>> good morning from london, i'm nejra cehic. this is "bloomberg daybreak: europe." asian stocks mixed after recent rallies. decisions fromey the south african reserve bank. pointing fingers, leaders warn the brexit clock is running out with no sign of a deadlock being broken. era, hending the abe set to be the longest serving near. bring you the latest, live from tokyo. ♪

nejra: good morning, everyone, and welcome to "bloomberg daybreak: europe." it's 6:00 a.m. in london. here is what is happening in the asian session, a mixed picture across the regional benchmarks in asia. .25%.ia-pacific up about i put the 10-year gilts in the risk radar and we are staying above 3% five times this year we have gone above the 3% level and pull that but for now we are staying there. a four month high on the ten-year treasury yield is not that far off the peak we saw in may. not only have i been talking about the 10 year yield but also the front end because that is worth noting. we've seen some curve steepening , up from a 20 basis point handle earlier in the week.

so it's worth talking about the entire curve but the 10-year gilts very much in focus. crude oil above $71 a barrel, up .8%, a two month high wti following of fifth we could drop on inventory data in the u.s.. a lot of times we talk about the 10-year gilts and we ask about the impact on equities. we did see some gains on the s&p 500 yesterday that we saw banking stocks outperform with those rates rising across the curve. sawtek underperform a little bit. direction ofny whether we will see divergence from the nasdaq are the s&p or anything later. we are still talking about the wrist to the global economy and we will discuss trade wars as well. and our guest joins us for a first interview after midday u.k. time here at something to look forward to in programming later. firstget the bloomberg

word news. >> european and u.k. leaders have exchanged warnings that time is running out to seal an agreement on brexit. need to decide they can break the deadlock before the deal is due to be completed. european commission president jean-claude juncker set of brexit deal was far away. the u.k. prime minister said she still stands by her plans. >> i believe it is the right proposal because it maintains frictionless trait. it's the only credible and negotiable plan on the table. >> canada says nafta talks and washington are cordial and constructive but there's no indication a deal will be struck this week. time buteements take

both sides are committed to striking a good deal. back to you. welcome back with more first word news in just a little while. let's check on the markets and asia with juliette saly. i'm sure you have been talking about the 10 year yield. juliette: absolutely, we have been talking about that and more in asian equity markets. we are seeing some gains coming through, asian stocks up for a third session. the nikkei slightly higher by about .25%. it has been fluctuating and technicals are starting show

that the nikkei could be overbought. those rallies we have been , but broadly it's a good session for asian stocks. certainly one of the front runners in the region. let's look at some of the stocks we been watching, an interesting ipo in hong kong, a hot market for companies to debut that it's been hit in miss so far this year. but the food delivery company is rising on its debut, it had a $69,ng price of hong kong up about 5% there. also watching the airlines in hong kong, after jeffrey said perhaps the worst is over for that sector new look at the headwinds from the oil crisis. and brick works coming a little bit under pressure, off by about 5%. market fundamentals remain supportive with new in-house

construction in those key states. that could hit the property market in australia. is a much, juliette saly in singapore. this selloff in treasury has taken the 10 year yield above 3% for the highest closing for much yesterday. it reverses a small part of the relentless curve flattening this year pushing some yields to the widest levels in more than a month. one ceo said the recent surge is not getting enough attention, aboutng yesterday financial media concern. joining us is the head of asset allocation, i'm disappointed that jeff gundlach did not watch me talk about the 10 year yield yesterday because i had charts showing it. i have a brand-new one for you today.

