unexpectedly improves. those are the latest things i'm watching this morning. futures are a little bit higher. some big moves in asia that i will get to in just a moment but coming up let's go to the market open with mark barton. mark: what is the market repercussion of that missed imf payment, can it be contained? what about emergency liquidity assistance? what will come from that finance ministers teleconference later? questions, questions, questions. no change on the greek tenure. yesterday it rose to the highest since november 30th, 2012. this is encouraging when we are talking contagious because italian and spanish bonds rose yesterday and are rising again today. the spanish 10 year yield down to .28% -- down 2.28%.

two point c -- 2.36% higher is the yield rising for the third consecutive month in june. the third quarterly lost. hoping the fed will boost rates and coming months. i will be on top of all of those. this is the euro against the dollar. it rose monday and fell tuesday falling wednesday and still it rose for the first quarter and over a year. it had strongest quarters since the third quarter of 2013. analysts are less bearish on the euro right now. the call for the end of the current quarter is

$1.07 and in april it was 1.04. one month implied volatility on the euro against the dollar is little changed for the second day. that was the most since 2010. this is the euro open. what have been the market repercussions of greece's missed payment to the imf? not much. european equities are rising. in the last two days the stock 600 has dropped almost 4% and every sector has declined. throw into the mix the biggest quarterly drop it's the second quarter of 2012. it is been a year or two but things aren't looking too bad so far. jon: a choppy start to european

trading for the first half of this year if you want to see what choppy looks like look at the shanghai composite. david ingles, what a move, over to you. reporter: let's start with that one. it looks like it would be a very uneventful session. let me start with the shanghai composite until this happened. a 5% drop over the last hour of trade, erasing all of the gains of yesterday. after all of this drama we are just about flat. volatility is still the game when it comes to china. this is an 11% move intra-a. -- intra-day. the market cap erased and gained between these two points roughly the size of the entire

economy of sweden. where do we go from here? i was looking a lot of these comments and these strategist notes here, there is no consensus but if there is one thing clear across a lot of these is that this panic will continue. first, any sort of bump will put us up -- push-up investors. second, any small dip will be exacerbated. that is china for you, another rocky day in the last time we had to move of 1% was three weeks ago. 1.5%, 2.5%, so forth. last two days 5% swing. this was a quarterly survey arguably the best measure of

sentiment across corporate japan. fairly good and very encouraging very at if you look at the smaller companies, less so or the service industry maybe less so and perhaps you can make an argument that the week japanese yen is helping with those exports that as far as purchasing power is concerned, not so much. let me just add overall what asia is looking like today as we wrap up the session. we are halfway back to friday's level before the big dip on monday. jon: that is a wrap from asia. a messy trading session in shanghai. that is our top story. greece becoming the first advanced economy not to pay the imf. the central bank will consider a response to the greek crisis. let's bring in a bloomberg team,

guy johnson in athens, hans nichols and berlin and paul gordon out of frankfurt. as far as the reputation of athens and the greek government is concerned, it is not a great club to be in. guy: you don't want to be in this club. you are waking up in a different place in athens this morning. yesterday you were in a program and you are protected effectively by the eurozone. today your out of the protection of the imf as well. that relationship has changed as christine lagarde effectively notifies the board that greece has missed a payment and the relationship changes significantly. as we look forward from here it is down to what happens next. the made up of journalists that created this paper after they

were laid off at the beginning of the financial crisis. the polling says the yes, the know and the undecided. it is starting to move in favor of the yes campaign. as pensioners begin to realize the reality of the situation. it is heavily restricted. jon: it is not arrears, it is not a default, the imf does not use the word but when we talk about the consequences, what could they be as far as the ecb is concerned? >> the prime concern is the solvency of the greek banks. the greek banks are pretty heavy on greek sovereign debt, so a missed payment is significant.

