."y: welcome to "on the move we are counting you down to the european open. i'm guy johnson alongside matt miller over in berlin. this is what we're watching, the bond theory. never go places they've be. bill gross warns a supernova will explode in the dense universe. the dollar dictates. asian stocks fall as the greenback climbs. does the buck stop here? pricing for brexit. it is week six of sterling

volatility. we speak to the head of its us mari. good morning. less than half an hour from the european open. let's look at where we sit. looks like a mildly negative start. asia got hit hard overnight. not seeing that in europe at this moment. down by 0.2%. the dax, a little underperformance coming through from that. asia really in focus. it does seem as if the dollar is dictating everything right now. matt: or central banks. if you listen to bill gross, what an amazing story. the japanese 15-year yield now at 0.01%. the 10-year yield in jgb's hit a record low of negative 0.15%. now we are seeing maturities on the way out to 15 years go

negative. the nikkei down 0.4%. it had been down moore earlier in the session. little bit of a recovery there. here you see silver. 17.2675. it has rallied so hard in the last week or two. it is now giving a little bit of the gains back today. brent crude, right now down about $.34 a barrel. wti off as well. that will give you some directional ideas of what is going to happen to equities today, especially in london. let's get to even on man with bloomberg's first word news. hasne: barack obama formally endorsed hillary clinton to succeed him as the next president. obama met with bernie sanders at the white house. president obama: i want those of

you have been with me to know that i'm with her. i'm fired up and i cannot wait to get out there and campaign for hillary. the israeli prime minister has pledged to defeat palestinian militants after a shooting in tel aviv. he also called on palestinian letters leaders -- palestinian leaders to condemn the attack. of the so-called brexit campaign has been accused of putting his own future ahead of that of british workers. boris johnson was debating the upcoming eu referendum. said he's using the issue to enhance his political credentials. johnson is seen as favorite to become prime minister if david cameron loses the vote and is forced to step down. >> they seem to want to take a huge risk with the employment prospects of millions of people.

care, you don't seem to about the millions of jobs at risk if we leave the eu. i think you only care about one job and that is your next one. european equities could lose a quarter of their value in the aftermath of a brexit according to a risk modeling firm. they found that stocks would be hardest hit among asset classes when it simulated the effects of a leave vote on a hypothetical portfolio of bond shares. pound denominated investments would slump 10%, more than those in euros, the model showed. global news 24 hours a day powered by our 2400 journalists in 150 news bureaus around the world. guy: thank you very much indeed. .eware explosive supernovas bill gross tweeted out overnight, global yields lowest in 500 years of recorded history.

that willsupernova explode one day. the alarm comes as bond yields across the world are going places they've never been before. we've hit record lows in japan, germany, switzerland, yesterday, the u.k. let's welcome our guest, the head of fixed income for investec. the charts are sensational. these are 10-years for a whole bunch of countries. the trend has been in one direction, lower, and we are crashing through the zero bound. japan's 15-year going negative now. when does it end? is bill gross going to be right and when? downsidemore about the if you get it wrong. the trend as you say right now is down. guy: the trend has been there for decades. >> there comes a point where it

can't go lower. one place where it might not go beyond, interest rate policy. in the ecb, we have an interest rate of -0.4%. we don't see yields going to -2%. i think we are in the final throws of a bull market. behind that, we've got qe. we've got week growth and inflation. people are willing to pay up for right now. matt: bill gross says we may be at a point, and we are, where investors are looking to first and foremost reserve capital. he says you may even want to hold cash. what changes that? if that is where we are, i want to be owning government bonds

even if i have to pay a little bit to keep my money safe? darren: people are building balanced portfolios. when we build balanced portfolios, we are more optimistic, but we may be wrong. as i said, in a balanced portfolio, bonds often go in the opposite direction to risk assets. i just want to bring a bit of breaking news. we are very macro focus for the moment. never line, this messaging app out of asia, has confirmed that it is going to sell shares in tokyo in new york in july. that news just crossing as we speak. some people not afraid to put their toes in the water. let's get packed to the conversation surrounding what is happening with these bond markets. people are just trying to assess

the risk. if you look at the risk premium, the way the market is structured at the moment, you saw that 20-year in the states taken down so easily. the market is paying significantly above fair value to get into fixed income. when you look at the liquidity story, how the market is structured, when we start to see people getting nervous about this, maybe the central banks start to change their tune. walk us through the end of this. is it a big bang? is it a supernova? is it an exploding star? is it a gradual drift off? darren: we have to go back about three years to the taper tantrum. that time, there was a big change in sentiment. yields hadmonths, doubled within a very short space of time.

