war that started in november last year. the analysts are staying the course this week. dax futures up by 27 points. ptolemy and let's have a look at yesterday's session. what a move yesterday in the euro. euro-dollar having it rigorous day since march. up 2% now. two big reasons for this creditors, clearly escalating control. it looks like they are getting close to boxing greece and giving them a final proposal. cpi moving to 0.9%. that move in the euro echoed with fixed income. german bonds having the worst day since august 2012. we go to 0.73%.

it is not just germany, it is spain, italy and france. they stayed north of 2% on the spanish 10 year. this wednesday morning, here is your market open, the dax up by a third of 1%. what is remarkable with all of these moves, 24 is hours away -- 24 hours away from the ecb decision. we are expecting a central bank to do nothing as far as rates. president mario draghi is news conference will be front and center. for more, bring in a bloomberg team. we have hans nichols in london.

paul, i want to start with you. what do you say about the bond market? paul: there has been some concern. in a speech that has become infamous he said it worries him where he's said the ecb would accelerate bonds purchases any months running up to the summer. in fact, they did so in may, i a extra 3 billion -- buy an extra $3 billion in bonds. the concern was not so much that yields were rising it is the speed with which it is happening. this is a concern to the ecb in the past, and again now. jonathan: as far as you are

concerned, the bond market will be a big heart of this discussion. but the data? doesn't that leave him happier? paul: well he has said the economy might be moving in the right direction. either way, there is a recovery going on. draghi and his colleagues have been very plain on what kind of recovery this is. it is cyclical, it is not yet structural. it will be -- it will not be structural intel government charts pushing for reforms. he said if they do not get out of this rut people never become an playable. -- people become unemployable. jonathan: hans nichols, let's bring you in. as paul said, the ecb are there

any reasons to be optimistic on risk -- greece? hans point the institutions -- hans: here is a reason not to be optimistic, according to people familiar with the matter inside that document, the creditor document, there is nothing on long-term debt relief. that was thought to be potentially, a all of branch -- all of branch -- olive a lot of people were saying it was a confused branch. the choice and because they had a great proposal. you have talk of a creditor proposal. even a german politician even said it was a confusing situation.

here is what he had to say. he said as long as the proposal does not meet economic conditions, we cannot come to an agreement. he is talking about the great proposal. there is a misunderstanding we should meet halfway. according to an official in brussels, that is not a credible proposal. jonathan: hans, you look at the proposals, one says it will not meet halfway, the greek proposal, did it stand up as far as creditors? hans: it looks like they are being dismissive. there is a local news agency that said it is a 47 page document. they called down on budget surplus. they don't quite need to have that 3.5% target.

in so many other ways, we do not know what it says about pension reform. there may be a little bit on the value added tax. there may be more on edit -- other tax schedules. bottom line, creditors do not think this is a credible proposal. we have to wait to see how mr. separatists -- tsipras reacts. we cannot promise if this endgame will not end in rico ruminations. jonathan: paul gordon and hans nichols thank you. one person i call in london is francesca at goldman sachs. francesca, great to have you here. the bond market, what a couple of months. typically there is a selloffs, and ecb meeting you expect them

to eye out that volatility. we are now seeing perhaps the ecb is the source of volatility. francesca: maybe an amplifier. we had a tremendous rally since they enacted qe in march. bond yields went to zero, now we are back again. i think that that is partly due to the way they carry out qe. they tell us only expose with their activity has been. just yesterday we learned that the duration of the german portfolio has dropped by a year. that means that the margin they bought maturity bonds that were shorter. that has amplified, i think the selloff. jonathan: they also told us they would frontload. i look at the data and it is not much.

it is hard to gauge, not only quantity but also the price discovery. the big discussion is price formation. how long do they leave it in the primary and secondary markets? francesca: the bond market is not elastic as it used to be. that is because of the regulations. that is a structural element. you have greece, then you had treasuries that are a bit optimistic -- opportunistic. that creates events for dealers, and on top you have the ecb that does not tell you exactly what there will do -- they will do. a client tells us they call it a freestyle approach. that creates volatility.

