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good morning and good morning to daybreak europe. straight to the news coming from credit suisse. franc's, a swiss beat on the estimate of 5.35 billion swiss francs. coming it at 1.3 billion swiss francs. pretax,uarter adjusted the number coming through -- 1.2 8 billion swiss francs. 1.06t on the estimate of billion first francs.

the global economic outlook and thesitive second quarter is coming through at 12.8%. of this, allw all the commentary on real-time in this earnings release from credit suisse laments the tliv blog. markets iss on the ieaking around the margins, flex ability on bond operations. the markets have read this as a dovish deciduous. the yen is following in the dollar strengthening but now unchanged. the market digesting the news come at a fighting where we go from here. the 10 year treasury yield because we knew whatever the doj when did would have repercussions. we have seen the 10 year boj yield dropped significantly.

we are down about 10 basis points, or basis point earlier with a 10 year yield retreating even more. 2.944%. weakness in the asia session, japanese shares leading these losses. the u.s. closing lower yesterday and the tech stocks dragon the same. then affect beloved city date average. coming up, we will hear from the ceo at 6:45 a.m. and we will talk exclusively with is the banks in europe and andy halford. gaining in hong kong after the results but now let's go to singapore with julia solly. juliette saly. te: donald trump is says he's willing to meet his willing counterpart rue son ronnie it with no preconditions as tensions within the country's

clash following his decision to draw. later, official saying the administration does not expect tehran to seek a meeting. president trump: anytime they want. it is good for the country, good for them come of that for us and good for the world. no preconditions. if they want to meet, i will meet. juliette: u.s. treasury department has said government borrowing in the second half will jump to the most since the 2008 financial crisis. as america's fiscal health worsens despite shrinking economy bit of the treasury expects to issue 329 issues and bt, theble de fourth-largest total in record. china's of visual factory gauge weekend in july has credit conditions.

the volatile currency eroded conference in the sector. the manufacturing burger just index fell to 51.2 in july 2 55.1 in june. the view my covering services and construction stood at 54, compared to 55 in the previous .onth you can find more stories on the bloomberg. we are seeing general weakness coming through. the hang seng up a one half of 1%. fairly flat heading into the last hour of trade. most markets are tracking lowest in the recently mix with a third consecutive session. this big fella is going through in the 10 year yield after the bank of japan said it would upward of don't moment.

tencent continuing to decline and overall and the hansen ingots. they did say that terrorists are standing - tariffs are standing by. across the straley and china up 7/10 of 1%. meredith. mara thank you so much:. u.s. president donald trump said he is willing to meet with his iranian counterpart with no preconditions as tensions between the goodridge is are flying after the withdrawal to from the 2015 nuclear deal. the white house appeared to walk back to comments with an official administration. is something we are keeping an eye on from overnight for looking at credit suisse, we want to bring you those numbers in update what is happening to the second-quarter

revenue number. francs,ion swiss beating the estimate. it is on track to achieve the 11%. basically, you can follow all this on the blog which we have on the bloomberg for you. all the commentary coming to rest we have the numbers and analyze them as well. the bank of japan. this has been keep her markets in the morning. it left its interest different. they will maintain the 10 year bond yield market at 0% but will be more flexible in bond operations. the longest wait since september 2016 with yield curves control what was announced. kathleen hays joins us live from tokyo. good to see you and thank you for joining us. it seems like tweeting around the margins but what were the important tweets to pay

attention to? think thewell, i vanity tweets around the margins, but the fact that the bank of japan has make any kind of change in the policy that has been in place since the governor came in and put that in place is significant. i don't think we should downplay that. the flexibility in bond markets oneations, was the big going in. including think bloomberg news. the 10 yearllow yield to go maybe above 0.1% because of the negative side effects this was having on the that came through even though there was a big debate. that is why they had the debate one hour longer than usual because they have to come to a decision and had to communicate

it. topicsuld rate the because of distortions. is whatvery important they were looking for, something do with markets, not so much keepbility -- they will this depending on the economy but extremely low rates for an extended amount of time. that is the forward guidance a. it will be around for a while. dissenters, there were platonists on the board. one of the new deputy governors, he did not dissent and went along with the consensus. >> there will no doubt be lots of questions for governor kuroda. what is the likely to be asked at the news conference? he is certainly going

to be asked what does this mean? why now? what has changed? are you more concerned about banks, a bond market with no liquidity? no trade. whether it is hawkish or dovish, a very significant former boj about what they did and what it means. let's listen. think mr. kuroda will make clear that it is not expressive. policy andning the what is attainable to create the environment. kathleen: that is the interesting twist. by making a change, allowing the 10 year yield, although he would say he would go higher or lower

