lizzy: this is "bloomberg daybreak: europe".

i'm lizzy burden and these are the stories that set your agenda. asian stocks dragged lower by losses in hong kong and china amid concerns over policy. the focus this week shifts to inflation reports from the u.s., japan and china. the 737 max 9's grounding goes global as the alaska airlines blowout puts boeing's comeback plan in jeopardy. u.s. secretary of state antony blinken warns the israel-hamas war could easily spill over into a full-blown regional conflict. as he continues his latest diplomatic tour of the middle east. very good morning. welcome to a new week. safe to say that equities are starting 2024 with more of a lamp than a bang. futures pointing to a lower opening on both sides of the pond this morning, in europe and the u.s. we had in the asian session shares struggling for direction. japan is closed, but the msci

asia pacific index down zero point 6%, dragged down by hong kong tech. this selloff driven by fears of tight regulation on gaming. on friday, you had the s&p closing slightly higher after the jobs report showed job growth beat expectations, but also the service sector slowing. s&p e-mini's lower a 10th of a percent. all eyes will be on airline stocks at the open, given the boeing max grounding news. we will also get a little fed speak from profile bostic later. that will feed the narrative of when the rate cuts are coming. if we flip over to the cross asset picture now, there has been no trading of cash treasuries this morning because japan is on holiday. trading will start at 7 a.m. london time for cash treasuries. they came back to the treasury selloff friday off the back of that strong jobs data, it was curtailed because buyers swooped in as the 10-year treasury yields neared 4.1 percent.

jp morgan says after this current rest, the treasury's bull run will very much continue. looking at the dollar pretty steady against its g10 peers. stronger as we await that inflation data out of tokyo tomorrow. the u.s. on thursday, and china and france on friday. euro-dollar meanwhile currently trading at 1.09. importantly, in your commodities space, brent has dropped to $77 a barrel after saudi arabia cut official selling prices for all regions. highlighting that you have this weakening demand. that's outweighing concerns over the red sea tensions and supply disruptions in libya. that's your big picture but letdown in now on asian markets. avril hong is on standby for us in singapore. what's happening where you are? >> as you touched on earlier, asia stocks are lower today. the msci asia pacific excluding

japan is about 0.9 percent down. the drag is being felt from the chinese stocks. csi 300 down, as is the hang seng, biggest decliner in the region, losses exhilarating to 2.3%. the offshore currency hovering at 7.17. we're seeing the chinese government bonds gaining ground. on the expectation of rate cuts from the pboc, which makes it crucial to keep an eye on data coming out this week on chinese prices, when we are expecting to see the consumer price index showing deflation for a third straight month. the trade and credit data also expected to show weak demand in the chinese economy. let's flip the board and take a look at hang seng tech. because that is bearing the brunt of that selloff today. all 30 stocks on the gauge in negative territory. we're seeing it headed for its lowest close since november 2022. losses led by the likes of x

paying, the ev maker extending declines from last week, when hsbc downgraded the earnings outlook, citing rising price pressures for the chinese company. let's take a look at the other bunch of stocks we have been tracking today. those are the suppliers for playmaker boeing in asia, including the ones listed in china as well as south korea, as the investigation into the alaska airlines incident continues. as investors assess the impact of the grounding of the 737 max 9 jets. kriti: i'm going to zoom now into that boeing story you mentioned. the door plug from the boeing 737 max 9 that suffered the fuselage panel blowout have been found. in a press conference, the u.s. national transportation safety board said the cockpit voice recorder was unusable. asia transport reporter danny lee joins us for more.

what else is the safety board saying? >> jennifer homendi, the chair of the nt essay, describing the chaos on board when this bang happened causing this rapid explosive depressurization. for example, the cockpit door, the force of the air rushing out of the plane -- the cockpit door which is meant to be very strong, it just blew open. there is a lot investigators will be looking at and this is only day one of the investigation into what's happened friday. the latest is indeed to that this door a crucial piece of evidence, has been found. that will hope fully glean clues as to why this door plug failed. lizzy: i'm sure it has put a lot of people off of their travel plans for 2024. myself included. what impact is this incident likely to have on boeings comeback plans?

