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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybacurate podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Monday, the twenty fifth of March in London.

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Speaker 1: I'm Caroline HEPKEA coming up today. As the deathtop from

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Speaker 1: the Moscow concert hall attack continues to rise, Putin makes

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Speaker 1: furious claims of Ukrainian involvement. Once bitten twice, not so

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Speaker 1: shy global bond traders once again load up on rate

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Speaker 1: cut wages and deadline day for Donald Trump, the presidential

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Speaker 1: contender faces having his assets seized unless he posts a

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Speaker 1: court bond worth more than half a billion dollars. Let's

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Speaker 1: start with a roundup of our top stories. Russia has

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Speaker 1: charged four men in connection with the Moscow concert hall

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Speaker 1: terrorist attack, in which at least one hundred and thirty

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Speaker 1: seven people were killed. The men had a number of

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Speaker 1: viable of injuries and one needed treatment during the heat hearing.

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Speaker 1: The court ordered that all four be detained until the

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Speaker 1: trial in May. Islamic State has taken responsibility for the

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Speaker 1: attack and posted footage of the assault, but Vladimir Putin

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Speaker 1: and other officials have made vague claims of Ukrainian involvement.

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Speaker 1: That is something that Vladimir Zelenski has strenuously denied.

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Speaker 2: It's just it's obvious that both Putin and others are

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Speaker 2: trying to shoot responsibility on someone else. They've already been

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Speaker 2: blowing up houses, shootings and explosions, and they always blame others.

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Speaker 1: The Ukrainian President's comments, spoken there by a translator, come

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Speaker 1: amid concerns that Putin could use the attack to justify

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Speaker 1: a new mass mobilization of troops for the ongoing invasion

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Speaker 1: of the country. On Friday, Russia unleashed the biggest missile

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Speaker 1: and drone assault on Ukraine so far this year. French

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Speaker 1: authorities have raised their security alert level to the maximum

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Speaker 1: following the deadly attack on Friday in Moscow. The Prime

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Speaker 1: Minister Gabrielle Attal said that the increased country wide awareness

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Speaker 1: level was justified given the quote Islamic states claim that

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Speaker 1: it was responsible for the attack and the threats weighing

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Speaker 1: on our country. Attal made the announcement in a tweet

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Speaker 1: on Sunday evening, following a Defense and Security Council meeting

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Speaker 1: organized by President Immanu and Maco. At the Elise Palace. Meanwhile,

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Speaker 1: in markets, bond traders are once again betting that the

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Speaker 1: Third ECB and Bank of England are close to cutting rates.

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Speaker 1: After entering the year banking on March, rates, traders are

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Speaker 1: now leaning towards June as the start of the easing cycle.

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Speaker 1: But after previous bets that central banks would be swift

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Speaker 1: to loosen monetary policy backfired, consensus is now building that

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Speaker 1: this time things are different. Matthew A. Dixon is the

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Speaker 1: head of fixed income strategy at Bank of America. He

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Speaker 1: says that we still haven't see the full effects of

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Speaker 1: rate hikes.

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Speaker 3: It takes twelve to twenty four months for rate hikes

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Speaker 3: to actually impact the economy. So if you're looking at

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Speaker 3: a lagging economic intoget inflation and the rate leg come

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Speaker 3: back and talk to me first half for twenty twenty

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Speaker 3: five to the back half of twenty twenty five and

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Speaker 3: tell me if rate hikes haven't worked. So they've gotten

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Speaker 3: the soft slash, no landing, they're going to continue to

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Speaker 3: play for that. With one hundred and seventy million people

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Speaker 3: in the labor force, every one percent increasing employment, what's

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Speaker 3: about too many people out of work?

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Speaker 1: It's worth playing for Matthew Ditchalk making the case for

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Speaker 1: rate cuts to come.

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Speaker 4: There.

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Speaker 1: The prospect of lower rates is particularly boosting the allure

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Speaker 1: of shorter data obligations, which stand to gain the most

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Speaker 1: as rate cut speculation continues to build. Now the UK

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Speaker 1: chances of Jeremy Hunt has pledged to maintain Britain's triple

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Speaker 1: lock state pension if his party wins the next election.

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Speaker 1: The commitment means that the state benefit would continue to

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Speaker 1: rise by the highest of either inflation averagjournings or two

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Speaker 1: and a half percent annually. Now, he told the BBC's

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Speaker 1: Lawercusbo that he is confident that the government can grow

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Speaker 1: the economy enough to pay for this.

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Speaker 5: That is an expensive commitment and you can only and

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Speaker 5: indeed and you can only make that commitment if you're

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Speaker 5: confident that you're going to deliver the economic growth that's

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Speaker 5: going to pay for it. What we saw in the

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Speaker 5: budget was because we have a plan for growth, the

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Speaker 5: OBI say that we will get back to two percent

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Speaker 5: ish growth over the next day to speak. That means that

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Speaker 5: we can start to make that very important.