than the zero present a level but going higher than it has -- what others are saying and what he expects him to explain his we are making this change because we have cut are explained -- inflation forecast and we are not at 2% but we have to make that monetary stimulus to get there so you can see this as a dovish step. that is what he have to communicate. >> the markets seem to be reacting. kathleen hays, global news editor, thank you. onset ins is julian, london. good morning. thank you for joining us. skeptics might say this is the boj testing the markets in the muchweek and did not do but the flexibility around the 10 year yield. what does that mean for markets? julian: i think people were looking for them for two tweak.

and have delivered on that delivered from much or correspondent said on etf's. i think to takes from the markets. the market is looking for them to have the inflation target 1.5% wish that have . i would agree in this is slightly dovish but it is not tightening because we have had lots of debate around the world on europe, the u.s. is tightening with japan following suit. the message day is not. down in the0 year treasuries down but we have seen some curves flattening if you look at the tens. willoughby curbs steepening going for premier even though the initial reaction is planning? the market anticipated

the move but it would be very helpful of the curve steepen slightly for the japanese banks and it is interesting globally, we have seen this rotation going on within the growth and momentum of stocks earlier in this of is the catalyst to see people rotating out of those moving towards cyclicals. maybe the tectonic plates are shifting and this is one of the smallest. nejra: does today's decision-making more equitable? jullian: we have like them for a long time and i think the market as an on and off love affair with japan. everybody would love to own japan and see the market do well. japanese manager -- a gradual

build. japan is changing but it will take some china. was if we thinking got a more hawkish reaction and talk global yields rise, we would see japanese investors repatriated back into japan but what we are seeing now is something different and i am wondering if to today's decision means the 10 year treasury yield is less market yielding. jullian: i think that the treasury yield is going to be dealt trump's views on trade and we will talk about trade later. the reaction to whether or not trade drives in the short-term the stronger dollar, the t -- tariffs have an effect on the economy. the market will be focusing on

the treasury. the reality, how strong the u.s. economy, has great gdp numbers and donald trump has taken that forecasting economic growth. it is going to be strong for the next quarter. that is what markets will look at. nejra: all right, julian chillingworth staves with us. we have policy announcements from two more banks. tomorrow, it is the fed with the boj next week. will apple earnings be enough to keep tech investors afloat? this is bloomberg. ♪

nejra: getting monetary policy back to normal. nejra: 6:18 a.m. in london. 1:18 p.m. in singapore. we have weakens in the tech stocks. a big drag on the asia benchmark. japanese stocks underperformed

somewhat after the doj decision. let's go to singapore were juliette saly has more. : credit suisse has posted second-quarter revenue that be the highest analyst net revenue came at 5.6 billion swiss francs. we will bring you the interview at 6:45 a.m. u.k. time. bill winters is getting closer to meeting his targets for the bank. estimates-based beat from the first pretext profits at $3.25 billion. in return climbed to 6.7% the bank as confident of reaching at 8% targets in the medium-term. cfo joins us for the exclusive interview at 9:30 a.m. u.k. time. the slowdown is starting to take a toll on samsung electronics.

the south korean company's net income fell short of analyst estimates as the sluggish margin hit demand for the galaxy services. the results reflect samsung struggles ensuring its mobile business, despite resilient demand for that memory chips. that is your bloomberg business flash. nejra: julius sally, thank you. investors rushing to invest in u.s. tech stocks. and itdaq dropping started with facebook last week which saw the biggest market cap slump in history. go investors get a break when apple reports today? joining us now is shelly banjo. good to see year. it seems expectations are quite high for apple this time around. shelley: people are hoping that as expected,in

15%, showing another quarter good growth this year for apple. maybe a little break from all the madness and the rest the tech sector. nejra: and the iphone growth story comes to a close, what services are expected to drive growth? shelly: that is exactly right. we saw with samsung, other companies -- phones across the world are really starting to see a slowdown and it is affecting a lot of be businesses data apple has been counting on services like apple music, streaming, the app store, things like that and new products like home devices to pickup some of the slack. that is not as big of the business as the smartphones so people are going to continue to keep a close look on what is going to happen with that business by the services are showing strength and promise.