>> the key thing for boeing right now is the reputational damage, particularly after the global grounding in 2019 the entire max fleet in fact. that was because of the two fatal crashes. i'm the more recent months, we have seen a big challenge for boeing because of the maintenance issues and quality control issues coming out of its factory, and of the supply of its factories. therefore, it has a lot to do to shore up confidence to show that it can build quality aircraft. lizzy: our asia transport reporter, thank you, as we look at those shocking images of the alaska airlines flight. let's get to the latest in geopolitics in the middle east. u.s. secretary of state antony blinken has warned that the israel-hamas war could easily spill over into a regional conflict. >> this is a moment of profound

attention in the region. it's a conflict that could easily metastasize, causing even more insecurity and even more suffering. lizzy:'s comments come as he travels across the middle east trying to calm tensions and urge israel to do more to protect civilians in gaza. for more, i'm joined by bloomberg's henry mayor. what are the main goals of blinken's visit? he has been several times and it seems like his message is not getting through. >> this is his fourth visit to the region since hamas attacked israel on october 7. there are two main components. one is short-term, to try and head off and its increasing escalation. we have had a series of events that have taken place that have raised the risks to assassinations. one of an iranian and

senior hamas official both attributed to israel. and we see in the red sea attacks on commercial shipping by the houthi's which are backed by iran. the u.s. and its allies have been warning the houthis to desist. he is trying to reign that in. at the same time, he is trying to put in place some kind of framework for what gaza will look like after the war. that involves israel and arab countries. lizzy: in blinken's words, the israel-hamas conflict could metastasize into regional conflict. what are analysts saying about that becoming reality? >> they take those risks very seriously indeed. at the moment, it's clear that iran has been upping the ante but at the same time, they have been careful to not push things

over. things can take an uninfected turn. at the weekend, there was a drone attack by the houthis that was shot down by that navy near a u.s. warship. if that drone attack had been successful and u.s. lives had been lost, then you are into different territory. lizzy: thank you for being across that story, as we keep an eye on the oil price, brand trading just shy of $78 a barrel. despite the tensions in the middle east. next up, u.s. politics. the house is coming back from recess today. u.s. congressional leaders have announced a deal on a topline spending level for the current fiscal year. it lessens the chances of a partial government shutdown on january 20. for more, we're joined by bruce einhorn. what exactly was agreed in this deal? >> this is a limit agreement between chuck schumer, the leader of the democrats who control the senate, and mike johnson, the leader of the republicans who control the house.

it's an agreement of the overall spending cap. the number is pretty much the same as the agreement that president biden negotiated last year with vanden speaker kevin mccarthy. kevin mccarthy, as a result of the compromises he made on that budget deal, and to keep the government open, lost his job. now here we have mike johnson, his successor, agreeing to something pretty similar to that deal from last year. we know that there are already some republicans who are criticizing the deal. chip roy a prominent republican from texas said that it is a terrible deal. the house freedom caucus which represents a lot of conservative republicans also has criticized video. the next step is now that this overall agreement is there, the different committees need to make the appropriations to create the bills to get things

voted on. it is no certainty that those things will happen. that they will avert government shutdown at the end of next week , but we are at least closer to getting this problem resolved. lizzy: for markets, the focus is on who wins the presidential race. how does this agreement affect the election? >> if you look back to the history of government shutdowns of the united states, any government shutdown that has lasted more than two or three days going back to the days of bill clinton, they have been in off years. they haven't been during presidential election years. i think there is a good chance that this does get resolved. nobody wants to have a government shut down during an election year. especially if you are the ones causing the government shutdown, because voters don't like shut

downs. while their memories may not be that long, they are not that short either. they won't forget about it come november. the fact that we have the makings of a deal means that most likely we're going to not have a government shut down the day after next week. but there is still quite a lot that can go wrong between now and then. lizzy: no shut down for now, but we will keep across it. bruce einhorn, thank you for that update. we have heard the latest on the geopolitics but it is a busy week ahead for eco data. overnight, the latest tokyo cpi print, which of course, is a decent indicator of the national headline number. an important gauge, therefore, feeds into when the bank of japan can start to hike rates. we also get inflation data from the u.s. on thursday. the bloomberg survey of economists says the underlying measure is expected to cool from