this shows the 10 year yield poised to break in whole 3%. five times this year it has briefly gone above and then pulled back. of one trend points to the upper direction, suggesting we're going to hold. are we going to hold above 3%? >> we should go above 3%, for sure. acceleration any in economic growth. inhave a negative momentum the u.s. and europe and even in the chinese economy. so economic growth [indiscernible] no inflation, no economic growth, something is going differently as far as liquidity. central >> are you know and the

are supposed to inject less and less liquidity compared to previous years. it should continue over the long run. just to give you another target, u.s.,ect 4.5% in the which is phenomenal gdp growth. [indiscernible] nejra: what does that mean for other assets? you could argue the reason this time that tenure yield about 3% has not got much attention is the fact that we are still seeing money moving into em, the dollar has been a little weaker as well in recent days. as long as the 10 year yield doesn't pose a threat to other assets, we can live in -- live with it at this level. christophe: we deftly can live with it at this level,

especially as long as economic conditions are reasonably good for business for investments, especially for corporate investments but also for housing investments and for individuals. to keep the momentum in the economic growth and to avoid any shock on the economies for the all first but also for economies on the planet europe.g it's supposed to tighten monetary policy from the beginning of next or. china is a different story and different dynamics. saul central banks -- central banks will rip -- so all central

banks will remain really to economic growth. nejra: talk about the 10 year yield but we have to focus on the front end as well. the two year yield at a tenure high and you go short than that and see the money market yield continues to grow. how would you be allocating in a portfolio now? would you favor equities over bonds, do you like cash over equities? christophe: if you look at our tips relative to bonds, for sure we prefer equities. as long as we have rising interest rates, what you expect is a total return from the bond market. comparisonout it, no , we prefer equities first. haved, the reason to portfolios diversify, you need to have bonds including yes

treasuries just for protection reasons. it could come from a trade war or any political issue somewhere in europe. .hat you need is protection this is the role of u.s. treasuries. nejra: we have some breaking news, the japanese prime minister has won his third straight through your term as head of the ruling liberal democrat party. this sets him up to become the country's longest serving premier, having been in power for six consecutive years. before that, japan had five different prime minister's in five years. votes, the rival getting 254 votes in the ballot. so that's getting you through the numbers there in terms of what has come through, the winningf japan's abe

the ruling leadership election. so it got these results. you can follow this on live . you can follow this on live . prime minister shinzo abe -- 553 votesears and his rival getting 254 votes in the ballot. we will see if there is any market reaction to this, not really expecting it to be a market moving event. dollar-yen is trading pretty much unchanged. i just want to get your first reaction in terms of japan's economic policy and what this means if you think about that in conjunction with the boj. [indiscernible] what we are experiencing

don't forget japan was in a different environment. the idea is to keep the momentum positive, in positive territory for a while to anchor economic growth around 2%. second, the target that has been announced by central banks of achieve an inflation rate at 2%. 2%. been slightly above targetr to achieve the at 2%. nejra: our guest stays with us but joining us from tokyo is stephen engle to update us on these results. great to have you with us.

run us through these results and put them in context in terms of what we were actually expecting. stephen: it's better than expected for shinzo abe and better than the tipping point number given by ubs asset management. they were saying the number the chief challenger or the loan challenger needed to get was 270, which would be 33% of the vote. it would not have many prime minister but it would have likely undermined shinzo abe into his third term, three-year term and perhaps spell the beginning of the end. instead are getting shinzo abe getting basically 68% of those 810 votes. coming in that leadership vote from lawmakers and another 400 from the rank-and-file that had already been cast around the country. with theetty well

lawmakers. i spoke with one of those lawmakers earlier today and she it is not a time right now with such good economic prospects and growth over the last six years to change captains midstream. and will stick to the lobby the stronger mandate perhaps gives him a little bit more -- they will stick to abe. it's a revisionists -- revision of the pacifist constitution. nejra: tell us what this means for economics now. the opponent was more of a halt, he wanted more fiscal responsibility. he did not agree with the user monetary policy. this is a good thing for .upporters of abe

it's probably a good thing for stocks. i haven't checked the stock market in the last couple of strong but the abe mandate is very likely good for stocks. nejra: i contain what stocks are doing right now, i got these japanese indices right in front of my eyes. the topics is off by .2%, the nikkei lower by .25% right now. we are looking at pictures, that rulingzo abe winning the ldp leadership election, no doubt stepping up to the podium to give it speech following that victory. thank you to stephen engle in tokyo. coming up, today we hear a rate announcement from the swiss national bank, the south african reserve bank, and we will speak with the governor of the latter at 10:30 a.m. u.k. time. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." let's bring you some breaking news on nestlé. this is a red headlines crossing the bloomberg in the past few minutes. nestlé sharpening its focus on food, beverage, and nutritional health as the board has reaffirmed the importance of nestlé health science. the key line is it is exploring strategic options in its health unit. nestlé saying the future growth of the skin health line increasingly outside. these are basically headlines coming through from nestlé. to give you some context, it had sales up 2.7 billion swiss