likely this is going to be a quick repricing of government bonds as an asset class. catalyst,will be the that is hard to put your finger on. right now, don't fight against the fed, don't fight against the ecb. that is what you're doing if you take an opposite view to the direction of bond prices. matt: yesterday, mario draghi was speaking in brussels and he said the central bank can always fulfill a mandate if it wants to. basically saying he could bring about inflation if he likes with monetary policy. do you believe that is true? is it possible that gets out of control? if there's any kind of supernova, it would be because inflation shoots up, right? darren: inflation would be the one thing everybody one he worried about. -- would be worried about. this is something we've done a

lot of work on. what is the path to the european economy, two other economies in the world getting back on track? we feel that monetary policy has gone as far as it can. i don't think there is much more benefit. then i think what draghi wants to happen is, he wants fiscal spending to be the next leg. the bit that worries me about if we ever get past fiscal spending and that doesn't work, helicopter money, that is when you don't want to be owning nominal bonds. inflation will be created because consumers will be the beneficiaries of that. guy: can i just check something up, one of your favorite charts, u.k. 10-year breakeven. it does come back to this moving the bonds. they've been cratering. not for a year, they've been cratering for the last 3-5 years.

inflation expectations are not there yet. you look at the oil price, starting to climb, is that ms. priced? darren: i think break evens are mispriced. byhink they are too affected things like the oil price. interestingly aren't stronger than they could have been. that hasn't really worked very well this year. you look at the u.s., we were down at 1.2% and now we are at 1.6%. the market that is most worrying, in europe, down at 1.4%, that is very worrying. i think draghi has a big task on his hands. it is not his fault. he's gone as far as he can. guy: that was the message yesterday. thank you very much indeed. up next, is your portfolio grexit-proof? rising.lity is

we talk brexit defense strategy next. ♪

matt: take a look at live shots of new york city at 1:45 in the morning, the city that never sleeps. looks kind of tired today. u.s. equities look tired as well. futures indicating a lower open across the board.

let's get you the bloomberg business flash. here's yvonne man. yvonne: thanks, matt. bp has agreed to merge its nordic unit to create leading offshore production an explanation companies. ld a 40% stake in the new company. the business will be renamed after bp. a whistleblower is helping the u.s. securities regulator in its investigation of deutsche bank according to people with knowledge of the situation. they say the sec received --ider information alleging the bank has declined to comment but referred to a statement given to bloomberg last month that said it is cooperating. owed that customers will be able to book rides in advance.

the new feature is being booked in seattle at first. the biggest u.s. rival, l yft, started testing a similar feature. ceo once dismissed the idea of booking a car in advance. guy: thank you very much indeed. asnd volatility is spiking investors seek shelter from a potential brexit. expectations for price swings have climbed and are at their highest since the global financial crisis. you can see that spike on the right hand side of your chart. a few other charts here. the first one i'm going to put up on the screen, this is the volatility chart. you can see it a little more clearly on the right-hand side. the next one i want to bring up is the pound-dollar, the cable rate one-month risk reversal.

the asymmetry means that people are buying sterling protection on the downside because of the asymmetry. you get a bigger move on the downside if brexit were to happen. that move has carried on over the last few sessions. this is the one that darren highlighted to me. that is cable in the white line. they bottom out in february, march. in february,d cable in april. when you look at what is happening with sterling, is the market acting logically? if you look at the risk reversal, he would want to buy downside protection. the risk makes you want to go in that direction. in many ways, sterling has not performed that badly. away,: only two weeks there's going to be a lot of volatility now.

having said that, sterling has done quite well since april. sterling has rebounded. i suspect more weakness over the coming weeks. it has performed as people would pretty much expect. matt: why do you see such low yields on british 10-year debt? 1.24%? gilts yielding we attribute weakness in the pound to brexit and yet people pile into the country's debt. guy: there is a big debate here. darren: side number one is that if we have brexit, investors will shun u.k. assets including gilts. yields should be going up if volatility and worry those up. my view is that if brexit occurs, it is a risk off event. there is a correlation between government bond yields around the world and i think the gilt

yields will go down. amongst other things, i think the u.k. economy is going to be weaker. we will need easier monetary policy. if you go back to the time of i think 2011 where the u.s. nearly default in on its debt, the best thing you could have thought was u.s. treasuries. guy: is the market set up in the way you would expect going into brexit? charts seem fairly logical. as you just explained, maybe there is a logic to the way the gilt market is operating. stocks have been fairly positive. classes across asset and we are now less than two weeks away. is the market where you would expect it to be right now? thing to mestrange was what happened on monday. the poll result showed that brexit was closer than people perhaps thought.

