anna: good morning. manus: i am live in dubai. this is bloomberg daybreak: europe. these are today's top stories. routechina's currency takes a breather after support from the pboc. you can't prime minister is set showdown oversh plans to keep britain close to the eu customs union after brexit. former malaysian leader denies wrongdoing in connection with a corruption scandal. ♪

anna: good morning everybody. it is 6:00 here in london. 9:00 in dubai. let's talk about this asian equity session. it is negative but not by a supreme measure. a little bit of stability injected into currency markets. pboc talking out. the yuan is up for a second day. this is the chinese offshore currency. we have those reassurances from the pboc. things have taken on a micro feel, micron technology in the crosshairs in a chinese court. there are lots of moving parts on the corporate level.

the next step in the trade war is what we will see on friday way with the u.s. imposing those tariffs on chinese imports. crude. the price of is in your because we had a new forecast out. they are talking about $85 in 2019. we have seen outages and the latest data in inventories in the united states. all of that leading to a concern about a tighter market. focus on these chinese stories. manus: there are two different stories here. there is a line in the sand from the pboc in terms of intervention on the yuan. has been wiped off of the value of the chinese equity market. is this a biking opportunity -- buying opportunity?

is that a value proposition? yes, he sees this as a value proposition. you have a line in the sand in terms of the yuan. intervention should be enough to put a floor under the demise. we have recovered from an 11 month low on the currency. global funds are buying bonds. we will talk more about this later. does china offer an opportunity in markets? anna: let's talk about what is coming up on the program. we are going to speak later on whoy to demetrius of mikula is the european commissioner for migration. don't miss that. mustn't talk about with regards last fridayement

and implications of the latest german coalition arrangement, what is that mean for the future of migration? let's go to bloomberg first word news update. juliette saly joins us. theresa may is said to be facing a fresh showdown with her cabinet over plans to keep the u.k. closely tied to eu rules after brexit. they want her to explain how a new proposal for the new customs regime will work. they're concerned that the plans could keep the country changed eurozone's tariff system. malaysian prime minister has built-in not guilty to charges in connection with a scandal. he was granted bail of one million. the x prime minister could be jailed for up to 20 years and

find. -- fined. president is seeking closer ties with switzerland and is calling on europe to sure up the nuclear deal. it will resume its nuclear activities unless france, germany, and the u.k. guarantee continued investment and trade. begin realrump will imposing sanctions on the iranian republic . >> the two countries agreed that the next deal -- nuclear deal is a political achievement. interest of every country in the world that this agreement is preserved, maintains, in the interest of international peace and security. it isit is -- juliette: july 4 so stock markets are closed today. some of the fun

tonight with our exclusive live coverage of the boston fireworks spectacular. that is at 1:00 a.m. london time. news 24 hours a day on air and at tictoc on twitter. than 2700 more journalists in more than 120 countries. you can find more stories on the bloomberg at top . you can see that late trade is down by 2/10 of 1%. we have a stronger yen gold moving higher. a lot of that moves into safe s.ven yuan rising for a second session, not giving a reprieve to chinese stocks today. a lot of action around the china-u.s. trade war.

micron shares fell as much as 8% in the u.s., weighing on the semi conductor index there. seeing a lot of the tech stocks in asia hit hard on the back of this micron story. nintendo is at a one year low in tokyo. the te stocks are up after the u.s. says it will be allowed to resume business activities in the united dates. that stock is down 64% over the past 12 months. anna: thank you very much. the people's bank of china has vowed to keep the yuan stable and not use it as a weapon in the trade conflict with the united states. the u.s. is scheduled to impose tariffs on chinese exports on friday. they will place levies on an equal value of u.s. goods.

and thated tip sales has the united states company often the world largest semi conductor market. this according to its taiwanese rival. joining us now with the latest is our bloomberg correspondent. this has been done as instructed, hasn't it? has slung from a gain after the-- pboc vowed to support it. the sentiment has shifted in the short term. the expectation is that if the market keeps pushing weaker, the pboc can take met -- tougher measures to support the currency.