four to 3.8 december in december. friday, we get a raft of bank earnings. jp morgan, bank of america and citigroup all dropping at 6:35 a.m. new york time. you can get a roundup of the stories you need to know in today's edition of daybreak. today, they lede on bond traders betting on this rally. they also have the shocking story of boeings 737 max, the grounding going global. closer to home in london, they have the tube strike called off according to the union rmt. good news if you are hoping to come into the office. all of those stories are in the daybreak newsletter which terminal subscribers can find by going to dayb . africa's richest person has been dragged into the nigerian government probe into the conduct of their former central bank chief. all the details on that next.

this is bloomberg. ♪

lizzy: is just coming up to 6:17 a.m. in london. we will go to the top stories in africa. the president of somalia officially invalidated a deal with ethiopia which had given somaliland access to the red sea in exchange for a stake in ethiopian airlines. the president of somalia officially declared the deal null and void over the weekend, after signing a law that repealed the deal. somalia said the deal breaches its territorial integrity and sovereignty. in nigeria, a. by anti-graft officials on the offices

controlled by africa's richest person will harm the economy and to deter investors. it comes as the probe into the former central bank chief godwin gathers pace. we are joined for more by our reporter in abbuja. what was the reason behind the raid? >> when he took office last year, president to nobu decided the foreign-exchange policy of the central bank that was headed by god when. he a pointer to look into the books of the financial institutions of nigeria. the accusations gave evidence that they received foreign exchange and then went onto the market and sold it at two or

three times the value. the company denied that on thursday evening. at the moment, the financial commission has not confirmed that investigation is ongoing. lizzy: just to tell us where about this ongoing probe into the former central bank governor. >> he was the chief for nine years until he was removed by tinobu. he was accused in a document published just before christmas of malfeasance including minute believing b --manipulating the naira, and being in possession of offshore bank accounts that were unauthorized by the cbn. to be clear, he has denied these

allegations. at the cross of the investigation, the foreign-exchange system that he ran. he kept the value of the naira low. he bid with another firm to do that. that's what the president tinobu was unhappy about. this investigation is ongoing. lizzy: we thank you for your insights. great to have you on. there is plenty more to come. we will go elsewhere around the world. this is bloomberg. ♪

lizzy: come back to "bloomberg daybreak: europe."

the bank of japan will assess the first results of annual wage negotiations. the ceo of japanese drinks maker santory says wage hikes could boost innovation. he has also told bloomberg that changes in the japanese economy are pushing corporate leaders to be more open towards m&a. take a listen. >> i'm sure there are so many reasons for us to believe that industry will be more active to use cash. there are some reasons. one, we know interest rates will go up. and we have cash. either one who wants to borrow cash, or for those who have a lot of cash, we need to take action. the reason behind this inflation -- the inflation is gone. our economy has so much changed for the better i would say. mostly, deflation was a huge

disease. business leaders thank inflation is gone. and plus, we have to take action. the reason behind it we noticed we lagged behind from the world. but there is a huge chance here in japan. everybody knows that we have to digitalize. we have to reform the society. a lot of changes are needed, so change is pushing us business leaders to do something new. i think 2024 is a big push for business leaders in this country to do something different than the last 30 years. >> the market expects the boj to scrap negative interest rate sometime this year. what does that mean for japan inc. where the interest rates will rise? >> immediate impact is the currency. japanese yen will be more

appreciated. perhaps to the 130's hopefully. second is more important. consultation of the industry, or metabolism of the industry. some companies can't survive by phasing the interest rate increases. but that is a good thing for our economy, because that will bring dynamism to our economy. that's what we needed. and we need such dynamism. >> we are now seeing significant changes in wages. he announced a 16% hike for younger employees. suntory last year you said 16% increase for 2023. it sounds like you are looking at 7% for 2024. can you tell us your strategies for increasing wages? >> i firmly believe that

nowadays, first of all, we raise wages first for the people working together. then that will galvanize people. then ask them to increase productivity. use to be the opposite. we increased productivity, then we increased wages. so our idea is, first of all, people first. and raise productivity after all going through the increases of wages. not once every 2, 3, 4 years. our people think that our company will increase wages not only one year, 2, 3, four,

continuously. that will create great motivation towards innovation. >> what is the most pressing issue for japan? what is the most pressing issue japan faces going forward? >> energy. we have to push all measures. every measure so that we can secure energy. because we are shifting to digitalization more and more. and we are catching up with the world. ai is used everywhere. energy is the source of economic growth. so we need more renewable energy. we need more reactors of nuclear energy. we need more wind power.

we need more new technology which generates electricity. we need every source of energy. lizzy: that was the suntory ceo in tokyo. china announced a sanctions against five u.s. defense industry companies in response to the latest arms sales to taiwan. the measures freeze the properties of those firms in china and prohibits chinese organizations and individuals from working with them. we will dive into borrowing more hi, i'm katie, i've lost 110 pounds on golo in just over a year. golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance. i had had conversations with my physician indicating that that was probably an issue that i was facing and making it more difficult for me to sustain weight loss. golo has been more sustainable. i can fit it into family life, i can make meals that the whole family will enjoy.

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lizzy: good morning, this is "bloomberg daybreak: europe."

in london, i'm a lizzy burden. asian stocks are dragged lower by losses in hong kong and china, amid concerns over policy. the focus shifts to inflation reports from the u.s., japan and china. the door plug from the boeing 737 max 9 jet with suffered a fuse ledge panel blowout has been found. as models are grounded by airlines across the globe. u.s. secretary of state antony blinken warns the israel-hamas war could quote easily spillover into regional conflict, as he presses ahead with high-stakes meetings in the region. it's just gone 6:30 a.m. here in london. let's check in on these markets for you. if you look at the equities picture, 2024 not really starting with a bang. more of a limp. futures pointing to a lower opening in both the u.s. and europe. we did have that u.s. jobs report on friday. off the back of it, the s&p closing slightly higher.

it showed that job growth beat expectations. that the service sector slowed. now you have s&p e-mini's down 0.1%. all eyes are going to be on the airlines stocks at the open, given the boeing max grounding news. we will also get a little fed speak later today from rafael bostic. that will feed into the narrative of when the rate cuts are coming. if you flip over to the cross asset picture. there has been no trading of cash treasuries because dependence on holiday. if you think back to friday, the treasuries selloff off the back of strong jobs data was curtailed because buyers swooped in as that 10-year treasury yields near 4.1%. jp morgan says the treasury's bull run will continue after this current rest. if you think about the dollar, it has been stronger against most of its g10 peers as we await inflation data. we got it out of tokyo tomorrow.

the u.s. on thursday. and china and france on friday. euro-dollar trading at 1.09, pretty steady. brent crude importantly, just shy of $78 a barrel. you have all of this disruption in the middle east. tensions in the red sea. the supply disruptions in libya being outweighed by the worsening outlook. you have seen saudi arabia cutting official seller prices for all regions as a result of that. we keep an eye on the oil price. for more the latest market moves and last week's jobs reports, let's go now to bloomberg mliv's mark cranfield. more misery in chinese stocks today. the japanese session not in action this morning, but the msci asia pacific index down 0.8%, if you six glued japan. dragged down by the tech stocks in hong kong. how worried should we be? >> if you are invested in that

part of the world, you should be worried because it has made a new low for around 14 months. disconcerting if you are thinking that the bottom was in for greater china equities. bloomberg haven't confirmed yet, but there is a report going around that the chinese authorities are now allowing shortselling again by asset managers in china. which probably helps explain why the market suddenly turned so negative today. it wasn't too bad at the opening, then gradually got worse during the morning session. and continuing on in the afternoon here. that may well be behind the latest about of anguish we're seeing across chinese stocks. is not the only reason of course. there is also frustration among investors who want to see a big shock and all response from the chinese authorities. they want to see bigger fiscal stimulus done more quickly. they want to see more aggressive monetary policy easing.

