abe,certainty ahead for said to win the fewest seats in the assembly. iran signs a $4.8 billion cnpc, thetotal and first investment in the country by an energy companies and sanctions were eased. >> the longest winning streak since 2012 and in the middle east a two day extension over its feud with the saudi led lock. block. trump meets with the leaders

of japan and china ahead of this week's g-20. >> welcome to bloomberg daybreak europe. i am anna edwards. >> i am manus cranny. she brought chocolate and tried to bribe us all. let's get back to markets. juneing news, the india manufacturing, 50.9, versus 51.6. we will wait for the u.s. manufacturing later. anna: all kinds of pmi today. euro btv 439, the oil market.

dawn. butchery at day, ther the eighth longest winning streak since 2013, why? paused for have the first time in 24 weeks. , the pace ofe shortening in the market, just for the moment has abated. anna: you couldn't believe that small move could be so significant, but apparently so. we will talk about oil in a minute. this is the picture on the msci asia-pacific. in china, rebound sparking interest in chinese stocks. going to russia, germany, the g-20 looms large. meanwhile, the bond connects

starting. tokyolitical story in could be significant for the national debate in japan, but the yen does not know which way to go. what is abe doing next, turning on the monetary and stimulus to get voters on board? dollar and crude. we touched on crude. poin .8%. up jp morgan still have a bullish view on the dollar, saying the dollar is cheap. there is the oil market, as you said, up .3%. anna: keeping a night on treasuries, the u.s. 10 year, 2.3, so the yield goes higher. at 16 basis point surge, up once

again on those yields this morning. withs juliette saly bloomberg first word news. juliette: in the middle, the saudi-let block has agreed to a extension made ofthe request of the emir kuwait. the coalition has blockaded over with qatar accusations the country is supporting terrorism. u.s. president has ratcheted up his feud with the media, depicting himself body slamming a person whose head has been digitally replaced by the network logo cnn. says it is a sad day when the president of the united states encourages violence against reporters.

several call it an assault on press freedom. north korea's nuclear ambitions have dominated phone calls between donald trump and japan and china. the separate conversations preceded trump's expected meeting with the leaders of asia's two biggest economies at the g-20 summit in germany. presidents the u.s. stance renewed tensions. in china come the latest gauge of manufacturing has added evidence economy is maintaining momentum after a strong start. the private survey beat expectations, 50 .4, up from 49.6 in may. outputs on orders rose. theresa may's government has changed its tune on brexit, striking a sober and realistic tone. chancellor philip hammond will use his speech to tell business leaders their concerns over the split when not be ignored.

gesture tociliatory an audience that feels it has been overlooked. angela merkel has urged g-20 partners to avoid deeper divisions as they may become irreconcilable. she said this week's g-20 summit offers a good platform for states to air their interests and an opportunity to forge common policy that benefits the global economy. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. you can find more stories on the bloomberg at top . to the year. the msci asia-pacific rose 14%, outpacing the world index. today, upside in the nikkei. the hang seng looking more positive. ,'ll stray the worst performer

even though we have seen a rebound in energy players. some of thek at stocks in detail. fairfax one of the worst performers, plunging the most since it listed. this after private equity suitors including tpg capital's failed to submit an order. macau gaming revenue missed estimate in there was speculation that president xi jinping's visit could have curtailed visitors from hong kong to macau. tay supplies nike, rising on nike strong sales outlook and broker upgrades. chart, is an interesting an exciting day, the opening of the china hong kong bond connect program, opening up that 9.4 trillion yuan bond market to

foreign investors. nomura estimates the only account for 2% of bondholders in china. this chart shows you the yield on china's generic ten-year bond outpacing the -- u.s., germany, and japan. it is open to foreign investors as of today and strong yields to be made. manus: thank you very much. great roundup. japanese prime minister abe faces one of the biggest tests after the ruling party lost tokyo's elections. seats,he ldp secure 23 the lowest number. the vote could be seen as an indication of outcomes next national elections. joining us now is isabel reynolds. ay was this result such

disaster for the lbp then? >> right, two main reasons. one, the tokyo governor has developed star power in the capital, making great use of social media, a clear agenda of cost-cutting, including having her own salary, and talking a lot about transparency and bringing the workings of the government in the open. people have liked that agenda. the other thing to note is the ldp has shot itself in the foot and a series of scandals failed to explain this to the public. the voters came out on sunday and try to punish the lbp. anna: what does it mean for abe 's policies? stimulus totowards

regain capital with a base in japan, what do you make of that? mean he willdoes have to turn away from his riskiest policies. he may have to put changing the constitution on the back earner. he came to power promising to improve the japanese economy, so ishas to show publicly he looking to what people want him to do. wille bright side, koike stay in her current job until 2020, so won't present direct threat to him, but he will see louder voices of criticism from within his own party and will see candidates running against him in next year's election for leadership of the o.b.p.. anna: thank you very much -- leadership of the ldp. anna: thank you very much.

