lizzie: this is bloomberg daybreak: europe. powell's pivot fires up risk rally. global stocks and bonds so as the fed chair signals rate cuts are on the cards for 2024. >> that begins to come into view and is clearly topic of discussion in the world and also a discussion for us at our meeting today. lizzy: recession risks on the mind of christine lagarde as the ecb makes its final policy decision of the year. a headache for the bank of england as it faces a stagnant economy and sticky inflation. we bring you full analysis of all of today's rate decision throughout the morning. very good morning. just past 6:00 here in london. as i say, it's a busy day for central banks today. just waking up after the fed decision last night.

it rocked markets. a dovish surprise in the commentary. futures pointing to an even higher opening this morning both in europe and in the u.s.. last night, we saw the s&p closing up even higher at its highest level in nearly two years. if you flip over to the cross asset picture, treasuries extending their gains this morning. the two year yield currently lower. 4.34 percent. you've got the 10 year yield falling further than yesterday. now down for basis points. 3.97% this morning. uneven we can dollar as well. currently the bloomberg dollar spot index, 4/10 of 1%. finally, on a day of many european central bank decisions, this is one to watch. the s&p may address its strength this morning. the swiss franc.

we've seen a rally in stocks and bonds after the fed decision around the world. let's see how it's rocking asian markets. april hong is on standby in singapore. >> we are part of the pivot party. the stocks and bonds, currency moving higher. some really stand out performers. korean won, the australian stock benchmark in positive territory. the regions benchmark climbing to levels that we haven't seen since early september. there are exceptions. let's take a look at the nikkei. it's dragged by the losses in the japanese banks as well as the exporters as the japanese yen strengthens. down 7/10 of 1%. our colleagues have pointed out they've been looking into next

year on the mca -- msci asia pacific because of the drag from china. many issue still resolved in the country, particularly related to the property sector. i want to show you the japanese currency and how it has fared against the greenback, given the fed reaction. you can see it's moving very clearly. below the 141 level for the dollar-yen in the session. really clear focus is on the fed today. lizzy: thanks for that. i want to dig deeper into what exactly jay powell said that surprise the markets so much. it was a dovish surprise so let's take a listen. >> you can say that there's little basis for thinking that the economy is in a recession now. there's always a probability that there will be a recession in the next year. inflation has eased from its

highest and it has come without a significant increase in him -- in unemployment. we still have a ways to go. inflation is still too high. ongoing progress in bringing it down is not assured. participants also didn't want to take the possibility of further hikes off the table. that's what we are thinking. given how far we've come along with the uncertainties that we face, the committee is proceeding carefully. lizzy: for more, let's go to ven ram. it wasn't just that remarkable press conference. we have lots of other signals from the fed about what they can do next year. talk us through those signals that the fed is going to pivot. >> morning. it was a dovish weekend for the fed. one that i wasn't expecting. the fed was supposed to walk into the pub and say, sober up. instead, they added to the revelry in the markets. the markets were pricing somewhere between 100 and 125

basis points of rate cuts for next year. now they've added mortar wit. they are expected 150 basis points. this entrenches the rally in the two-year and the tenure part of the curve, particularly on the duration side. investors have been convinced that there's no more fed rate hike. they are planning a petition for deep rate cuts for next year. that means duration is going to rally from here even though it rallied considerably. lizzy: jay powell walking into the pub in his santa suit and buying around. talk us through the market impact beyond bonds though. >> beyond bonds, more immediately today, we have the ecb and boe meeting as we know. i say that because central banks tend to hunt in packs. we've already seen a considerable disinflationary

narrative in the euro zone. what the fed did overnight is going to push the ecb to acknowledge that progress and probably cause rate markets to bring forward the rate cuts that they've plan for ecb. at the moment, they are thinking april will be when the ecb will cut rates if they change the language today. they may bring forward that positioning into march. lizzy: thanks for joining us. we will continue that conversation exactly. the ecb is up next. christine lagarde and her colleagues facing a deteriorating economic outlook for the euro area. with the backdrop of rapidly flowing inflation. let's get more from maria tadeo. what are you expecting from this final meeting of the year? >> it is the final meeting of the year. i was just reflecting about this last night. what a turnaround it's been