there have been lots of promises in the past few days from chinese officials. but there has not been much action. it looks increasingly as if investors are saying we will switch our money to more interesting places. just when you thought valuations were as low as they could go in greater china, they have gone even further to the downside. at the moment, there isn't much in favor of what's happening. if they don't come out quickly, people will think about the lunar new year holidays in a months time, and markets wind down before then. so we could be in a period in which nothing good happens for china stocks until mid-february, which will be disappointing for people who thought this year would be the turning point for hong kong equities. lizzy: if we switch focus to the u.s., anyone who is getting back to their desk after the holiday today will want to look at what the jobs numbers friday have done to rate cutting bets for the fed. what are your takeaways from the report?

>> bloomberg economics summed it up nicely. saying the only good part about the jobs report was the headline nonfarm number, which beat expectations slightly. if you dig deeper, the numbers are not healthy at all. one of the problems is the total number of employed people has fallen in the united states to the lowest for about four years. there is too many part-time workers who can't find sustainable work. it was following up by another ism report that included another weak sector for the employment part as well. you throw those on top of each other, the services part of ism was weak as well, and it leads into this week's inflation data where core inflation is affected to be lower again. the ninth month consecutively where we get a low number. all in all, it is suggesting some of the feelings are justified. employment is weakening.

inflation is coming down. it will keep the door open for the fed to talk about a march interest-rate cut. no wonder the market hasn't backed off, even though those headline numbers weren't so bad on the jobs data. the fed speakers maybe try to push back, but if the underlying employment situation weekends, people will look past it and to say recession is still a possibility in the united states. lizzy: we will hear from rafael bostic later today. mark cranfield from mliv, we thank you as always. let's get back to the bowing story. the door plug from the boeing 737 max nine jet which suffered the fuselage panel blowout has been found. in a press conference, the u.s. national transportation safety board also said that cockpit voice recorder was unusable. >> the circuit breaker for the cvr was not polled. the maintenance team went to get it, but it was right at the two

hour mark. and it was completely overridden. at two hours, it re-records over it. lizzy: let's dive into this with our bloomberg aviation editor, what else is the safety board saying here? >> the safety board and people at the scene with that are going through the plane and are trying to piece together what happened. we know the broad contours, as you said, this so-called the door plug was ejected violently as the plane climbed out of its departure airport. they have said several times that this was incredibly lucky this didn't end in a more tragic event. there was nobody seated next to this opening. most likely, people would have been sucked out. imagine, had the plane been at a higher altitude, this could've

ended more tragically. it reminds me of a week ago in japan. very different events, but two lucky outcomes. in one case, everybody escaped from the plane and in this case, the plane landed safely. what they are doing now is going through the plane looking at exactly how this plug was affixed to the fusillades. -- fuselage. you see in the images that it came out clean. that is something that shouldn't have happened. we heard that the cockpit voice recorder is unusable. that's not great, but they probably have enough to go by given that the plane is otherwise intact. lizzy: shocking images. miraculous actually. what impact is this incident likely to have ongoing's -- bowing's comeback plans? >> this is yet another event in a long string of malfunctions and issues they have had. they have had problems with misaligned hulls and issues with loose bolts.

now this is the most catastrophic event. it's hard to imagine anything worse than a big gaping hole in the plane midflight. we haven't really heard from boeing proper yet. we will be looking out for whatever comments the company might have internally and externally. we will get their full year for last year for last year orders and deliveries tomorrow. that might be that first chance to address the public. all they have set at this point is they are supporting the effort. they support the grounding. this particular type of plane has been grounded by the faa. they moved quickly after this. it is not widely flown. there are 250 of these planes around. this affects 170 aircraft globally. not a huge amount of planes, but the fallout and the optics, is really bad for boeing and will take some time to get through. lizzy: benedikt kammel in berlin.