yet the u.k. equity market went up because the dollar was weaker. commodity prices were stronger and the u.k. economy is made up of lots of energy companies. guy: below that, smaller stocks. darren: they are behaving logically, i guess. i think those stocks will bounce post brexit if we choose to stay in, which is our main expectation. matt: the concern if you leave is mainly the uncertainty i'm assuming. do you think a drop if you leave the uncertainty would be short-lived? darren: i think there lots of drive inat have some the case that the u.k. leaves the eu. if bond yields were to rise, credit perhaps more than government bonds. drop, iequities were to think any drop will be met with buyers. matt: all right. stay with us.

we are minutes away from the open. up next, we look at today's trading session in asia. stocks fell the most in a month as yields reached record lows. details ahead. ♪

guy: welcome back. minutes away from the market open europe.

asia had a difficult time, the biggest drop in a month in terms of equity performers. not massive moves. australia got hit. mining stocks were under pressure. by msci asia-pacific down nearly 1% overnight. i want to show you the dollar index. these two things are correlated. this is the dollar index. it has been rallying over the last couple sessions. this is a three-day chart. dollar up, risk off, does seem to be the trend. darren ruane joins us now. that is the trade at the moment. the dollar is dictating everything. go, dollar up and down, stocks up, is it as simple as that? darren: it has been for some time. one of the reasons there was so much risk off, commodity prices were week, the dollar was strong. that, they gofrom up, risk assets go up.

i think a weaker dollar is good for the world. stop here?he buck are we at the sweet spot? darren: the goldilocks phase. we're not, will we will get higher interest rate, but not in the form of 2% or 3% anytime soon. that is good enough that the dollar doesn't go up too much. equity markets can push on. guy: what is it going to take to change the scenario? sorry, meant? jump in. matt: i just wanted to point out, jobless claims yesterday came in at 264,000, lower than we were looking for, basically the lowest number we've seen since 1973. obviously you have to juxtapose that with the horrible jobs number we had last friday. i wonder what you think the fed is going to do. darren: i think it certainly is a tricky one.

june is out. i think july looks like it is becoming less likely. they won'tink increase interest rates. guy: we will take a break. see you in a moment. ♪

guy: good morning and welcome. i'm guy johnson, in the city of london, moments away from the start of european trading. matt miller has your morning brief. matt: thanks. the big bond theory. yields in japan, germany, and the u.k. go places they have never been before. bill gross warns, a supernova will explode in the debt universe. and the dollar dictates. asian stocks fall the most in a month as the greenback climbs -- does the buck stops here? volatility sterling as the currency dances on the polls. we speak to the head of it so

pso mori. guy: we think at this point we will see a negative start of the session. we saw negative starting asia and that continues through most of the day. and then another as we are anticipating, and there we go. slightlyis opening negative, down by around 1/10 of 1%. as you can see of markets are down around 1%, the cap opening, down by 2/10 of 1%. the euro stocks, down around 2/10 of 1% and it looks like we are seeing some weakness -- the miners got hit in asia. here's caroline hyde. let's look at what sectors are on the move when it comes to the stoxx 600. percentage point is the benchmark, digging into

energy, selling off at the moment, materials on the downside and it seems as though we have one little ray of green that is consumer staples, all other industry groups are on the downside. george soros is warning about market volatility, peter thiel concerned about the bond market, bill gross saying that a supernova is coming. let's look at the bond market and what's opening and u.k. yields. e we have come, yields grinding tighter. still in positive territory, but still the yields go lower on the united kingdom. check out when you compare it to japan. japanese 10 year bonds hitting record lows, currently in -1.45, yields grinding tighter. at the moment. look how those u.k.-japan have come down. let's have a look at stocks on

the move. today,overs and shakers the 2.4 billion euro for the aviation state and shares in five years -- lufthansa going lower and tesco is down 7/10 of 1%. matt, some breaking news? matt: yeah. bund yields are hitting another low, the same story across global government debt. take a look at what we see -- i'll zoom in here on this trade. right now we are down to zero point 02%. -- 0.02%. that will be an all-time record low return for lending your money to the german government.