further european central bank. we started the year on this automatic pilot on the hikes and now we are going to ended on a conversation around cuts. if you look at the decision today, the european central bank is expected to keep rates unchanged. that means policy unchanged. we already know this by now. it means that they are done hiking. the zeitgeist now for the central bank has to do with the cuts. we've gone very quickly over the past few weeks from this narrative of higher rates to now cutting rates. when you look at 2024, the market believes there will be more than 100 basis points in terms of cuts from the european central bank. because of the deteriorating economic picture for the ecb, there's her number of days on the table. some say you can see june. some believe a soon as march depending on that economic outlook. for me, it will be interesting to see beyond that monetary policy decision which we are exciting them to keep rates unchanged.

how they respond to this pivot. the market is already pushing and running two steps ahead of the european central bank. there's a pivot for the central bank. try to delay that conversation until the start of 2024. that will be the key for me. lizzy: so if the decision itself isn't the most important thing here like with the fed and the boe, what are you looking for precisely in the forecasts? how important are they today? su: -- >> remember, it's not just the pot -- monetary policy decision. we also get the new projections for inflation and gdp. that's the entire pension -- tension of the story. for a while now, there's been criticism that the european central bank at times is too optimistic about the resilience of the european economy and inflation is coming down faster than the even expected.

that tension, that narrative could really well signal the timeline going forward when it comes to those cuts. what's also important, you know that forecast can change. they can pain a narrative for the central bank and it helps to explain what they are thinking could also feature into that conversation. what's also important be on the forecast particularly will be any reference to the investments. the conversation has been dragging on for months. will she change it? this is connected to laying down the groundwork for that first cut from the european central banks. any references to changing the reinvestments, the market has been expecting and predicting for months now. the central bank has to take that step. lizzy: economists expecting a speed up. thank you for that.

i hope the sun comes up for you. we will bring you full coverage of the ecb policy decision at 1:15 u.k. time. stay tuned for that. it's a busy day. central banks across europe as well. we will hear from the s&p president thomas jordan later today. that decision comes at 8:30 a.m. london time. the expectation is that they are going to keep rates on hold but push back against the market expectation for rate cuts. maybe they will surprise us after jay powell's example last night. keep an eye on the swiss either. it's been on an absolute tear. at 9:00, we will have a decision. this could be a bit of an outlier in europe. we could get the last quarter-point hike of the year.

then we turn to the bank of england. 12:00 p.m. london time. the expectation is for a whole. 5.25%. like the fed, what's interesting about today are clues to the future path for rates. we did have that softer than expected u.k. growth print yesterday. off the back of that, traders have doubled down on their bets for rate cuts next year. now they are fully pricing for cuts for 2024. that weighed on the curve yesterday and it could push one of the last remaining hawks on the monetary policy committee to go for a hold this time. i will be speaking to one of the former hawks on the monetary policy committee later in this program. michael saunders, former mpc member and offered economics policy advisor. he is coming up here on daybreak europe. for all the stories you need to know to get your day going, you can get around on the daybreak new -- newsletter.

today, they lead on treasuries, climbing after the fed signaled that next move will be a cut. also jeffrey good block predicting that the fed will cut by two whole -- 200 basis points next year. the treasury yields will fall to below for 3%. poppycock says phil gross. he says that this year if -- euphoria is wanted. the yield is where it should be. and then we have a look towards all those european central bank decisions which we will be covering in depth for you right here on bloomberg. that newsletter is at da why bigo. coming up next, we discussed africa. a debt deal for somalia, renewed hopes for attracting investment after the war-torn nation secures $4.5 billion in debt relief. all the details of that next. this is bloomberg. ♪

lizzy: welcome back to bloomberg daybreak: europe. 6:15 am here in london. south africa's state-owned electricity provider as calm is on track to pace its seventh consecutive full-year loss as the utility crumbles under the weight of its 400 billion debt pile and continues to survive on the back of taxpayer funds. meanwhile, south african annual inflation slowed in november. cpi came in at 5.5% in the year to november compared to 5.9% the previous month amid a sharp decline in feel prices. investors are fully pricing a quarter percentage point rate cut from the south african reserve bank in may. some betting on a half-point reduction. the other end of the continent, somalia has reached an agreement for four point $5 billion of debt with international lenders.

