♪ >> good morning. this is "bloomberg daybreak: europe." i am tom mackenzie in london. these are the stories that set your agenda. central bank bonanza in europe.

investors watch to see if the bank of england will open the door to an august cut the day after u.k. inflation slowed to the boe target for the first time in almost three years. policymakers in norway and switzerland will also have their turn. the swiss national bank's decision on a knife edge three months after it delivered a surprise cut. plus, a barrage of new polls show u.k. prime minister rishi sunak and his governing conservative party on course for a wipeout with keir starmer's labor potentially set for an historic majority. let's check in on these markets. asian markets giving up some of the gains that have come through in the early part of this week. the u.s. is back later today after the holiday yesterday, looking for directions, it seems, these equity markets. european stocks struggled for direction yesterday. the ftse 100 looking to add 22

point so far. s&p futures back after that holiday, looking to gains of 3/ 1 of a percent0 to build on the records that continue to punch through on the s&p with that tech. nasdaq futures rallying right now, looking to add 0.6%. let's lacrosse asset. in terms of the data, we have the nonfarm payrolls later but it's the u.s. jobless claims will be focused in on today. that of course after the decision from the bank of england expected to stay on hold. it's the statement and any changes around language that will be crucial and whether they guide to a potential cut in august. markets. some bets on that -- markets paired some bets on that. a bit of selling pressure across bonds in europe yesterday. the pound at 1.27. we watched the pound in the run-up to end on the back of that decision from the bank of england. the inventory story out of the

u.s., that data expected to come out, that inventory state or later today. gold up 0.5%. the bank is expected to keep rates steady -- the bank of england is expected to keep rates steady today with the pending election making a move more difficult. . the latest services inflation came in higher than expected even as cpi, the headline, fell to 2% in the year to make. let's get more from lizzy burden, who was outside the bank of england. is there anything markets should be watching out for today given that the expectation is, of course, that they will stay on hold? lizzy: well, you're absolutely right. you already saw a market reaction yesterday off the back of that hot services inflation reading. you saw a tick up in gilt yields and the pound off the back number at let's the mpc off having to cut rates today but they have already seemingly ruled one up, a cut -- ruled one

out, a cut because of the election. it seems like that will have to wait until after the july 4 election. we have not had any speeches in the time since the snap election was called and we are expecting the votes but to be the same today, 7-7, to hold two to cut. what could be interesting could be the next meeting because this is the last one for the deputy governor, who is going to be replaced by a woman who is thought to be a little more hawkish, so perhaps we see a change in the dynamics on the committee. no presser, no forecast today. we are expecting the guidance around the decision to remain the same. we have -- they have already gone towards and easing bias. tom: as you say, they are constrained in terms of the communication because of the politics. and on the politics, another round of polls just reminding us of the challenges facing rishi sunak and the conservatives at this point as we count down to july 4. lizzy: it looks like the

conservative party is on for electoral annihilation. three poles suggesting so, including one suggesting that the prime minister himself is going to lose his seat. indeed at this point, tom, it is the polls leading the narrative, not the other way around. the defense secretary has been on the broadcast rounds talking about how it's less about winning the election and more about reducing the scale of the labour victory, reducing the losses for the conservatives. that is notable in itself. things are looking bleak for the conservatives in this election. tom: that's a significant adjustment in terms of messaging from senior conservatives. lizzy burden outside the bank of england on the central bank decision upcoming later today, and of course, u.k. politics. on monday, the u.k. business secretary on the shadow business secretary, jonathan reynolds, will go head-to-head in a live,

televised debate moderated by bloomberg's francine lacqua and will face questions from britain's leading business trips. catch the debate monday -- business groups. catch the debate monday on bloomberg tv, youtube, on the website, and on bloomberg radio. and switzerland, are expecting a nailbiter decision from the swiss national bank, who was the first among economies to start using as it made a cut in march to 1.5%. let's get more from bastion been wrapped in zürich. what is the snp expected to do? seems like there's division on this? >> it's a very open decision, even to snp standards. snp could surprise markets we know that from the cut in march. we could definitely see a lot of

movement coming in the franc. volatility is high. the big question is, how will they see the franc? because the currency has appreciated, has started to appreciate last month. has it gotten too strong? if it has, the policymakers are likely inclined to go on their pace and cut again, even though other global peers like the european and the fed are very hesitant about using. -- about easing. tom: the recent strength of the swiss franc will be a factor for members of the snb as they make that decision. talk to us about the uncertainty and how the inflation story in switzerland ties into that conversation? >> inflation in switzerland is very low by international standards, just at 1.4%. that's significant lower than in the euro zone or u.k. or u.s. it has not softened in the last two readings.

1.4% is the year high. and the fact that it has not really retreat from that high would usually be a good argument for the snb to say let's take it easy, that's not cut now. you have the franc on the others and some people argue that the franc and the franc exchange rate is actually more important to this little open economy in switzerland more than interest rates. it's with a question where policymakers will set the priorities. they are not exactly forthcoming in their communications. we just don't know what they think. we will jesse we were just -- we would just see, we will just be surprised when they announced their decision in zürich, 8:30 in the u.k. tom: we are getting ready for change at the top of the snb, with thomas jordan stepping down after the next couple of meetings. to what extent is that going to bear the bear at all on the decision today, the upcoming departure of thomas jordan? >> quite honestly, i don't think so much.

like, a lot of people are speculate about that. but honestly, thomas jordan is really just a hotwired economist and he would just do whatever he sees best for the economy. i don't think the decision will have, the fact that he is about to depart, will have any impact on the decision which is going to be made. also, the most likely candidate, we don't know he will succeed him, it has not been announced yet, but the most likely candidate is his vice president. he is very much a follower of jordan. he joined the snb as an intern to thomas jordan. so we don't expect any particular change in policy. it's pretty much going to go on and policymakers in zürich were just look what they think is best for the swiss economy. tom: ok, fantastic set up ahead of the snb decision today. bloomberg' swisss economy and government reporter, basch and ben rath.

at absurd for us we will be speaking to thomas jordan after that rate decision. of course, one of his final interviews before he steps down, so stay tuned for that interview as well. let's get the market reaction in terms of how the markets are gearing up for these rate decisions from the boe and snb with mark cranfield from bloomberg mliv standing by for us. the snb looks to be as we were hearing from bastian a very very close call. how are the markets kinda preparing around this, around this decision, with the eye on the swiss as well? mark: it's all about the swiss franc. traders needed to try and figure out, is the swiss national bank ready to block the strength of the currency not -- blunt the strength of the currency now or are they going to wait longer until they do it? that's what the decision comes down today. the swiss franc has once again proved itself to be the ultimate haven currency. in the recent weeks when we have seen some disturbances because of elections, whether in france or the u.k., or we have seen

geopolitical tension, people have just flooded into the swiss franc. it is extremely strong against most currencies, especially against of the euro. that's where people measure really how strong and how far the currency is going. so that euro going swiss franc across has seen the swissie appreciate a lot. they are very sensitive to moves and that. there an open economy. they depend very much on their currency to help to modify inflation, which it's been doing. but there are times when the currency gets too strong. that could will be one of those periods. but they may want to wait a little bit longer because we still have the french and u.k. elections to come. if there are further disruptions in european markets because of those two vote, even more money will flood into the swiss franc. they may decide to wait a little bit longer to see if the swissie strengthens even more and then maybe they will respond to it. so quite likely, the final move

for them will be it's a little bit early. but at some point, they will want to weaken swiss franc a little. tom: the swissie is a safe haven amongst the political challenges of the euros on. we are looking at cable at 1.27. we saw gilt yields up, a bit of selling pressure across u.k. debt, particularly the front-end, yesterday. how much is priced in ahead of this decision from the boe? tom: probably a bit already, particularly in terms of yields have come down a fair bit. we got the 10 year gilt yields getting close to 4%. they have fallen reasonably over the last few weeks, partly because they are following what's happening in treasuries as well, but also because of anticipation, as lizzie was saying earlier. there will probably be a set up to suggest interest rates will come down, probably sometime in the summer, in the u.k., and traders will position for that. there is certainly room for gilt yields to pop higher. treasuries are starting to

stall, there's an election coming in the u.k. the bank of england could be a bit more cautious than people expect today. they will want to tread a fine line where they don't give anything away to help either political party. they are aware the fed is taking its time to lower interest rates as well. and although inflation came down to their target, some of the services numbers are still a bit on the high side. so we actually make it a slightly more cautious approach from the central bank. they could see -- that could see gilt yields going up of the. stock market could probably take it because of what's happening in the rest of the world where markets are so buoyant, especially the u.s., as you were saying earlier. all in all, the most likely place for action today is in the u.k. interest-rate market. tom: ok. markets further, further in terms of the position, potentially further upside in terms of u.k. yields as we lead up to the boe decision. on the back of that boe decision, potentially more caution from the central big, particularly given of the services inflation component. mark cranfield on how the

markets are positioned ahead of the snb and boe. thank you. here's what else to be thinking about, as well as the snb and boe. we had nor just make as well, their decision come that -- we did have norges bank as well, their decision coming at 9:00 a.m. u.k. time. given the ability for that economy to be relatively resilient in the face of rates, at what? 4.5%. the economy showing that resilience. to what extent do they guide the first cut and push that back in terms of market expectations? that will be in focus with the nor just bank decision. before we get to norges bank, we will get details in terms of the health of the car market, the eu 27 member nations new car registration 7:00 a.m. u.k. time. to what extent is the auto market of europe holding up? as, of course, there are signs that may be the eurozone and its economy are starting to show a little bit more optimism. would is the ev component within

that as well? that will be interesting given that growth has been slow in that part of the market. we will get the initial jobless claims out of the u.s. at 1:30 p.m. u.k. time. unemployment at 4% in the u.s. will initial jobless claims edge up? what what it tell us about the relative cooling of the job market in the u.s.? you can get a round up in today's edition of deibert. terminal subscribers can go to dayb . coming up, china dropping hints on how it will punish the eu for its proposed tariffs on electric cars. details on how beijing is thinking about its response, coming up. this is bloomberg. ♪

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tom: welcome back to "bloomberg daybreak: europe." happy thursday. china is said to be preparing a series of retaliatory actions against the eu for proposed tariffs on electric vehicles. the likely target include alcohol, cars, and food products. this of course coming after beijing said it was launching a probe into eu exports of pork. let's bring in james now for the details on this. what do we know? which sectors are potentially vulnerable? which companies are potentially vulnerable? as beijing draws of this list? james: i think the first two things are pork producers and branded producers. brandy, almost 99.9% of brandy production is exported to china or france. pork production mostly in spain, some in denmark, other places across europe. those are the two sectors china

has already announced a that they have started antidumping investigations into. this is a way of them imposing tariffs in a way that would be compliant, or might be wta compliant --wto complaint. there's been allegations made against other industries, wine, dairy, aerospace sector as well, that's been made through state media channels, trade associations, sold a little less official. those are the sectors they are looking so far. if you look down where those are from, is concentrated in some countries where the chinese think they may be able to swing some support against the tariffs. if they can swing the spanish government to oppose the tariffs in the eu, if they can convince enough germans, german car companies that they will put tariffs on german cars and convince the german car companies to lobby about the tariffs, i guess the hoping in beijing is that they can convince enough companies that the pain is more than the

benefit they would get by imposing tariffs on chinese ev's. tom: interesting in terms of how targeted these potential measures could be end in terms of how they hope to sway some members of the eu. on the autos front, james, we know on that point that the german chancellor, olaf scholz, is concerned, and has expressed those concerns about potential tariffs on chinese ev's. how does china looking at german-made and european made autos being shipped to china? james: the current tariff on all cars imported to china's 15%. that was lowered during the trade war with the u.s., sort of an offer by the chinese to try to avoid a trade world the donald trump. it did not work. china could re-raise those tariffs to 25% and has already hinted it might do that, especially against european cars. if they were to impose that tariff, that leads to a wto complaint, so they might impose it on american-made and japanese cars as well.

porsche exports most of their cars from europe to china, so they would be hit. mercedes-benz, if you are driving a certain class bmw, they are very expensive cars, the really luxury cars, or the luxury german carmakers, these are all being exported into china. this is going to put them at a disadvantage in terms of trying to compete against other luxury cars, like lexis or whatever, and against the increasingly luxurious ev's that chinese brands are coming out with. the issue with germany is that it does not seem to have a unified position on this. some people in the government have come out incredible opposed to this, michael transport mr.. the foreign minister -- like the transport minister. the foreign minister has come out totally in support of the tariffs. the chinese chancellor will arrive for discussions on this issue with the germans, sorry, with the chinese. it's very unclear whether he can present a unified german position, either from the perspective of the government, or from the perspective of industry, because there's other

parts of the current industry in germany and other industries in germany that are actually quite supportive of this. obviously, the chinese are try to lobby and threaten the german government and german car industry about these tariffs. it's hard to imagine that germany is going to get unified behind one or either position anytime soon. tom: ok. james mayger in beijing on how officials are looking to get up that potential territory action to some of the eu product being shipped to the second largest economy in the world. in other news, vietnam welcoming russian president vladimir putin in the face of u.s. criticism. putin arriving in hanoi from north korea, where he signed a comprehensive strategic partnership with kim jong-un. vietnam is brushing aside western criticism of its invitation to putin, who last visited vietnam in 2017.

the u.s. embassy in hanoi said "no country should give putin a platform to promote his were of aggression." manchester united's newco under tells bloomberg why he fears for the future of the premier league. more from that exclusive interview, next. this is bloomberg. ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr

on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

♪ tom: welcome back. the new co-owner of manchester united says people running the premier league are in danger of ruining the world's richest football competition. he spoke exclusively with bloomberg's francine lacqua. >> i just think the premiership needs to move carefully. no need to get yourself in an endless legal wrangle. because at the end of the day, the premiership is probably the

most successful sporting league in the world, certainly the most successful football league in the world. and we have this expression up north in england, if it ain't broke, don't fix it. you have to be careful if you start interfering too much, bringing too much regulation in. you finish with the manchester city issue, the nottingham boat, and on and on and on. and if you're not careful, premiership is going to finish up spending more time in court then it is going to spent thinking about what's good for the league. we have the best league in the world. don't ruin that league. there was all this conversation about anchoring, you know. what would anchoring do? anchoring would then, that would inhibit the top clubs in the premiership. and the last thing you want in the premiership is for the top clubs in the premiership not to be able to compete with the real madrid, barcelona, bayern munichs, that's absurd. if it does, it ceases to be the

finest league in the world. we've got the government recognized that -- we are now talking about the government regulated coming in. if you've got a government regulator, at the end of the day, they will interfere, and that won't be good. so i have a few concerns about the premiership. when richard scootermore ran it, it was a very finally, very successful. it became extremely successful and then everybody starts interfering and messing about, and that's obviously not good. >> do you worry about the people in charge? is it a personality concern? >> it's not. i don't know how they drift, i mean, i've only been in football for six months. >> will you've been following it for a long time. >> that's true. >> i know allison, she's very sensible, what have you. think that drift into complexity

that's unnecessary, i think people just need to stand back and think about whether that's good. i mean, they should remember what the premiership is about. it's the best league in the world. tom: that was a chairman jim ratcliffe speaking exclusively with bloomberg's francine lacqua. coming up, i am going to speak exclusively with hg ceo and managing partner matthew brockman, one of the most significant pe names, particularly in the tech space, in her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

>> good morning. this is bloomberg daybreak: europe. these are the stories that set your agenda. central bank bonanza in europe. investors watch to see if the

bank of england will open the door to an august cut. the day after the u.k. inflation story slowed to the boe's 2% target for the first time in almost three years. policymakers in norway and switzerland will have their term. the swiss national bank decision on a knife edge three months after it delivered a surprise cut. plus a barrage of new poles show the u.k. prime minister and his governing conservative party on course for an electoral wipeout. labor potentially set for a historic majority. let's check in on the markets. u.s. futures pointing to decent gains. the u.s. comes back later today after the holiday of yesterday. the fresh records that will push through by the s&p. looking to build on that. s&p gaining three tens of 1%. nasdaq futures pointing higher by six tents of 1%. european stocks looking for

upside, pointing higher by two tons of 1% after a challenge day. looking to make up for that today. the ftse 100 looking to add 100 points. s&p futures and nasdaq futures pointing higher as well. a catch up in terms of the selling pressure across the bond space. you saw that on the front end in terms of u.k. debt yesterday on the back of the inflation data showing services remain sticky. for 24 on the benchmark 10 year. yields up shy of three basis points. jobless claims out of the u.s. later today. more detail in terms of the health of the labor market. cable at 127. expected to standpat at 525 but it's whether or not the statement gives guidance in terms of august. markets pairing their bets on a potential august cut from the boe. $85 per barrel. gold having a solid session as well. up 6/10 of 1%.

2342. citigroup says finance industry jobs are more likely to be effective -- affected by artificial intelligence than any other sector. 54% of jobs across banking have a high potential to be automated. joining me for an extrusive conversation now on the ai shift across industries with a focus on tech and software is the ceo and managing partner of hd matthew brotman. one of the largest backers of scale software companies with a 70 filion fund under management. let's start there in terms of the disruption across the labor force. and the focus on financial services. does that report, does that estimate from city chime with what you are seeing matthew: ai is one of the technology shifts

of the decade. it's easy to overestimate the speed at which things change but underestimate the pace of the impact. our view is you will see a bunch of stuff early now. the real long-term effect will be in the white collar services sector. finance would be impacted in terms of hundreds of thousands of people working around us in the city of london, how they conduct their jobs, what work they have to do. it will be significantly impacted by the automation of the workflow as a i gets developed into the workplace. tom: what's interesting is you have this touch point. 50 companies within the portfolio. most of them focused within the software space. you have a granular feel as to how the companies are adjusting and the demands of their clients as well. presumably there are some who are facing a threat from generative ai. others are looking at an opportunity.

how are your portfolio companies adjusting to generative ai? matthew: our aggregate is 150 billion in value. i would split it between the short-term and long-term. almost all of those countries using genai for improving the way they develop software, serving customers. the margin impact or value of being able to do more with automation is being shown up in the cash flow of those companies. short-term effect is very positive for software and very pronounced. the longer-term effect as genai works into the workforce, when you start seeing labor affects. what we spend time on now was around, how do you think about the long-term? 5, 10, 15 year impact of this. building products which will automate the finance drills. how do you think of a product in the long-term? that's where we are trying to

put our effort. the short-term stuff is quite clear by now. tom: that suggests that you are more sanguine about this debate. there's been a lot of focus in terms of the spend coming through around data centers and trips. the relatively small amount coming through in terms of the monetization story. you are seeing benefits for your companies as they invest in ai. matthew: you've got people building the foundations. the infrastructure and capex that's needed to put all that capacity in place. that's going to be a handful of players doing that. as it starts coming into the application, that's how you see it benefits our portfolio. you are seeing this stuff which is shorter term which is more productive, more margins. how you produce software, how you produce customers. you need less people to do that workflow. as you start coming out medium-term into how lawyers work, how people trade on the markets, how doctors conduct

themselves, the ai piece of that will be magnified. the daily job, the daily workflow, how they engage with patients or customers or other brokers will fundamentally shift. it's intelligence. intelligent in terms of the way it interacts with you. tom: is that where the next wave of value creation comes from? matthew: yes. for us, we have a bunch of software companies doing workflow and automation of different jobs. we are more efficient today. our big focus is, how do we build product which is going to make lawyers in london or new york more productive? how does the ai piece of that change their day? they both spend 20 hours on a document. the ai will drive a lot a lot of the creation process that the lawyer is doing every day. tom: you also have a message for founders around return on investment.

your takers don't focus, don't become obsessed with our ally. i wonder how much of a challenge that message is in an environment of high rates, particularly when investors are calling for profitability from these tech investments. matthew: it's unusual. you get these times where there's a need for innovation. for the last decade, if you were in software investing, commercial execution, sales are the themes. now it's about product. how do i think about the markets , what my customers are doing? you have to innovate. this is about thinking about how i can innovate and change what i'm doing. innovation is not as easy to quantify. the best innovation happens when you are sure what you are building and how it will pay back. it's a mindset shift which is something we have to focus a bunch of our portfolio on. tom: big day in terms of central banks and focus on interest rates.

how important is it for rates to come down? typically high rates is a challenge. will that be a catalyst when rates come down for your portfolio companies? matthew: a little. most software that we are invested in is resilient. workflow stuff. mission-critical. you see an impact for demand when rates go up. as they come down, few enterprise company -- customers will be willing to make investment with new staff. it's a more muted affect than if you were in a cyclical sector. the sector is very resilient over the long term. tom: thank you very much indeed. great to have you in the studio. how software companies are adjusting to generative ai and the opportunities around innovation in that space. sticking with the genai story. one of openai's cofounders says he is starting a new ai research lab. plans to continue work at a lab called safe super intelligence

focused on artificial general intelligence or agi. they took part in the 2023 ousting of sound -- sam altman as the openai ceo before changing course and helping engineer his return. coming up, threats and opportunities. how military tensions are giving a boost to norway's biggest defense firms. details next. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. the bank of england is expected to keep rates state -- steady later today. the election making a move difficult. politics overshadowing the difficult decision for the boe. cpi and inflation data came out yesterday. services inflation at 5.7%.

jackie bally joins me now. a preview of the boe and what to look for in the months and quarters ahead. let's start with a question of the statement that will come through, the minutes from the boe. given that rates are expected to hold. what are use -- you scrutinizing within that statement? jackie: like you said, we are expecting rates to stay at 5.25 once again. a more difficult day for the bank of england, given the election blackout. there's less opportunity to really get into the gritty analysis of the language being used. we will be relying on the minutes. from that, trying to get an idea as to whether the rate cut in august is to come. the bank of england has been using language of higher for longer, talking about having this restrictive policy in place for longer than the market was anticipating.

that's the shift that the market will be looking for. will we start to dial that back a little and maybe be slightly more dovish in their statement for the rest of the year? tom: is it your estimate or your expectation that they can leave the door open? they do open the door to an august cut. or do you think there's caution now, given what we saw yesterday , within the inflation story? jackie: yeah. i definitely think there's room for caution. in fact, the market is saying august is less likely. every time we get close to the meeting, the expectations get dialed back further. sometimes we might be looking at september or even november the first rate cut in the u.k.. you are saying, obviously the headline inflation number they were promising yesterday, hitting the 2% target. you've got to look underneath that. the services sector inflation still high at 5.7%.

higher than the consensus. the bank of england has emphasized before that that is what they are looking at. it's that sticky wage inflation that comes through in the services sector that's causing the issue. tom: how does a barrack -- do they break the back of the services inflation? jackie: yeah. you've got to look at the connection. does the economy slow down? it tends to lead to an increase in unemployment which takes the pressure off of wages. there's lots of relationships that have to change. it's a bit of a fine balance for them. the u.k. services sector inflation is high relative to other countries in europe that have had higher inflation. it really comes into a lot of the public sector wage increases that have happened. the u.k. has a very dominant services sector which means that

wage inflation data has an iron that has a higher impact. tom: we've heard from andrew bailey saying that rates are in restrictive territory in the u.k.. how do we think about how much restriction is needed then to prevent a resurgence of inflation, given that many economists think that the data and numbers will take up toward the second half of the year? jackie: that's true. we still have the sector -- these external factors that are outside our control. thing about where the inflation originally started from, the supply side. the global markets. so we are very much, depending on what's happening to energy and global oil prices, that's going to impact inflation. you are right. even though the 2% target has been hit, when you look at what economists are forecasting, there are concerns that we might not maintain it there. you've got to look underline at the core inflation and the wage data that we talked about.

tom: ok. head of a mere. thank you very much indeed. great set up as we look ahead to the decision from the boe and what to think about when it comes to the statement and action in the months ahead. thank you. monday, u.k. business secretary will go head-to-head in a live televised debate moderated by forcing look while -- francine lacqua. that's on monday. switching focus now to geopolitics and the question of defense. as the war in ukraine wages and questions loom about a trump presidency and what it could mean for the nato alliance, politicians have woken up finally to the continents new defense reality. the european defense companies at record highs. the gap between political rhetoric and battle ready hardware remains vast. the norwegian defense giant comms bird is taking a step to

close the gap, opening a naval missile factory outside the capital of oslo. oliver crook is on the ground for us. how does this small town in norway fit in to europe's ambitions around having a defense strategy to meet the needs of the moment? oliver: it's a surreal experience getting here. going through the fjords and valleys into this small and sleepy town where you've just built a new missile factory here. this is one of the biggest defense contractors in europe. this is exactly what they are building now. naval strike missiles. the joint strike missiles. it puts the rubber on the road. the defense conversation that we've had in europe. the politicians saying, we need to build up. that cost a lot of money. the new facility that just got built is 150 million euro investment.

what they need is the confidence. contracts going into the future that these investments make sense to make. otherwise there's no point. the other thing we need to take into account his time. three years until you get the idea rolling off the assembly line. tom: that timeframe is important. the missiles behind you, what are they used for, how are they likely to be deployed on the battlefield? oliver: yeah. these are the naval strike missiles. this is a 1-1 scale. in the front of it, you have all the navigational hardware, sensors and that sort of thing. what's interesting is that the joint strike ones are what go into the f-35's, the pristine state-of-the-art, military

hardware from the united states. the reason they've selected these missiles is because norway had specific needs for these sorts of missiles. this is 400 kilograms. it needs to be able to navigate over mountains, down fjords, and track the water. you can set them on a target, 200 kilometers away, and it will strike them with extreme accuracy. this is the thing you can put into f-35's or on the back of a truck, all over the place. early mobile. you will find them at the u.s. military, poland, u.k.. it goes out to the militaries in battlefield all over the we are -- world. tom: that's the global picture. as you stand there at it, talk to us about norway itself building out its own defense. it shares a border with russia. that's a challenge. it's a country that has this massive sovereign wealth fund. it is cash rich. what is norway doing in this

space specifically? oliver: norway sits in an air cash in an interesting place. it is exceedingly wealthy from its sovereign wealth fund. you have to remember, the war in ukraine has benefited financially from higher oil and gas prices. the only seller here in europe. it's done well. it's also socially progressive and concerned about making the right decisions in terms of ethical investing. the sovereign wealth fund won't touch any defense company that has anything to do with nuclear missiles. it's also home to the nobel peace prize. they've decided to really change their track in terms of military spending. they want to hit 2% this year. by 2030, closer to 3%. by 2036, they will be spending 4% of gdp on defense. it's a serious concern with russia. not necessarily because of a military invasion but their oil and gas fields have been targeted by drones. very concerning here for the government. tom: oliver crook in norway on

the defense industrial in norway. lots more from norway still to come. we will be speaking with the ceo of that company and to norway's defense secretary later today. oliver crook wringing us those interviews. stay tuned. now to stories making the news this thursday. the head of france's business lobby has criticize the campaign programs of the far right and leftist alliance, sagging they are a danger to the economy. patrick martin told the newspaper that mary le pen's national rally would cut the country off from the european union. he said the policies of the less just -- leftist front with lead tub extra public spending a year , financed by taxes or the deficit. plenty more coming up. stay with us. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. now it's been a challenging year in terms of the treasury markets and how you are positioned within and along the curve in the u.s. on u.s. sovereign debt. we have a bloomberg story out today and the chart that shows what's going on in terms of the losses that came through on the front and of the year and how things have recovered. you are now down on treasuries year to date by about 0.1%. that recovery has come through as markets bet, investors bet. cooling prices in the u.s. will lead eventually to a fed cut. it's not fully priced until november. but you have seen that turnaround in terms of the views on the treasury market in light of the inflation data and

economic data that's come through from the u.s.. it is in stark comparison to what's happening in china. china's bond market has been one of the best performing. the money has flooded into chinese debt. that's much more a story about deflation and expectations that the central bank of china, the pboc, will be compelled to cut. bloomberg economics warns that that won't happen and to get more clarity to the position of the fed. the fed looming large in this equation as well. china's bond market has just had a stormy year as money has moved in. not necessarily an indication of health of the chinese economy. more expectations they will be compelled to cut. we flipped the board and what's happening with the u.k.. i don't know if you've been told this. bank of england day. not expected to change the rate. headline coming in at 2% yesterday. under the hood, services at 5.7%.

markets readjusting. gilt yields selling at the front end. markets readjusted. now pricing in a very small chance of a cut in august. not fully priced until september or november when it comes to the boe pricing in one or two cuts this year. we will see how the statement today adjusts if et al. -- at all that pricing. we will get the u.k. business secretary and shadow business secretary going head-to-head for a live televised the bite -- debate. this is bloomberg. ♪

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♪ >> good morning from london. this is "bloomberg markets: today." i am guy johnson alongside kriti gupta and tom mackenzie. we are an hour away from cash trading in europe. what do you need to know? it is a big day. will a strengthening swiss franc give the s&p cause to deliver --