we have had a number of records here, an all-time low for jgb in japan, an all-time low in england as well, so guy, it is shaping up not only to be the story of the day, but the story of the decade. guy: multi-decade,. in some ways we have a meeting -- multi-decade, in some ways. we have a meeting in frankfurt, the bundesbank spring meeting. the head of the institution is giving a few comments. let me run you through the details. we saw some interesting stuff out of draghi so let me put some of these up. he is saying that the euro area has a lot to go on fiscal policy the, and that's an interesting the is that seems to be movement toward the idea that structural resort is the next light of the story.

a virtuous cycle of monetary and fiscal policies. this is interesting coming from a german. they have this idea that you have to balance the budget and make sure fiscal policy is a in line with a long-term goal. the ecb can't ignore the buildup of financial imbalances we are distorting the market and that is with the end saying. we are the weird world. m he's also trying matt: the germans are unhappy that the french haven't made the structural reforms they need to, not even starting the conversation with the peripheral then the idea of a central banker asking politicians for a little help with fiscal policy is not new, right? ben bernanke was begging congress for help. janet yellen has stated numerous times. areticians around the world

concerned about their careers, about how long their party can power, and sometimes it seems -- what are you chime in if you think this is right -- they sometimes seem to the other party ahead of their people. his problem? yesterday, mario draghi was saying there is no time to put up these reforms and yet i don't see european politicians rushing to make them. >> i agree. and monetary policy has gone as far as it can -- fiscal policy must take the reins. and it's not so much individual politicians, certainly in germany they are calling for budget discipline and i think that needs to be relaxed so governments can borrow more. something that we are missing in the world. i need to get my german

geography better -- interesting things coming out. he is saying that the gdp linked sovereign debt is worth exploring. do you think we have reached the limits of our innovation when it comes to understanding how the eurozone can function, maybe starting with the ability to ofrow, this correlation rates that have been created and started at the beginning of the year and then got blown out? do you think there are areas -- linking gdp to bond market access? >> and that is not a new idea. that is somewhere that has been brought to =-- that can happen. the bottom line is that the central bank has the government bonds back, and i think that is the greatest organization we have seen we are all scratching

our heads wondering how can bund yields be at zero. i don't think that's true, but that innovation -- i think we have gone as far as we can get with innovation and monetary policy. more monetary policy is not the answer. guy: there are different ways of linking the way the economy functions and the actions of the bond market. they are desperate to avoid transfer and one way of avoiding that would be to link access to the credit market vis-a-vis structural reform on a forward footing. >> and i can see why those people who tried to make of these new innovations would want to do that. , one thing westor like about bonds is that they are very simple. the more variables you attached the more complex the product. guy: he will stay with us.

off the football tournament in paris. the month-long event faces a raft challenges. strikes, flooding, terror threats. we live in the french capital, next. ♪

guy: welcome back. 10 minutes past the hour. let's look at where the markets are -- european equities are soft, down by around one half of 1%. take a look at the dollar, explaining what we are seeing right now. in terms of the moves within the market, let's take a quick look. losers -- lufthansa is down, there is a deutsche downgrade and hayes has been cut. they are both softening up and it looks like that is the only news i can see. both of those stocks have been cut. euro football tournament kicks off today in paris for the month-long event that faces a raft of challenges, including strikes, flooding, and terror threats at its highest level. carolyn conan is in paris.

talk us through the risks. you can see the eiffel tower behind me and the giants soccer ball suspended that the challenges are many in terms of security threats, seven months after the terrorist attacks and as many as 100,000 security officers will be deployed to protect the stadiums and the fans, including 10,000 soldiers. the second challenge is the strike in the streets. will be striking from tomorrow until tuesday and there are suburban trains expected today -- the national train director advised for people to arrive as early as 6:00 p.m..

p.m. tch starts at 9:00 and in the streets, the supporters may be surprised by -- it'srise of guards not good for the image of france, especially at a time when the waters are just receiving, leaving behind mud and debris all the way along the river. matt: that is awful. i can honestly say that i'm glad i'm not paris. francois lond -- his approval rating has been pretty dismal. how does this impact that? and if france wins, does the approval rating gain? weoline: it is possible, and are away for the next election, so the president needs this competition to be a success.