at the source of the selloff is the fact that yields were at ridiculous levels. we talked about yesterday. we have had a revision a -- revisionary inflation it ties into oil prices, etc.. jonathan: the last time you and i spoke we were approaching the german 10 year. two days ago we were below .5. we are forecasting german yields to maybe have an extra 20 basis points of upside. that could happen in one day. have you make those forecasts? francesca: last time you said bond yields would double. we have now, 90 basis points. it is going to be the wrong price in any event. y 90, not 125 -- why 90 and not

125. we are starting to see the effects of qe the draghi mentions has been creeping higher since february. we expect that to go back to 2% and drive the nominal curve with it. i think the effect of qe is 60 basis points on fair value bonds . they will stay below 2% for a good. time. period of time. jonathan: strategists say greece is contained. you and i have not discussed how it is contained. if greeks -- if greece exits,

how many bonds dubai? -- bonds do you buy? francesca: the ecb will insist they are in for the marathon of keeping qe in place until september. i think they will have contingencies if they grexit. my problem with contingencies is it is -- it is systemic. events could be replicated in other countries. you could have a confrontational government come into power and the situation repeats. the response needs to be more than just a monetary/. splash.

it needs to involve an upgrade. we need depositguarantees our domestic. then schemes that maybe take fiscal resources and redistribute them in times of need. what we have today is conditional and the funds are not there. jonathan: to wrap this up, a lot of people want to hear what you say about the treasury market. your prediction, is the yields decline. what interests me is in a selloffs, it is duration, 30 years, even 10 years, the ones that got hit hard -- you are saying, the curve will flatten. francesca: there are two forces

that will push yields up. one will create bond across the development space. the other is a central bank hike in rate. the only one i can see in the future is the fed. that will flatten the yield curve, the real rate structure will go up on the front end. he problem now is the data has not been friendly to the united states. we are hopeful it will pick up any federal react. today it is not happening. jonathan: that is your bond market wrap. coming up, the battle may be back inside opec, sanctions on iran are lifted, the group needs to deal with another million barrels a day. sepp blatter resign at fifa. australia beats estimates as growth grows.

we have the economic look ahead this morning. we have a conference a little bit later. u.s. adp employment change is out this afternoon. ♪

>> opec is a collection of

collaborative interests. the statements made last year, particularly by the saudi's it is a choice, it was about the oil market prices falling and the basics of why they said that in terms of supply and demand was lower six months ago. those basics have not changed. i don't know why there should be a different outcome this week in a meeting. jonathan: that was simon henry read i caught up with them at the chatham house london conference. the mood seems to be optimistic.

>> the situation on the market is improving. jonathan: ryan chilcote is on a grand -- ground. what have even hearing? -- what have you been hearing? ryan: out of the oil market watchers, all but one have said they expect the opec countries to keep the production target as it is. that is called a rollover. ason is straightforward. they like direction they have seen the oil price move-in since month ago -- six months ago. though they may not like where the price is right now, caught up with the angolan minister yesterday. >> the right price is the market.

right now it is 67 for us. 70 80, it is good. ryan: people are actually calling for opec to raise the target. one of the reasons is, they are effectively already above the ceiling which is 30 million barrels. producing 31 million barrels makes saudi arabia the biggest producer. last month, saudi arabia produce the most on record. in addition you have iraq coming on rapidly. there is a feeling if there is a deal with iran and they bring more oil perhaps it would be a good idea to raise the ceiling to make more room for iraq. jonathan: thank you very much. still with us francesca.

also jason is here. the end of 2014, the story seems to be opec once to flush out shale six months later, has that changed? jason: it does take a long time for the oil companies to respond. there is a big delay between that and production. jonathan: when we talk about opec we talk about saudi arabia. i look at $65 a barrel and why do the saudi's feel comfortable with $65 a barrel? do they want it lower? jason: you would have to see $70 to see something.