good morning, simon. caught my lines that attention, a fascinating story for japan, but reflects a broader trend, the ruling party lost to an upstart output. where have we seen that before? this represents a challenge to the japanese to go back focusing on the economy. >> the challenge lay down doesically means for abe he pull the levers of the last 3-4 years monetary fiscal stimulus or take the high road, which is international contemporaries have not taken, and use the time to look at structural reform, which it sounds repetitive, but is the real challenge. the monetary stimulus only provides your window within to do it. he faces that choice.

if he does not embrace the high road, the political challenges will come thick and fast later in the decade. anna: the whole point of abenomics was taking the higher road, was about structural reform in the economy as well. the other story this morning his there may come pressure on governor kuroda, boj governor, and a former governor saying he is out of ideas, radical thinking, and that was the experiment with the boj. do you see that is a possibility? >> to the first point about the high road coming yes, but we keep talking about the monetary and fiscal stimulus and never have got into the third arrow in the quiver, which was the structural reform program. forerms of the future governor kuroda, the biggest challenge he faces is if this

bit of a taper tantrum in global bondts and that 10 year target 0%, which looks flaky this morning, heading higher, that may be the bigger challenge to growth in the short run than any challenge from within the movement to take a different path. there is this hawkish tone. manus: the tone has changed. anna: exactly. china and about introduce that theme, china's new bond length started today with little market reaction, the bond connect program with hong kong gets offshore investors are a way to access the mainland's $10 trillion market. it is a one way direction of travel. anna: butcher money in -- manus: a whole other story if you want to take your money out. as was the question with this,

this moneyeds because we have a cracking graph that shows the amount of on issuance versus redemption. corporate in china desperately need external funds because of the deleveraging process. this is the amount of bond issuance is, the real need, financing china inc. >> it is. they have been unsuccessful previous years finding international money for a $10 trillion debt market. less than 5% is held by foreign nationals. ,e have to ask the question why and given 3.5%, 3.6% yields on how thatar showed compares favorably with other international bond markets. a lack ofggest

symmetry, money in an money out. the main crumbs around the ok does resentity challenges with the risk premium associated with that return than they are comfortable with. chinese making great steps to put in place all kinds of infrastructure to open the nation up, increase transparency, access, tying the chinese economy into the global market, at least the infrastructure, book whether hearts and minds are there to allow integration and freedom part of these international money markets. >> the problem is each of the steps are not binary. it does not take you from lack of transparency to complete transparency. this is consistent with the chinese way of opening up. it does not want to do this and they specific step. they want to take baby steps. this is another baby steps.

see symmetry on capital flows in and out of china, i don't think you will see post so movement of international capital into their debt markets. manus: baby steps takes you to a whole other level. simon, you stay with us. let's get you set up for your highlights for your week ahead. she's back. international diplomacy center sang a lack of diplomacy perhaps on the way the g-20 goes. xi jinping in moscow to meet with vladimir putin. the next day the chinese president holds talks with angela merkel ahead of g-20 in hamburg. manus: that summit takes place on friday, all building to how will donald trump act and react with his russian counterpart? set to hold their first face-to-face meeting as heads of state. coming up -- a milestone agreement,

iran plans to sign a formal contract with total and cnpc for the first investment in iran since sanctions were levied. this is bloomberg. ♪

anna: it's just gone 1:20 in the afternoon. juliette saly standing by. the eue: alphabet said .ntitrust fine will cut profit the company plans to report the fine in a separate line on its income statement. for pushingenalized its own shopping services ahead of rivals. toshiba said it is considering listing its energy unit in switzerland. timeframe by the end of september. the company says it continues to consider other options,

including selling the business. that is your bloomberg business flash. manus: thank you very much. to sign a plies t contract with total and cnpc to develop its largest gas field. manus: it is the first foreign investment in iran in energy since sanctions were lifted. what is the significance of this? put this into context for us? it is a big corporate name. >> that is entirely accurate. we have been waiting for a wave of potential deals since sanctions were eased. out this announcement from total and cnpc that they have signed this deal. the rationale makes sense.