nejra: re: expecting to hear anything about the impact of the trade war an ample supply chain? shelly: i think that is what everybody wants to hear. apple's dead set in the center of this trade war. 20% of the business from china. they make their products in china. they have the second-most number of stores in china. if china or the u.s. really wanted to make a statement in this trade tensions, apple is the perfect lightning rod. we have not seen up a really talk about any issues they have had. tim cook has talked against tariffs. but we have not seen anything in the game yet as we have seen other companies like cte. thank you so much, shelly banjo in hong kong. julian come i have a very simple chart showing the nasdaq dipping

below the 50 d moving average after the losses we saw yesterday and tech providing a drag in asia. it is a technical chart. do we see further losses in tech stocks? jullian: i think it is not surprising overall that people have been taking profits. you have done well this year. people were slightly looking forward in the opinion to take an excuse. one where weto be see the best in a number of companies coming through. consequently, as we were talking maybe that was a good catalyst to see people switching across the word financials. nejra: i want to take a quote from morgan stanley, they said in a note that a just begun and the correction will be the biggest since the one we experienced in february.

it could have a greater negative impact on the average portfolio. the sin the next question which we can look at tech individually but what about the impact on the broader market? will it cause more generally in u.s.? jullian: i think it will interesting to see how the rotation goes but yes, we are undoubtedly in the process of seeing monetary tightening and european economies as well. this is towards the top of the cycle. it is no surprise seeing a good performance from the u.s. see profit-taking. and we will see this break in the nasdaq and that will exacerbate the movement in the short-term. nejra: would you stay positioned in tech a font individual business models?

jullian: tech is universal world that means it is a tech company wide brief that you need to take the individual stock and believe in long-term business models. they other companies they can invest in the future. companies like not all of things magna are talking about which is microsoft, apple, google and amazon. thee companies with business model is defensible and they can grow that and is not just driven by a fan. into will be growth areas electronic games and things like that. a lot of interesting things to look at but they are not cheap. if we see the rotation out of tech, what are the sectors likely to benefit?

jullian: i think, again, we have to debate today's numbers which were not great which is not good news. i think people will be looking probably to get more defensive. in the dual bulls space, you have to be careful because there are companies with a business model is not built for the 21st century. they are not the brands of that millennials and generations want to buy into. people investing in the brands have products people want to buy and moving the times. nejra: julian chilean with stays with us. up, alex schneider joins us with his first interview the day. ,e will talk about earnings business models and talk a little bit about cost on the sector and also, worse, is you on where the oil markets go from here. lots morning's to get to from the day later as well.

we will see from the credit suisse ceo. this is bloomberg. ♪

nejra: 6:30 a.m. in london, 2:30 p.m. in tokyo. we are waiting for governor kuroda to speak. we have seen more reaction in the 10 year yield that has been dropping after the tweets around the boj policy. headlinenews from the -- second quarter, business etf -- 1.25%.nt to pu that seems to be the main number the the market is focusing on. at 8.1 8arter revenue

billion euros. a slight miss. 2018 business if you growth at 3.5%. he joins us for an exclusive interview that question in with the markets and here is emery. >> the bank of japan dominating the news. in terms of equities, the announced more etf's. it is more under pressure. the nikkei and relatively fresh. 1%nland china, down 2/10 of after the factory gates dropped. moving on, more on japan. the 10 year yield and the yen falling. it is going to be showing how

much the bank of japan actually owns in terms of government debt. that is what the bank of japan holds in terms of the jgb market. the 10 year yield at 0% but in flexibility in the bond operation. it has been another big day for tech earnings. samsung and apple, 22% of this smartphone market samsung has the income next. what this doesn't show is the competition from many of the like whilepetitors way and xiaomi which are threatening samsung and apple in the smartphone space. nejra: thank you so much. as for the first word news with juliette saly.

japante: the bank of delay its key interest rates unchanged while announcing policy tweets including a shift in purchases and exchange traded funds towards assets linked to the assets and flexibility. the sacrament bank said it would reduce the amount of bank reserves subject to its negative interest rate. to maintain the current extremely low levels of short and long-term interest rate for an extended amount of time. donald trump has said he is willing to meet his iranian counterpart with no preconditions. that comes as tensions between clashod countries following his decision to withdraw from the 2015 nuclear deal. later, the white house walked back those comments with an official saying the administration does not expect to ran to seek a meeting.