that should see some oligo's external debt falling to less than 6% of gross domestic product by the end of the year, from 42% previously. for more all knowledge this, we go to -- who is live. what did it take for somalia to get this deal over the line? >> yeah. lizzy, it took 10 years of conversations that were initiated by the former president. a decade layer, -- later, they been able to achieve the triggers that were set by the imf despite political headwinds. this includes managing the expenditure, ramping up tax collections. revenue growing to $345 million from $69 million in 2013. it created good governments and reduction of poverty. some ali has tried to remain on track with the imf program.

they've undergone six reviews of the imf and of the ecf program. as remarkable as these efforts are, the world bank country director says now more than ever, they have to learn how to manage their debt unless they find themselves in the very same situation 20 or 30 years later. lizzy: what's the significance of this debt forgiveness to the growth of some ali a? >> is very significant. 30 years of fighting means that there was very little economic growth. that meant that there were little resources they had when into servicing debt. now they can have many investors to invest in critical sectors such as infrastructure and building. they have a functional health care system, provide quality education and create jobs for the youth. the trickle-down effect will be reducing inequality and also reducing poverty. they are also looking to buy more ripples. the u.n. lifted the embargo on

importation of weapons. they can restore peace and civility because the finance minister says economic development goes hand in hand with security. lizzy: all right. angst. -- thanks. now let's go back to cop. it has wrapped out -- up now. the summit also focused on the destruction of nature and how to stop it with a full day devoted to protecting biodiversity. let's get more now from -- thank you for joining me. you just taught me how to say it and i messed it up. how big of a problem is it if the world leaves the damage to nature unchecked? kobad: it's a huge problem. firstly for climate goals, nature is critical.

the deforestation and nature lost more broadly is currently responsible for about 10 to 20% of global greenhouse gas emissions. all of the predictions for how to beat these climate targets also relies on nature absorbing about 10 to 20% of global greenhouse gas emissions. the continued loss of nature itself poses large risks to global economic output. studies suggest that about 50% of all economic output is moderate to highly dependent on nature. if we continue on our current trajectory of nature precipitously declining, we can expect to lose about $2.7 trillion worth of economic output by the year 2030 and that's in a pretty conservative estimate. lizzy: wow. so this is a big economic threat. how do we avoid that scenario? kobad: it's a very big economic

threat. the way to avoid it is to halt and then to reduce nature loss. and then to have nature being restored. the key really to that is to reduce our harmful impacts on nature. the forestation is an obvious one. but then there are other activities which are really driving the rates of extinction and nature loss that we are experiencing. things like over applying fertilizers, excessive use of pesticides, drawing too much water, things like invasive species like feral cats and foxes. at the core of it is money. the world currently spends about $160 billion on protecting nature. all the studies suggest that we need to see that ramp-up to about $1 trillion per annum by the year 2030. lizzy: that got really start. how do you bridge that financing gap there? kobad: the most obvious measure

is to redirect harmful subsidies . the world currently sent -- spends $1.9 trillion. governments -- these include obvious candidates like subsidies for fossil fuels but also agricultural subsidies. encouraging harmful practices like excessive application of fertilizer. these subsidies go all the way to force trees and fisheries. these subsidies for the land sector and fisheries don't need to disappear. the tap doesn't need to be turned off. they need to be redirected and repurposed. instead of incentivizing harmful activities, their settings are tweaked so that farmers in fishers are incentivized to do more sustainable practices which could save them costs on things like fertilizers and pesticides. lizzy: we appreciate the

