Speaker 1: Good morning. It's finally the seventh of July in London.
Speaker 1: This is the Bloomberg Daybreak You Up Podcast. I'm Caroline
Speaker 1: Hepka and.
Speaker 2: I'm Stephen Carroll. Coming up today, A job to do.
Speaker 2: US treasury yields have soared after stronger labor market data
Speaker 2: push rate bets for the Federal Reserve even higher.
Speaker 1: Rallying in Asia. UBS's global wealth chief goes hunting for
Speaker 1: new assets as the Swiss banking chant looks beyond the
Speaker 1: credit sweet takeover, plus.
Speaker 2: The UK government planning to roll back an EU ban
Speaker 2: on free investment research for clients. Let's start with a
Speaker 2: roundup of our top stories. US treasury yields shooting to
Speaker 2: their highest level in fifteen years after surprisingly strong US
Speaker 2: jobs data. Markets are now bracing for today's non farm
Speaker 2: payrolls numbers after ADP data on Thursday show the US
Speaker 2: companies adding almost half a million jobs last month. That's
Speaker 2: the most and over a year. Dallas Federal Reserve President
Speaker 2: Larrie Logan says more interest rate increases will likely be
Speaker 2: needed to spur meaning full disinflation.
Speaker 3: I remain concerned about whether inflation will return to target
Speaker 3: in a sustainable and timely way, and I think more
Speaker 3: restrictive monetary policy will be needed to achieve the fomc's
Speaker 3: goals of stable prices and maximum employment.
Speaker 2: LOSTALLUS FADED President Laur Logan speaking at a Central Bank
Speaker 2: Research Association forum in New York. Economists surveyed by Bloomberg
Speaker 2: are expecting today's non farm payrolls to show two hundred
Speaker 2: and thirty thousand jobs were created last month, which would
Speaker 2: be a significant slowdown on the May figure.
Speaker 1: US Treasury Secretary Janet Yellen is meeting Chinese Premier Lee
Speaker 1: Kiang today as part of her trip pamed at stabilizing
Speaker 1: four ties between the world's two largest economies. So far,
Speaker 1: Yellen has already met Central Bank Governor Yi Gang and
Speaker 1: former Vice Premier Liu Her. Former US Treasury official and
Speaker 1: now TCW Group senior analyst, David Lowinger says that this
Speaker 1: trip is about risk management and avoiding misunderstanding.
Speaker 4: The US channel relationship is at its lowest point in
Speaker 4: over fifty years. There's all kinds of accidents waiting to happen,
Speaker 4: and communications are vital and e economic officials in the
Speaker 4: US and China just don't know each other, and you
Speaker 4: want to set up those lines of communications before the
Speaker 4: crisis happened.
Speaker 1: David Lowing, a former US Treasury senior coordinator for China affairs.
Speaker 1: He was speaking as Bloomberg has learned that US officials
Speaker 1: started a fresh round of inspections of new listed Chinese companies.
Speaker 1: People familiar with the matter saying around a dozen firms
Speaker 1: audits were being reviewed, including ten Cent and dd.
Speaker 2: UBS's global welschief Ikbal Khan is looking to find net
Speaker 2: new money for the bank in Asia. Bloomberg's Brian Cursis
Speaker 2: has more from Hong Kong.
Speaker 5: Cohn is back in Asia gunning for new assets after
Speaker 5: the firm's takeover of Credit Suitez. People familiar say CON
Speaker 5: hosted receptions for hundreds of wealth staff in Hong Kong
Speaker 5: and Singapore. Sure it was to celebrate the two firms
Speaker 5: coming together, but the underlying message was clear find net
Speaker 5: new money. Conn is betting that Asia will generate lucrative
Speaker 5: fees even as Credit Suisse suffers outflows in other regions.
Speaker 5: With the takeover, UBS will have more relationship managers in
Speaker 5: Asia than its rivals DBS and HSBC combined in on
Speaker 5: Kong praying credits, Bloomberg debreak Hero the UK.
Speaker 1: Is planning to roll back the European Union's mified too
Speaker 1: ban on free research for clients. Bloomberg understands that Jeremy
Speaker 1: Hunt will unveil the step on Monday as part of
Speaker 1: a review of rules. Bloomberg's Tom McKenzie reports it.
Speaker 6: Looks like Miffed Too may be scrapped in the UK.
Speaker 6: The Chancellor is expected to make an announcement in his
Speaker 6: Mansion House speech on Monday to accept the findings of
Speaker 6: a lawyer led review. The key piece of EU legislation
Speaker 6: forced financial firms to separate the cost of investment research
Speaker 6: from trading expenses, but critics say it resulted in less
Speaker 6: investment research being made available. Rolling it back may be
Speaker 6: part of the Chancellor's efforts to boost the attractiveness of
Speaker 6: the UK's financial services in London. I'm Tom McKenzie, Bloomberg
Speaker 6: day Break, Europe.