thank you for that crucial context. we will keep an those airline stocks at the open. i want to come closer to home now. in the u.k., the firing gun has very much been fired on the u.k. general election. rishi sunak said last week that his working assumption is the vote will be held in the second half of this year. there had been some speculation after the announcement of an early budget on march 6. a spring election hasn't been ruled out. we heard from the opposition labour leader keir starmer, he urged sunak to set the date, accusing him of putting vanity before country. he wants simply to cluck up two years in office before he goes to the polls, says keir starmer. it seems like rishi sunak is hoping to cling onto power as long as possible in the hopes that he can make more progress on his five targets. they include growing the

economy, stopping the illegal migrant crossings over the english channel, and cutting national health service waiting lists. those are looking pretty bleak given the legal challenges facing taking asylum-seekers to rwanda. given the doctors' strike, the longest in national health service history. we heard from rishi sunak himself yesterday on his rwanda plan. take a listen. >> as chancellor, my job is to create knives -- to scrutinize and ask questions of every proposal that crosses my desk. it's the chancellor's job now because ultimately this is all taxpayers' money. just because someone is asking tough questions doesn't mean they don't believe in the proposal. lizzy: rishi sunak saying he always backed the plans to deport asylum-seekers to rwanda, even if you raised significant doubts when the idea was floated by boris johnson when sunak was

the chancellor. this was first reported by bloomberg. you are likely to see politicians up and down the country. it's very much hard hats season here in britain. let's not go to germany. we had a week-long protest by german farmers taking off this week. they are angry over subsidies being phased out amid the government's budget crisis. let's go to our germany correspondent. he's live in berlin. the budget crisis seems to be hitting all parts of german society and industry. >> this is where the rubber hits the road. we were talking in the abstract about billions of euros here and there, how they plug the hole. one of the ways was for the government to remove these tax exemptions for agricultural diesel and taxes on agricultural vehicles. the farmers did not take to this at all. the week before christmas behind

the brandenburg gate there was a convoy of 1500 tractors that stretched a mile in front of the bundestag airing their discontent, saying you are threatening the commercial and economic viability of farming. the coalition stepped back and said we will scrap this plan to raise taxes on agricultural vehicles, but we will still phase out this exemption on agricultural diesel over three years. that is not get enough are the farmers. they are starting a week-long protest, not just in berlin, across all of germany you will see blockades on roads that starts today. it underlines how complicated this budget crisis is, and how deeply it reverberates across german society. lizzy: strikes across europe very much not a thing of 2023. but it's not just about farmers, it's a much bigger political issue for government. >> they have been bleeding votes and popularity for a while, this coalition government composed of the three big parties, social democrats, liberals and greens.

you can see is they have been hemorrhaging in the polls. to has benefited is the cdu, merkel's old party, and the far right, alternative for deutschland. they are now the number two party in germany. this is significant because we saw it last week with polarization in germany. the vice chancellor robert habeck and the economy minister was on his way back from vacation on a ferry. there was a blockade of farmers to welcome him and they had to turn the boat around. this talks about the polarization we're seeing in a year where we're expecting contraction last year, maybe this year, and later this year three state elections where we expect the far right, if they were held today will sweep the polls. lizzy: oliver crook, thank you for that update on the strikes as we look at euro stoxx 50 futures currently lower a third of a percent. we will dive into commodities

next. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe." brent trading shy of $78 a barrel, as saudi arabia cuts crude prices in all regions amid persistent weakness in the market. a ronco sell its flagship arab light for a dollar and a half above the benchmark. it is cutting its prices to northwest europe, the mediterranean and north america. we will keep an eye on oil prices throughout the morning pre-let's go to ev's now, because slovakia and the czech republic are the world's biggest car producers on a per capita business.

winning then the nickname, the detroit of europe. the transition to ev's is putting this industry in jeopardy. for more, i'm joined by our reporter in prague. how is the shift to ev's playing out in the economies of slovakia and the czech republic? >> what we're seeing is companies such as volkswagen and volvo, the carmakers are investing heavily to prepare for this which. -- the switch. they are investing billions of euros into this change. there are questions about what will happen to be auto suppliers that make up the backbone of the industry as such, and keep the economy going in these two countries. lizzy: give us the picture of the impact for auto parts suppliers in those countries. >> our industry accounts for a quarter of exports in those countries. in slovakia, as much as 40%.