president trump: anytime they want. it is good for the country, that for them, different us and good for the world. no preconditions. if they want to meet, i will meet. juliette: factories weekend in july as kalanick credit conditions and the volatile current eroded confidence in the sector. the manufacturing purchasing manager index fell to 51.2% in july. that was lower than the forecast by economists. pmi stoodufacturing at 54 which was compared to 55 in the previous month. global news 25 hours a day on air and at tictoc. on twitter in more than 120 countries. nejra: in singapore, thank you so much. let's have the latest on what president donald trump said about iran and oil. julian is still with us. other dynamics in the market

affecting the oil rise. what i found interesting is how oil has outperformed you to date compared to the broader commodity market. how clear is the path? jullian: i am not sure it is that clear at all. the price has been better run by politics. thewhat is happening in rebels and the saudi's. that is why we had that last .eek the market will react in a with donaldy trump's message of possible talks that i think the playbook and tries thewn of them around the table and claims success. how it works and i am not sure the iranians are going to give a great deal with any talks with the u.s. that we

will have to wait and see. quite a lot of pressure on the world. you can see the market being quite volatile. us nowcal says with lundin petroleum just breaking and sticking on the oil theme. it increased its production guidance. joining us on the phone is alex schneider. interview on second current earnings. nice to have you. thank you joining us. meat andarter eating you have also reduced your cost guidance and that is what i want to ask about how have you managed to reduce those costs? lex: please with the results, very high production efficiency. posted high we have

on the upper end of the guidance for the first half. average's role of this hot productive efficiency, they have seen guidance from what used to be 74 to 82,000 278,000 282,000. very please with those results. i want to get your outlook on the oil price. ?elp clear is the path alex: first of all, they high demand in the world's on the and of the strong economies we have seen discipline from the opec members and that has led to reduction of the strengthening of the old price. we are in theward level of $70 plus and we will stay there. if they can put

ceiling limits against they have shown europe the year, the ability to continue to grow. what we've seen is a lack of investments during low cycles and that will have an impact on the supply side. nejra: with that well above $70 a barrel, if you are experiencing and generating significant free cash flow. cash?rgaret employment and on: that is correct the back of the phenomenal growth. we have seen production quadruple and we have a scheduled project, it is going to come on stream by the in of 19. the company has seen a

significant development in the production and the ability to generate cash flow. deployment, we are going to focus on the growth and spend capital for the existing projects. redistributed product. it worked on the first three we have mades and it very clear this has to be sustainable and we have intention to grow. million and next year, we have stated it will be at least $350 million or more of cash dividend and this will be sustainable. we talked about how you managed to bring them count but are you seeing signs generally the big oil industries is rising?

alex: good question. i think lundin petroleum has shown it is one of the record up rating costs. we have posted $3.3 per barrel. you will find very few companies with the low income comps. it is a combination of very high quality assets in taking advantage of the market. general, there will be a certain inflation. pressure don't see yet but it is possible as the old price goes higher, there will be pressure. nejra: thank you so much, alex schneider, joining us for his first interview of the day. coming up, interviews you don't want to miss. the conversation in just a few minutes. atexclusive with the cfo

9:30 a.m. u.k. time. this is bloomberg. ♪

nejra: credit suisse reported second-quarter earnings. zurich frencha in within interview. good to see you. francine: we spoke of what the results overall. the downside maybe on the global markets. expanding to me why it is unfair to compare them with rivals because the different strategy and global markets to support the rest of the investment bank. it is there to support the wealthy clients. off, thes paying highest estimates when it comes to new moneys but it also comes

to the international wealth management. i asked him about scale. he is happy with the business is. this is the 10th quarter out of the 12th quarter. here's the chief executive seeking to me in zurich earlier. outsource.can have it is the revenue between the lines. you will see us making much more money. that is what you see today. the amazing recovery. profit so, it is a natural thing. more recovering, incurring to come. have tradeou tensions, possible shutdown --

equity valuations. > we are supposed to get the numbers today. when we started three years ago, the markets trading was the 9% of the profits. moving from a to b was key because today, we look at markets and trading -- it is driven by wealth management which is much more stable and much more predictable. absolve productivity. be there because they can grow. 17%, that is huge and they can go because they support that. --ther important result is in thetructuring unit in

end of 18 targets. and 40 --getting we're at 10 and 39 off leverage. done structurally. and it is so small that we can stop weighing on a results. financially, that is important. it contains more than 30 million. there were losses and 19. if we continue to grow, make the assets 7%, very few banks grow revenue. down 5%. that is positive.