insights and the analysis as always. thank you for that. we have plenty more ahead. this is bloomberg. ♪

lizzy: welcome back to bloomberg daybreak: europe. bloomberg has learned that u.s. national security advisor jake sullivan has met with saudi arabia's crown prince to discuss the israel hamas war. it comes with the u.s. attempting to both limit the gaza crisis from spreading further into the region and salvage normalization talks between israel and saudi arabia. meanwhile, the u.s. department of defense says its chief spoke with his israeli counterpart to reiterate the need to protect

civilians during idf operations. austin called for an increase in the flow of aid to gaza while also supporting israel's efforts to ensure hamas can never repeat the october 7 attacks. to the u.s. now where house republicans have voted to authorize an impeachment inquiry into president biden. the party-line vote sets up a high-profile clash between congress and the white house as the 2024 election looms. the investigation focuses on the biden families finances and the business dealings of the president's son. biden has denounced the inquiry as baseless. nasdaq has worked to fix a system error that impacted thousands of stock orders, leading some to be counseled and incorrect clearing information to be submitted. an exchange operator is said to have told market participants yesterday that it's investigating the order entry issue that caused the inaccuracies and delays.

bloomberg has learned that apple faces a potentially hefty fine as well ban on app store rules that the company is accused of using to thwart music streaming rivals. in the latest european union crackdown on big tech, regulators are said to putting the finishing touches to a decision on apples practices. vivendi is considering splitting up its media and entertainment empire into several companies to better take advantage of each units strength. universal music group, the french company said it has endured a significantly higher conglomerate discount, reducing its valuation and limiting growth opportunities for its subsidiaries. receipts jumped to 9% in new york. coming up, it's a busy day for central banks including the bank of england. i will be talking to michael saunders who is now oxford

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lizzy: good morning. this is bloomberg daybreak: europe. these are the stories that set your agenda. powell's pivot fires a publix rally. global stocks and bonds sore. rate cuts are on the cards. >> that begins to come into view and is clearly a discussion topic in the world and also for us at our meeting today. lizzy: recession risks on the mind of christine lagarde as the european central bank makes its final policy decision of the year. there's a headache for the bank of england as it faces a stagnant economy and sticky inflation. we bring you all of today's rate to sessions throughout the morning. good morning. 6:31 a.m. here in london. it's the morning after the fed decision and it was a shocker for markets. if not in the decision itself,

in the commentary around it. futures pointing to a higher opening in both the u.s. and europe this morning. the s&p closing at its highest level in nearly two years yesterday off the back of those dovish signs from the fed. christmas very much coming early for markets. the green line for rate cuts given by jay powell for next year. treasuries extending their gains today. the two year yield is currently at 4.34%. lower eight basis points. the 10 year yield also fell yesterday. now it's at 3.96%. lower five basis points this morning. you've even got a weaker dollar as well. currently, the bloomberg dollar spot index is down one third of 1%. finally on a day of many european central bank decisions, i'm keeping an eye. the s&p may address it strength this morning. the swiss franc currently

stronger against the dollar. so watch out. now it's a busy day for central banks. last night, the federal reserve held u.s. interest rates. its latest plot implying 75 basis points of rate cuts in 2024. let's get analysis from jamie rishaad. i'm sure you weren't surprised by the decision itself. how surprised were you by the messaging from the fed last night? jamie: it was very surprising. everybody was expecting some degree of pushback on market pricing. the idea is that it was too soon to declare victory on inflation. he went even further than that. there's no pushback at all on market pricing. a full embrace. despite declaring that it was too soon to claim victory, he gave no real impression of that in his remarks afterwards.