they can mop up liquidity in the offshore markets. they have plenty of tools that they can use of the market doesn't let them. many areng-term, expecting more weakness because all the fundamental functions are still there. we might see more tariffs this week. still impactsl -- in monetary policy easing. all of those factors are still there. bank of america is expecting the currency to weaken at the end of this year. is there the same sense of panic as there was in 2015? globally, there doesn't seem to be the level of contagion we saw then from the fx right. actually, nervousness has

spiked but it is far away from the levels we saw in 2015. one good example is the offshore yuan three-month reversal. -- the an indicator gauge stands at 1.1%. that is far away from the level we saw in 2015, which had spiked to 4.5%. it has been trading in lockstep over the past few days. that suggests that there is not much panic in overseas markets as well. manus: thank you very much. the very latest on the chinese story. li na, there has been a positive or thought in the yuan market.

has the pboc done enough with verbal intervention? would you fight that? lena: i would not. is playing a balancing act here between allowing the to ange rate to depreciate more fundamentally sustainable equilibrium level in light of the effect of a negative trade shock on chinese growth. time, it does not want to trigger more retaliatory action by indicating that it is starting a currency war with the u.s.. this is a very delicate balancing act. it is ultimately down to the chinese authorities to decide where the line in the sand, where intervention will begin to kick in. has devalued recently because the chinese authorities have stopped intervening into the market to prop it up.

in terms of a cash flow it has been overall positive. there has been a growth in reserves. -- yuan to valuation devaluation has been in the cards. this is a neutralizing mechanism that chinese authorities are prepared to take in order to take the pressure of the tariffs away from chinese exports. risk materializing will probably be the ones to watch. anna: in terms of the currency, i have this chart around bearish positioning yet to reach extremes. this was something our colleague was just referring to. three-monthring the

risk reversals in 2015 and showing that they were extreme compared to where we are now. the market does not seem as bearish about the economy now. is that because we trust the pboc to jump in more? or we aren't so worried about the market forces? what is it that covers the market cannot be more bearish on the chinese currency? are two competing forces here. we started the year with the expectation of synchronized global growth. it came hand-in-hand with the chinese yuan depreciation against the dollar -- appreciation against the dollar. we have transferred into a very different situation now. that managed aspect is offering some comfort to the market.

we are in a more uncertain environment, there are many possible scenarios, as opposed to the one line central narrative we had at the start of the year. that will inevitably have to have an impact when you are valuing financial risks throughout the world. manus: how brave are you feeling this morning? bond traders and commodity traders, have a look at this. the money flows into the bond market in china. it is the number one bond market in the world. the money flows in 21 months in a row. 16 months of rising money going into the bond market. can thatntinue -- continue given the concerns about the underlying health of the debt market in china? lena: i like your table. i think what is telling global

investors is that there is a balance of payments triggering some disorderly yuan devaluation. comfortows a sense of that china's authorities are able to manage the degree of the valuation and the spillover fact -- effect that this will have on other emerging markets it -- market currency. there is a structural shift in the chinese credit conditions which is being managed by the authorities because much of the social financing that happens in china in recent years was also accompanied by a negative toll in productivity growth. there was a lot of credit generation that was not productive. of the gets cleansed out of the system through defaults and bank recoveries. the fact that we are seeing this is encouraging, and encourages

notepad in the domestic market. it is the rest of asia that bears the brunt. if you have a deficit, you are the one the market focuses on. in terms of the bigger picture ,nd the machinery around trade the wto is in the crosshairs. a news agency talking about how china and europe should resist trade protectionism and talk about sectors where there could be more cooperation. how much of an opportunity for the china -- for china and the eu to work together here? lena: i think the most likely will be a rerouting of global trade, a recruiting of globalization. andange in supply chains sources. anna: globalization will be tested but will come back? >> in -- lena: in the

short-term, we have seen this in the diversion between german orders and u.s. orders. very limited spare capacity. over time, as companies adjust as flows reroute, we are going to see strengthening of micro trade routes between china and the eu, china and latin america. they'll have to involve a more progrowth and pro openness resolution. manus: let's see what happens next in trade worse. it could be far worse after the fourth of july. lena stays with anna and myself. theresa may's brexit show down. can she convince her feuding on her tray plans. -- trade plans?

anna: malaysia's former leader has pled not guilty to charges of corruption. we will bring you the very latest on that story. this is bloomberg. ♪

manus: it has just gone 9:21 in singapore. we are hitting the nine-month low in asian stocks even though we have this relative stability, a positive or thought in the yuan. stocks have been skittish and nervous. she is never skittish or nervous, she is always in control. juliette saly in singapore. chinese court has temporarily banned chip sales by micron technology, cutting the american company off from the world's largest semi conductor margaret -- market.