china has been snapping up energy assets around the world. some of the majors have been chipping their toe in the dealmaking space. the timing, the iran announcement is expected to come on the day that was going to be the deadline for qatar to respond to those 13 demands from the saudi-led gcc alliance, and it involves an oil field that iran shares with qatar. there is this interesting geopolitical angle. one source here on the ground thought that the decision to restart production in the northfield asked field earlier cause of the the diplomatic spat with saudi arabia and other gcc member since it heaped pressure on other opec countries, so some fascinating dynamics on the ground. manus: what is the latest on the qatar situation?

the kuwait these are playing a crucial role here as mediators. exactly. as i alluded to in that previous answer, we have had supposedly an extension of the deadline. saudi arabia according to local media saying it has agreed to this extension in response to a request by kuwait, acting as mediator in the dispute. hason't know whether qatar agreed to the extension and whether or not this makes any difference to the disagreement. we saw strong words out of the foreign ministry yesterday saying they would not concede to anything that violates national sovereignty. meanwhile, saudi arabia said there is no room for it remainss, so unclear whether an additional two days will be enough to result this dispute. manus: thank you very much. u.s. turn our attention to crude extending its longest run

of gains this year as drilling in america slows, futures climbing in new york, more than 8% in the past seven sessions. simon is with us. manus: yes he is. which of the stories in oil you believe? the big selloff or the bounce of the last eight days? >> big selloff. the baker hughes rig count is providing early week in visio some, but i am not buying it myself. i think that was the least effective production cut from opec, and six dollars a barrel lower. is whole of the marketplace looking at the sensitivity of the u.s. shale market to lower prices. there ishink large-scale capacity coming off

at the $45 to $50 range. you would probably have to see sub-$40. are they prepared to take that short-term pain? i don't believe they are. manus: the saudis don't seem to be in the mood for that. one of our top stories, opec , the total estimated production of opec. ae is now producing more than million are also day. by the time opec in november, there will be screams unless something dramatic happens, if the market continues in this bandwidth, you will hear clamor for them to do more, but is there an appetite? >> there is little appetite with stretched finances and a lot of opec countries. also through nigeria in their. a number of countries exempt from the production cap who for

geopolitical reasons were given leeway. will pressure come on them to participate? that is a plausible scenario, but goes to show something i have been talking about for six months, the geopolitical stability of the opec group means, which is fundamentally more unstable since the arab spring, makes comparisons with 1998, which a lot of professional analysts are drawing, very inappropriate in this cycle. there just simply is not the desire to impose short-term pain on the population. effectively public works programs will continue at lossmaking to represent a geopolitical stabilization program. as well and the gas story. thank you very much. you stay with us here on daybreak. anna: barclays is in the dark.

four executives in the bank itself face fraud charges over capital raising could we bring you the details of what is to come. this is bloomberg. ♪

manus: welcome back. the dollar against the yen, 112 .5. let's check in on the markets. a muted session across asian equity markets, trading volumes light. nikkei and hang seng volatility rose the most in a month on friday. that coming down quite a bit in today's session. fromility might be awaking

a coma, but still pretty groggy. are, adding towe a 16 basis point surge last week, the most since march, but the 10 year yield is just 1% above the record low set a year ago this week and this shows that the verge an convergence. diversiongence. the worst start to the year for the greenback, finishing the longest such stretch since 2011, wiping out postelection gains. if history is any guide, things could get worse. the dollar has weakened with positive and negative data surprises.