defaults would be even more serious. should that be the case the ecb has to question whether they can continue to extend the emergency liquidity it is keeping banks afloat with at the moment very the like -- moment. the likelihood is that the ecb will hold off for now. it will wait for that referendum because that is a democratic process. even though it is independent and can do so if it wants to it is quite likely to hold back and then next week will go through it all again. jon: i can hardly wait. hans nichols we talked about the monetary policy with paul and reputation with guy on the i want to talk to you about the politics. merkel said no new politics before sunday's referendum. is she speaking to heard domestic audience or is that the reality? hans: it is both.

she is saying no serious negotiation's because greece went down this decision to have a referendum. but think of her comments as part of a negotiation. they can change the recommendation. they can change what the referendum has to say. or they can call off the referendum. think of her comments as part of the negotiation about whether or not greece will even have a referendum. if you call it off, you can fast-track or accelerate negotiations on a third a lot, what greece would have to do what pension levels were at. you can go back in time six to seven days. you could restart those. it will be a big issue. if you restart those talks it have to redo all of the math. all of those budget projections will need to be refigured after

the economic output for however much longer this goes on. jon: you listen to hans and you talk about the politics. i look at the monetary policy issues. i look at the markets right now spanish strip is down three basis points. a lot of people say no contagion. as far as you are concerned, how much work is going on behind the scenes right here, right now as far as anti-contagion measures are concerned? >> certainly a couple of notable policy have canceled public appearances. it was made clear that not only does the ecb have existing tools to deal with any unwarranted volatility, it is looking at new tools as well. that is quite important.

it is conditional. it might not be able to react very quickly. you might buy a lot of german stuff if you use it in its current form. you might need something targeted and yet fast and it seems as if the ecb is probably considering its options in the background. jon: all of this going on publicly as far as politics are concerned a lot of it going on behind the scenes on the monetary policy but the reality of capital control thomas banks being closed what is happening inside tsipras's party right now? guy: that is the critical question and what we are beginning to understand not everybody was convinced that the referendum was the right way to go. not everyone was convinced -- convinced that the strategy put in place was the right one.

they fail to find a deal with the creditors of the last minute and now they deal with the consequences. we knew that a certain extent but it is a party that is trying to figure out the best way to go. what happens after that remains to be seen. jon: the bloomberg team like that of affluence, frankfurt and berlin. let's give you the lineup of what is coming out the rest of the day. schreiber is presenting the budget. an hour later, the greek finance ministers looking to cool. the ecb governing board is meeting at 4:00 p.m. to discuss the consequences on that missed imf payment. let's bring in gabrielle stearns the head of global macro research. head of investments eaea.

before an interview i get a series of notes about what my guests think and at the top of your line was an 80% probability that greece will exit? that is brave. guest: somewhere between 70 percent and 80%. if we were down at the pub rather than tv i would start with a four letter word. it is absolutely momentous and disastrous. i am a bit of an imf geek. i used to work there. defaulting on the imf is unbelievable. the big thing is capital controls and closing down the banks. the whole reason to avoid default to the imf and ecb was in my mind to avoid capital controls. once you have the bank closures the gloves are off. it is unmitigated disaster.

i don't think -- i don't think it is likely they can stay in the euro. jon: when you hear things like that and look at the potential of a next. the perception is that it will not matter so much. i have the dax up and yields lower. we are trading perception, not reality. how are you managing risk? >> the reality is that the contagion risk is significantly higher than 2012. whether it be a liquidity program or the ela, potentially funding qe or whatever it takes, what we have seen is a shift of the debt and the obligations of the creditors going from the private to the public sector so this is really a negotiation between the greek government and the eurogroup.

so the potential contagion out there is pretty limited. jon: do you take that view as well? as you shift the debt from the private sector to the official sector, the imf had a big role to play. do they have to look at themselves this morning when they see the likes of greece and join the same club as zambia zimbabwe sudan, somalia? guest: the greek row graham -- program -- in a sense although defaulted -- defaulting the imf is terrible their lending was reckless. there using fantasy debt and sustainability announces -- analysis. i like the idea of the imf being senior and they have -- in some sense they deserve it and in some sense they share the pain.