unc, theyn favor of issued a preliminary injunction stopping macron from selling 26 products. disputeates a trade between china and the u.s. that is engulfing industries from steel to auto and increasingly the electronic sector. resume. is letting zte business activities while they way a seven-year ban on the company. the easing didn't come soon enough for a bid for them to win a contract in italy. firm lost the deal because it is barred from buying u.s. technology. it may become the most significant confrontation between europe's biggest low-cost carrier and organized labor today. they reduced desperate used a

vote in favor of industrial action. that is according to the irish airline pilot association. the ballot is the latest in a series of later -- labor battles for ryanair. that is your bloomberg business flash. anna: thank you very much. 1:23 inpore it is: -- the afternoon. let's talk about something that is happening in the u k. theresa may is facing a showdown to keep the u.k. trade -- tied to the u.k. trading rules. this comes ahead of a key meeting on friday with her cabinet ministers. they are feuding over fear that the premier could water down red lines on brexit. that is the view of the brexiteers.

lena is still with us. we heard about a new idea around the customs union, various reports floating around about what that might contain. from your perspective, what really matters here? is it the fighting within the cabinets are what they come up with and whether it will be satisfactorily -- satisfactory to wrestle -- brussels? lena: it is the economic outcome. i think that it is clear at this point that brexit remains current -- extremely polarizing for government and the two main u.k. political parties. it is probably my thing for -- polarizing. anna: you think brexit is still possible? outcome is quite polarizing. we have to extreme scenarios. scenarios are between a

default position of continued customs union's but without a deal for services, which is critically important for a very open economy dependent on capital flow. a harder hand, we have brexit scenario. the deal depends on there being a deal on the table. a lot more volatility if we don't get a third way scenario. parliament continues to object to a single market customs scenario, we could wane -- wind up with a great deal of political uncertainty. manus: i love your utter dispassion. i struggled to put the two together. type that together for me on sterling. we're looking at the gilt market outperforming their peers.

we have a position that needs to be barbell as far as financial risk management is concerned. we have a scenario where we will either get a steep devaluation in the pound, given two factors. the u.k. economy is in a slow lane with regards to growth. a 1.4 or 1.5% gdp growth this year. whether the freshwater economic weakness, it will not change the fundamental case that is the u.k. economy growing at full capacity. whatever comes out of the eu-u.k. negotiation this year, there will be future escalation between the u.k. and europe. there will be more frictions.

that is a headwind to long-term potential growth. manus: more friction possibly to come. we have more to delve into. our guest stays with us.

anna: this is bloomberg daybreak: europe. it is 6:30 here in london. the dollar against the yen, a little bit of movement there. the yuan is a little bit stronger. we see some money still going into havens, gold is stronger this morning. here are some of the things we're watching for today. and bond markets are closed, today is independence day. don't lose our live coverage of our boston fireworks spectacular. when :00 a.m. london time. whensed to be a time

independence day would be quiet and global markets. you can't be sure these days. manus: we should save of you extra fireworks. the exports from china to the a record,tes are at no irony in that. youave a full and square -- are up very late last night. i wonder what you were doing. fireworks all around london. we are going to get an update on the economy. poland's prime minister will address the european parliament. you will be speaking about the future of europe. let's check in on the markets. any sense of calm? how are we looking? >> there is a sense of calm. good morning. the asian pacific index is

trading unchanged. low, near this nine-month lower since october. we are not seeing the losses we saw in the past couple of days. some of the equity markets in the red. china is one of the losers. china and south korea unchanged. it is hong kong that has been underperforming. when it comes to chinese equities, the shanghai composition in particular, you have been talking about whether the valuation of chinese equities makes them a value proposition, moving on to the u.n.. -- yuan. we are seeing strength in both the onshore and offshore. the pboc propped up the currency. up the option markets, three months risk reversals, that bearish tilt remaining low relative to where in 2015.ck

for now, we are seeing a reprieve when it comes to the yuan. interesting to look at how the concerns around trade tensions, that is what is still weighing on some equities, is playing out in the commodities spectrum. gold is big. we are seeing safe havens big. the platinum-gold ratio is the lowest ever. platinum is at risk because of its role in the auto supply chain. we know the concerns around auto when it comes to trade tensions. taking a look at oil moving higher. moving towards $75 per barrel. nhat is confirmed by a inventory street. manus: thank you very much.