the seventh quarter in a row we have positive growth. it is a trend but doing it quarter after quarter is very powerful. ,ore than $4 billion of profit raising revenue and reducing costs. it is going to add to our profits. once the funding truck, it is not necessary anymore. nejra: what about global markets? tidjane: global markets, it is a better.art of making it we don't think that is right. the global market tragedies not to maximize the standalone global market revenue. it is to use global market to power the division. 8% and that is

because we keep it under a strict cap. we could change revenue and have more capital and then you would taken alts but we have path which is the use the blue markets to serve our clients. that is working very well, . that allows us to your profit. more important government it therates a lot of -- and universal bank but it would not be there without him. and it is embedded in the outperformance that is key. we are not going back in time to find comparables. idwm -- n time did h

tidjane: we have created a joint venture between global markets. that is working extremely well. 25%. nejra: asset management? do you need scale to capture the passive investment? tidjane: we are very happy with asset management. profits are 25% year-over-year. we have untold stories. asset management was focused on serving the flows. what have converting proportions. --y are primarily serving when the create a new product, we will typically raise it. selling it. veryis very good and

profitable business and recurring income which is high-quality revenue and recurring income. very pleasing. the cost is still there. markets andto the comments. nothing could be further from the truth. we understand the difference between gross and net. i sent gross targets that make room for investment. you see 7% in the near-term a lot than expected. general a lot of expenses. and thea new system

understand.stry to sensitive on hearing we are achieving by not investing. tidjane talking to francine lacqua. it seems in the final stages of turnaround plan, he was francine:.up the he was pretty upbeat. to expand thet global market that they are executing. it is think orders into a 12th quarter restructuring plan. cost control, everything is fine. we see the expectations. the million-dollar question for

investors is is that the business model that two to three years on the line that was to work and the main question, is there a big market downturn, what impact? do outflows can anticipate because people freak out if there is a big market move, something we explored also. nejra: thank you so much, francine lacqua in zurich. let's get some final thoughts. you heard a great shot by francine. ifdering on credit suisse the final stages of the turnaround plan, is he giving investors enough reason to stay with the stock? jullian: as we briefly were discussing, people were quite cynical and when he laid out the plan, quite a lot of skepticism on whether it would work. today's numbers demonstrate in has worked. would share some clauses that

led to the downturn and how they whether that storm. to really prove that the model is going to work. it is a very different model and he turnaround a bank into a wealth manager and asset manager with product which is a much more profitable and stable business. let the hell it pans out. nejra: india bank has a potential market downturn. which break in the european region would fare better? jullian: i think you have to think that any of the banks that still have high dependency on trading active are going to suffer again. so, i would say to you, gina downturn, you want to make sure you have a well-funded bank with haveassets, banks that beaten to your one ratios and you get banks that is north of 10% and banks that are not too dependent on trading at the. nejra: is it positive generally knee-jerk plant in the u.s.? in the u.s., yes.

we like the west bank state of we think they are important and researcher in and a strong position. in europe, there is work to do. the last few days, i mean, we have had some pretty mixed signals. i think the european banks have a lot more work to do to sort out the balance sheet and cut costs. nejra: looking at the earnings season, is it an in bull market inequities? jullian: i think the market is coming to terms with the fact that assets very early on, u.s. earnings probably, this quarter will be the best the season. but i don't see a massive shakeout in markets. but i think markets will adjust

but outthink investors will be too concerned. the adjustment, a meaningful correction or a little bit of volatility? jullian: a little bit of volatility but a little bit of downside and i think people will move on and frozen rope remain reasonable into 2019 as soon as donald trump will predict the next quarter. nejra: thank you so much to julian chillingworth for joining us. he will be joining us on bloomberg radio today break on london to carry on the conversation with our colleagues. on banking, anyhow for joined just for exclusive for you on 9:30 a.m. u.k. time. next, second-quarter earnings and nest estimates with revenue whong estimates on the ceo

joined us for an excuse of interview next. this is bloomberg. ♪

>> reporting the best pretax profit in three years. telling bloomberg that he is happy with levels of growth. >> are performances driven by wealth measurement which is such -- much more stable. we can then absorb [indiscernible] tweaking targets, cutting the inflation forecast for the next three years and says it will allow movement. the yen and 10 year yields fall. the sector is the biggest drag on asian indices, can it become

the first $1 trillion company? nejra: good morning. as we wait for the european equity market opening in an hour with will bring you some breaking news, a lot of company earnings coming through so let's talk through honda, it is hosting its full-year operating income view. missing the lowest estimate on that first quarter operating income. coming in here for honda at ¥299.38 billion. the estimate on that first-quarter operating income 253.75 alien yen. we are seeing the beat of operating income. ¥710 billion,e at it did see ¥700 billion before so that outlook is rising,

