good morning, this is bloomberg

daybreak europe. here are the stories that set your agenda. european futures trade broadly flat as traders stop by for wednesday's data on u.s. inflation. the u.s. treasury secretary mr. pboc governor in china. gm's relations with beijing on further footing. we have a lot of geopolitics to get through. let's just take you back on friday. markets -- markets concluding that the u.s. economy will power corporate america even if it means rates stay higher for longer. it's wall street futures

pointing to a lower opening. this could you get some gains. you can see the difference when it comes to treasuries from that u.s. jobs report in terms of fan cuts. back to about 65 basis points this year now. the two year yield is currently lower attached. the dollar is a touch lower. oil has been lower off the back of israel, saying they will pull some troops out of gaza and bitcoin is back below that 70 k mark having broken through it over the weekend. let's zoom in on asian markets. what is happening where you are? west good morning.

as you were dissing, asian stocks are starting the week a little bit on a bright spot after that better than inspected u.s. jobs report we saw. he does not release much the main sentiment in the hong kong shares. just a little bit more poor. basic 80 meant to liquidate in these wanting a petitions. i also wanted to take you to the commodities space a little bit with iron or rebounding other bit after this rock -- after this long weekend we had in china. gold is also extending gains there. big buyers of gold. that has been feeling this scorching hot all-time record rally. china has been buying coal for about 17 months straight. the big story out of town but the currency today has been top of mind for traders. we saw the previous he fixed the

yuan. this is a level they have been leaving the fix at for several weeks and months. we have been tracking with the onshore rate is for this to present training ban in this reference rate. that is from the weekend of the training ban. the policymakers have stepped in when you feel the depreciation pressure really building in. analysts are saying there is a possibility that it continues. just a little bit of breathing room into that onshore spot rate. >> thank you for that. the gold lose could be partly to do with china not all about the fed story. let's talk about u.s. china relations now. janet yellen still in china due to all the news conference later

this morning. as she wraps up that trade. it is after talks that the pbs a governor had with her. she said she helped nations between washington and beijing which are more stable now. >> as the world's two largest economy, we have a duty to response by manage our compex relationship and to cooperate and show leadership on addressing pressing global challenges. >> for more on the trip we have jill. it was like yellen has had a delightful weekend cruising down the pearl river with the vice premier. it does he like janet yellen is washington's good cop in this entire situation in the u.s.

china relationship. while she did spend her trip criticizing china for some issues, particularly overcapacity on importing cheap goods, generally it seems like it has been a pretty pleasant trip for her. this is her second trip in nine months. it generally has seemed like it has been pretty diplomatic. more details from janet yellen we have the press conference in just a couple hours. seems like there has been a decent response from beijing. >> can you expound on what china's reaction has been? surely they can't take all of that lately. >> certainly in state media they haven't. the official news agency for

china was lasting yellen over some of those capacity comments. what about u.s. subsidies for things like that? that is where you are seeing the most pushback from a lot of officials. this is all across given things. we have not really see the big fulsome response. i will caution you that china is also just coming off a four year holiday. we will get some resumption. we will see if there is a struggle reaction out of beijing in the wake of this extended weekend they just had as well. >> thank you joe. we think you for that update on yellen's visit. let's get to the middle east now where israel is pulling some troops out of southern gaza as hamas passes the six month mark.

chris coons says the move is likely a tactical decision case hezbollah or iran attack. we can bring in roslyn matheson for analysis. what is behind this move and does it affect potential fights there? quick they have been fighting in gaza for the better part of six months. there is probably some truth in that. there is also the reality they like to reinforce their trips in the north of israel. that is where he has blessed hands attack from lebanon. all of this in the aftermath of their airstrike on the every need to plan a compound in syria. there have been repeated warnings from iran in some sort of allegation. there is a possibility of step activity. they are also pulling that back

out because they want to be able to move palestinians in that area. none of this suggests a desire to go in to have that offensive in rafah. this is not a withdrawal, this is purely tactical -- tactical on the part of israel. >> might -- what might i rate -- what my iranian retaliation look like? >> it will be really unusual. really big escalation for them to attack israel directly instead of firing missiles directly to a major center in israel. that is basically a president in what you might see is that kind of proxy activity primarily through hezbollah through lebanon possibly again urging who these on in the red sea. they have been blocking shipping in the red sea for months now. they are talking about --