oil, a day winning streak, the longest since 2014 for wti. after the bear market we saw recently, the bets on the route may be peaking is money managers have been adding short positions at a slower pace. manus: thank you very much. let's have a look at the mobile version. you know how to get it. it is on your mobile and your bloomberg machine. the cover story, plan b, a plan b for brexit. city of london allegation heads to brussels with a secret plan for a free trade deal, and based on a concept of mutual access. that is citing people familiar. the plan has unofficial support in whitehall and german officials and comes as the u.k. chancellor philip hammond urged is this leaders that the government is listening after

disasters general election. anna: the next story is on qatar , given another 48 hours to meet the demands of its gulf neighbors. the extension was granted after the foreign minister delivered a letter in response to the list and set on saturday his country won't concede and was set to let today's deadline pass. fed minutes on wednesday of the june meeting, part of significant insight into balance sheet unwinding. might be ruffled on thursday. the upturn in inflation is not yet self-sustaining. anna: four former barclays executives will appear in court. and three senior

managers and the bank stand u.k. seriouse fraud office of conspiracy to commit frauds. joining us is our bloomberg european legal editor. thank you for joining us. talk us through the details of this case. >> it goes back to the financial crisis in 2008 when several banks were being bailed out by the u.k. government, and barclays did not want to be taken over by the government and was trying to get there own had 12 billion pounds at one go from qatar, and with the prosecutors are looking at is another part of the deal. they paid 300 million pounds in firmory fees to a qatari and made a 3 billion pound loan available to qatar at any time. manus: what is going to happen at today's hearing. procedurally easy.

come in, state names, given bail hearing,or another 10-15 minutes altogether. what we are hoping for is getting a look at the indictment , which will have more details on the charges. all we know is they are charged with the vague terms of false representation or unlawful financial assistance. hopefully we will get details from the indictment to explain more. manus: let's see what is delivered today. how bloomberg -- concerns over brexit will not be dismissed, assign the government is striking a more realistic tone on the divorce talks. who triggeredrs the withdraw from the london and go 6-12mmission

nautical miles from the u.k. coastline. a great deal of discussion was made yesterday on a whole host of challenges. i'm not can it get into the nuances. there is a definite shift in terms of negotiation and sentiment. hammond is about to talk to businesses and you have these , soces about fisheries there is saying sense of a shift in the stands for negotiations? >> there is. it is the third part of negotiations. we have not heard from money. we've heard about northern ireland and the land border, we've heard about the right to remain in the u.k. for eu nationals. of therd part

negotiating approach to this, which is to address those three areas first. the third part is money, financial services, a passporting arrangement, trying to wrap it up in that, to make the most difficult part of the separation for them which is the divorce bill and tying that up with key strategic services. it is a sensible approach. said theyn't the eu don't want to tie up in the future trade deal, which is what this would be alluding to? what the eu 27 is on the agenda right now. they said it is about the land border, eu citizens, and the divorce bill. >> you allude to something which is common knowledge, the eq are not prepared at this stage to do

any of the future arrangements until those component parts are this has to tie in with the fact that the u.k. government fundamentally does not agree with that and is trying every approach, particularly the key area where the u.k. government has some leverage, which is on money. it can if it wants to walk away from its obligations. there was along with the symbolic, thete idea of the u.k. walking away. manus: it was on the front page of the telegraph. >> the idea of walking away where there is no international court which can impose such a of the fewis one bargaining chips the u.k. and therefore in t we use it. manus: one of the things is the

shift in the sands from the doe. -- boe. the squeeze in terms of the u.k., the savings ratio is now the lowest on record, below 2%. real income with a longer stretch of declines in 40 years, and people are talking about raising rates. have i just lost the point here? int would be the final screw terms of social policy here in the u.k.. >> three members lost the point, which is that at this stage with the amount of uncertainty over the future trading relationship u.k. has with its european colleagues and a short-term spike in inflation, it is not the time to be raising interest rates in the u.k., and are int the mpc members

that position, and with the governor providing slightly , the rhetoric of one-week changes to the next. what ever it says, this is not in environment where the spike in inflation we are seeing in the u.k. will be mitigated by factors to mystically controlled. presente perception of presen negotiations in the bounceback in the oil price. near zeroest rates would be a foolish move. manus: there are two things people talk about one is the possibility of another election, and two, another referendum. so your probabilities on that? >> i have a terrible forecasting

record on politics. in the see any appetite conservative party at the moment for another general election. they are petrified of the idea that all the momentum that is laced with relevance, but momentum is with the labour party, so therefore there are conservative mps who will say let's get through this next to your window, and also the strategy is that theresa may has withtially impose a window which she can do the two-year article 50 process. focusvative parties will on getting a plausible leader to follow it. anna: do we need a coalition to forge brexit? we need grown-ups in the room, across parties or other parts of the conservative party is an interesting question. out answer the second part of the question, whether we get

another referendum or test of public opinion. it may not take the guise of a referendum. thatnk that is plausible the economic pain starts to mean more profound, more long-term. you mentioned the savings ratio. if that is a way of household budgets smoothing through a temporary compression, not only sensible, but plausible. it can't be sustained for long, and if pain continues, a revisiting of this question is plausible before the end of the article 50 process. anna: thank you very much. manus: breaking lines from the finance minister. anna: in japan. the deputy finance minister talking in japan, supporting the abe administration and supports the premise are at the time of this defeat in tokyo. manus: 23 seats. anna: much below expectations.