it almost feels as if it was a dream and it was all transitory in the end. clearly that's going to have implications around the world. we will be seeing the implications of that today from the ecb and the bank of england. lizzy: do you think he's made it easier for christine lagarde to make their own bold passes later on? jamie: sure, yes. even just before blackout, powell was pushing back on market pricing a bit there. lagarde's last remark said that she thought that the policy may -- rate will stay where it is for a couple of quarters. i don't think we will be hearing a huge amount of this from the bank of england anymore. more likely is that they will acknowledge the policy rates are going to come down in 2024. they will be more circumspect than the fed has been. for the bank of england, inflation is stickier and wage

growth is faster. there's a greater inflation problem perhaps years and elsewhere. lizzy: thanks to jamie rush. you've set us up perfectly for our next conversation. bloomberg economics ranks that the bank of england is going to hold rates today at 5.25%. to discuss the commentary around it though i'm joined by michael saunders. he was a member of the bank of england monetary policy committee. now he's a senior policy advisor. great to have you on the program. you heard jamie talking about the potential impact of jay powell commentary last night. the you reckon andrew bailey will read the room today and adjust his guidance in line with market expectations for rate cuts in 2024? michael: i don't think he will. the bank of england has a higher inflation forecast for next year than the fed.

the bank of england should see inflation at 3% at the end of next year. if they are right, they won't be cutting interest rates quickly. the bank of england for tactical reasons will want to talk tough near-term in order to try to put a lid on pay deals. many pay deals are said in the first few months of the year. the bank of england will want to talk tough in order to try to ensure they set pay deals at a significant lower pace than what we've seen in the last year. the u.k. has a much more sticky domestic aid driven inflation process than the euro area or the u.s.. that's the main thing which the bank of england will be seeking to ring out of the system. lizzy: so that's the guidance. markets are also going to be looking to the vote split for clues of the future pastor rates. do you reckon the remaining hawks will turn for a holds today?

michael: i wasn't always a hawk. i think it will still be of -- a split vote. i wouldn't be surprised if the vote is a bit more clear cut the last time. last time, it was maybe one or two if the hawks would slit -- switch. the mpc will want to keep alive in the language the possibility of a further rate hike. they won't be talking about rate cuts. i think it's far too early. the strength of pay growth is too great for them to be looking to pivot to easing. lizzy: if you are on the committee still, when would you cut rates next year? how fast and how deeply? >> i would be conscious about cutting rates. they will come down next year. probably in the second half of the year rather than the first half. it's likely that inflation will be close to the target. perhaps not quite at the target in the second half of next year. pay growth will probably still be well above the target

consistent pace. i think the mpc against that background will want to keep rates relatively high, above the neutral level for some time. lizzy: we will face a general election in the u.k. by the very last minute in january 2025. how worried are you that inflation strikes back because of tax cuts by the conservatives? michael: we will have to see what happens in the budget for next year. you have to remember that so far, this government has raised taxes significantly. there are further tax hikes underway because people's personal tax allowances are not being indexed in line with inflation. so the real value is being eroded. of course, real public spending is set to fall significantly. the overall fiscal stance is still set to tighten significantly in the coming year and in subsequent years. as long as that's the case, i

think the mpc will be worried about fiscal policy. lizzy: we also had that weaker than expected gdp print yesterday. i wonder how worried you are about the recession risks in the u.k.. michael: the economy is going to be flat for the next few quarters and inflation will come down. i think it will under shoot the mpc forecast in the coming year. that's what will eventually open the door for rate cuts. we are on our way back to price stability. it's too early for the mpc to declare victory at this stage. lizzy: when we look around the world, i wonder which central bank has the biggest credibility gap between market expectations for rate cuts and what the central banks actually planning to do. clearly a gap that jay powell tried to close last night. michael: that's a tough question. the ecb is likely to soften its language and cut its forecast

significantly. remember, if you go back to the september meeting, it is said that inflation in the euro area wouldn't get back to the 2% target until late 2025. that forecast looks significantly out of date. i would expect euro area inflation to be back to target six months from now. i don't think they will cut rates in the first quarter but it's quite likely they will be cutting rates in the second quarter. so only a few months from now. the ecb has the opportunity and they are likely to take it today to cut their inflation forecast. while not talking about rate cuts, the low inflation forecast will be read by markets is opening the door for easing. lizzy: what about the bank of england? you have public confidence in the institution out a record low. how much of a credibility deficit is too much? michael: i think public dissatisfaction with the bank of england which you see in the