according to the organizer, this could have positive economic impacts for friends and generate withch as $1.4 billion ticket sales and millions of supporters expected. many are cashing in -- right now they are trying to cash in and have launched the challenge. along, thent popularity issue is huge. 16% at the moment in the polls -- it could have an impact if france wins, just like when france won the world cup in 1998, it had a positive impact --the trucn truck sheetrock jacques chirac. france is anticipating strikes that plagued the nation, that it is not alone.

many have called for fundamental challenges and changes to how countries are being run in order to bolster employment and growth. mario draghi has been increasingly outspoken on the subject. >> there are many understandable political reasons to delay structural reforms, but there are few, very few, good economic ones, and because delay is simply too high. given the interactions between policy that i described, it is , thatryone's interest they buffer each other. if only because that would shorten the time it takes for each to produce its effects. draghi is was linktone is he?stling, isn't we have just been hearing about hollande's popularity, germany with the election, brexit -- you

look at the political turmoil around the continent right now, very few politicians have had the guts to push through major structural form. even in italy, matteo renzi, shrugging. a big vote coming up on his plane, and he is struggling. draghi's going to find it tough to make the stick. >> one of the fiercest that this increasing fiscal spending -- that's the big debate -- when does that come? things have to get worse before they start to get better, but i agree economic reforms are badly needed. but the population does not want them because it means it interferes with their way of life. matt: i was speaking yesterday

-- a member of parliament in germany and the assistant finance minister, he was saying if he had $10 million to spend on stimulus measures, he doesn't know what you would do with it. all the projects they have had are already pretty much completed and the infrastructure is pretty perfect. do you think we will see any fiscal stimulus coming out of the countries that can afford it? i in terms of affording, think that's down to the budget rules that have been set by the european commission. in terms of can you spend things -- i agree to some extent that maybe there are some infrastructure projects that have gone as far as they can. in terms of stimulating growth i think there are things that can .e done i think there's lots of room for physical expansion in europe. guy: there is one avenue that hasn't been tried yet, and that's the eib issuing bonds, going out there and investing in huge infrastructure projects.

big d.c. grids, that kind of thing, stuff that would make a meaningful difference long-term, and the ecb buying that debt. aroundink there are ways that describing it as monetary financing. are we being creative enough? governments are going to be constrained in their ability to do this, but draghi has the ability -- he just needs to think more about the way he is acting. >> yeah, but that is going back to the force on the monetary ise and draghi -- i think he right in pushing back in saying that is as far as we can go. he talks about the transmission mechanism being broken -- there are ways in which you can fix it. -- he can pond directly push jobs is individual parts of the eurozone by simply saying we are going to invest. we will build a bridge, a road, we will make it happen.

europe needs infrastructure and jobs and some sort of money flow, and that is one that you can make that happen. i don't think it is quite as easy as saying we will provide you with monetary finance and then increase fiscal spending. the idea itself is very worried about credit risk and has been -- it doesn't want to see in default on its bonds. guy: it would default on its bonds. >> well, if the projects are not credit worthy, then there can be default on the projects. with the juncker plan, the eib hasn't been able to fulfill its target for spending. they wanted to lend to $20 billion a year and it has only got to 11 billion in the first

year. it looks like they just can't find projects that are the right risk it for them. >> mhm. but when you start spending capacity, there is lots of capacity in terms of employment in europe, and you might end up building bridges and roads that going nowhere -- but if you employ people who weren't previously employed, and there should be a multiplier effect,, they spend money, they have a high margin, that creates economic growth and become self of filling. sometimes you have to spend money to make more money. already. darren, thanks so much. he will stay with us. when we come back, we will talk about the silver rush. gold on steroids, assets backed

by the precious metal are approaching an all-time high. more details of maternity ho ur. ♪

guy: welcome back. a quick look at what's happening in the bond market, where the story has been over the last few days. germany pushing ever lower in terms of the yield, let unchanged. government bonds continue to push down. we're back in campaign mode over

in spain, borrowers trading 1.43. a little bit higher on the yield, prices a little softer. the story right now. we will talk to darren and get his take on 10 years. the spread rate is definitely on. matt, let's talk about something else on the move -- the march into silver seems to be ongoing. matt: yeah. i want to talk about that and show you a chart that bloomberg brought to you march 20, when we first highlighted this trade, and it really is playing out. we all know that gold has gone almost parabolic -- sorry, silver has gone parabolic. we referred to it as gold on steroids. gold tohave is the silver ratio. the price of gold divided by the price of silver over the past 20