manus: yes. the bundesbank got help this weekend ensuring monetary policy would be adjusted. he said the central bank and shift stance even for inflation. anna: playing the supporting , selling with the ecb is doing if you like to the german public. ersch saying we can act in some way. where does the ecb go? the tcp needs to see a

broader set of indicators inflation is picking up. swap is 1.4. has been clear in the governing council have been supported thus far of wanting to see that pushing towards 2%, which we have not seen for two years. until that point happens, the ecb governing council will remain in placating mode, not action mode. manus: last week, one of the most staggering moves was the move on the bund market. this was almost three standard deviations. deviations on the und market. i know you are a market economist, so to that income in the momentum in the bund we

almost doubled in terms of yields in europe last week that to me is a staggering reassessment of the markets perspective on the ecb, who is out of kilter after what you've heard? >> i think the market is out of kilter. it is probably whip sawing as a result of being perennial at the way in terms of monetary policy is going in europe. farm, the flow of capital is trying to provide some hedging for a position which was perhaps overly bearish on the european monetary policy. anna: thank you very much. thank you for your thoughts. simon french joining us there.

we will be joined by the of the italianl banking association at 3:30 p.m. u.k. time. manus: well done. if you are a bloomberg customer, you can watch the show. anna: he's laughing because my time is not that good. manus: your italian is perfect. we have a young italian reducer who corrected -- producer who corrected me. tv , everything you need to know for your trading day and week. you can join us. join on the chat. they don't know what to do. anna: they are waiting for your contributions. , a video bylam cnn the u.s. president on twitter. it is sparking a new wave of criticism. we will bring you the latest. this is bloomberg. ♪

anna: welcome back. 1:49 in the morning in new york. future suggesting something positive in the united states. remember, holidays taking place this week, july 4. slightly fewer trading hours that would normally be the case. let's get the bloomberg business flash with juliette saly. juliette: thank you. i ran to sign a deal to develop the world's biggest gas field in collaboration with total and cnpc. the$4.8 billion contract is first investment by an international energy company since sanctions were eased last year. former barclays cto will be among four x bankers to appear at court today, scheduled to

appear along with the others falling the announcement by the serious fraud office they were to be prosecuted over the way barclays raised billions of pounds from qatar in 2008. there has not been any comment yet. toshiba has said it is considering it's energy unit in switzerland to be listed, with a target timeframe by the end of september. the company says it continues to consider other options, including selling the business. that is your bloomberg business flash. manus: thank you very much. president trump has posted a video on twitter that the picks himself body slamming and choking a person who's had has been digitally replaced by the logo of cnn. message which several called an assault on press

freedom. simon french is still with us on daybreak europe good many conversations to be had about what we are seeing right now in terms of the president's twitter account. wasof the things that talked about a lot in the u.s. yesterday is the extent to which fromweets are distracting the serious business of health care reform, tax reform, and all the other things heading into the g-20, on the things investors would rather the president was focusing on. the social media aspects of the president's behavior is the backdrop so when he goes to congress to try to get potential congressional members across the aisle, they will see that as a backdrop which may be placed will with the trump base, and it does.

the media is not a popular aspect of the trump base's views, versus one where you need to get broad-based appeal to get the mathematics in congress. standpoint,omic these reforms are necessary if you want to get the growth target that steven mnuchin and donald trump have spoke about. it's not possible under the status quo. there needs to be a retooling of the u.s. economy, very difficult to do with that kind of noise going on in the background. anna: republicans last week were still confident tax reform could be done. the most important problem facing the u.s. administration is the debt ceiling. >> the u.s. treasury will run out of money september, maybe october. to think that simultaneously

a fiscally hawkish congress, it is difficult to seatgeek structural reform taking place concurrently with that. ,anus: you have just come back ey can still do the tax reform. the g-20 meeting is coming up. trump has been on the phone to japan and china. tradel all revolve around , and potentially not a great g8 or g7. g-20 coming up. how much of a risk is tariffs? they have gone quite on the subject, haven't they? how delicate will g-20 be this week for trump? short-term, he probably does not have as much pressure as he will have coming into the midterms to raise tariffs. 45% tariffs on