francesca -- jonathan: francesca, what is the biggest driver? francesca: if you look at nominal yield particularly in the u.s., we try to -- nominal rate bounds and you have a compounding effect of the china policy stimulus affecting commodities. i think it has been a big driver. jonathan: looking at the bond market, you see this selloff and sovereign debt, people forget and it comes back. it'll said it was great. -- people say it was great. i look at the patrol -- petrol oil bonds. we all went a yields, but considering the risk of not just

the company, but the underlying commodity, it still looks like there is fraud in this market. francesca: i think there is a lot of appetite for corporate credit. i think across investors community there is appetite for long-duration assets in general because they are in short supply. jonathan: the big story in the u.s. is we would have this kickback in yields in sovereign space scene into credit. when oil was at $90 a barrel, it did not look at it 60. do he gets to a point where the bond market starts to impact oil production in the u.s.? jason: the equity markets have remained open. we have seen a large number of u.s. e&p companies in equity.

the other market untapped is private equity market, i think we are seeing that. we are seeing equity phil the role that debt -- fil the role the debtl had. jonathan: the line in the sand keeps changing. did the market get that wrong? jason: we all missed the rapid increase in productivity in the shield players -- shale players. i think we are still at levels -- at oil price levels that can severely investment. jonathan: who has the hardest job, fixed income or commodity?

francesca: i much agree with the cost inflation in shale. the way we map it into fixed income is by saying this market can rebounds more quickly, and we have reached a level where it is more stable. that will map into forward inflation in a different way than we have had historically. there will be less fluctuation coming from the energy complex. lower volatility from that side. we will be looking more at core inflation as a driver of prices and bond yields. jonathan: at the same time, the fx strategist have been glued to the phone. heavy fixed income strategist been doing that? francesca: yes, indeed. francesca --

jonathan: what will happen with opec? >> i think we will see -- jonathan: here we are 25 minutes into the session. the 5100 up by 2/10 1%. the dax up .1%. the bond market and the fx market were selling off yesterday. the german tenure had a yield below 0.5%. right here it is up another basis point. we were approaching zero at one point. i am looking at a euro at 1.113.

mario draghi looking -- walking a little bit of a tight rope. the kickback in yields, how does he approach that? what does he say about that? still to come, blad -- blatter quits the game. we will bring you the details and reaction. we will do that after the break. ♪

jonathan: good morning, and welcome back to "on the move." let's see how things are shaping up in the equity markets across europe. it looks like a morning of losses for the first 30 minutes. the dax, not much of a rebound from yesterday. it is down 18 points. switch up the boards, this is where the this -- big action was yesterday, the euro was down and then a spike of 2%, just yesterday. the german tenure -- 10 year

yields backup. crude going into an opec meeting going up at $65 a barrel. let's lift the lyric -- lid on the stock indexes. >> if you look at seller's group, that is the biggest gain on the stoxx 600 this morning. mrs. astor, according to familiar people, merge talks between sellers and a hold up this morning. they are discussing either and all share deal or a mix of cash and shares. the two companies are looking to reach an agreement this month. a grocery giant with $60 billion in sales. moving on to gibson's car phone -- dixons car phone, sales up

13%, beating estimates for the fourth quarter. also raised its forecast for the profit. on decline bhp billiton this is the world's biggest mining company. the ceo had a grave warning for the commodity markets today. he said oversupply is here today and it will keep prices lower for some time. jonathan: thank you very much. the big story in the sporting world, changes on the field for fifa. joining us is mark barton and justin kerrigan. just in, when the story dropped yesterday, the first question was, what does this mean for qatar? how much is really at stake?

justin: in terms of the stock market, you can see that reaction, we were down 3% at the open. since then can -- since then stocks have recovered, 1.5% down on a day. that is very much in character from what we saw you -- saw last week with the arrests was a selloff. in the days following, the market recouped. we are seeing the same pattern. what is at stake from a broader point of view is the prestige for qatar. at the end of the day, this is a wealthy country. they have the highest per capita gdp in the world. huge natural resources including natural gas. it is the biggest exporter of