francs in 2017. nestlé saying the reviews to be completed by mid-2019. so nestlé to explore strategic options for the skin health unit. leslie humphrey in dubai. planazon is considering a to open as many as 3000 new amazon stores in the next few years according to bloomberg sources. it would threaten convenience chains likes 7-eleven an independent pizzerias and talk of trucks. and amazon spokesman declined to comment. tok ma has said he promised create one million jobs in america but it's impossible to fulfill because of the u.s.-china trade war. the remarks were made in an interview on the new service saying the pledge made with president donald trump is no longer feasible doesn't the

unstable trade situation. 2017d donald trump met in to discuss adding business to the alibaba platform to boost employment. the brazilian it is considering making a bid for the companies fifth largest phone company, nextel. considering discussing the possible deal at the board meeting on monday. representatives for telecom italia a nextel were not available for comment. that's your bloomberg business flash. nejra: i get so much. there's a big day had for central banks, will get a policy decision from the swiss national bank. i half hour later nordisk bank with the forecast of a rate hike and the south african reserve bank announcement. let's turn to the fed as well because president trump is planning to nominate nelly young

to the board of governors. she's no stranger to the central bank having previously led the division on policy. she would join the open market committee as the fed confronts a buildup of financial dangers. our guest is still with us. i want to go back to point you made earlier were you was saying that central banks you to support growth. what does that mean in terms of the fed also managing financial stability risks with an equity market that keeps gaining? christophe: i think the idea is twofold. normalizeone is to .hort-term interest rates we expect to more interest rate hikes this year and two more next year. the second thing is the liquidity injections that central banks did in the past

decade, including from the fed. we have to manage these two consciously in order to keep safe the economic above as much as possible 2% for the u.s. economy, for example. we know we will probably reach a peak in terms of momentum from the u.s. economy this year. the decline is negative. on the other hand, regarding the credit cycle, things are running relatively well, economic growth is up today, but only at 4% or 5%, which is quite low compared

expansionaryus phase is we've experienced. the fedwhy on one hand has to heighten but on the other hand they should continue to boost the cycle in order to goodain growth reasonably above 2% which is a tricky situation for the fed. for financialn destabilization of the economic system. nejra: you expected to fall in 2019. what does that mean for the patriots the? synchronized global growth that we have at the moment? does it mean that growth in other parts of the world starts to catch up and central-bank divergence becomes more convergent? christophe: by coincidence, not by agreement or discussion around the table. this is why, and you say

rightly, the economic cycle, the cycle will bec destabilized in a few months in the global economy. because of that, [indiscernible] itch is why you mentioned may be too tight today. buying the swiss franc, or is it overvalued right now? christophe: yes. nejra: thank you so much. christophe will continue the conversation with us on bloomberg radio at 7:30 a.m., but he stays with us for the hour as our guest host. lots more left to discuss. if you are bloomberg customer, you can watch the show using tv . you can also follow all of our charts and functions and message us directly if you have a

question, do get in touch. far away from a brexit deal, jean-claude juncker says he's brexitfident the deadline will be broken. this is bloomberg. ♪

it's 6:30 a.m. in london, 1:30 in the morning in new york. s&p huge are struggling for direction a little bit. we did see muted gains yesterday banks rising and the 10 year yield holding about 3%. let's check in on the broader market. >> asian stocks struggling for a bit of direction as a whole. china drifting lower and the hang seng as well is down. japan is up, trading at the highest in three months and the coffee outperforming, up .8% -- kospi outperforming.