surveys is really a function of high inflation. if inflation comes down, as i expect it will do over the coming year, the bank of england would be able to regain its popularity. for central banks, it's not a popularity contest. the important thing is that they do what's necessary in order to get inflation back to the 2% target. the bank of england i think has done the appropriate amount of tightening. the policy is now restrictive. the question is just holding out a restrictive stance for sufficiently long in order to get back to the 2% target. over time, the popularity will sort itself out. lizzy: i was interested in your comments recently that the tightening of u.k. migration roles are going to weigh on growth so much that they will leave the chancellor so little headroom, we might not be able to make those pre-election tax cuts that we were talking about. do you think they will make the bank of england's job harder as well by limiting potential growth? michael: lowering potential

growth has weighed on the u.k. economy significantly over the last few years. real gdp per head for this year will still be below the 2019 level. the u.k. over that time has been the worst performer among the g-7 countries. it's not likely to get any better in the coming years. i have to say, low potential growth doesn't really make the u.k. more inflation prone. it also bears down on the pace of demand. low potential growth is neutral in terms of the output which is what matters for the inflation prospect. it means the u.k. is also stuck in a low growth threat. as for the fiscal arithmetic, there are quite a lot of moving parts. lower bond yields since the autumn statements will help fiscal arithmetic. if the ob are projects lower migration, that would harm it. there may be other moving parts between now and the budget. i think it's too early at this

stage to have an assessment of whether the fiscal position will look better or worse. but the fiscal space in any case is very limited. the government's fiscal plans at the moment rest on large unspecified, and frankly impossible cuts in real public spending over the next few years. lizzy: all right. you've just committed to coming back on bloomberg tv after the spring budget. thank you for your insights. always great to have you on the program. later, we will be speaking to martin leal, professor of economics at king's college london. he was replaced by michael saunders on the monetary policy committee. stay tuned for that conversation as we look ahead to the boe decision and 9:30 a.m. london time. plenty more that markets are watching out for today.

swiss national bank delivers its decision on its policy rate with a hold. it's followed by norway's central bank leaving rates unchanged as well. at 12:00 p.m. in london, the boe reveals its latest decision of the year. not to be left out, the ecb. watch for that announcement at 1:15 p.m. u.k. time. christine lagarde will hold a conference 30 minutes later. there is also important data from the u.s.. initial jobless claims duet 1:30 p.m. u.k. time. don't miss that. coming up, recession risks in focus as the european central bank makes its policy decision today. the details, next, live from frankfurt. stay with us. this is bloomberg. ♪

lizzy: welcome back to bloomberg daybreak: europe. equity futures in europe pointing to a higher opening. in the u.s. as well after last night's fed decision. now we look ahead to the european central bank decision later today. it meets in frankfurt at 1:15 p.m. u.k. time. markets weighing a deteriorating economic outlook with a rapid slough down in inflation. for more, we join maria tadeo for us. i hope it's getting brighter for you now. what are you expecting from this final meeting of the year after jay powell's surprise last night? >> the lights are not even on. that tells you we are always the first on the field. listen, it's the final meeting of the year. it's been a roller coaster year for the central bank which has gone from very aggressive hikes. now may be running ahead of the

european central bank. fully moving into the first cut. in terms of dissent -- today's decision, the european central bank is expecting them to keep rates unchanged. in theory, what it means is that they are done hiking. no more hikes. this is now a conversation that has fully paid fitted now -- pivoted now from how much more to hike to cutting those rates. for 2024, there's more than 100 basis points worth of cuts that are being priced by the markets. all kinds of dates flown around but that shows you how the site kinds has moved into the cuts. some say it will happen in june. others believe april. there's a very dovish case suggesting it could happen as soon as march, depending on the economic outlook. that's what the market believes. today, it's about the european central bank. they would also put out new economic projections. that will help the narrative or explain where their thinking is