jon:, before we had to break, do you agree with that? >> one thing i did what to talk about is well is when you look at the risk across the outside of greece. if there is a pathway from one of the members to actually leave, is there actually annexed premium premium priced into the market and because at the moment with the hunt for yield and the hunt for return you have italian bonds at the moment trading at 250 basis points compared to 7.5% where they were in the last restructure. so the question is will there be a recalibration of the risk? i think there probably will be but i don't think we will revert back to where we were. investors should expect an exit premium. jon: a big question for the

market. you will stay with us for the next 15 minutes at least. coming up sluggish to stimulus. and mark carney's european headache. what to expect from the financial stability report. all of that and more throughout the next hour. equities higher. back in two. ♪

jon: good morning and welcome

back to "on the move." we are 20 minutes into the trading session here in europe. the dax up by 110 points. the choppy two days for the dax. down by 5% monday and tuesday and we bounced back on the german equity benchmark. let's head to beijing for the breakdown of what is going on in china. the pmi released a very chalky -- choppy session in the equity market as well. let's start with that pmi itself. what is the takeaway? what is the long-term trend? guest: i think the headline message from the june emi data is that things in the factory sector have stopped getting worse but they have not started getting better either. if you look at the official pmi and the market you might for june they both came in close to the mark that separates them

improving from deteriorating conditions and that is basically a message of stability in the factory sector. the neath the headlines there were a couple of things to get concerned about terry and -- about. expectations. they were very high and march when the stimulus seemed to be kicking into high gear and over the last few months they progressively edged down. the second potential flashing light is what is going on for employment. another month of job shedding and chinese factories. jon: i mentioned another flashing light for them as well is the equity market. the market up 1% as i wake up this morning. what is the story and how is the connection between that and what happens with the people's bank of china going forward? is that the bigger flashing light? guest: i think that it is a big flashing light for them.

we saw them cutting rates in making a targeted cut in the reserve requirement ratio on saturday. the message from the central bank when they did that was that this was about growth and rebalancing, but it was also clear that the timing was related to the sharp drop we have seen in the equity market. if the aim was to stabilize the market then the central bank has not succeeded. we have seen continued volatility this week and so far today the market is down by 5%. if you put together the signs from the pmi, they are continuing to struggle and the equity market where the rate cut wasn't enough to satisfy investors and the expectation going forward has to be for more easing. we have penciled in another rate cut the for the end of the year. jon: thank you very much for joining us. let's get a final take from our

guest, head of global research from macroeconomics and bill street. i want to start with you gabriel. if greece is just the greece story what is going on in the chinese equity market? is that a global story? >> i think that china is certainly a global story. what we think is that the long run picture on china is more bleak than a lot of people are expecting. there is a 30% chance of growth averaging something like 4% which is way worse than consensus. that would translate to global markets through things like commodities, global trade has been incredibly weak so really woprobably a lot more worrying than greece. jon: china telling the one story and the equity market in europe

the easy money was made in q1 q2 was ugly and then the ftse 100, no gains. the s&p 500 -- minimal gains. is that the story for the second half? >> we're still pretty positive for developed markets on the equity side. when you look at europe, apart from the noise we have had the return has been pretty good so far. i think we look for europe to continue to perform and i think we need to get out of the way and look at the fundamentals. you look at earnings growth, sales growth, it is still pretty positive, the underlying weakness in the euro will help a lot of those exported countries and oil will have a significant tailwind as well. if you take the presumption that the contagion risk is controlled we would look for a positive second half on the equity markets. jon: what is your estimate for

how long you will take that in? take some money off the table if you are worried about liquidity, are you guys not saying the same thing? >> i think we would take a slightly different approach. it will always be affection points in policy and what we are discussing with our clients is all about participation and looking at protection. staying invested in the markets but look at techniques, how you can participate on the downside. you can insulate from a lot of the volatility events. it was just a matter of time before greek kicked off and it will probably be a matter of time before russia kicks off. it is a matter of participating or see that the evaluations are compelling but look for ways of insulating your portfolio and protect them. jon: talking about fundamentals we don't often talk about fundamentals.

the people at the fed right now -- is september still an option? >> the way that we see it is that september is still an option. but it will be way way higher than the upside are presuming. as of last week they are still staying september and another one in q4, but on average, if you think the average event the downside is probably late september. jon: if we are still talking about greece in september, does the fed push back? >> i think so. jon: thank you for joining us this morning. it has been a pleasure. the head of the bank of england mark carney talking the support. and outside, a beautiful day in london. potentially hottest day of the

year could be the hottest in a decade. back in two. ♪

jon: good morning and welcome back to "on the move." we are live from the city of london 30 minutes into the trading day. the ftse 100 higher by 51 points. the dax -- it has been a rough two days. down by almost 5%. the stoxx 600 having its best quarter since 2009 followed by the worst quarter since 2012. i want to check out the bond markets because that was the worst quarter on record. euro-dollar down by 0.3%. euro-sterling also a little bit weaker.

last quarter, the german bond was the story. the first july and the first way of q3. mark barton has the details. mark: this is my favorite chart of the year. this is attacks during the first quarter it grows by 22% and then the best quarter since 2003. how did the fortune change in the second quarter? the dax fell by 9%. that is an extraordinary change of fortune. the worst performing european benchmark in the second quarter. the fourth worse performing in the world. still, it is a by 13% year to date and trading at 13.8% times estimated earnings versus 15.9 times on april 10. that was chart number one. this is chart number two.

last quarter the best quarter since the third quarter 2013. that is extraordinary. it rose against the dollar. the strongest quarter for almost two years. analysts are slightly less bearish on the euro read the consensus for the third quarter is for euro-dollar and 107. the call in april was for 104 and the fourth quarter median forecast is for 105. 15 strategists still expect the euro to be at parity or lower by the end of 2015 and check this chart out. these are the bloomberg world bond indices. i have looked at the three-month return of all the sovereign bond

markets in the world. look at the eurozone, that was the worst quarter ever for eurozone bond markets. it leads me to the question what was the worst performing and what was the best performing in the world? it is very clear that greece was the worst performing sovereign bond market. forget u.s. agency debt, did any sovereign bond market give us positive returns in the last three months? new zealand. the sovereign bond market up by .9%. besides that everything in decline. what a year it has been. jon: greece has become the first advanced economy to miss a payment from the international monetary fund. the greek government asked for a new two-year rescue package but

angela merkel dismissed the request saying there was nothing to talk about before the referendum sunday. the official pmi came in a 50.2 for the month of june. the shanghai composite closed down. later today, mark carney will prevent -- present the bank of england's semi financial stability report. since december it highlights the economic liquidity risk and the recent economic outlook. for more, let's bring in richard jones. on monetary policy, we talk about financial stability risks and in 2013 people were trying to decide whether we separate macro credential policy from monetary policy. as we sit here now can you do that? guest: i think greece will be

one of the central things that mr. carney will talk about today and a lot of the questions from journalists will naturally be on greece. i think that if you look at the timing of the first bank of england rate rise we have been in a made august iteration for the past six weeks or so. i think there is an inclination for some members to want to tighten rates much sooner than that. but because of the strength of the pound which is one of the resultant things from the greek crisis -- on the one side you have wages being an issue but on the other side you have the strength of the pound. in a quarter that just ended yesterday the pound with the strongest performing currency in the g 10. jon: as i look at things developing and you talk about the personalities of some of the people that might vote for a rate hike, they were made to

look a little bit silly as they put their hand up for a rate hike and had to withdraw. do you think that stays in the consciousness of people? >> i think of the economy i just described you have the strength of the pound acting as a break versus what looks like reasonably good rate settlements. that dichotomy -- we'll and mccafferty on the one side. we'll said he will vote for a rate hike in august. and then the member of congress saying he thinks the strength of the pound more than offsets wage increases. it looks to me like the market is looking at all of this and the timing of the first fed rate rise and saying, sometime around the middle of the next year as late as august is when the bank of england will hike it. jon: the other thing, i remember you saw sterling rallying and a