we had the yield on the 10 year which is themark key level that many are watching. london futures pointing to a positive open in the u.k., but in the u.s. they are negative. abovetending gains, wti $71 a barrel and brent above $79 a barrel. this as concerns of market tightness. debbie yesterday showing crude inventory the lowest since 2015. the drop has been prompted by the u.s. rise in exports. american exports are in white while the crude stockpile is dropping in the blue. there's more tightness and concerns in the market as the sanctions start to hot what's happening in the oil market. that is surging prices since the ins of august, as much as 9% the oil price but opec and its allies will be meeting in

algiers and investors will be waiting for any sort of strategy or signals they get to supply and demand. moving on, i want to look at what is happening in the cannabis world. this is the most read story on the terminal this morning. see one stock start racking -- skyrocketing more than 1000% since the company went public this summer, leaving some of the crypto companies in the dust. 50% yesterdayet as the ceo said it may be one of the few companies that's part of the industry that could be worth 100 billion dollars. on tuesday jumped 30% and got approval to import to the u.s. for medical use. we can look at some of the other cannabis companies that are joining the craze. and more of a crazed than last

summer's crypto. has welcome in both up at 6:30 in the morning. the stock nearly double before wiping out entire gain and less than it hour, only to finish 40% higher than where it started. >> despite the roller coaster ride, share still injured today up a whopping 40%, but still a far cry from the 94% peak. you can see the shares hit -- 45y $300, which is minutes later he gave up all those gains and went negative. been in the last 15 minutes of the session, it rebounded that 40%. through all of this, the shares had four trading halt. said itging director left a sea of bodies both long

and short behind in its wake. some saying it was beyond comprehension. why the crazy ride? the ceo claimed that one day his company could be just one of a few other players in the marijuana industry with a valuation north of $100 million. this came just one day after the to thea approved tilray import marijuana for medical research. 1000%.have risen above looking at the number, you can see some clear echoes of the blockchain euphoria that we saw in the past year. i act into the bloomberg terminal with me again and you see the parabolic skyrocket has beaten blockchain stocks hands down. we know what is happened to

blockchain and cryptocurrencies for short. 20% rate fell as much as but did care most of those losses to settle at $200 a share. still, that is 30% off its record high and that was just sent a few hours earlier. all that was a fairly quiet session on the s&p 500 yesterday. bloomberg first word news from dubai. is planning to cut the average tariff rate that a chart is imports from the majority of its trading partners as soon as next month. that's according to bloomberg sources. the move comes as the nation is trying to use emulate domestic consumption and support the slowing economy and follow similar cuts on tariffs in july on a wide range of consumer goods. u.s. and china are also engaged in a tit-for-tat trade war with both sides increasing the levies

imposed on some goods imported from the other. canada says nafta talks in washington are cordial and constructive but there is no indication of a deal will be struck this week. the foreign minister will meet the u.s. trade representative again later after two rounds of talks yesterday. she says trade agreements take time but both sides are committed to striking a good deal. ,hat's another constructive detailed meeting with the team, the atmosphere continues to be cordial. there's a lot of good faith in goodwill on both sides. more workals now have to do and will continue working this evening and we agreed to meet again tomorrow. japanese prime minister shinzo abe has won his third straight three-year term as head of the ruling liberal democratic party. 553 boats.

he will become the country's longest-serving premier. u.s. secretary of state is called for a new round of talks with north korea. mike pompeo says america welcome kim jong-un's promise to dismantle a missile test i -- missile test site if the u.s. takes what pyongyang calls corresponding measures. >> we've made steady, albeit we havegress, but always known this was going to take some time. south koreans had a successful engagement, president moon the chairman kim over the last 48 hours, where he made another step for we will get verification of an element of north korea's program on the ground, that's a good thing. we are moving forward in the relationship. president trump is good. >> 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. nejra: thank you. time is running out for the u.k. i see you has offered no indication they can break the breadth a lot. that's a key meeting in austria entering its second day. european leaders told bloomberg negotiations are not progressing sufficiently. >> how close are we to getting a deal on brexit? 10?0- .> type is hope >> i don't think we are any closer to an agreement than we were in march. we will keep working on it. [indiscernible] nejra: our reporter was on the