years. everywhat you can see is time the gold to silver ratio gets above 80, this red dotted lines, you get these incredible returns and silver, outpacing the returns in gold. 1995, this period in silver was up 36% and gold went down 44%. and during this period, after we passed through 80%, silver was at 182%. 2008,hen we passed 80% in silver rose 407% and gold was only up 105%. you can see the incredible outperformance each of these times the gold to silver ratio crossed over 80, and now it has done it again. by the way, guy, silveris found in the earth at 70 parts per billion. gold is only found at 4 parts

per billion. more sense to have a gold silver ratio less than 20, and right now it is at 79.4. guy: you had a busy morning, haven't you? matt: i am kind of a gold bug. guy: fixed income yielding virtually nothing. divided by 10 years are divided by gold? >> the problem is that the u.s. 10 year is very attractive on a relative basis, and even in the u.k. it's at 124. that's also attractive. if you buy into that, there is yet -- guy: where is 10 year by the end of the year? direction is down because of the convergence straight. as we have seen over the past week, it is possible for bonds and equities to make money in the same environment. guy: gold -- is it just an anomaly? >> we have been adding it to our

portfolios in the past month. we're worried about trade protection, currency wars. and money in the future. guy: thank you for your time. ♪ ♪ get ready for the rio olympic games

by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you? x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1.

guy: welcome to the bloomberg brexit debate. i'm alongside matt miller in berlin. we will be covering the latest news, market action, and politics around the upcoming eu referendum. first up let's get to nejra cehic. nejra: thanks. the leader of the so-called brexit campaign has been accused of putting his own future ahead of that of british workers. boris johnson was debating the upcoming referendum ahead of the ise -- his opponents said he using the issue to enhance his political credentials. he is seen as favorite to the prime minister david cameron.

>> they seem to want to take a huge risk with the employment process, millions of people up and down the country. you don't seem to care about the millions of jobs -- i think you only care about one job. nejra: meanwhile, citigroup says u.s. treasury yields may fall toward record lows of britain votes to leave the eu. the bank says a brexit may weaken the trade lines and current economic growth, sparking massive demands for treasuries. european equities could lose about a quarter of their value in the immediate aftermath of the brexit according to a risk modeling firm. it from stocks of the hardest hit among asset classes on a leave of vote hypothetical portfolio. pound denominated investments would slumped 10% more than

those in euros. and those are the stories we have been watching. guy: thank you. let's talk about how the market has been reacting. another of charts we could show you but let's talk about what's happening with the volatility we are seeing. out and has bottomed what you have continued to see is the expectation of more volatility ahead. this is the volatility brexit, pound volatility. and we areng continuing to push higher. the market is pushing a distpersion of outcomes. you can see this in this view of table risk reversal, people continuing to buy protection, risk continues to give greater. they believe if you were to see a brexit, you would see a bigger moved to the downside, and that is why you are seeing in taking

place. that continues to push ever outward. stories,we have to top a little bit of a technical market. here's what politicians and economists and business leaders have been telling bloomberg about the eu referendum. but ifink we will remain you look at the opinion polls we are very close. we have to be concerned about it. >> i very much hope that the people of britain will vote to leave the european union -- it is right that we should become a self-governing democracy with a global perspective and not a european perspective. and it is also the best thing for the economy. >> it's for the u.k. to make that judgment. we will maintain our special relationship with the u.k. whichever way they go. as an economic matter, it seems pretty straightforward to me

that remaining is economically stronger for the u.k. that scenario, you start negotiations, which takes exital years on a proper from day one today too. conceivablet is that if there is a leave vote -- and there is a great deal of uncertainty not only about prospects for the u.k. but the longer-term prospects of the european union. guy: the voices of the brexit story over the last week. the story in the u.k. is definitely ramping up. huge posters up everywhere, the campaigns getting into that final gear, making this big plush. i doesn't let's get some commen.