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Speaker 1: So that was the chaser Jeremy Hunt and now his

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Speaker 1: comments come as the Labour party also reaffirmed its commitment

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Speaker 1: to the triple lock. The Institute for Fiscal Studies, though,

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Speaker 1: has calculated that the state pension cost the government eleven

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Speaker 1: billion pounds a year more than had it risen in

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Speaker 1: line with either inflation or earnings since twenty ten. Now

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Speaker 1: to Ireland, where the Education Minister Simon Harris has been

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Speaker 1: named leader of his party Phinogoyl, making him Prime Minister elect.

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Speaker 1: The move comes after previous leader and Premier Lea Varadkar

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Speaker 1: announced his intention to resign last week. Now Harris stood

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Speaker 1: uncontested for the leader spot and used his first speech

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Speaker 1: to emphasize a commitment to cooperation in Ireland and beyond.

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Speaker 4: We will always be a party that will work with

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Speaker 4: everybody across this island of Ireland to embed peace and

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Speaker 4: prosperity and to make sure we harness the untapped potential

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Speaker 4: of the all Ireland economy. We will always support democracy

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Speaker 4: and freedom and we condemn onreservedly the horrific illegal invasion

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Speaker 4: of Ukraine by Putin and we stand by Ukraine always.

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Speaker 1: That was the Phinnogoyl leader Simon Harris speaking there. It's

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Speaker 1: expected that Harris will be formally voted in as t Shirk,

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Speaker 1: the Prime Minister in Ireland, on the ninth of April,

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Speaker 1: when Parliament returns after its Easter break. Today's deadline, we'll

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Speaker 1: see Donald Trump either have to post a bond to

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Speaker 1: cover a four hundred and fifty four million dollar civil

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Speaker 1: forward verdict or risk the seizure of some of his assets.

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Speaker 1: The former president says he has almost five hundred million

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Speaker 1: dollars in cash, but would need closer to a billion

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Speaker 1: dollars in reserves to cover the amount and also retain

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Speaker 1: enough cash to run his real estate company. The deadline

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Speaker 1: coincides with Trump's appearance in a Manhattan court for a

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Speaker 1: hearing related to accusations that he falsified business records before

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Speaker 1: the twenty sixteen election. And those are today's top stories

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Speaker 1: for you. Now, let's talk a little bit more about

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Speaker 1: Russia holding a national day of mourning on Sunday after

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Speaker 1: the terrorist attack that killed at least one hundred and

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Speaker 1: thirty seven people in Moscow. Four men have now been

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Speaker 1: charged with terrorism. Joining me this morning is Tony Halpin. Tony,

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Speaker 1: good morning. You lead our economics and government coverage in

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Speaker 1: Russia and the wider region. Still a lot of unknowns

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Speaker 1: does seem that the evidence points towards the attack being

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Speaker 1: carried out by Islamic State.

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Speaker 6: Yes, good morning. Certainly Islamic State have claimed it. They've

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Speaker 6: published videos showing what they say are the four men

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Speaker 6: who were carrying out the attack. Putin, as you mentioned, though,

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Speaker 6: continues to point toward Ukraine, even though they are unable

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Speaker 6: to provide any evidence showing that they alleged that the

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Speaker 6: four attackers who were detained were on their way to Ukraine.

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Speaker 6: Russia itself, of course, is deeply in shock and people

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Speaker 6: are really reflecting that it harks back to a period

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Speaker 6: in the early two thousands when terrorist attacks were frequent

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Speaker 6: and cause real alarm.

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Speaker 1: The narrative from the Kremlin, though, Tony, is that the

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Speaker 1: attack came from Ukraine.

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Speaker 6: Yes, and there are probably two reasons for that.

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Speaker 7: I mean.

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Speaker 6: The first is, in any normal country, a massacre of

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Speaker 6: this size would immediately raise questions about the competence of

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Speaker 6: the security services and there be political demands for to

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Speaker 6: role in the leadership. But nothing of that sort is

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Speaker 6: happening in Russia. Because put In, even though he dismissed

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Speaker 6: warnings of a terrorist attack just a few days before

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Speaker 6: it actually took place, doesn't, of course, want to hold

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Speaker 6: the FSB accountable for these failures, and it serves the

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Speaker 6: Russian state's purpose to try and blame things on Ukraine

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Speaker 6: because they're desperately trying to maintain support for the war,

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Speaker 6: and that's raising questions about what they might be planning next.

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Speaker 1: In terms of the motivation behind the attack, then, I

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Speaker 1: mean the US intelligence had warned about this, right, yes, they.