talking to each other to get this unusual show that iran and the u.s. despite all this -- neither really want a direct conflict happen. we will probably see something of a bit more asymmetric. thank you. we also had more of the back channeling in the u.k. as well. the u.k. talking tough over the weekend when it comes to the situation in gaza as well. as covax back to the economic data. we have the u.s. cpi number coming out on wednesday. a bit of news -- a big bit of news the fed. surprisingly strong u.s. job numbers. the data is projected to show a modest lowdown in the underlying inflation. dan, we had jeffrey powell saying strong hiring on its own is not going to be enough to delay policies. this was a large job support we got friday.

do we think any fed officials will still be calling for three this year? crystal leadership -- i always say this, it is important to focus on what the leadership is saying, not what some of the ones who might talk more are saying. jay powell has firmly anchored his view that there will be interest rate cuts. more than likely it is a projection, not a promise. it also means they don't have to rush. rapid hikes that -- don't seem to have slowed growth down that much. let's not forget we have been with inflation. pce. the inflation measure that the

fed bases its supercenter target on has come down dramatically from where we were in 2022. at one point in 2022, pce was about 7%. it is now 2.5%. you're also probably going to hear a lot of talk about the last one being the hardest and so forth. we just need to see a continuation of numbers. we don't have to necessarily be better. it is an average of 2% over time. >> all right. it seems clear at least that the u.s. is not in a rush to cut rates. and yet for the ecb, this looks but emotion out onto many at this point. so with this diversions, what about the weaker euro feeding into the european inflation story. >> what is transpiring is much

more clear. munication has been much less vague. even the austrians are typically like hard money recognize the economy is not in great shape and the net flexion has come down markedly. they asked a pretty pertinent question last week. which is if you are all talking about june the press conference will all be about june, why not just do it now? it is a good question, economically, you will not see a lot of change between now and the june meeting. there is a case for just getting ahead of the narrative. doing it in june. that would be impressive. >> are they just hiding behind those jobs numbers? why not just do it now? we think you for that analysis.

as i say, it is a busy week. we only talked about u.s. cpi coming on wednesday. this is a crucial piece of the data puzzle for the fed. economists are expecting a modest lowdown in core inflation even if the headline inflation stays around 3% 20 end-of-the-year. the super court inflation has been really sticky here. we were just talking about the thursday ecb rate. all of this is pre-much a done deal. the focus very much on clues as to that path beyond that and how much diversions they will be on the fence on rate cutting trajectory. and then on friday, we get ben bernanke's review on forecasting. the expectation is never the recommendations are, it is going to take a while to be in limited and even when they are, they are more likely to affect bank of

england's munication's. we will wait to hear the specifics on friday. all of that will take you today's edition of the debris news. all of that after the leading on china this morning. coming up later in the program, zimbabwe replaces its battered dollar with the new currency backed by foreign currencies. we will bring that story next as well as an interview with hsbc. it is looking to bolster its wealth management business in china and india. we will hear more from that exclusive interview with the ceo , noel quinn. stay with us. this is bloomberg. ♪

welcome back to bloomberg daybreak euro. we will head to africa now where zimbabwe is reprising its battered dollar with a new unit that will be backed by currencies, gold and other precious metals. this is a byway six attempt to have a functional currency since 2008. just talk to us about this transition to the new currency. >> it has been a long time coming judging from the current state of the zimbabwe economy. inflation is high. this about wayne dollar has lost near 7.5% of its value to the dollar this year alone. that was -- they waited with

bated breath. the central bank says they have up to 285 billy does up is truly happening is are we calibrate in their systems and raising the current balances in the central bank governor who assumed his role a month earlier that inspected says a couple of changes becoming. part of these changes is wanted to show the zimbabwe currency also destabilizes so they can have some stability in the prices of goods and services. >> talk us through some of the other key decisions. this was the highest rate in the world. but it wasn't the highest in zimbabwe. his niece higher for the public sector for them to invest and

even grow. >> a selection of couple of zeros from their previous currencies. >> we thank you. that is the other for zimbabwe's new currency. i also just want to take a check on currencies because it was a

week for this last week. we had the confluence of geopolitical risk and supply-side issues affecting oil. this is just shy of $90 per barrel. in terms of geopolitical, we were a level of $72 per barrel in december. 90 is a level that opec-plus is likely to want to maintain. around which the price can fluctuate as in everybody will because if it has back toward $100 per barrel as gold is as it could, that would perhaps feel inflation and her demand. you might say the 90 sweet spot that powers and economic recovery and the question being, can they maintain it? brent just shy of $90 per barrel.