the landscape is beginning to shift -- or is it? what are we seeing? now, you average the polls there has been moved to a much tighter race since six or seven weeks ago although you need to separate the online polls from the telephone poles. but overall, it looks tighter than in the past. we musttion is -- always be wary about learning from referenda. the scottish pulling, which we were heavily involved in, lead to the u.k. well ahead, and ultimately at the last minute it came back 55% to stay. and i think that is one scenario. overall most of the betting markets are suggesting that remain is where the money is going. the polls have remain ahead, narrowly. but there have been upsets and nothing is ever certain. guy: do you get a sense of what messages are getting through,

and what is moving the dial? >> we have been looking at that. the people who want to leave -- it's all about immigration and sovereignty. both groups of voters acknowledge that there are short-term economic disruptions in for leave the voters that is less important. interestingly, we found that for both groups of voters despite the economy being a key issue they think their solution is going to be better in the long term. one key argument for remain is that on trade we have been doing what's called narrow science -- implicit response analysis which looks at how people take to answer a question. that is a new dimension in research, and what it is showing is that although they think they will be ok, it takes that much longer to come to the view for remain.

it is certainly a kink in the armor. i can understand the leave --paign emotional campaign they want their sovereignty back, they want to be the master of their own domain, but which areas are they really pushing as far as a need for independence, and do they really have such a lack of independence? i can't imagine britain doesn't have control of his own immigration policy. this is not about numbers, this is not even without facts. this is about determination. the details of money paid to the european union and the actual numbers of immigrants that might or might not arise if we stayed or left -- a lot of this is just confusing voters. the proportion of people who say they are undecided has increased.

it's very much, particularly for the leave brigade, an emotional thing rather than anything definite about the future. remain as the conservative with ," which is there to say ultimately turns out to win. do the remain voters -- are they truly terrified of an actual brexit? >> interestingly, both groups of voters say they don't think, from their own personal standard of living, it is going to change much. most say they won't be any difference. but what is very clear is that the remaining voters asked that, market, a lot the of short-term disruption of the next five years, and 90% of economists we pulled last week are saying the same. lots of anxiety about short-term

upset and short-term reductions, and in my 30 years, i have had more interest in this from the financial markets in terms of what the polls are saying than anything else in my entire career. avershow are the le performing? how significant other inputs? >> of course they matter, because they are the talking heads we see on television. that when you ask the public who they will pay attention to, they say politicians come a long way down the list. guy: so who are they listening to? some argue that the process has been poor, that the information flow has not been as accurate an. what are they basing their decisions on. you talk about emotions -- ready fax come in? >> the facts are there, but they are incredibly hotly contested, and numbers are thrown around with abandon, which leaves most

people to go with their heart. tv news is on of the key sources --information and the media i think the key point is that there is no politician who trumps everyone and all of them have only got about one person and five saying they think that's the key person. although cameron does carry a certain weight. guy: we need to talk about the process you are going through and have stories developing. up next, brexit in the bond market. a record low yesterday at the referendum approaching. details, next. ♪

guy: welcome back. let's get to one of our top market stories -- you take bond yields fell to a record low. this as the referendum approaches. they have been rallying with treasuries and everything else, with investors seeking havens as global optimism continues to fall. and weave been softening continue to watch the u.k. 10 year. you can see the long-term trend pretty much everywhere. let's kick this around. we have a government bonds fx reporter, and still with us is then page.

obsessedts are pretty and paying attention because of what's happening running the referendum, yet we have been scratching our heads as to whether or not -- does this have anything to do with that financial fascination or more to do with u.k. yields -- effectively they are just marching to the same tune? >> absolutely, a part of the reason is because of this safe haven. if you really want assets that brexit is a, massive risk factor that people really aren't prepared for and we are seeing those record low yields. here thatve a chart kind of shows this in a better way.

what i have done is i have put gilt yields here and inverted yields, so you can see the gilt while the pound comes down. i think it gives you a good proves and in a sense it guys point, that this move has little to do with this move because over the last year the pound has really remained in a rain while gilt yields continue to go crazy. -- ifer if investors you're polling shows that people are afraid on both sides of the debate -- people who want to vote for leave are also the kind of people who are putting their money in treasury and government debt because they are worried about what will happen to the markets just the same as people who want to vote to stay. >> the one thing that voters is that on both sides

if we do leave there is going to be incurable of uncertain tea, period of volatility, and that is almost certainly priced and. the question is whether as a price worth paying. two people in the market believe the polls? we are getting this weird mix where you talk to investors and they are concerned but there are huge amounts of money still being funneled in one direction on the basis of what's happening here and sometimes not even the level you would hope. >> absolutely. people aren't sure about the people don't want to believe the polls, they like to look at the betting odds. but every time a call comes out you get these huge slides down and the next day they are rallying by even more and it is clear that people aren't sure