lifting its full-year operating profit outlook two ¥710 billion is a700 billion yen, that key headline coming through. it is going read on the bloomberg, we have some numbers coming through from sony. going to quite a few of these japanese companies. listing its full-year net income forecast. if we look at sony first quarter, coming in at ¥195.01. beach on of 145 so a -- a beat on operating income. it is keeping its full-year operating income output the same and the expectation is that it would rise. that is what we are seeing from sony and moving on to bp, we have a lot of numbers to digest. from the oil major bp, we have debt, $39.3er net

billion and then the second number,adjusted ebit $5.4 billion area the estimate was $5.12 billion. for bp. quarter, coming in at $7 billion and it sees four-year organic capex at $15 billion. it did see 15 to 16. and adjusted net, $2.82 billion for bp. eating the estimate of 2.66 alien dollars. equityook at how the market open might look like. we are seeing weakness in asia and weakness overnight in the u.s. with tech shares providing the biggest drag and the u.s. and in asia. it looks like we will be unchanged in the european session, going nowhere on the ftse 100.

that and cac 40 futures. some of the losses we have seen in double equities will turn around when it comes to the european session. u.s. futures are pointing higher. up .2 of 1%, seem for the let's switch up the board and take a look at fixed income. this has been interesting. down, year jgb yields after tweaking from the boj saying it will be flexible with the tenure target. we have seen the 10 year treasury yields drop four basis point and that matches what -- what we are seeing with the bond futures. also on o.a.t.'s, we could see yields follow the tenure jgb yield. we saw a similar thing yesterday where we saw global bonds yield they look likem, they will be falling in tandem. we heard from credit suisse, shares are up 3% in premarket trading and we will bring you

interviews with bob dudley and two interviews. let's get the bloomberg first word news. u.s. president donald trump has said he is willing to iranian arabian -- counterpart with no tensions. tolowing trump's decision withdraw from a 2015 nuclear deal. there white house said the expecttration does not to ran to expect a meeting. they want. anytime they want. it is good for the country, good for them, good for us and good for the world. no preconditions. if they want to meet, i will meet. juliette: the u.s. treasury department said government are we will jump to the most since the 2008 financial crisis.

america's fiscal health worsens despite a strengthening economy. they expect to issue net marketable jet -- debt in july through september. that was the fourth largest total on record. factory gaugeal weekend. -- confidence was eroded. in manufacturer -- falling july from 51.2 in june, lowered in the forecast i economists. not fracturing pmi stood at 54 compared with 55 in the previous month. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . a little bit of a turnaround in late afternoon trade area did chinese markets turning around somewhat. the csi 300 flat.

japan closed out the session flat. we did see quite a bit of a movement coming through in the end. that fall coming through in bond yields. following the boj saying they would allow upward and downward movement in the 10 year yield. a story is market has closed higher by .251%. some weakness in some of the e.m.'s, india snapping the street -- streak. if we have a look at stocks in detail we happened focusing on the fallout of the bank stocks in the u.s. once again tencent leading declines in the region in terms of tech and the hang seng, off by 2.6 percent. samsung electronics second-quarter numbers were a little bit disappointing, up i one third of 1% in late trade and we are watching india's largest airline because it is falling to the lowest in 16 months, rising fuel prices and a weaker rupee. to $4 fell by 97%

million. yield hasan's 10 yearurop dropped five basis points, the most since june 2016 in the session so we are seeing some market fallout from the bank of japan's decision. it left key interest rates unchanged while announcing policy tweaks. that is something we want to talk about with our guest, to more of the world's biggest central banks are scheduled to make policy announcements this week, tomorrow it is the u.s. federal reserve and on thursday the bank of england announces its latest policy decision and governor mark carney gives a news briefing. now joining us is the fixed income portfolio manager at jpmorgan asset management. great to have you with us. it seems the markets have taken this as a dovish decision from the boj at least for today. 10 year yields on the jgb

dropping but will we see curve steepening further down the line? diana: the market has been expecting to see a more explicit guidance on where the tenure target was or perhaps a bit more information around how much was willing to tiger -- tolerate. we have not got back in the statement, we will see what the governor comes out with at the conference. but i think ultimately, this is positive for yields, we think it should be supportive for bond markets because the boj has committed to keep rates low. nejra: what do you want to hear from kuroda when he speaks? diane: we would want to hear with that range is, what they are looking at. they will keep 10 year yields and allow some flex ability around that. markets will want to understand what that flex ability looks

like, is it plus or -15 basis points or -- ultimately that would have a significant impact to other markets. want to bring that onto global markets because what we have seen seems to be providing a drag on the 10 year treasury yield, down almost four basis points and europeans bond yields moving lower. as long as the bank of japan stays its course with its monetary stimulus, will that provide a drag on global bond yields? weit has and it is something have been arguing, we think the strength of the u.s. economy does not warrant rates being where they are. rates should be closer to 3.5, we should look at gdp, inflation, etc. come about because you have this build -- bid for a yield that comes from the policy rates it is hard for us to get there. in a rapid manner. while the boj is keeping rates anchored, it will be a steady