imports from china, 20% to 25% with mexico, key elements he has gone completely silent on. if the domestic agenda stalls and the elements where he can use except importers rather than congressional support will come back as his key leverage tool. somes why at think at point, and this underpins a bullish view on the u.s. dollar, is that protectionism will come back as we had towards midterms and the eyes of the white house shift from the domestic reform program to getting reelected. the focus at the end of last week was on steel, and tariffs on steel and the way the white house is not on the same page. back to treasury yields. manus: j.p. morgan con the

dollar in the risk radar, j.p. owned saying it is under and under loved, but look at this breakout in treasuries, reversal last week. crucial in will be terms of the balance sheet discussion. >> that's right. september or december, will that nothe moment the fed starts longer investing? there was some questions about reduction not a quick in the for trained out of balance sheet. the way you read this is the fed at the moment has given up on the inflation perspective and trying to return to normalization. anna: normalization, that is the

word. simon french, thank you for joining us. 'snus: coming up, draghi 'slitical woes --shinzo abe political woes. we will bring you the very latest. this is bloomberg. ♪

manus: uncertainty ahead for abe. feweste set to win the seats ever in the tokyo assembly of it the prime minister reshuffles his cabinet and changes course. anna: iran will sign a deal with hotel and it marks the first investment in the country eyeing an international energy companies since cents -- sanctions were eased. the middle east, qatar gets a two date extension over its feud with saudi arabia and the block. the president talks north

korea with japan and china ahead. ♪ manus: welcome to daybreak europe. it's a flagship morning show in london. anna: i'm anna edwards. 7:00 here in london, 8:00 in paris. we started the program talking about the oil price around three cents wti. the rally seems to be continuing. let's have a look at the features and see what they expect to open up across your opinion markets. -- your opinion markets. markets.an you are seeing this momentum in global equity.

if you look at the splits, you have the china data, the bminese data, you have the back in expansion again, that momentum, overall sentiment as to the equity story. anna: decent story. let's look at the risk of radar. resoundingly flat. we did see the shanghai boosted from the date of read. we have a japanese yen in their, as well. once again, an upstart political movement coming from seemingly nowhere. the survey did not boost equity markets in japan, up 1/10 of a percent. let's roll that over. manus: little bit of dollar, as i say, dollar got stronger,

jpmorgan has a relatively bullish view on the dollar, saying it is under owned and relatively cheap. the focus will be on the fed. there is a possibility of a knee-jerk reaction. that's what one or two market commentators are saying. oil is up for the eighth day in the road, longest winning streak since 2013. why? the reprieve. they reduce the number of rigs for the first time in four weeks and anybody that thinks that that is a fundamental driving reason for getting involved in a market, i challenge that. anna: let's put a close on the japanese and australian market. down for tenths of a percent. gold dropped to the lowest level since may 16. everything seems to be moving at this hour. tax -- the s&p asx is

down. thes: these are bonds and drop in price and rise in yields, do you need to radically rethink where you are? last year use all the abundant to 4.5%. in terms of yield, you are and as guy.494% keeps saying, the year and target is .46%. anna: let's get to first word news now with juliette saly. juliette: in the middle east, the saudi agree to a two date extension for qatar to make its demands. it is reported that the decision after a mediator received a letter from qatar's foreign minister. the coalition has crated a blockade.

the accusations are the country is supporting terrorism. aggravated thes feud with the media after uploading this video of him tackling somebody whose face was replaced by a cnn logo. lawmakers, mostly democrats, also condemned trump's message, which some called a assault on press freedom. ande calls between trump japan, accusing the u.s. of trespassing for a guarded missile launch and that tennessee. this could signal that the white house is displeased with china's efforts to pressure north korea to curb its missile program. in china, the latest age of manufacturing has added evidence that the economy is maintaining momentum after a strong start to

the year. it be expectations, coming in at 50 points from 49.6 in may. the u.k., theresa may's government has changed its tune on brexit, coming with a more realistic tone. chancellor philip hammond will give a speech on the confederation of british industry to tell business leaders their concerns will not be ignored. it's a jester to an audience that feels it has been overlooked. hasany's angela merkel urged her g-20 partners to avoid divisions and economic policy as those may become irreconcilable. she said this week's g-20 summit offers a platform to air different interests and an opportunity to forge common policies that benefit the global economy. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.