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Speaker 6: Gave quite a specific warning at the seventh of March,

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Speaker 6: saying that there was a risk of terrorist attacks on

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Speaker 6: large scale gatherings, including concerts, and put it on Tuesday,

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Speaker 6: met with top Federal Security Service officials and publicly dismissed

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Speaker 6: that warning as some sort of American propaganda designed to

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Speaker 6: frighten and divide Russian society. So that's pretty embarrassing for

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Speaker 6: the Russian leader. Islamic State, of course, has targeted Russia

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Speaker 6: in the past, and particularly since Russia went into Syria

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Speaker 6: in twenty fifteen in support of Kasha Alaha forces in

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Speaker 6: that country civil war, So it is not.

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Speaker 7: A surprise that Islamic State has claimed.

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Speaker 6: It, but we still don't know if they're actually fully responsible.

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Speaker 1: Meanwhile, Sunday also saw the third major Russian attack against

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Speaker 1: Ukraine in four days. So what actually about the course

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Speaker 1: of Russia's war in Ukraine.

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Speaker 6: Yeah, since Britin was re elected last Sunday, Russia has

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Speaker 6: definitely stepped up air attacks on Ukraine, targeting energy infrastructure,

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Speaker 6: in particular on Sunday. In fact of Russian missile briefly

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Speaker 6: crossed into Poland and that paused Polish authorities to protest

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Speaker 6: to Russia and to no FI NATO allies. Ukraine has

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Speaker 6: been striking back as well. It struck two Russian ships

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Speaker 6: off Crimea on Sunday.

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Speaker 7: So there's a general.

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Speaker 6: Intensification of missile attacks even as there's not much change

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Speaker 6: on the ground in the war.

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Speaker 1: Tony also, just lastly, what is the mood done in

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Speaker 1: Russia and in Moscow?

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Speaker 7: Well, people are in shock.

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Speaker 6: This is the biggest attack and loss of life in

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Speaker 6: Moscow since two thousand and two. Many people have grown

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Speaker 6: up believing that this sort of terrorist attack was part

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Speaker 6: of their past, and now suddenly it's returned to their

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Speaker 6: presence and it's created a great deal of in security

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Speaker 6: and distress.

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Speaker 7: The city is in.

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Speaker 6: Mourning and the country is in mourning, and people are

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Speaker 6: really trying to process what's happened.

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Speaker 1: Tony Halpin, thank you so much for being with us

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Speaker 1: this morning. That Tony Halpin leads our economics and government

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Speaker 1: coverage of Russia and the wider region. Now, as we

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Speaker 1: heard last week, the Federal Reserve and key global peers

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Speaker 1: finally appears set to begin reducing interest rates as soon

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Speaker 1: as June. So let's move on to talk about bond

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Speaker 1: traders who have started to cautiously begin reloading wages that

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Speaker 1: actually burned them only a few weeks ago. So have

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Speaker 1: they got it right this time around? Johnny Snow to

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Speaker 1: discuss is Bloomberg's FFX rashist Dave Finity, Good morning. This

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Speaker 1: really stood out to me in the piece. Jim Reed,

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Speaker 1: Deutsche Bank's global head of economic research, reckons that markets

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Speaker 1: have pivoted towards Dubvish policy seven times in this cycle,

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Speaker 1: and on at least six previous occasions. The outcomes have

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Speaker 1: actually been hawkish. So it's not been a very good record.

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Speaker 8: Yes, it's certainly a very tough trade. Indeed, I mean

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Speaker 8: the markets have been looking well, expecting or hoping, however

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Speaker 8: you want to view it, for the Federal Reserve and

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Speaker 8: other central banks to cut rates as inflation as is

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Speaker 8: seen to be slowing, and obviously when you think I

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Speaker 8: like to last year, there was obviously worries were a

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Speaker 8: session which hasn't materialized yet, but there was expectations of

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Speaker 8: that and based of that, markets were going okay, fed

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Speaker 8: other central banks, you will be cutting rates now as

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Speaker 8: we know that didn't turn out the case.

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Speaker 7: And what actually has happened.

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Speaker 8: Is inflation's pre nstking them they've expected, and in economy

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Speaker 8: has actually been growing more than expected. As a result

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Speaker 8: of that, yields have stayed high and pushed higher than expected.

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Speaker 8: So every time there's been a dipping yields because the

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Speaker 8: market's way forward looking, so it's quite happy to run

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Speaker 8: with this idea. As soon as there are dipping yields,

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Speaker 8: it goes down, down, down, Then reality, shall we say,

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Speaker 8: sets in and the treasury is pushed back up. So

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Speaker 8: they keep losing on these bets that yours will go

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Speaker 8: lower this time though, particularly someone like the Swiss National

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Speaker 8: Bank last week which cut rates, they're thinking maybe this

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Speaker 8: is finally the time.