ground in salzburg with the latest. maria, great to see you. i know you have been very busy as have the new leaders. in the last couple of weeks we are hearing from the e.u. that a deal and 6-8 weeks was realistic, and now we hear from jean-claude juncker it's far away. what happened? away is far away, very far from all the expectation, the summit, we got very little yesterday from the u.k. point of view, theresa may, keep this in mind, she spoke for 10 minutes. basically she said the u.k. has evolved this position. were not going to make any further concessions. now it's time for the european and alsodo the same rejected the idea that somehow northern ireland will have to in a position different from the u.k.. it's becoming increasingly obvious that this is a problem of perception. a politicalrder is

problem, they are not going to swallow anything that makes it look like the u.k. will be somehow broken up. union it's aean technical issue and if there is no backstop, there is no deal. update ont is the this special summit in november that we kept talking about yesterday? has been confirmed now, for two reasons, they will tell you we need extra time because the technical details are still not there. this is a political issue but also technical. we need to work out exactly how things will be done. also the political declaration that will follow the u.k.'s exit, they need more time to work on that and this is crucial, they say theresa may will end up making confessions, she just needs more time to do it. so the deadline's move from october to mid november. the expectation is today that we get a clear date for it. maria.thank you so much,

kristof is still with us. on the basisng that we are going to get some kind of deal by year end? just because we outcome,w exactly the outcomes.to extreme the first one is hard brexit, or the opposite, no brexit. the second case of referendum to try to cancel the brexit. as i've said many times here brexit is bad for the u.k. economy and its socially -- at atically very point in time it may make sense to engage the u.k. in a civil

referendum for brexit. -- to cancel brexit. the probability of a hard brexit is rising week after week for a few months. it's very bad for the u.k. economy. we got that u.k. inflation data on except -- unexpectedly accelerating yesterday. when you look at investing, i know you're looking at volatility, uncertainty, complexity, and ambiguity. the political sphere comes under that uncertainty issue. i want to talk about italy as well. the spread is been tightening up , saying the yield spread is unlikely to fall far below 250 basis points. we did have's comments yesterday saying the budget deficit would come in under 2%.

is that what you are expecting as well? we expect the probability slightly above 2%. this is why we still expect a high spread [indiscernible] for interest rates. relief from this perspective. having said that, it is manageable for the european union and especially for the eurozone. so we don't expect any systemic risk from that perspective. the scenario for italy and the rest of the eurozone is in terms ofalanced economic perspective. how are you factoring this uncertainty in your portfolio allocation, or are you

just waiting on the sidelines? christophe: we're looking for from thetime to invest andian public deficit issue it could be in a few months from now. we have a very balanced approach . ambiguity, is clearly something we will have for a while. this is why balance of allocation is absolutely key. a balance portfolio means investment in risky assets can in case ofturns

shocks coming from brexit or the italian decision. have not even got onto u.s. politics. coming up, emerging markets been smashed this year but there are signs that is starting to change. icm hit the bottom? our guest will join us for an exclusive interview at 12:30 p.m. u.k. time. this is bloomberg. ♪

londonit is 6:48 a.m. in , 1:48 in the afternoon and hong kong. sengong kong -- the hang slightly higher. it's been a mixed session in asia.

sley: jumping on the first-day trading after racing $4.2 million in new to public offering. the food delivery and neighborhood service giant turn to an ipo to fund its increasingly costly battle for customers in china where it's up against alibaba in food delivery . >> its growing superfast and close to breakeven. we believe are going to build , we will become privately owned but a more mature business. >> the trump administration has persuaded volkswagen to comply with sanctions on iran and almost all of its business in thecountry, according to

u.s. ambassador, the final details were hammered out on tuesday after weeks of talks. under the agreement, the german car wreck would still be allowed to do some business in iran under humanitarian exceptions. wells fargo's chair has taken the rare step of denying the bank of looking to replace its ceo. saying the entire board asked him following weeks of whispering maastricht that it contacted a former goldman sachs executive. : earlier this year finished as a white house adviser. that's the bloomberg business flash. nejra: thank you so much. let's check in on what is trending across the bloomberg universe. the zombie apocalypse has never been so comfortable. keep its hit to franchise alive through a series of movies and new tv shows that

could cost several hundred million dollars. e.u. and u.k. leaders exchanged warnings that time is running out to seal of brexit deal. at a summit in salzburg, jean-claude juncker said it was far away. surging u.s. bond yields are being met with shrugs. amazon is said to plant up to 3000 cashierless stores. find out more across all of bloomberg's platforms. let's turn to emerging markets and ask if the route is over. e.m. assets have had a terrible year. now there are signs of a turnaround in some of the world's biggest -- some of the world's biggest investors say the selloff is overdone. us asest is still with well. paul, first of all, we've just

said him equities are not in a bear market anymore, but what are the signs that e.m. assets are back in favor with investors? paul: you can see it in the emerging market currency index which is poised for its second straight weekly gain which is something that hasn't happened since january. china's main stock index, the shanghai composite is poised for its worst -- first weekly gain in months. you can see some of the assets that were battered the most and if we look at turkey and argentina, for example, off heavilyve sold earlier in the year. both argentina and turkey's case, the bond yields are down more than 100 basis points since september. nejra: is it just about some people seeing an opportunity for now?

there are still cleared of risk out there for emerging markets. we've been talking about the 10 year treasury yields above 3%. paul: what makes it different this time is the dollar. the dollar has been pretty that's flat for the last three months. makes it aying it good time to get back into emerging markets. the rising u.s. treasury yields we've seen this week, 10 year yields are back about 3%. that is not dented enthusiasm for e.m. assets. the correlation between u.s. treasuries and emerging markets dollar runs is the lowest in two years which suggests a further increase in u.s. yields my not actually hit the e.m. assets to heart. fantastic charts we

been showing you are holding off before getting into riskier assets like emerging markets. why do not see the opportunity at? -- why do you not see the opportunity yet? >> we are looking for clear signs in the emerging market world. need stimulus from the chinese authorities to make sure of the target on gdp growth this year. [indiscernible] paul mentioned a minute ago. prices --financial crisis pressure, and this way hand -- ong on one the other hand, by races are

very attractive. the valuations are very attractive. as global economic growth is preserved, as long as we don't have any risk of recession. nejra: it's like you read my mind. up got a chart showing the that is calledor every u.s. recession since 1970. we're looking at the conference board meeting index. is this recession in the u.s. perhaps a global recession coming? christophe: if we have a recession in the u.s., it will not affect the rest of the global economy but it could trigger a sharp slowdown in the global economy. but we don't have any earnings signals anytime soon in the u.s.. most of the pessimistic

economies consider the duration of good reason for recession. on the other hand, what you're it's the density of the economic cycle. the density is a way to measure ,he acumen nation process usually the trigger for recession. the sixstage, it's highest density. for the time being, we don't see any early signals for a recession coming anytime soon. nejra: ending it on a positive note. paul wallace for taken us through emerging markets. butext, no master deal yet,

hints of optimism. next, asiscuss that well as everything happening in global markets. this is bloomberg. ♪

anna>> this is number daybreak europe and these are today's top stories. mixed, china says it plans a broader cut as unisex month and markets await key decisions. pointing fingers, eu and u.k. leaders warned the brexit clock running out. mixed, china says and calling for a new round of north korea talks and volkswagen bins to the presidents will as it calls on iran.

good morning and welcome to daybreak europe to my has gone 7 a.m. in london. we have seen a bit of a mixed session, the msci asia-pacific up .2 of 1%. we saw your stocks close slightly higher yesterday. in terms of how europe might open, it could be a fairly quiet session pretty much flat of -- overall. ftse 100 futures ahead up one pointwe saw your stocks close slightly higher yesterday. in terms of -- .1 of 1%. the big story is what is happening in the treasury market. no one was paying attention to the financial media even though the 10 year yields were at 3%. i was. i talked about yesterday and today in that 10 year yield we are at a through five or 306 handle.