and they have to be very versatile to make sure they are staying out but i don't know how sure people are. guy: you talk about the level of interest from the financial community -- are they paying attention? it was interesting -- there were a few polls that were pro-remain a couple weeks back in the market responded positively to them. we can go through the details in those polls, and it changed in that story very little. there were just a couple telephone poles and they were a little bit more pro-remain in the market set up and paid attention. >> yes, and i guess you can say we are pulling company, and you can choose which one you prefer. we were the least inaccurate in the general election and the most on the scottish referendum and it's true that the pound rallied -- we are all trying to get it right and it's difficult

to call. this only happens every 40 years or so, but most of the polls still have remain ahead. there are arguments that it will --tinue and it will be fine it's what the experts in the pundits and political scientist think -- but there is certainly a 40% chance of brexit occurring, and that's quite high. the 40% of people leave the today, that is bad. we saw in the scottish referendum a lot of volatility -- we had leave ahead in several yet the final result is 55%-40 5%. we tried to learn from all of the things that happened in the general and in the scottish referendum but ultimately nothing is perfect.

,f it's in the margin of error there's 3% at least on all these numbers -- unity anxious -- i would be anxious if it was within 3%. to be honest i think remain is about six or seven points ahead. matt: we had bill gross saying that monetary policy central banks are pushing people to seek safety. we had a director of commodity products saying that monetary policy was monetary amphetamine for gold. and then you have deutsche bank saying that central banks are pushing people toward a brexit. how many investors have you talked to are going into safe haven assets because of brexit rather than because of monetary policy? >> i think it's definitely entwined. and a lot ofyellen

central banks clearly putting off decisions they have to make about their monetary policy until after the vote. banks aren't moving forward until they know the outcome and you need to be investing on what the outcome could be. guy: volatility over the next couple weeks. do we expect them to tighten, to spread? >> to be honest, i would expect the polls overall to stay out where they are. if you look at individual polls, you will see polls move closer together. we are releasing a note on methodology, which has the effect of reducing the remaining leaves. -- the remaining leads. yes, there will be individual polls. if you look at the overall direction, don't get too excited ll until you po have seen all the others move in that direction, and things can change at the last minute.

5% to 10% of voters decide on the day, and pulls can't help you with that. guy: thank you very much. thanks. remember, go to the bloomberg -- we aggregate and do all the numbers for you. that's on the bloomberg. investorsoup thinks aren't properly pricing and the risks of an eu exit, next. ♪

matt: a quick check on markets to see how we are doing. less than two weeks until the brexit vote. monetary policy and uncertainty like the eu referendum are pushing bond yields down to record lows and that is what you see stocks down. britain's biggest banks could fall further from the 25% drop they have already seen this year is the u.k. votes to leave the eu according to one citigroup analyst -- our banking reporter joins us on set with more. our investors pricing in a brexit here? >> it doesn't appear so, which is interesting, because if there

is a brexit vote, then stocks could fall significantly and the volatility would be far worse if investors aren't pricing things in. but you have to think that stocks are down about 25% year to date for the largest u.k. banks -- that's quite a significant fall anyway. he would have thought that some of that was brexit related and if it's not that says negative things about the banking sector. guy: how does it stack up against the global banking sector? hasn't been a disproportionate fall, in line? that is one way of looking at this,, saying they are down but in line. >> the u.k. banks are down in line with european banks generally. so there is some divergence with canadian banks, for example, quite an incredible chart. it's a record performance since the financial crisis has hardly blessed and then you look at the

u.k. banks and there has been a negative performance, particularly for those heavy restructuring periods. --yds isn't doing so bad they are through the worst of the financial crisis but there is still a long way to go. guy: talk about the asymmetry -- it suggests 24% down for european stocks. why would banks get in the hardest? >> thanks would get hit harder because they are so directly correlated to the performance of , particularlymy with the likes of lloyds banking group, george osborne in the housing market that could fall about 18% and britain's largest mortgage lender would be negatively impacted. global traded have and european trading operations -- they would have to move operations elsewhere in europe. guy: our banking reporter.

don't miss our interview with jean-claude trichet a at 10:30 a.m. u.k. time. ♪

yields in japan, hileany and the u.k. -- w bill gross warns the supernova will explode in the debt universe. council member says a cycle of fiscal and monetary policy is needed to fix the euro area. stress test says european stocks could lose a quarter of their value in the case of brexit. welcome to "the pulse" live here