always with something new and innovative in the chart space. it might be fourth of july but it is still a big week for the federal reserve. we have the minutes from last month's meeting out tomorrow. the jobs report comes out on friday. investors could get clues about what the central bank plans to make next. front end of the yield curve, where it is pointed will take stage in the second half of the year. our guest is still with us. the lowest ratio in 10 years. i put it to you, that is more than just a smoke signal. that suggests that we can be in anda bit of a supply deluge perhaps a bit of five years stepping back in the second half of the year. what does it say to you? talking,we have been

this was the direction of risk for global markets, a weaker yuan and a bit of a buyers strike. that this is clear a transition year. .e have this two-way market in the slow lane, we have the fed moving towards normalization. is u.s. cyclical recovery now all but complete. there is very little spare capacity in the u.s. economy. it has been growing above trend for several quarters now. that is creating signs of heating and the label market. -- labor market. at this point in the cycle, when the economic cycle has normalized, it would be normally consigning -- coinciding with normalized financial conditions. that is not the case. rates has beenof

quite glacial. secondtimates for quarter u.s. gdp growth are running in the range of 5%. that is over a percentage point higher than treasury yields. the treasury yield is supposed to tell us something about real gdp growth and the inflation premium, it is clear that none of this is priced in. balancing is still quite too large. they will have to proceed with normalization because the theomy strengthened to point of the cycle we are at, even though global headwinds are growing. anna: they will have to make their own assessments on inflation. you're talking about inflation expectations. trade rhetoric really hits and we stopped talking about inflation expectations. tariffs could lead to the wrong

kind of inflation. where do we go on u.s. inflation? lena: we have had this breakdown of correlations between u.s. 10 year real yields and the growth cycle, it is clear that thanks to the balance sheet in recent years, there has been this drop in real year between nominal gdp yields. it reflects to demand as well as financial assets. on the other hand, there is the static growth in inflation expectations even though oil is back above $70 per barrel. that suggests that the market is lagging behind the fundamental position. with respect to what the fed is clear that it is is below the feds target.

i think, from here on, it is down to wages to ignite and dictate where we are at. the global market is normalized. the means we are at the neutral level for inflation. the fed should be pursuing normalization. a sense ofnt to get how bull or bear you are. roger burgess, this is the smart money index. apparently the first 30 minutes of trade, it is fear and greed that drives the market. smart investors put their money and in the last half hour of trade. the dow is only down 9%. you have tax and buybacks on the left-hand side and you have the smart money way ahead, a lot more aggressively lower than the market. how do you look at that kind of an indicator? would you share that level of smart money worry? lena: i think that we are

on the one hand global growth is still strong above trend. global financial trends are very easy. on the other, we have signals that we are at the peak of the cycle. the cyclical recovery is the most of any major economy since the crisis a decade ago. supply as itwing pertains to potential growth. higher the impact of test spreads on credit conditions drill economies. time, till risk events in turn -- the most important thing, for the first time in a decade, with political risk rising and central banks we are stepping

back from the stimulus we have seen in several years. no longer the key priority for economic policy in major markets. fiscal policy is about economic nationalism across key areas. monetary policy is turning back towards an inflation management as opposed to the global economy. that is a regime change compared to the conditions we have faced in the last decade in terms of hedging of extreme risk scenarios. anna: indeed. the chief economist at the ecb saying interest rates are taking a comeback in institutions all caps. -- toolkits. our guest stays with us. have mentionede it a few times. the west bond and stock markets are going to be closed today for independence day celebrations. you can watch some of the celebrations life here on bloomberg television's. our exclusive live coverage of

the boston pops fireworks spectacular. malaysia's former leader has pleaded not guilty to charges of corruption and criminal breach of trust with connection to a multibillion-dollar scandal. isning us now for the latest shannon adam. it's a happy with us. hey there. it has been a really busy morning. we have the former prime minister facing criminal reach of trust and one charge under the anticorruption act. he could beent --

facing up to 20 years in jail. manus: what actually happens next? what are the next steps? >> we are waiting for the trial dates. people will be watching out for what happens between now and february. anna: has there been market response to this? is this somebody who still moves markets despite the fall from grace? of, thenk it is more indications of things going down in malaysia. we have had investors selling off malaysian stocks. we have had the benchmark index near a six-month low.

there are definitely market implications. there's more to come. it is a story that keeps on giving. we thought we put a lid on that last year but it has come back. editor,n news desk shannon adam. for hist, i sat down first interview since he was on the job in january. we will bring you our exclusive interview. that is next. this is bloomberg. ♪

manus: it has just gone: -- gone 9:46 here in dubai. very happy independence day.

the dollar slipping every so slightly. if you're having apple pie, candy corn, these are the kinds of things we understand that are part of the celebration. there has been a heatwave over new york. we take a broad survey of all american foods here at bloomberg. dollar is strong as a pancake. they say they will restructure their operations to make itself more agile. i spoke to the ceo. it was his first television ceo -- television interview since taking over the top job. >> money taken a stage further. we are investing a whole amount of thought into taking full advantage of the digital revolution. today, the traditional airline offers economy, business, and perhaps first. you have one of three choices

and you pay a ticket pricing accordingly. what we are looking to do is become the airline of choices. the analogy i would use is like a dim sum meant to -- menu. we can all go into the , a seemingly endless amount of choice, select what works for you through digital interface and only pay for what you want. if you want to trade up, you can trade up. if you want to trade down, you can. we want to be an airline that provides choice and embraces the digital revolution. his premium and economy part of that? absolutely it is. manus: when will you deliver yours? are in the process of looking at some of our aircraft types. it may not be unrealistic for us to be on a similar timetable. manus: are you moving away from

ultra luxury? tony: back to choices, that is the whole purpose of the logic of choice. no matter what choice you or anybody else makes, that is a good choice. for you, if it is not economy you wanted ahaps different meal option, that was a good choice. we want to make sure that we can provide that. you commented before about residence. if you wanted the uber luxury experience, that would be a good choices well. we want to be able to provide choice as opposed to the binary in terms of you are either high-end or low-end. we don't believe the market shaping out that way. manus: let's talk about the market. there is am rich, yourself, and kadar. is there room for all three of you? sameou all eat at the table? the world population is

growing faster. macro level, the answer is yes. we are confidently humble. grow win the opportunity presents sustainable growth. we'll be looking at the commerciality of how we look to grow. we will not grow for growth's sake. that was the ceo speaking to me nn exclusive interview yesterday. that is a man was on a mission. grabs unders up for his tenure. let's move into a ram. -- iran. the president is seeking deeper ties with switzerland.

u.s. has put the accord in jeopardy after pulling out and pledging to impose sanctions on the islamic republic next month. resumeve said they will their nuclear activity unless france, germany, and u.k. guarantee continued investment and trade. the two countries agreed that the nuclear deal is an important achievement on the political level. the fruit of long and difficult negotiation, and it is in the interest of every country in the world that this agreement is preserved, maintained, in the interest of international peace and security. are iranian coverage leader is here with me. you look at this story, what do we expect? we have heard, what happens next in the story? >> we are looking at the measures that the eu may be

taking or how far they may be able to go in order to counter the u.s. sanctions that are unilaterally imposed and are going to be introduced as early as next month. have, coming up, on friday, a meeting with foreign ministers from the parties that remain in the deal. u.k., germany, france, germany, china. they're going to discuss a proposal, and economic package, that is aimed at offering iran against thoseran sanctions. anna: how expensive can we expect that to be? what can we expect from that meeting in austria? our guests have said it will be difficult for european countries to stick with the iran deal. difficultoing to be

for them to come up with something that a substantial. we have a u.s. just a couple of that the u.s.ten is working towards diminishing the number of buyers of iranian oil and trying to cut it down to zero the revenue that they would be getting from oil exports. this is the cornerstone of the iran economy. these are the things these countries are up against. is puttingt, iran the message out there, other parties have to step up and save the deal. thank you very much for joining us. good to get your thoughts on the latest developments. our guest is still with us. not everybody is following the story, buthe oil trump is not happy with the oil prices.

there are outages in venezuela and canada. the iran story is part of this as well. if this is worrying president trump, this may be affecting base expectations in the u.s.. lena: the other concern is that we haveorrelation, between oil prices and u.s. stocks, broke down last week. that is worrying to me. that is one of the key correlations that held through the stock market rally over the past decade. the disruption to international supply chains which is being politically motivated and driven from the u.s. is a concern in the context of trade wars. it is clear that this is economic nationalism which continues political friction in global trade, it is going to be negative for growth. will change the

magnitude, direction, distribution, the pricing of global trade of goods. ultimately, less trade and more expensive trade is a route to less efficient investment and higher cost and lower profit margins and ultimately a route to weaker global to -- potential trade growth. if we do see these trade tensions escalate, something the centralshock, banks have to rethink that, do they have to do both? central banks are in the business of managing demand conditions, in terms of global demand supply balance. as long as there is not a secondary round of full over -- then they arect,

probably going to be prepared to look through a temporary oil supply driven shock. i put together the prompts. month versus the further months. this is where you begin to think that this market really is beginning to squeeze. it doesn't have much spare capacity. if societies react moderately towards what donald trump wants, are we in for a squeeze? ita: i think that, clearly, inflation potential is too low. too low for this level of international oil prices. given the strong historical correlation, there will have to be normalization in the 10-year

gilts. -- yields. the trade tariffs are not going to be a systemic event. anna: thank you very much. this is bloomberg. ♪

manus: good morning from dubai. from bloomberg's european headquarters in the city of london. these are today's top stories. manus: you want turnaround. china's currency fall takes a breather. the country's stocks slipped to a four-month low. you can prime minister is said to face a fresh showdown with her over new plans to keep written close to the eu customs union after brexit. the former malaysian leader denies wrongdoing in connection with a corruption scandal. ♪

manus: warm welcome to daybreak europe. a.m..10 a.m. -- 10:00 an upgrade and oil prices. more on that in a moment. , wehave equity markets bounced from recent lows yesterday on. that gave some released to the market. can we continue? we're coming down to jerome powell's news conference but also to those trade wars. will they go? that is the question for markets. you have macron tech being closed out of china. that really

expresses the principle of what is happening in trade. it is the fourth of july so a lot of u.s. bond traders will already be in the hamptons. futures are open. slide ever so slightly on the u.s. equity futures. really begin to see the number of articles being written about he built and the lack of demand, that is one of the great debates out there in the market. you are seeing prices fall, yields rise. pmi anonymous day for italy, spain, germany, the whole of the euro region. may movehat made -- the bond story more than we see during the start of trade. anna: let's have a look at some of the breaking news out of london.

on track numbers coming through. they say they are on track to a treat to hedge a million pounds worth of cost trading. combining these two big retailers to take on the big giant that is tesco. that is the bigger story around the backdrop. is likely to show that st. mary's has lost market growth. it is coming from a position of weakness but certainly on track. let's talk about the risk radar. is closed because of independence days. let's have a look at how the market is doing with that in mind. many traders are out of the action later in the day. asia-pacific down by 2/10 of 1%. a little bit weaker in the asian session. bit of stability coming into the currency.

this is the cmh for chinese offshore. 6.63. we had moved back away from that level. a little escalation in the chinese currency as a result of the pboc comments about the economy. they said it was all to do with fx forces. brent price of crude in as well. approaching that $78 per barrel mark. was talking about how $85 is now their forecast for 2019. we will be speaking with the european commissioner for migration, don't miss that exclusive interview. the migration story, european politics still part of the conversation. as get a bloomberg first word news update from juliette saly in singapore. juliette: theresa may is said to be facing a's fresh showdown

with her. sources, herthe colleagues wanted to explain more clearly how a new proposal for the uk's future customs regime work. some pro-brexit ministers are concerned the plans could keep the country changed to the eu permanently. former malaysian prime minister to printed not guilty charges of corruption in connection with a multibillion-dollar scandal. appearing in the country's high court, he was granted of veil of one million. the x-ray minister could be jailed for up to 20 years and fines. the x prime minister could be jailed for up to 20 years and find -- fined. watch some of the independence day fun tonight with her exclusive live coverage

of the boston pops fireworks spectacular. that is at 1:00 a.m. london time. global news 24 hours a day on air and at tictoc on twitter. powered by more than 2700 journalists and analysts. you can find more stories on the bloomberg at top . we have seen the yuan gain for a second session following the comments from the pboc late yesterday. a little bit of stability coming through. you have a lot of feeling coming through in hong kong and china. of theust closing session weaker by a third of 1% on yen strength and we is in australia. -- weakness in australia. index holding at october lows. a lot of focus on the u.s.-trade dispute as well. to u.s. has allowed zte

resume some business activities. you have seen those shares get back some of the earlier gains. umc in focus after that court ruling in its favor with micron technologies. it was tracking higher in taipei. to the upside, we have seen a lot of buying come through in telco stocks in the region. saying its battered shares have artie factored in the company's profit forecast. a few bright spots. some of the korean farmer stocks , generally down. anna: thank you very much. has foundank of china to keep the yuan stable and not use it as a weapon in the trade conflict with the united rates. we talked about that as the comments hit 24 hours p.m. -- hours ago. aging said it will place levies on an equal value of u.s. goods. now, good to see you.