liquefied natural gas. even s -- even if qatar lost the world cup, you would see the infrastructure continuing, but probably slower. that is not mean he will build stadiums, but certainly trans- heart and other types of infrastructure that are already -- transport and other types of infrastructure. jonathan: people are concerned this is a reputational kind of thing? justin: exactly. the world cup is a huge event. it gathers a local audience, qatar is spending $200 billion on this project including eight stadiums for the hosting of eternity. as i said, it has got so much else going for it. a very small population, enormous energy resources at

disposal. were this to happen, we have to keep that in mind, nothing has been decided a lot of other events have to unfold before we get to the point where qatar is having the world cup taken away over a. of time i think you'll see qatar recovering quickly. there will be the moment of anguish and hesitation in the market over the next few weeks and months as the saga unfolds. jonathan: great to have you on the show. mark barton, what a week for fifa. the big question is a, why do we have to wait in till the end of the year and be who is going to be player for the year? mark: six to five favorites

according to william hill, he is the one who said get down se -- sepp. he made a brave decision, mr. blatter, to step down. interesting quote from mark pete he says yes, your man is favorite. he has some skeletons in the cupboard. he voted for qatar. it is being investigated by swiss authorities. mind that's way. jonathan: the odds narrow on him becoming the president of fifa. another link, the sponsors, the last three months the sponsors put out these are generic --

generic statements that say we agree that fifa needs to reform. is that a judgment on the president itself? mark: there up in unison coca-cola, budweiser, saying the governor -- governing body needs to modernize. they have been slow to criticize fifa. plowing tens of millions of dollars into fifa. it is huge. it is the most televised sport. if you leave, someone else takes your place. visa was more vocal last week ahead of the election, they said if they did not change, they would examine their partnership. they said yesterday they are

encouraged they are trying to in -- change. the most interesting is from gas from -- gas from would continue to sponsor them any 28 -- in the world cup. they said the company sponsorship is in place until the end. it does not stipulate any change in case of management. europe is up in arms. russia is not so happy. jonathan: blatter leaves and we seem to think that is ok for the sponsors to carry on. just because they had his left does not mean the organization is ok. mark: current vice presidents

were indicted by u.s. prosecutors, seven former. if you asked me to question why did blatter step down? nine of your current officials have been indicted secondly he did not win the election as well as he might have. 73 voted for the prince. he said he might write when -- he said he might run again. the big thing is things closed in on him. they allegedly authorized a payment the prosecutor said was a bribe. according to another person familiar blaster -- blatter is under investigation by u.s. prosecutors. you have the election result you have the facts that 73

national members out of 209 voted against him. i said this to mark pollio -- palio the net just closed in on hims,. to quote him, although the members have given me a mandate and reelected me, this mandate does not seem to be supported by everyone. jonathan: mark barton, i think you will be a busy man. still to come, we are on central bank watch. the bank of england begins its two-day meeting. we will discuss what was said after the break. make sure you keep it right here on bloomberg tv, we will bring you the ecb rate decision, followed by president draghi's news conference. back in to hang -- two.

♪

jonathan: good morning and welcome back. let's get you up to see -- speed with some of the top stories. the european central bank needs in frankfurt later today. economists expect no change. president draghi's news conference will be of utmost importance. berkeley set -- barclays says an

increase as possible. shell cfo weighed in on opec, i caught up with him yesterday at the conference for an exclusive interview. >> and general it is wrong to regard opec as a unity body it is a collaborative interest. the statements made last year by the saudi's were about the oil prices falling, let the market find the right level. the basics of why they said that in terms of supply, demand was lower six months ago, it has come back a bit. there is no reason why there should be a different outcome.