Speaker 2: The leaders of Sweden and Turkey will meet ahead of
Speaker 2: a NATO summit and Vilnius on Monday. Natosakus General Yain
Speaker 2: Steltenberg is trying to make progress on Sweden's accession to
Speaker 2: the Alliance after inconclusive talks yesterday. Speaking to Bloomberg, Sweden's
Speaker 2: Foreign minister, Tobias Bilstrom said they would like to see
Speaker 2: a clear response from Turkey.
Speaker 7: We have reteriated over and over again. But we live
Speaker 7: in a world now following russia suggression in Ukraine, but
Speaker 7: is very unstable and that is shown not at least
Speaker 7: in the part of the world where we live, namely
Speaker 7: the northern part of Europe. Sweden joining the NATO is
Speaker 7: going to bring a lot more security to the table.
Speaker 7: Sweden not being present in NATO is going to do
Speaker 7: exactly the opposite.
Speaker 2: That was Tobias Beltrum, Sweden's foreign minister, speaking to Bloomberg
Speaker 2: ahead of the NATO summit in Lithuania on Monday.
Speaker 1: And finally, Samsung has reported its worst decline in quarterly
Speaker 1: revenue since at least two thousand and nine. Shares slid
Speaker 1: two percent in Seoul, with a vestas uncertain when a
Speaker 1: year long electronics in memory chip demand slump will actually end.
Speaker 1: The Korean tech john's twenty two percent decline in sales
Speaker 1: was larger than expected, though the ninety six percent drop
Speaker 1: in operating profit was less bad than forecasts. Those are
Speaker 1: top stories.
Speaker 2: Well something to think about on this Friday morning, especially
Speaker 2: as the weather is heating up again, summer travel everyone's
Speaker 2: looking forward to there's summer holidays. Not wait, somebody's coming
Speaker 2: up in the papers in a moment about that. But
Speaker 2: I do recommend today the piece from Andrea Felstadt, our
Speaker 2: Bloomberg opinion columnist about the phenomenon of peak holiday travel
Speaker 2: and that actually twenty twenty through twenty twenty three may
Speaker 2: see the peak in that as well. And this is
Speaker 2: partly linked to what we've heard from airlines, for example,
Speaker 2: over the past few months about how seats are going
Speaker 2: to remain more expensive post COVID book of a whole
Speaker 2: range of reasons. But of course higher interest rates going
Speaker 2: to feed into people spending. People are still spending on
Speaker 2: holidays for now, we know that from all of the
Speaker 2: reports we've gotten recently out of travel related companies. But
Speaker 2: the question is when we get to this time next year,
Speaker 2: will people be that much worse off that they won't
Speaker 2: be able to afford their summer holidays.
Speaker 1: Well, and also there was the you know, the revenge
Speaker 1: travel theme too, was definitely there after COVID, that people
Speaker 1: wanted to go to wonderful, far flung places to enjoy themselves,
Speaker 1: which they'd missed out on. But yes, you're right, interest
Speaker 1: rates and also the fact that those holidays and the
Speaker 1: weeks in the sun are much more expensive now than
Speaker 1: they were previously because of inflation. That actually that may
Speaker 1: not be sustainable. So the industry, airline industry, hotel industries
Speaker 1: done quite well, but maybe that won't continue. Yeah, piece
Speaker 1: is very good.
Speaker 2: Yeah, and she also digs into the idea of how
Speaker 2: people are also booking later, partly because of those those
Speaker 2: price challenges as well. So anyway, worth the read if
Speaker 2: you're thinking about your summer holidays this morning.
Speaker 1: Yeah. Now dogged least on US employment, boosted expectations for
Speaker 1: interest rates and saw treasuries tank. On Thursday, benchmark treasury
Speaker 1: yields have ropped back through four percent, and those on
Speaker 1: Bloomberg's index of global government bonds have hit a fifteen
Speaker 1: year high. Joining US now. Bloomberg's executive editor for Agent
Speaker 1: Markets Paul Dobson, and you're actually in the radio studio
Speaker 1: in London, Paul, lovely to have you with US. Markets
Speaker 1: are now bracing for the non farm pay rolls today.
Speaker 1: What should we expect from today's figures because that was
Speaker 1: the big driver yesterday ADP.
Speaker 8: Yeah, absolutely, and so I guess people really don't know
Speaker 8: what to expect. I mean, the ADP figure was so
Speaker 8: remarkably strong and such an outlier relative today's expectations, and
Speaker 8: that's why we saw a rather extreme reaction in the markets.
Speaker 8: The ADP has not always been the best predictor of
Speaker 8: what the non farm payrolls report shows are. The following
Speaker 8: day that said, I guess we're now all rushed to
Speaker 8: the other side of the ship and we're all expecting
Speaker 8: a very big number again today here, and so we'll
Speaker 8: be keeping an eye not just on the headline figure
Speaker 8: of course, but on the average hourly wages numbers as well,
Speaker 8: so tend to tell us more about what the inflationary
Speaker 8: outlook is.
Speaker 2: Yeah, certainly. I mean, looking at the reaction in bond markets,
Speaker 2: this huge routing trousurries. Now looking at your yield over
Speaker 2: five percent for trousuries this morning. This is affecting markets
Speaker 2: all over the.
Speaker 8: World, absolutely, and we saw the rises in bond yields,
Speaker 8: or the sell off in bond prices carry on through
Speaker 8: to ages today, lifting those interest rates in markets like
Speaker 8: Australia too. I think it's really interesting that we have
Speaker 8: that global aggregate index average yields back up to the
Speaker 8: highest level since two thousand and eight, and returns on
Speaker 8: government bonds or on global bonds for the year are
Speaker 8: now basically back to zero. When you know, at the
Speaker 8: start of the year, everyone was counting on this as
Speaker 8: the place to put your money, take that yield and
Speaker 8: presumably have a little bit of capital gains as well
Speaker 8: from increases in prices, So that part of the investment
Speaker 8: outlook has been rather scotched. Now we're starting to see
Speaker 8: that push over into the equity side as well, So
Speaker 8: I think that's really interesting that sort of shifting correlation
Speaker 8: from people seeing the economy and the better economic news
Speaker 8: is good for stocks. Last week, now everyone's worried again
Speaker 8: the interest rate environment is just going to have to
Speaker 8: become a lot more restrictive.
Speaker 1: Yeah, that's the thing. So what is it done to
Speaker 1: pricing around the Fed's path? Is it shades of twenty
Speaker 1: twenty two all over again?
Speaker 8: Yeah, it definitely. It definitely has that sort of feeling
Speaker 8: the air, although I mean, you know, for all of that,
Speaker 8: we're pricing in one more FED rate hike pretty soon
Speaker 8: and then another one by the end of the year.
Speaker 8: So it's not extreme. It's not like the market is
Speaker 8: absolutely terrified now relative to the UK. Of course, where
Speaker 8: are these expectations and what's baked in? Or a lot
Speaker 8: higher again, and we're still looking for a much more
Speaker 8: aggressive BOE taking interest rates here higher still, so you
Speaker 8: could argue that their scope for FED pricing to continue
Speaker 8: to seep into those erschel and yields in particular. I
Speaker 8: think the other thing to consider when you're looking across
Speaker 8: the yield curve is that the past few times when
Speaker 8: we've got to around four percent on the tenure treasury,
Speaker 8: that's brought in longer term investors, pension funds, that kind
Speaker 8: of type of investor looking to lock in those long
Speaker 8: term yields. They see that as an attractive play. And
Speaker 8: so maybe, you know, even if we continue to feel
Speaker 8: that pressure at the short ends of the yield curve,
Speaker 8: there might be a little bit more support out there
Speaker 8: for the back end.
Speaker 2: What does all of this mean in terms of what
Speaker 2: the Federal Reserve does next.
Speaker 8: Well, we heard from some of the fair policies makers
Speaker 8: this week talking about the need for more hikes. We
Speaker 8: saw in the minutes there was certainly a feeling among
Speaker 8: a good number of the officials that further hikes and needed.
Speaker 8: I think the FED has been pretty explicit in the
Speaker 8: need to get inflation under control and the willingness to
Speaker 8: slow growth or ever and trigger you know, some sort
Speaker 8: of a recession if that's what's needed in order to
Speaker 8: win this battle, because it's so worried that those inflation
Speaker 8: expectations become unanchored. So I don't think that they will
Speaker 8: be worried about what the market is doing. So much
Speaker 8: is worried about what inflation is doing and still paying
Speaker 8: attention to try to get that under control.
Speaker 1: Yeah, Paul, I think it's a bit of a crucial moment,
Speaker 1: isn't it in markets today. We've thought we might be
Speaker 1: sitting the start of summer, but.
Speaker 8: Maybe that's Yeah, this is my this is my summer holiday, Caroline.
Speaker 8: Good welcome and cold weather and.
Speaker 1: And big moves in bond markets. Well, thank you so
Speaker 1: much for popping into the studio. Lovely to see you
Speaker 1: actually in person, say Paul Dobson, Bloomberg's executive editor for Asia. Markets.
Speaker 2: Up next, more bad news on HS two casts and
Speaker 2: London air pollution warning. Now the paper review on Bluebird
Speaker 2: Daybreak Europe.