lot of people sat here and said what this means is tighter fiscal policy and looser monetary policy. as we go to the budget, is that the story? >> i think it very much is. if the austerity measures are strong next week it will mean that the bank of england will feel less inclined to tighten sooner rather than later. it gives them more breathing space because they won't feel the need to tighten as quickly. jon: you bring up the fed. if you and i had this conversation last year we would say who goes first? the fed or the bank of england? but now we are talking but the fed in september. what is changed so much as far as the bank of england is concerned that does not impact the federal reserve. >> if you look at the weakness of the euro that we have seen and the importance of the

exchange rate to the u.k. economy that is the one thing that is really weighed on the bank of england. i also think with energy prices having fallen sharply as they did and we are not really running away to the upside i think that is another thing that will probably keep inflation contained. until they feel that inflation is starting to pick up the will not feel inclined to tighten the reins. jon: our resident expert, thank you for joining us this morning. still to come on the program, we're back live in athens where we will speak to the resident of the greek tourism confederation on how the crisis is impacting the vital industry. on the screen right now. live pictures of people queuing up outside atm's. when we talk about the finances it is the greek people who are suffering right now. forget the markets. back in two. [inaudible] -- ♪

jon: 41 minutes into the trading session and here is a picture of the markets in europe and asia. the ftse 100 up 0.9%. kicking off q3. we go higher on the footsie 100 -- ftse 100 here in london. the dax is down by almost 5%. the shanghai cop as it --

shanghai composite on your screen is not a typo. down 5.23%. when i woke up it was down 0.9%. the biggest swing since the 1990's. as someone said on twitter it is like playing in a casino, never mind and equity market. here is what some of our guests have been saying about the crisis. >> they will have lost a very serious -- >> confidence vote? >> yes. >> a no vote is not going to solve the tragic dilemma. >> there is a material risk of grexit. but de facto leaving and legally leaving our two different things. >> i think greece is playing

living in its own world with a game of chicken and with the consequences he does not represent the full part of the country but tsipras is taking it over. jon: we just what to get to some breaking headlines. we are standing by waiting for a new strategy update and we're just getting the news right now that we will not get the strategy update until the end of october. deutsche bank says on the website, it is too diversified and too complex. moving around the company like deutsche bank is like maneuvering a tank. it is not nimble, it will be difficult and we are awaiting that strategy update. committed to resolving disputes expeditiously. the ceo says they must simplify the business model. i will give you the update a little bit later.

i want to get back out. guy is standing by in athens with the guests. guy: we are right in the middle of tourist season. the sun is shining. the bigger cloud hanging over the tourist sector right now is what is happening with the banking sector and the inability of tourists to access the funds that they need. they're not restricted in the with the local population is. let's find out what kind of an impact we are seeing. tourism federation -- nice to see you. you must be busy right now. give us the lie of the land. >> as you know tourists can access your account also the

arrangements the hotels can give, petty cash to visit the other guests and charge their card. basically we don't have issues at the moment. the daily reality of the resorts and athens has not been affected. people are worried and they asked a lot of questions. things are normal safe, quiet. they were very quiet. the normal presence of police. things are ok for now but obviously things get protracted over a long period of time and if we start seeing some of problems maybe in a week or two. guy: are you seeing cancellations and what is the

last minute story? >> very few cancellations. people ask questions and how is the reality. airports, sports, transportation and hotels. for the moment, all is ok. obviously a few people are worried that they want to cancel but this is a very small percentage. as you said we are in the middle of the high season. we see a considerable drop so we are losing last-minute business which is about 20%. these people for the moment will wait and see. clearly we will see an impact in july. i hope this will be resolved by this sunday. all the tourist sector is in favor of yes to the euro and the referendum. i think this will be finally the