some auto parts makers have already cut staff. some are warning they will not be able to keep their workers in the years to come, which may create pressure on the jobless rate in the regions further away from the capital cities of prague and bratislava. lizzy: i'm wondering where you have seen neighboring countries poland and hungary attracting new electric battery plants. are we going to see a similar theme in the czech republic? >> governments are hoping to do the same. they are in talks with various investors at various stages of the process. however they have not been able to copy what hungary and poland have done, which have attracted, not just attracted, but they are already building battery plants. we haven't seen it, but the hope by both governments is they can catch up. lizzy: andrea, we thank you for that story. i want to stay with transport

news. the u.k.'s rmt union says that strike plaintiff this week for the london underground has been called off after progress. it threatened several days of travel chaos. so it's back to work if you are going to travel by tube. the wall street journal says elon musk's drug use is worrying executives of businesses he runs. the journal cites businesses saying musk has used lsd, cocaine, ecstasy and psychedelic mushrooms at private parties. musk said in august he had a prescription to use ketamine as an antidepressant. he has not responded to requests for comment. stay with us. this is bloomberg. ♪

>> the jobs report was

absolutely hotter across the board. >> solid report. >> the labor market is still strong. >> what does this mean for the fed? >> this reinforces the notion that the fed will not rush to cut rates. >> simply taking back rate cuts is a relatively easy call. >> that likely means that the fed does not actually cut rates. but that's a premature conclusion. >> i'm expecting a 50 basis point cut in march. >> i don't think so. >> the fed will be waiting a while before it starts cutting rates. >> they will start cutting in may, june. >> you are looking at the back end of the year. lizzy: bloomberg guests weighing in of the jobs report and its implications for fed policy this year. i want to take you through a few charts to set you up for the week that respond to that u.s. jobs data on friday. i start with the yield curve because the entire curve is now

back above 4%. 2's, fives, tens and 30's as you can see. traders betting on a 2024 bond rally unfazed by the recent pullback. they see it as a chance to seize on elevated yields before the fed cuts rates. that was on full display friday after the jobs report. you had job growth unexpectedly accelerating in december. bond prices dipping. but the selloff curtailed because buyers swooped in as 10-year treasury yields neared 4%. the point is that rebound, even in the face of data that underscores the strength of the economy, highlights the stark shift in sentiment. that investors are increasingly confident in the strength of this bond market. that it's very much back on its feet. you have j.p. morgan saying anything between four and 4.2% is a buy for the 10-year, and td securities saying the 10-year yield will end 2024 at 3%.

if we hone in on that jobs data. as you can see, the nonfarm payrolls added more jobs, but private payrolls missed estimates. there were other weaknesses, as we talked about with mark cranfield. the biggest drop in household employment since april 2020. a spike in the duration of unemployment spells a drop in labor participation. more temp workers unable to find jobs. more people taking part-time work for economic reasons and a decline in working hours. it's not all strength under the bonnet. thus, while the initial market reaction was too cool wages on deeper fast cuts, swap traders reformed those fats so that now they see 140 basis points of cuts this year starting with a two thirds chance of a march cut. i also want to take you to oil prices. despite the geopolitical tensions, the weakness in crude persists. yes, you have read see turmoil and protests in libya shutting

down oil fields, but the market is shrugging that off. you have also seen saudi arabia cutting official selling prices for all regions, including its asia markets. underscoring the worsening outlook. before i go, i thought we would show you the map of the day at bloomberg. as you can see, 2024 will be the year of the rate cut. bloomberg economics' aggregate gauge of rate cuts across the world shows a decline of 128 basis points this year. it is going to be led by emerging economies. there is 20 more to come. tom and mark will be with you next for "markets today." ♪

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tom: this is "bloomberg markets: today." the cash t l