-- higherrhaps with as the year goes through. thea: you have a call on treasury yields of 3.5% to 4% over the next 12 months. how will he get there with these global dynamics? later second half in midyear, we have not seen the full impact of the tax cuts in the u.s. economy and we have seen this morning the markets also digesting the news on the treasury issue on the second half of the are which is significant, the second highest since 2008. you have less support coming through from the european central bank. that should allow the u.s. to reprice higher. nejra: does that mean we will see curve steepening or an end to the flat rate?

diana: we will see a little bit of steepening but it depends on where the issuance will be, which point of the curve the u.s. treasury targets. it is concentrated on the front end, it might be slightly more of a range bound rather than outright steepening. fora: what does this mean corporate's, where do you see the opportunity and the corporate space fixed income question mark diana: in the corporate space, we think the reasons for [indiscernible] has provided opportunities in that area. we think u.s. high yields particularly when you look at things such as leverage and the earnings season we are going through also provides interesting opportunities within emerging markets. we are starting to see how much value has been created in some of our space. particularly when you look at the latin american markets where -- corporate's in argentina

underlying earnings look robust. opportunities have to be selective. nejra: are you saying the u.s. equity market tell you one thing where high yield is telling you another, equity markets are saying late cycle and high yields say made or -- midcycle? a: there are areas in some sectors of the european market where the balance sheet is not as robust as it could be. we have -- within the u.s. sector the high-yield area has been delivering. that trend of delivering is youct whereas in the u.s. will see a bit more of the late cycle. nejra: thank you so much to oa, great to have you with us.

let's turn back to earnings and estimates. revenue slightly growing. joining us for an exclusive interview is the ceo of austria's largest bank here to discuss second-quarter earnings. good morning to you and great to have you with us on the program. i want to pick up on your comment on the annual revenue erste has promised to raise revenue and you talked about a slight increase, when might we see an increase that is more than slight? see an increase that is more than slight given our are up by 24%its and quarter on quarter, we are up 30%. i guess you could call that relatively good. to ask you about

the ecb, when should the ecb raise rates to have a positive impact on your business? andreas: our main interest income is raising for the moment, based on volume, although rates have not moved at all. i think we all would expect that we could see a rise in the euro rates towards the end of next year, that has been repeatedly said so by the ecb. our wish would be that this increase could come a bit sooner. inflation rate in germany has moved up to 2%. maybe we are in for a positive surprise. nejra: a positive surprise would be good for everyone. but in terms of when the rate

rise comes from the ecb, how long will it take for that to impact your revenue? adreas: it will be probably slight increase on the short end. it will -- it depends on what that will do to the yield curve. for a bank like ours that is ary deposit rich, we have loan to deposit ratio around 92. even a slight rate increase does good to us, we have seen that in the czech republic where we have several rate rises during the last 12 months that have a very positive effect on rni. if that happens in the euro, we will be happy. are positiveises for you in the czech republic, but what about the measures against mortgage growth in the czech republic, how much of a headache are those for you? andreas: they are not really a

headache for us area to the contrary. conservativevely vis-a-vis many of our competitors on our ltv and debt to income ratios. happening now does not hurt us at all. it is good for us. nejra: if the regulatory concern about overheating or even a bubble forming justified? andreas: i think they are justified. if you get into territory of double-digit loan growth, i have full understanding if regulators introduce measures to bring growth rates down a bit. rates ofe have growth a percent or 9%, that is still

healthy. it should not go much beyond that. i have no problem with that. been: your share price has outperforming the banks index and quite a few of your peers in europe. why do you think that is customer -- that is? andreas: basically the fact that we have a very compact strategy. we run very large banks in central and eastern europe. onconcentrate heavily commercial banking and retail banking. basically our loan portfolio is more than covered by client deposits. we have a rather conservative business model and in times like these, i think conservative is this models are doing better than others -- business models are doing better than others. we can be lucky on having maybe the best digital banking

platform in this region. i am sure you know it is called george and it is fantastic. nejra: i have heard about george. erste is known for its trade app. nejra: the biggest downside risk of -- that we have had under control, are we ourselves. for making room mistakes. you have to do a good job in order to maintain that kind of performance. being happy about your digital platform is one thing, but we have to invest constantly in it, competition is growing.