wti at $80, 68 currently. gold at a new high. you have some talents coming in from china as well. that brings me to iron ore. all of this on the speculation that demand from china for pickup. china is the world's biggest steelmaker. we have trainers back after the long weekend even a boost to the commodity. we played were still had for you. so stay with us. this is bloomberg. ♪

>> the ai driven boom in demand has helped drive a 400% shares surge controls the center part

of the chipmaking process. the ceo told us exclusively has a couple he plans to further strengthen its position. >> what's most important is that we have technology to other companies don't have. we are in charge of the process. transfer molding is a common method but the compression is required for high-end chips. we developed the first part of this technology in 2009. in -- even after 16 years we see local competitors of this technology. >> you currently own this market. you create about six to percent of the world trip ceiling machines. do you have any plans to further that market share? wife this is on how much customers create this.

i think this is the most competitive point. we have a strong desire to have 100% control of the process. we have seen the emergence of many manufacturers. this will rightly squeeze profits. if you want to make money, we after focus on the high-end market. we should specialize in this area and expand these markets. we occupy more than 90% and we want to maintain this supposition globally. >> there is huge demand for ai chips globally right now. what is your plan to increase output coming forward? we have been working toward a tenure vision of achieving 100 billion yen by 2030 -- 2032. we would like to start building a structure in the next is clear to achieve our goal of 100 billion of sales by 42. >> your shares are up for x over

the past year. do you see this as a good opportunity to capitalize on those stockades? potentially investing and boosting production? >> we are very grateful and happy about this. rise in the stock price creates capitalization. we nee -- we need to create a considerable investment. i believe the stock price has made it easier for us to do so in many ways. i am truly grateful for that. >> what about m&a? which sectors and regions look attractive to you? how much do you want to invest? >> the parties do not achieve a win-win situation. in any opportunity in the future we always focus on this. >> you him to do with a major south korean chipmaker. do you expect your korean business to eventually be as big as your sales in china are currently? >> especially in ai devices.

we expect them to make a large investment in the future. we believe the market will continue to grow. the chinese market is still very large. i think it and a different dimension. china has its own way of doing things and create an samsung and sk hynix have their own original ways of doing things. we are not thinking of them in the same way. >> what is the one thing you think japan needs most when it comes to staying ahead in the world? >> believe the basis of a manufacturing company is to

>> good morning are the stories

that that your agenda. asian stocks stalled the week with gains while european futures trade broadly flat as traders stand by for wednesday's data on u.s. inflation. israel says it is pulling some troops from southern gaza. the oil rally takes a breather plus janet yellen meets the pboc governor on her last day in china. as she aims to put things with beijing on a firmer footing. a very good morning. walking to a new week and to explain what is happening in the markets, i will take you right back to friday. that blockbuster u.s. jobs report. markets interpreting it as good news is time. good news on the strong economy. even if the price is raised higher for longer. you have treasury stock futures pointing to a slightly higher opening but higher for the

european futures. if we put the board over to the cross asset page, you can see the impact of that jobs report on treasury. you had a bit of a repricing. now traders up 65 basis points of rate cuts for the fed toward the end of the year. then you see treasuries off the back taking lower. higher three basis points, 4.77%. the dollar is a touch stronger. if you look to oil there, brent's trading at $89, 76 a barrel. israel pulling out some of its troops or saying that it will. they managed to pass over the weekend. we now take into what is happening in the asian markets. what is happening where you are? >> good morning lizzie. as you were just saying.

we are taking a look at benchmark equities across japan and us rather, south korea all taking higher, starting the week off quiet strong. we also want to turn to onshore mainland chinese stocks in hong kong. not quit his exuberant as we are seeing in the other kind of asian regional stocks. they are facing a demand to liquidate. the pile on. we saw that in the country garden as well. they are taken a hit on the stock site here. we're looking at gold. gold is also want to tear recently around the citations of these potential u.s. interest rate cuts and also the central bank's out of china and india. kind of pushing up and driving up that price. the chinese central bank has been doing this for 17 months straight. and also on the currency front,

you had the dollar a touch higher. almost all of them near their you to date lows. traders have been this fixing level where the bank officials basically set where the onshore rate can trade in a 2% trading band. they kept it just below 7.1 which means if you get the onshore right now, it is already kind of near to that year and trading band. a lot of depreciate in pressure here. to see what this means from the policymakers taking more forceful measures to defend the currency. >> we thank you. we will stay in internet because hsbc osseo says he is pushing to improve his banks wealth management keep abilities in china and india. just as strong in its home market. he was speaking is closely to david ingles earlier.

>> in 2020, three to four in our personal banking business in hong kong. we saw significant customer acquisition growth. we saw -- we also saw rounded up 50% growth in terms of the booted -- the new business writing last year. the lucrative base in hong kong today is higher -- i still see hong kong is a vibrant financial center. that is a function of still coming out of covid. what would inflation and interest rates do? we saw the capital market starting to pick up as well. the fact that hong kong is still a vibrant financial market. >> i know you are such a report in couple of weeks. we just wrapped up the calendar quarter.

how do you think the quarter went for you guys? that is a culmination of our hard work and also the blind see of our customers. as we went through covid, our return -- returns were the best for over 10 years. i was really pleased with the performance. we are making sure that we are well-positioned for the future. every region performed well.

in india, we made over $1 million profit. we made over $3.5 billion. >> we did some reporting on our plants in germany. >> we remain absently committed back across all of europe. there is no change in that. we have some business lines in germany. we are considering options for those. that is what the speculation was but that is not our international banking proposition. >> thank you for clarifying. another bank has also been looking at russia. could you give us an idea of

when you want those? >> we have regulatory approval? they're in the process of trying the transaction. >> know when their speaking to us exquisitely at the bankable investment summit in hong kong. now to central banks, shaping up to be another busy one for traders. the pivotal usc i data leaving. less than 24 hours later, a rate decision from the ecb. joining me not to take us through all of that is ruth carlson. how are investors trading with risk events like this leaving? >> absently. he has been rougher currency traders. especially in 2024. which was deeper valley position

at the end of last year. the swiss franc, the aussie and the yen. we are continue to impress on the upside. it would take a great person to do this on the dell even though it is expensive by historical standards. uscp i could be another went of the dollar strength on wednesday. we could see the dollar getting a very strong bid. >> i will be brave it seems inevitable that the ecb will cook before the fed. how can this feedback into inflation question mark >> absently. traders could be eyeing this for

the year. in less than 24 hours you have ecb. there is a course of doves out there. when you look at where currency markets, it is about 2% versus the dollar. if the ecb does cut more than expected, the decoupling of the ecb and the fed's rate path could mean a weaker euro, bank of america has already come out to say the week and parity could come out. is 4.5% the next big test for bond traders looking for opportunity?

>> they don't get any rest here. 4.5% after ember that markets love big, bold numbers. it's only looks that way. around 4.4% currently. if we look at the ymca on the terminal, bond yields are inspected at the terminal under 3.9% by year end as the fed cuts rates. if that is the case, investors may be looking at these levels as a good time to get in but 4.5 is certainly a big number to watch out for. >> we thank you for that look ahead to a busy week on the macro front. jesting understory of central banks, on friday, it is a big day right here in the u.k..

we would get the conclusion to ben bernanke. this would inspect the report on boe forecasting. we had to wait a while for it. but it is really likely to be an interesting one. the governor of the bank of england has already it did it will require retiring the boe charts. the economic outcomes are different variables. in the u.k. we don't have a dot plot unlike the fed. i don't know what you call this talk of mountains. seems like a dot plot to me. it seems like they will be replaced with scenarios. this is the sort of situation you have if the economy does x versus y. we are waiting for the new deputy governor to take a seat on the monetary positive commission.

she does not join the mpc is a letter on. another big question to the report is whether the make inlet will continue to use the market path for interest rates as the conditioning assumption for its forecast. he created a lot of confusion for saying there will be a recession but recession was conditioned on rates following the market path which the bank did not endorse. there are confusing. they managed to even confuse the u.k. newspapers. we await that report on friday. we got india is vying to take china's engineering crown. this is bloomberg. ♪

>> welcome back to bloomberg daybreak: europe. to india now. the nifty is higher than have a present this morning. if we just take a look at why, this is already in overvalued market. the he has been powering shares, power generators. that he is bringing risk to the market. you have water shortages and crop damage keeping food prices elevated. pushing back the reserve bank of india's rate cut. the nifty 50 higher than half a percent. this is the subject of today's big tech.

this is the engine of global growth. we will get more on that big take with dan who is in new delhi for us. this could become the world's driver of economic growth. >> there are number of obstacles in here right now. this needs to urbanized the economy. it is working on all these things. lodi has made a priority of investing huge sums of money in infrastructure. foreign companies are flocking to india. every global company around the world right now has an india strategy of some kind as they pivot away from china. there are a lot of obstacles

ahead for india. growth is not where it needs to be right now. economists say for india to capture the growth from china -- these are levels that china enjoyed for its recent history. a lot of investors returning there. still some obstacles that need to overcome. >> what is the significance of that apart from boosting modi's ego? quick that one major outcome.

this is the increment of contributor. it meant that china was the markets activity. it meant that china was the magnet for -- foreign investors. looking for growth, looking to purchase paid in that market. we operated under this section that china would carry that mental. we saw this is the end of the pandemic that kind has struggled to produce that growth. there are many eyes on india to see if india can be that next driver for growth.

really exciting. the subject of our big tech. we thank you. we have plenty more ahead. stay with us. this is bloomberg. ♪

quest this was a hot report. jobs above 300,000. upward revision, strong household survey, hours up nearly 10% annualized rate. this was a hot report that suggested that if anything -- the economy is really exhilarating. this is very different from what most people were expecting and fits the thesis that the neutral

rate is much higher than people supposed and tight money is much less potent people supposed. >> let's talk about the mutual rate. you sent the fed should have at least some idea of the mutual rate. we heard from chair powell this week where he said we were strict in our policy and he quit dismissal he said he doesn't need to worry about the -- whether mutual rate is going forward. they like saying we don't need to know what the mutual rate is. that slicing you should drive your car on a field without looking at the speedometer. it is just a mistake. you cannot now and i don't know what the chairman said in full context and i want to be fair but there is no way to judge what policy is without knowing

what would be a neutral policy. my view is that the evidence is overwhelming that the neutral rate is far higher than the 2.5%, 2.6% that the fed talks about. that evidence comes from four places. first we have high interest rates and we have an economy that is if anything growing faster than its long-run potential created jobs as fast or faster than natural growth in the labor force even allowing for immigration. second, we have an economy with financial conditions that are extremely loose that are actually looser than they were before the fed started the whole tightening process. if you look at credit spreads, you look at the stock market

suggesting that in the fullness of at all, financial conditions have not been tightened in an appreciable way. if you look at the markets estimate of the logo neutral rate as formed by looking forward interest rates, that is comfortably above 4%. if you look at the fundamental determinants of mutual rate, we have big surges in budget deficits that if anything looked to get worse given the political process. we have big changes in resilience investment, in green investment, new investment, in data centers along with

deglobalization with mate -- which may limit capital inflows into our country. you look at market estimates. you look at financial conditions. or you look at the current strength of the economy. the neutral rate is far higher than the fed supposes. question was larry summers speaking with david westin following that hot u.s. jobs report we can dive a little bit more deeply into that now. we will look at the morgan stanley chief u.s. economist on friday. she was talking about integration specifically and the impact on the labor market. jay powell has said because of immigration, you have bigger economy. not a title i. this was well illustrated in the jobs numbers. the white line. look at that crocodile mouth

opening out. stoking wage pressure. you can see the impact on the stock market on friday. good economic news, good for the market. a strong economy expected to power corporate america even if it means rates higher for longer. is bloomberg. ♪

anna: good morning from london. asian stocks follow wall street higher. looking ahead to