what has the yuan been doing since the pboc tried to verbally support the currency? it has behaved as instructed, hasn't it? yuan has swung from a loss to again and has rallied for a second day in a row. sentiment has shifted. that is because a lot of traders are expecting that the market doesn't take the signal. the pboc will take tougher measures. the pboc has plenty of tools they can use. they can offload the dollars in the currency market. that is currency intervention. make.s a move they will that is going to burn a lot of

hedge funds. all theong-term, fundamental factors that were driving the recent appreciations of the yuan are still there. still have not found restoration for the trade, we may see more tariffs come in this week. expected,ry easing is the economy is still flowing. big of america is saying the currency will depreciate by the end of this year. manus: tell me this. the volatility we are seeing now, it doesn't shine with the level of volatility or panic that we saw in 2015. that has not seemed to happen thus far. what is different now to them? -- to then? are not seeing a lot of

panic in fx markets at all. some gauges of nervousness have spikes recently. there really front away from the levels we saw in 2015 and 2016. what good example is the offshore yuan three-year risk reversal. it has bite recently but is still at 1.1%, which was the far of 4.5% -- which is away from the peak of 4.5% we saw in 2015. the onshore and offshore yuan have been moving in lockstep over the past few weeks. that means there is not much bearish bend in the overseas market in the yuan. manus: thank you very much. latest on thery daily machinations of the yuan movement. good to see this morning.

we see this demolition derby take place on the equity of -- equity market. is the rock stopped for now? shaun: you have to look at what the pboc is saying. they have control over this currency. we may see a further depreciation based on what the dollar is doing. they have control map. if you go back to 2015, they were changing the regime in the way they manage money. regime.o manage now they have a manage regime managing its flow. look at the recent appreciations. it is about 3%, exactly what we had in 2015. i wouldn't expect much more significant depreciation on the currency from here. anna: you have faith in the pboc's ability to control this? , either youg believe that the pboc allows the currency to weekend and then can stop it from weekend -- we

getting, or you believe it is market forces. and then you have to doubt that they have a control that they want us to believe they have. shaun: this is a very small adjustment. we only move back to the levels we were in february. we had quite a big appreciation in the yuan. they have control over this. it looks stronger than it did in 2015. they did not have this big outflow going through. commodity prices are not falling. the pboc has control over the the -- the market. about the gender play here. are the stronger of the breed. they are stoic in the face of market turbulence. tell me why. shaun: we have a team who was looking at customer data. we found that women were four

times less likely to react to market volatility than men were. men like to play the market and think of it as a sport. women focus on their goals. we found that really strongly through brexit. anna: were women drawn to a different time horizon around trading? that just mean that there were not very many women trading minute by minute moves? women were focusing on their goals, what are they trying to achieve by trading? think, markets are volatile, i'm going to take my money back. very different behavior story. anna says on a daily basis, you have to think about the long-term trade. i listen. every single day. anna: hangs on my every word. manus: i do. i only change the gears on the show.

you have your hands firmly on the wheel. you are in charge. anna: not today. i have been up too late watching football. manus: that is a whole other story. how do i position myself for a good outcome from a trade dispute between china in the united states of america? do i sell autos? by tourism, by financial. honey position for a good outcome? shaun: german exports look great to us. emerging markets look cheaper. broad bm story, very cheap to execute. emerging market growth looks to be strengthening after a soft run. we would buy that global trade story and ignore the noise. anna: you are convinced by german exporters, even in a time where trump is threatening to but tariffs on european cars?

goal, weere is an end just what it is. we have seen it with north korea. some of this policymaking gets to an outcome. automakers have been trying to get together internationally. they want to come to an agreement on global tariffs. despite the strong rhetoric, or things -- there are things going on. anna: the endpoint is yet to be determined. our guest stays with us on the program. coming up, america celebrates independence day is the fed paces -- faces a big week. we will talk about what we can expect. of theyou can watch some fun tonight with our exclusive live coverage of boston pops, the fireworks that secular. 1:00 a.m. london time on bloomberg tv.