outcome. for monday, there will be a new negotiation with the government that will possibly be formed to deal with europe and greece staying in the euro. guy: what happens if it goes the other way? in the middle of tourist season to see a major rupture with europe. can you plan for that? >> i don't think realistically anybody can plan for that but the circumstances are so dire for the greek economy. in the interview with your channel i explained that i do not see any possibility of greece leaving the euro because one day, greeks will vote to stay in the euro. we will see this sunday what will come through. i am sure 100%, the people will vote for greece to stay in the euro and for monday people will

start normalizing again. guy: are you worried of a the possibility of significant increases in taxation on your members? this is almost at the heart of the negotiation. >> there's a rate of 6.5% on accommodations and 13% on restaurants. we said ok it is within the competitive levels. italy, spain and france at 10%. we accept even 13% accommodations because we said, we need to help as well. we don't -- we know this will kill tourism and grace.

13% on accommodations and 23% on food or restaurants. i'm sure that the new negotiation will start as the basis of 13% but doesn't make any economic sense. the other side was fed up. there will be a way to push through the limit. i'm sure that a more logical negotiation would take economic factors into account as well not only political considerations as negotiations. we are very hopeful that there will be financial economic factors. guy: thank you for your time. the president of the greek tourism federation. back to you. jon: thank you very much. joining us live from athens. we have all angles covered.

not just athens but frankfurt as the ecb is set to meet to discuss the consequences of the missed imf payment. pmi is focused, looking at an italian pmi coming in below survey of 54.3. a slight miss. the french pmi coming in better than the survey. the final reading in the month of june at 57 -- 50.7. german manufacturing data crossing the wires. i will bring you that in two minutes time. we will be in berlin for the latest headlines out of deutsche bank. back in two. ♪

jon: good morning and welcome back to bloomberg tv. germany in focus for the next couple of minutes as we await the pmi. deutsche bank as well. they delayed their strategy update until october. hans, what is the situation? hans: the new ceo sent a letter to all deutsche bank employee sang the bank is too diversified and complex. that in part is what they have always been saying. that they need to get back to their core value and court operations. we do have a delay of the strategy review until october. what this means for the plans that jane announced two months ago -- that is unclear to me.

do they still plan to buy back the remaining shares from postbank and do an ipo and 2016? a lot of the things jane announced was late april and then the board approved. this is the strategy. unclear to me just what he is trying to do. is he trying to roll back all of that or give back a little more breathing room? jon: two big stories out of germany. we have a look at the pmi as well. that was a mess and i will bring you the update as i go straight to the bloomberg terminal. the italian pmi manufacturing final reading in june at 54.1. we did not just get data out of italy we got data out of a

france just a couple minutes ago. that was a beat of 50.7. a data miss in italy and the data miss in france. five seconds away from the data out of germany. mark: a data miss in spain as well. both spain and italy's numbers were much higher than 50. germany, 51.9. bang in line with the flash estimate and the previous months as well. germany, highest manufactured pmi data since april. just to reiterate what you said italy 54.1, low the flash estimate. near the high 2012. spain at 54 point five, below the flash estimate and still near the highest since 2012. germany bang in line. france above estimates. the eurozone pmi manufacturing

data in a matter of minutes. the market reaction is not much. euro-dollar pretty much where it was ahead of the release of the german figures. it is down over the week. have a look at the stoxx 600, contagion in the mist payment from greece to the imf, stoxx 600 up right .75%. jon: a lot going on globally. here is the data to keep an eye on. we go global as manufacturing numbers today across the world. eurozone reports for june and you can't manufacturing at 9:30. then the u.s. report from the institute of supply and management at 3:00 p.m. it could be the hottest day of the year and some say the decade. temperatures predicted to soar as high as 35 degrees. the ftse 100 up 0.8%.

51 points higher. i am on twitter. good luck for the rest of your day. ♪

>> greece becomes the first developed economy to miss a debt payment to the imf. european central bank will meet later to consider the consequences. merkel rules out any more negotiations before the weekends referendum. the eurogroup finance ministers will discuss a bailout for the indebted nation on a call today. meanwhile, thousands of passengers queue outside of the nation's banks. opening today to allow them to withdraw 120 euros. heathrow is named as the best option for new runway by the u.k.