going. today, what matters when it comes to the ecb is whether or not the head of the ecb decides to in some way concede that this pivot is real. will she try to push back or delay that conversation? they did not want to precipitate the cuts from a market perspective. obviously the european central bank worries about cutting too early, that could undo the monetary policy they've done. will they try to delay that conversation until the start of 2024? how will they push back or not this market narrative? that will be the key going into this meeting. lizzy: thanks to maria tadeo. we will be bringing you full live coverage of that policy decision at 1:15 p.m. london time. the news conference with christine lagarde is half an hour later. in other news out of europe, the hungarian prime minister looks likely to dictate the outcome of an eu leaders summit later

today. he's been pushing to block funding for ukraine and obstruct the start of talks for the country to join the eu. let's find out why from john fleming in brussels for us. what's going on here? why is hungary rejecting the aid plan? john: the backdrop is their close relationship with vladimir putin. that is not something that you can do much about in the short term. the issue here is over funding for ukraine. hungary is objecting, saying that because it's part of haggling over the more long-term you budget. it's an issue that's tied up with finances. all been is holding up the ukraine aid. there's a two-day summit in which leaders will try to find a way perhaps of reaching a solution now or postponing to a later date.

lizzy: there's plenty more on the agenda. what other issues will be discussed at the leaders summit? john: that's right. hungary is objecting. it wants a strategic discussion before we can even start membership talks. just bear in mind that both of these issues are key for ukraine's morale, especially what's happening with u.s. funding and the counteroffensive. we have a host of other issues, from migration to israel hamas and other -- also a 12th sanction package against russia. lizzy: we thank you for that update on the eu leaders summit. we will have full coverage here on bloomberg plenty more ahead. this is bloomberg. ♪

lizzy: welcome back to bloomberg daybreak: europe. i want to get you up to speed on last night's fed decision if you are just joining us. 6:53 here in london. it was a dovish surprise from the fed. not in terms of the decision that was held steady, rather in terms of the acknowledgment that the next move is going to be a cut. the fomc sees 75 basis points of cuts in 2024. they also revise the inflation forecast lower across the board. fed pricing for next year now is closer to 150 basis points of cuts in 2024. the two year yield yesterday fell its most since the fpv fallout in march. the two year yield 10 -- down 10 voices points. it means that financial conditions are near the most

accommodative level since february 2022. the s&p hitting a new year to date high and futures are pointing to an even higher opening this morning. now we turn attention to all of the many central bank decisions coming up in the european region this morning. this afternoon as well. we have a 12:00 p.m. bank of england on thread needle street. its task is really to balance the worst growth outlook in the u.k. since andrew bailey took over as governor. and then rising even more rapidly and inflation still more than twice the boe target. all of this fueling the risk of a rage -- wage price spiral. markets and economists reckon you will also get a hold from the boe at 5.25%. what becomes interesting from the bank of england are the clues about the future path for rates. just as it is for the fed and the ecb. we don't have a forecast from

the bank. we don't have a press conference. we don't have a dot plot yet. it puts immense pressure on the guidance to push back against market expectations of cuts next year if that's what they want to do. look at the guidance from the last meeting. they say that monetary policy is likely to me to -- need to be restrictive for an extended time. translation, higher for longer. that will be a harder message to deliver after that softer than expected u.k. growth data yesterday. traders doubling down on their bets for rate cuts next year. now they are pricing for cuts in 2024. it weighed on gilt yields across the curve yesterday and it could push one of the last standing hawks on the monetary policy committee to go for a hold this time. megan greene, jonathan haskell, catherine mark. out of the three, greene is thought to be the likeliest to waiver. that decision at 12:00 london

time. we will discuss it with martin we'll who will be right here on bloomberg tv at 9:30 a.m. we are going to speak to snb president thomas jordan. it's a jump -- jampacked today. the ecb decision followed by christie -- christine lagarde. 4:00, we speak to the former ecb chief economist peter prate. so much coverage coming up for you on bloomberg. we are looking at futures currently pointing to an even higher opening this morning. lots more analysis coming up. stay tuned for that. this is bloomberg. ♪

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