jonathan: let's talk australia. just when you thought the aussie economy was drastically affected by a drop in prices. the gdp beats expectations coming in at 0.9%. let's check in with dan petry in hong kong. you leave australia and go to hong kong, what happened? dan: this is a case of the facts that is mining projects were coming on stream. all of that production ramped up all of that construction has fit into this result. it is a declining commodity price. the only thing we see is the supply side feeding into that story. it is next court laid number. it does mask -- we did see the

market reaction was down. the aussie dollar is still down. the export really mask what is going on with the domestic economy, which is soft. fools gold is one of the themes being thrown around. by and large, any growth is good. jonathan: you mentioned the mining component, which has been week -- weak. does australia need to unlock another industry? how does the rpa play into this? dan: the rpi is tied to what goes on under seat -- overseas. the central bank just hopes the

aussie dollar will go down. in cutting they are trying to stimulate the demand side. migration flows we are creating shopping stew -- centers where people mill about and hang around. they need to unlock industries they were once good at. some industries, medical services and appliances was an industry that was historically very strong in the country. they also have very good food production sectors and technology because of that. that is what they need to unlock area that is where the jobs growth is. that is what is renewable in the future. i'm not sure if it had a profound effect on the economy, by and large, australia has huge challenges if it does continue to grow.

it seems a tough proposition at the moment. jonathan: thank you very much. the ecb meeting today, the bank of england beginning its two-day meeting this morning. what a difference 12 months makes for the bank. mark carney prepared the market for a hike. markets are telling a different story now. here is richard jones. i look at this morning and it seems to be telling me, forget a hike this year we are going out all the way next year and maybe beyond. richard: if you remember the qr last month, the bank of england essentially endorsed market pricing for the timing of the first interest rate hike. at the time we are looking at may or june for a lift off, now we are looking at august 2016,

with a 95% chance of 25 basis points rise in july of next year. jonathan: what interests me is going to the inflation report and the election. it was a story of a titans fiscal policy, and a rally in sterling. richard: i like to look at the sterling rate. even if the bank does nothing and telling the love next year you have the european central bank which is committed to having an expansive monetary policy. the bank of england is going to have a monetary policy that might guesses -- might not necessarily be tightening right away, but it will be tightening more than the ecb. in the year, sterling has increased 11% against the euro that is a big increase.

that is something that worries the bank. jonathan: potentially another headache is the breakfast -- grexit situation. you can look at cpi and market pricing, very hard to gauge what grexit risk means for sterling. richard: we don't know how the campaign will play out. we don't of the timing of the referendum, we don't know exactly how those dynamics will play out. i think was interesting last week we saw there was some talk of perhaps a senior leader figure -- liber figure who could potentially lead the campaign to get out of the eu. that is interesting if you get a cross party coalition like that, that could be interesting. in terms for what it means to be bank i think it is uncertainty.

for me, if anything it pushes them out further. jonathan: decision day for the bank of england is tomorrow. richard jones joining us this morning. a lot of data, a lot to talk about. french pmi, the services number comes then. the initial preliminary reading is 51.6. a lot of data to break down, a central bank's decision to talk about after the break as well. we will do all of that in two. ♪

jonathan: good morning and welcome back to "on the move." "the pulse," is coming up. hans nichols is here. behave. what have you got guys? hans: we have the prime minister of the netherlands coming up. guy: -- hans: the question to mark has got to be, what you say to the dutch people? this is part of the greek saga, all of the 18 eurozone countries

will have to prove it, some of them are. a lot of these government face difficult decisions in their home countries. we don't know how northern european parliament will react. everything in the greeks are saying if there is going to be another bailout, it is not directory -- directly. guy: do you have a mandate. that is right. we will figure out if the people of europe will back greece rid jonathan: the germany services pmi final reading is 53. a lot of data and some big moves in the market. the ecb could be more interesting than last week. guy: -- hans: can they have private conversations with market participants. people like you will be listening to the tvs and trying

to hear it is almost like a dog whistle that mario draghi has. guy: i will be listening for what happened on this meeting on monday. what was said, what was the result? is it still open for negotiation , or the ultimatum? jonathan: these two to come up next. up ahead the market day. this afternoon we get the adp employment change. the big one for us is coming up later, keep it right here on bloomberg tv. we will bring you the ecb decision later today. that's it for me. good luck for the rest of your day.

♪

guy: sepp blatter is set to be under investigation. what is next for world football and the waqatar 2022 world cup? hans: greek prime minister tsipras has to vienna. guy: as dutch taxpayers are warned they may lose 12 billion euros they leant to greece we will speak to the dutch prime minister mark rutte in paris.