fireworks, music, celebration for the fourth of july. this is bloomberg. ♪

anna: it morning everybody. 7:19 here in london. it is 10:19 in dubai with manus. closed the united states for much of the trading day because it is independence day in the u.s.. we won't pay to much attention to what futures tell us at this stage. european futures are part of the story. down by a quarter of 1%. we will keep an eye on those because the asian session has been a little lackluster. we did not see the selling like we did yesterday. a little more stability in the chinese currency. let's get a bloomberg business flash with juliette saly in singapore. juliette: the ceo of --

following almost $3.5 billion in losses. more jobs may be cut and jet orders are in doubt after a six-month review. he told manus that demand for travel is higher than it has ever been. failures,ill be more that can began teed. there will be failures this year and next year. there will be more startups this year. there will be more startups next year. the key take out for me is the fact that there is more demand for travel now the numbers ever been. a chinese court has banned chip sales by micron technology, cutting the american company off from the world's largest semi conductor market.

according issued a preliminary injunction stopping macron from selling 26 products. a trade dispute between china and the u.s. that is engulfing industries from steel to auto an increasingly the electronic sector. zte resume letting some business activities while they way seven-year ban on the company. it did not come quick enough for them to win a bid in italy. the chinese firm lost the deal because it is barred from buying u.s. technology. contract went to sweden's ericsson instead. that is your bloomberg business flash. anna: thank you very much. it may be the fourth of july but this is still a big week for the federal reserve. job data is due to be released on friday. investors could get clues on the

next move from the world's most important central bank. ramping u.s. treasury up bill issuance, the front edge of the curve is set to his stake stage ino take center the second half of the year. many top about the nuclear option for china, buying fewer treasuries. we focused on the issuance of bills because that is what we have been talking about this week. do not expect them to press that nuclear button in china? many guests say they won't go there. shaun: i think it is an extreme measure for china. it would hurt china as well. treasury prices would fall. it is quite the nuclear option. china could use more qualitative measures in this trade dispute rather than the tariffs themselves. that is a big concern. u.s. treasuries give the amount

of supplies necessary. we're about to go into earnings season. and abrupt the numbers this morning. -- anna broke the numbers this morning. where are we going to see the strongest uptick to growth and delivery in these numbers? emerging markets have their own challenges. what is going to be the strongest earnings season as we get the reports? shaun: i still think it is going to be the u.s.. q1 had very strong numbers. there is expectation that the earnings should be strong. japanese earnings look quite well -- quite good as well. our favorite pic is the u.s. at the moment. u.s. stocks have free--- reevaluated. stocks look averagely verily -- value. are the earnings

expectations that manus was talking about. how much you expect the trade tensions to keep a deal -- lid on yields in the united states? i have a chart that shows one gear change in treasury yields outpacing the long and. the short and that is reactive to fed policy. talk about how maybe it is the trade concerns keeping a lid on those longer-term yields. is that your view? shaun: it is. there is small risk aversion in markets. we are deals being question down. it is unsettling investors. bullishness about global markets in particular, it is not surprising that you see yields down. if we start seeing inflation weping -- creeping up, if get a big print on jobs on friday, we did see yields go back. anna: ok. manus: it is interesting, we're

up.ng wti pump the breakevens in the united states are coming back a little bit lower. we're still not seeing massive breaks or animals. reflation stories are we? all the pressure is in real yields. there are a good hedge at the moment. we are seeing quite a lack of inflation pressure, despite a tight labor market globally. unemployment rate is below the natural rate, we are not seeing a pronounced pickup in wages. the inflation outlook still looks reasonably good. we are still almost in the goldilocks scenario. anna: you said you are still buying it's the globalization seen despite the threat. does that extent to what u.s. industrial, what many of the

markets are making a storm in a teacup? shaun: we like u.s. tech. i think it can sustain those margins. we still like the u.s. market as a whole. we still see rates going up into the middle of next year. thank you so much for being with us this morning. markets are set for long lunches , u.s. equity futures are open and trading. not a huge amount of value put into those. we wait for the powell commentary. will the stability in the yuan carry through to markets? it is all about the pmi in europe. anna: we get pmi data later on. we will wait for those minutes tomorrow. a quick word on steelmakers in

europe, we have seen the chinese with an environmental blueprint about the curve in production instill in china. that is seen as something that could lift european still producers. this is bloomberg. ♪

guy: good morning. happy fourth of july. welcome to "bloomberg markets." open." "the european cash trade less than 30 minutes away. china focus. chinese stocks continued to slide. macron aggression. china temporarily banning sales from the u.s. chipmaker.