Speaker 6: The news you need to know from today's papers.
Speaker 1: Blue again and joins us this morning for more. The
Speaker 1: Financial Times has the headline decision to delay HS two's
Speaker 1: London terminus will cost at least two hundred million pounds.
Speaker 1: The whole not far from where I live in Houston,
Speaker 1: is going to remain then the construction.
Speaker 9: Oh Caroline, Yes, by the looks of it for now,
Speaker 9: but who knows what the future has to hold. But
Speaker 9: the additional two hundred million pound figure has actually been
Speaker 9: revealed in a report from a cross party group of
Speaker 9: MPs that will be published today, and I must say something,
Speaker 9: it's pretty scathing. They're warning the government's decision to delay
Speaker 9: constructing HS two will cost this huge sum of money,
Speaker 9: and they actually argue that from the very very beginning
Speaker 9: the budget was completely unrealistic and one of the biggest
Speaker 9: headaches has been the tunnel close to Caroline has been
Speaker 9: the rebuilding of Houston Station actually to accommodate huge high
Speaker 9: speed trains are going to be coming in and out.
Speaker 9: The project was designed to carry passengers from London to
Speaker 9: Birmingham and the North of England. It suffered these bad delays,
Speaker 9: large costs, overturns, and this particular you know, design projects
Speaker 9: in the station close to your house could exceed seventy
Speaker 9: billion pounds. That's up from thirty seven billion in twenty thirteen.
Speaker 9: And earlier this year the government did announce plans to
Speaker 9: halt work on Euston Station and the final streatch of
Speaker 9: the track to control these ballooning costs which include that tunnel.
Speaker 9: And the report from the House of Commons Public Accounts
Speaker 9: Committee out today, as I said, very critical of the government.
Speaker 9: But Caroline and Stephen, this was a huge plan to
Speaker 9: link London to northern England. Great in the concept of things,
Speaker 9: but has been more difficult to achieve than first thought.
Speaker 2: Yeah, certainly, and that bill going even higher it seems
Speaker 2: for the project as well. Lee, And let's go to
Speaker 2: the Times next headline. There thousands of European flights maybe
Speaker 2: delayed or canceled as air traffic controller threatened strikes.
Speaker 9: I feel so bad reporting this because we've all been
Speaker 9: so excited for our summer holidays. I must say I
Speaker 9: was delayed on my summer holiday, but I got over
Speaker 9: it and got there in the end. But many more
Speaker 9: people could be so. Up to a third of all
Speaker 9: European flights are now at risk of being delayed or
Speaker 9: canceled this summer after air traffic controllers said they would strike.
Speaker 9: Now this is according to The Times newspaper. Controllers at
Speaker 9: euro Control that's a European air traffic management body, have
Speaker 9: said they would walk out over the peak of summer
Speaker 9: after talksovers staffing, rosters and pay has just broken down.
Speaker 9: So British holidays now face holiday makers now face this
Speaker 9: agonizing weight because we're going to find out in the
Speaker 9: next couple of days when the walkouts will be. So
Speaker 9: it's pretty you know, touching times if you've booked a flight.
Speaker 9: Also here in London are mt Union. They've announced more
Speaker 9: strikes on the London underground for July the twenty third
Speaker 9: to twenty eighth than Caroline. If you're a mother and
Speaker 9: you have children or a father parents, know that some
Speaker 9: teachers are going on strike in England today too. So
Speaker 9: lot's happening.
Speaker 1: Yeah, absolutely, two days of stri co action in the
Speaker 1: UK in terms of schools this week alone. The Guardian
Speaker 1: air pollution could kill London as a sporting capital. Sebastian
Speaker 1: co Worn's subco big voice in terms of world athletics
Speaker 1: and sports in general.
Speaker 2: Yeah, huge voice.
Speaker 9: Remember He was very, very instrumental in the Olympics that
Speaker 9: we held here in London in twenty twelve. But now
Speaker 9: the World Athletics president is warning that the climate crisis
Speaker 9: and poor air quality may just cause havoc to the
Speaker 9: sporting calendar. Yesterday he was speaking to Gary Lineker in
Speaker 9: a panel at Wimbledon, and he basically says that even
Speaker 9: London could be a very difficult place to hold these
Speaker 9: sporting events because of air pollution and the effect that
Speaker 9: that could have on athletes in the future.
Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the
Speaker 2: stories making news from London to Wall Street and beyond.
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Speaker 6: I'm Caroline Hepka and.
Speaker 2: I'm Stephen Carroll. Join us again tomorrow morning for all
Speaker 2: the news you need to start your day right here
Speaker 2: on Bloomberg day Break.
Speaker 8: Europe,