life is not going to get easier for us. one risk is simply the management risk that we have and the other risk is political volatility that has been increasing quite dramatically. that we cannot influence but we can -- we have to cope with that political risk. it is a time where i believe good managements can do a good job and not so good managements do not such a good job. nejra: thank you so much, erste groupchl from bank. let's get the bloomberg business flash. isiette: credit suisse giving investors reason to stay with the bank through the end of its three-year restructuring. second-quarter net revenue of 5.6 billion francs beat analyst estimates with the swiss universal bank doing better than expected on revenue and adjusted pretax profit. international wealth management

had profit of 461 million francs which was also about citations. >> the call for performance is driven by [indiscernible] which is much more stable and predictable. we can then absorb [indiscernible] bill winters is getting closer to meeting his targets for the bank. the london-based lender need pretaxes, set to trade, three percent. return on equity climbed 6.7% and the bank said it was confident of reaching it's a percent target. at --harters cfo joins us standard charter cfo joins us later. that is your bloomberg business flash. nejra: thank you. one of the uk's larger term builders returned -- reported first-half numbers, citing poor weather affecting revenue in the

first quarter but it will remain on track to deliver on 2018 expectations. joining us now is the ceo, peter redfern. good morning to you. how are you expecting to deliver on this 2018 expectations? p: 2017 was a record year and every expect -- respect. we expect 2018 to be higher on ims and margins. but in small amounts. the first half of the year is flat but we knew that and so no great surprise. if you look at where our book and, we can see the margins the weather issues we saw in march, we are catching up on and so we feel comfortable looking at 2018 as a whole. nejra: one thing making people in london are -- uncomfortable

is house prices have been under pressure. is that still underlying demand when you build homes, how strong is that? was a record sales race in every way. the first half we were about 3% behind. overall still a very strong set of market conditions for new build homes but we cannot ignore consumer confidence as we look at the next 18 months. it is not without any risk but if you look at all of that statistics and performance in the field, it is very good. nejra: how much of an impact could we get if we have policy tightening? we are expecting a rate rise this week. pete: we have talked about this before, we did before the first raise right -- rise. smallter-point rise, a rise which does not concern us. the impact on average markets, 25 to 30 point -- 30 pounds a

month. mortgages are affordable. , there is a we do general confidence in the consumer. about what is going on politically in the u.k. in a wider sense. nejra: do you expect the weakness in london to spread to the rest of the u.k.? p: i do not think i do. the weakness has been centered around the upper end of the market with a different set of buyers. it helped other buyers. a d-linke see quite market between prime central monday -- london market and the rest of the u.k. for the majority of our purchases it is a combination of confidence and mortgage cost availability, the latter remains good and the former is less solid than it was a year ago. nejra: how much of an impact could brexit have to the

downside on house prices? on businessesct as a whole are muted. not-- those factors do affect us directly. interest standpoint it ratesely to keep interest lowest for longer and that is the impact on our customers. it is hard to call. nejra: i have heard that you wanted to back off a little bit from central london. what is the progress? pete: that do not -- does not quite fairly reflected. we bought in central london after the market changed because we saw opportunities, we see that as a long-term place you want to be. there will be a slightly shorter business in the short-term. we can afford to take a longer stance and remain there, we have

a good team, we have good assets there are difficult short-term conditions that creates opportunities along with risks. nejra: you along with your competitors are one of the worst performing stocks on the s&p 500. what defines you differently that means investors will pick you? getting under the skin of every part of our business and modernizing, changing it in a creative way. we are doing an awful lot with our customers that will help sales rates and pricing. we are doing a lot around efficiency. we have had a strong performance for a number of years. we are challenging ourselves internally. , thank your redfern for joining us on set. that is it for daybreak europe. the european open is up next. they will be speaking shortly with bob dudley after the energy

giant beat second-quarter estimates. this is bloomberg. ♪

guy: good morning, welcome to bloomberg markets. this is the european open. we are live in london. i am guy johnson alongside matt miller in berlin. but: asian stocks are mixed more to the downside, the yen unchanged as treasuries gained, jgbthe real move comes in 's. the cash trade is less than 30 minutes away. guy: