 9: time and time again from a lot of not only

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Speaker 9: Cherman Powell, but from of the other FED speakers and

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Speaker 9: the voting members as well. In the last i want

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Speaker 9: to say, six weeks or so, where they're still saying, look,

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Speaker 9: the economy is extremely resilient. You are still seeing a

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Speaker 9: very strong labor market, you are still seeing wage growth increase.

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Speaker 9: Not to mention a lot of the unions and the

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Speaker 9: strikes have been come a part of the conversation as well.

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Speaker 9: This is all not exactly indicative of a slowing economy.

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Speaker 9: In fact, it's an accelerating economy. And I think that's

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Speaker 9: what's kind of throwing everybody for a loop here, because

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Speaker 9: the markets were positioned for a slowdown. The question is

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Speaker 9: when does the slowdown happen at the end of twenty

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Speaker 9: twenty three, or at the end of twenty twenty four

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Speaker 9: or now even the conversation is twenty twenty five. And

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Speaker 9: that's I think why you're seeing Chairman powersply start to say, well, Okay,

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Speaker 9: we might need to just give it a little bit

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Speaker 9: more time to see how the bond market actually shakes

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Speaker 9: out before we hike again. But we will hike again.

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Speaker 9: And that seems to be the message that the markets

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Speaker 9: are taking so far.

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Speaker 1: Yeah, the only thread of negativity seemed to be that

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Speaker 1: US consumer confidence that dropped to a five months low

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Speaker 1: in data out yesterday. How much work do you think

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Speaker 1: has been done and sort of for the FED as

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Speaker 1: it were, in terms of tighty financial conditions from the

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Speaker 1: recent surgeon treasure.

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Speaker 9: You quite a bit. And this is something that you've

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Speaker 9: heard from a lot of not just market folks, but

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Speaker 9: also people from around the world as well. I'll remind

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Speaker 9: you that Governor you wait over at the BOJ said

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Speaker 9: that as well. He said a lot of the moves

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Speaker 9: in the GGB market isn't actually based on the Japanese economy.

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Speaker 9: It's based on the US economy the selloff you've seen there.

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Speaker 9: But I think what's so important about today is not

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Speaker 9: just the Federal Reserve announcement, but also the refunding announcement

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Speaker 9: that we're going to get in a couple of hours

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Speaker 9: as well. And this kind of pre I wannt want

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Speaker 9: to say pre dates, but basically comes before the Federal

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Speaker 9: Reserve decision I think comes out about nine am US time.

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Speaker 9: But basically the idea here is that the idea if

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Speaker 9: you need to fund a fiscal deficit, which for some

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Speaker 9: reason is now being talked about more and more by

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Speaker 9: the Federal Reserve, whereas it wasn't really part of the

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Speaker 9: conversation before because it was such a long term thought process,

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Speaker 9: the Treasury needs to issue more debt. Now the market

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Speaker 9: knows that they're expecting more debt. What happens, though, is

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Speaker 9: that if you actually have less on the market, then

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Speaker 9: suddenly you have more demand for limited supply because you

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Speaker 9: have less supply than expected. And what that basically does

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Speaker 9: is push a lot of yields lower, create a lot

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Speaker 9: more demand for the bond market in a way that

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Speaker 9: completely turns the current trend in the bond market on

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Speaker 9: its head. So so far, we've seen a sell off

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Speaker 9: in the last couple of months, this kind of major

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Speaker 9: volatility where a lot of people don't want to be

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Speaker 9: exposed to the bond market, one because of the fiscal

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Speaker 9: deficit issues. Also because there are people don't really want

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Speaker 9: that exposure to the United States. It's not seen as

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Speaker 9: a haven the way it was before, simply because we

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Speaker 9: go in these iterations of government shutdowns and deficit talks

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Speaker 9: as well. And on top of that this kind of

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Speaker 9: mix of hawkish talk, add on the geopolitics and the

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Speaker 9: oil price to it, well, you don't really want to

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Speaker 9: be exposed to the inflationary story in the United States.

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Speaker 9: That being said, if you start to suddenly see the

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Speaker 9: market plumbing, which is what this refunding announcement addresses, kind

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Speaker 9: of turn around. You have this built in demand for

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Speaker 9: the bond market that's going to create basically a vacuum

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Speaker 9: that pushes yields lower and turn the entire market move

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Speaker 9: on its head. And a lot of people are saying

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Speaker 9: that that announcement is going to be more indicative of

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Speaker 9: where bonds go next. Than the Federal Reserve. Will.

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Speaker 7: M