you can find more stories on the bloomberg at top . a mix to day in asia to kick start the second half of the year. we have the survey out of japan, closing 1/10 of a percent. australia's market weakened abe decision the in korea. stocks, this at was listed in may 1992 and australia, it's on reports that has it equity citizens failed to submit their binding offers for the media company. mattel is leading the decline. getting revenue much weaker than what was expected for the month. this is listed in terms of bond and number of broker grades --

upgrades. of thethe opening up china hong kong bond connect today. you can see if you are looking for yield, you should get into this china generic market is we have a yield on the 10 year rise more than what we have seen in the u.s. on market, also germany's 10-year and japan's tenure goes back to 2012. it's a $10 billion bond market open to foreign investors. it's currently about 2% of those who own china bonds are foreign investors. certainly some high yields. juliette, thank you very much. prime minister shinzo abe faces tasks afterardest the ruling party lost japan's

assembly. it's the lowest number in the capital. anna: the vote could be seen as an indication for the outcome of japan's next national election. joining us from tokyo is isabel reynolds. why but this result such a disaster? what explains the weak performance? as you said, it was an appalling performance by prime minister abe and one is the star power that took his governor has been able to guilt over the past year since she took over the position and 11 -- a landslide election had her become tokyo's governor. her first actions was to cut her own salary in half so they know she was serious about cutting wasteful spending. on the other hand, we have seen

them shoot themselves in the foot. they had a whole series of scandals and they failed to explain those in any way that would convince the voters and that has made voters very angry. and they show their anger at the ballot boxes on sunday. manus: indeed. we have the guest host for the next 30 minutes. great to see. guest: good morning. manus: i like what analysts said, i do listen. [laughter] here we go, it is in other political upstart. by an upstart party that is smart on social media. haslinda: simulate come from nowhere. manus: it has potentially serious ramifications that has been brought to abe's door. every five ors six years, the party gets into some sort of scandal. does it change the agenda or

implement rate in japan is at an all-time low. let's go back to the japanese question. has beenmic question driving 20 years from our perspective and the upstart social media thing is an enchanting one because is it abe itself -- himself or is it the way they behave? it's typical of their political outlook, from my side, i look at the economic side. is bad.e sentiment where should the japanese focus be and on this story? on the three arrows and the reform one? if you look at the liquidity base, it's been doing well. the small gaps and the small stocks in japan have reflected that, unlike the rest of the

world where we have had a lovely bund market. japan is unusual. thatreflecting that idea there is a wave going on in japan, a private sector wave. the boj has been withdrawing liquidity and a slowing down the program in which the private sector has been going up. it's done quite well. contrary to other developed markets. japan wants to its own tune. manus: that too can change. the former governor says kuroda is going to run out of ideas. we need to change, we need something new. of the national pension fund keeping buying eds, getting companies to buy back their

shares from the bank of japan or the boj tells companies we are going to share your -- self your shares on the market. i think the point is, japanese coast do not need something. when everybody looks at japan and sees fractional gp, they have not got a private sector problem that we have got. japan is a different mix. if you are worried about the next two or three years, japan is one of those natural hiding places. not have tont does liquidate and the private sector is full of cash. that's the place you want to be. anna: let's go to another part of asia and talk about china's first new bond week. -- bond link. it gives off short investors another way to access the mainland, tens of trillions of

dollars in debt markets. 2% of that is on by international investors. this is a story of need by china's domestic corporate. but it is one wave at the moment that is, give us your money. that is what i am saying. money can flow into the bond market in china, but we do not know or understand the ramifications for the money coming out of china. this is getting the opportunity for china to deleverage. guest: i think you will find a lot of foreign investors resistant to the standards of corporate behavior in the chinese market. i'm not talking about the basis of bond managers. you can sell an exuberant story. bond managers want their money back. it's a long path to that market being fair. anna: a little fanfare around

this particular box connect is that it's familiar in hong kong. , everything that hong kong stands for has led to this project. guest: there will be a narrow stock read interesting. teresting. looksk bond money different. there will not be quite the tinted glasses about the internet and all things mobile. give me my money back. it's obviously a long-term story. a lot more have to change and the standards have to change. taking a part of the bond is something completely different. manus: last week was about

rhetoric from the central bank in this week is going to be about u.s. manufacturing, european numbers as well. what i find interesting is, you look at the different interests in growth, the basic assertions are, the u.s. is going to struggle to deliver, struggle to deliver momentous growth on the upside. the heavy lifting has got to be done by china. that is what's going to give the word, again, momentum. that's the bit that surprises me because it takes away from the upside of the pie. guest: they are busy restraining their liquidity. we talk about to eat programs locally. and china has been making everybody else look like a picnic. they stop that this year. it's interesting that you can look at the u.s. and argue you can bring your into the argument. pmi's are topping out.