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Speaker 7: They're right.

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Speaker 8: Obviously, we'll have to see other data comes out, because

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Speaker 8: it isn't worry if the data does come out, continue

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Speaker 8: to be elevated and so strong growth stick inflation. Then

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Speaker 8: the question is how much those central banks actually need

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Speaker 8: to cut rates.

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Speaker 1: Well, what prompted trade is to jump the gun a

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Speaker 1: few weeks ago.

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Speaker 8: Then again, it's all expectations of what you think is

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Speaker 8: going to happen any week data, particularly if it's inflation

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Speaker 8: data or week growth data, that will get the market excited,

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Speaker 8: going okay, this is the start.

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Speaker 7: Something a trend that is going to happen.

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Speaker 8: And unfortunately what's happened is the expectations you've men are

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Speaker 8: going too this year. They literally thought there'll be a

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Speaker 8: seventy seven per cent chance in mid January of the

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Speaker 8: Federals are cutting rates in March. Now we know obviously

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Speaker 8: that didn't happen. And the reason being is obviously that

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Speaker 8: inflation data, whether it be the CPI measure or the

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Speaker 8: Fed Federals preferred the shore of course personal consumption Expension index,

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Speaker 8: they actually remain elevated and actually upticked, which is what

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Speaker 8: the market did not want. And therefore markets dial back

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Speaker 8: expectations for freight cuts and that's where US shields go.

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Speaker 8: So again the idea of US feels pushing lower got

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Speaker 8: beaten up.

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Speaker 7: One more time.

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Speaker 1: Yeah, absolutely, so, then where do you think the major

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Speaker 1: action in the market is right now?

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Speaker 8: I think in terms of yours the main if you

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Speaker 8: look at FX, it's very sort of sideways based.

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Speaker 7: If you look at implied volutility very low.

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Speaker 8: So really the markets aren't looking too much at the

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Speaker 8: FX side equation. Obviously, we want to see what Banka

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Speaker 8: Japan does. Does it intervene in the markets to prop

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Speaker 8: up the end. If so, you may see some volatility there,

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Speaker 8: But the market really still looking towards rates as the

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Speaker 8: more active trades we say that will give them the

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Speaker 8: bigger bang for the buck. Of course, the catches that

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Speaker 8: been burned how many times? I think the the US

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Speaker 8: core PC data, which again is the Federal reserves A

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Speaker 8: third measure inflation that comes out again this week, the

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Speaker 8: monthly data does if that stays elevated, then it raises

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Speaker 8: the question yet again, Well, the Fed signal three dots

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Speaker 8: sorry threeweight cuts in its dot plot should it actually

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Speaker 8: be two? Which't is not good for the trade that

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Speaker 8: years go lower. Having said that, if that data comes

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Speaker 8: in weak, then that will empower the bond balls to say, yes,

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Speaker 8: finally inflation is under control.

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Speaker 7: The path it has been broken, and you're more.

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Speaker 8: Like see in the front run them, so you'll see

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Speaker 8: treasury is more like being bid very very quickly into

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Speaker 8: this idea that finally yields are headed lower.

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Speaker 1: Yeah. I mean it's a bit tricky, isn't it, Because

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Speaker 1: that core PCE number, the Personal Consumption Expenditures Index, which

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Speaker 1: is seen as rising by zero point three percent. That

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Speaker 1: data comes out on Friday. You've also got the Eurozone

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Speaker 1: in the Japanese inflation data, and it comes out again

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Speaker 1: on what is a holiday in a lot of countries,

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Speaker 1: on Good Friday, and then you've got Easter Monday, where

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Speaker 1: a lot of markets are also closed. So do you

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Speaker 1: think that could be tricky in terms of market timing.

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Speaker 7: Yes, definitely.

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Speaker 8: And it's just ironic the way it turned out, because

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Speaker 8: you're going to have thin liquidity on those days because

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Speaker 8: of the holidays, and a lot of traders will be off,

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Speaker 8: a lot of markets be closed, so thin liquidity will

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Speaker 8: more than exacerbate the move in whichever direction it goes.

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Speaker 8: As you said, the inflation data is supposed to come

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Speaker 8: out quite high, and it's quite solitary.

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Speaker 7: We say a point three percent month over.

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Speaker 8: A month, which is not really consistent with the fence

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Speaker 8: target of two percent and the hero of you have

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Speaker 8: at two point eight again very very sticky because it

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Speaker 8: was that before. So this idea is if if traders

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Speaker 8: have started to load up one way and they have

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Speaker 8: to get out of the trade inin liquidity positions, that's

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Speaker 8: definitely not ideal and you can see an exacerbated move.

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