it's already peaking. this year, monetary policy looks like it will tighten into global momentum for growth. the chinese areit's already pea. not going to be accommodating because they are in a tightening phase. we are looking at interest rate rises here. it's going to be a very tight year this year. some thoughtshave in our next conversation. he stays with us. manus: up next, humble. the brexitds back bravado. chancellor hammond is set to tell business leaders, may will listen. this is bloomberg. ♪

anna: welcome back, everybody. these are live pictures coming

to us from space. the release of the spacex crack from the international space station. i understand they go by gmt. the mostis is one of famous welcome backs on tv. i think it's 6:20 in space. let's get to juliette saly. bring some sobriety to daybreak juliette, please. juliette: i am firmly on the ground here on earth. iran is set to set up a deal -- the contract is the first in energy company since sessions were eased last year. it will be intel ran for the signing of the formal agreement. john kelly will be a monk forex bankers to appear at westminster court today. he is scheduled to appear with roger jenkins following the

announcement of the vote last month. they were going to be prosecuted about how barclays raise billions of pounds in 2008. they said they would contest the charges, but there has not been, by the others. that is your bloomberg's is flash. the: let's talk about business leaders not being dismissed. it's a jester the government is striking a realistic tone on divorce talks. this license european vessels to access waters as 12 nautical to miles off the coast like. no jokes about the six and 12 northern milestone, nor how many european catch in it. the principle of it is, hammett

talks today. to get a message that theresa may is up for listening, this seems to be f shift in tone. then the telegraph says we are going to threaten to walk out if we do not get our way on the brexit bill. i'm lost on the direction of travel for brexit negotiations. guest: we are still in this obsessive idea that i do find entertaining. have the bits we want, but not the bits we don't want. we believe the customs union, the free-trade era, this is mathematics. that is it. given this conversation about who is going to do what, and that's it. we are fudging from our side. you are not going to cherry pick. you are in or you are out. i was talking to cbi, so what?

that means free movement. how is that going to work? i do not think there is any clarity at this point is the rules have not changed. why should they move their position? anna: the other side of the argument would be, look at the markets that they are income a german exports. therefore, once that kind of deal -- guest: more romantic britishness on how this works. they are not going to stop buying bmws because they cost 4% more. i'm sorry. a big part of which is the european market. manus, i had a go at this last month. i do not apologize for not voting for her. i think it's madness. you are going to end up with a fudge. we are going to have our perspective, which says we will cherry pick. have norway, have switzerland.

i do not think we know yet. the soft tories on the other side. it's going to be there. and theis on one side main co-on the others. it's going to be a generous -- enormous mess. we look very weak. manus: let's get back to the data. the squeeze is on. on smallest amount of money record and incomes are getting scratched by the most in 40 years. square that with raising rates in 30 seconds. guest: that number is a slight anomaly. goes to dropping, we

all know this. the adjustments suggest it for or so, but it is very low for a reason. manus: what are the national statistics? anna: some of that increase in inflation, there are secondary effects -- nost: i'm afraid there is evidence that the rates are going to take off. manus: lunacy or -- guest: they need to do something at some point. anna: thank you very much. i was going to say that's a nice place to leave it, but i am not sure that was. inus: that's it from an a and bloomberg the european market show is next. great to have you back in the house. it was a bit lonely without you. anna: thank you very much. your opinion equity markets. manus: marching to the upside.

we will see if that resists in the next half hour. thank you for joining us. this is bloomberg. ♪

♪ >> this is the european open. the guilt will be opening. i am guy johnson in london, matt miller not here this week, but you may be hearing from him throughout the week. q3 begins as the new quarterbacks off, -- kicks off. trump tweets, the president rants up his feud with the media i posting this video, showing himself body