we are at 3060 we are not far off. .e are near the four-month high at least a day because five times this year we have gotten above it and pulled back. to year yield is worth watching as well. we could see yields fall further in the cash market bonds open now in europe so maybe the bund spreads tightening judging by futures. we have some breaking news. aston martin basically here saying that they look onto announcement of the price range coming through, the range for 50 two 22at 17 pounds pound 50. aston martin setting the price range we have some numbers coming through from diageo. here in of companies

the headlines, aston martin seeing a market capitalization between four pounds in two pence and five pounds and seven. 7 billion pounds. word news.he first >> european and u.k. leaders have exchanged word news. warnings that time is running out to seal an agreement on brexit. neither side offered indications they could break the deadlock two months before the deal is due to be completed. at the summit in salzburg, jean-claude juncker said the brexit deal was "faraway." three u.k. prime minister said she stands by her warnings plan. >> i believe this is the right proposal because it maintains friction with trade. it is the only credible and negotiable plan on the table that delivers no hard border in northern ireland.

>> china is planning to cut the tariff rate that it charges on imports as soon as next month. that is according to bloomberg sources. the nation is trying to stimulate domestic consumption. an follows similar cuts on a wide range of consumer goods. the u.s. and china also engaged in a tit-for-tat trade war with both sides increasing levees imposed on some goods imported from the other. canada says nafta talks in washington are cordial and constructive but there is no indication the deal will be struck this week. the foreign minister will meet with u.s. trade representative's again later after two rounds of talks. she said trade agreements take time but both sides are committed to striking a good deal. constructive detailed lighthouse her and

his team, the atmosphere continues to be cordial, there is a lot of good faith and good will on both sides, we are working hard. our officials have more work and will continue working this evening and we agreed to a meet at -- tomorrow. shinzo abe one by 100 53 votes to 254. it said him up to become the country's longest-serving premier. the secretary of state has called for a new round of talks with mike -- north korea. welcomedeo said they [indiscernible] pyongyang. takes what calls corresponding measures. >> we have remained steady, but we haveprogress always known this would take some time.

the south koreans had a successful engagement. president moon with chairman kim over the last 48 hours where we made another step where we will get verification of an element of north korea's program. on the ground, that is a good thing. we are moving forward, the relationship is good. >> the white house says president trump will number -- nominate an economist to one of the three vacant seats on the federal reserve board of governors. he is a senior fellow at the brookings institution who [indiscernible] at thent three decades fed and helped strengthen the banking sector after the financial crisis. 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 .

>> let's check in with juliette saly. a bit of a mixed session. not the rally we saw yesterday although you have the benchmark index higher. they're closing fairly flat, technicals were showing it was an overbought territory after the four-day rally we saw since 2016. weakness coming through in hong kong and chinese stocks and in india and austria closing weaker down by one third of 1%. you have seen a little bit of positivity coming through in some of the emerging markets in asia. having a look at some of the market themes across the day my in the u.s. we saw the strong debut of x financials and another strong ipo debut up wi-fi percent in late trade. the chinese food delivery and neighborhood services giant had a listing price of 59 hong kong dollars. this has been a hit and miss

market but the stock doing well in its first trading day. we have also been watching the japanese yen which was at a two-month low and we are hearing that the prime investors party is set to win. you do have the dollar a little weaker against the end. have a look at the kiwi, it is the front runner in terms of currencies. a very strong print on economic growth for the new zealand economy and the second quarter. that is getting analysts scrambling. thekiwi up by .61% against dollar. thank you. this selloff in treasuries has taken the 10 year yield above 3% and kept it there for its highest close. reversing a small part of the curve flattening that has been seen this year pushing some yield gaps to the whitest levels in more than a month.

watch 3.25% on the 13th, and joining us now is the etf investment storage are at the mo global asset management. great to see you and i want to say justin black should watch debris europe -- daybreak europe. i showed the chart last hour showing the 10 year yields breaking and holding 3%. points.een testing one reason financial media did not pick up on this is we are seeing the tenure yield holds but u.s. equities continued to gain and money is moving into e.m. so perhaps that is why it is not so much of a concern. >> it is a good point when you what isu.s. equities,

puzzling is everywhere else in the world especially in european equities and emerging-market equities, investors have been discounted the risk of a trade war into the valuations. that is why they are cheaper. when you look at u.s. equities, the risk has not been priced in yet. it is puzzling. the yield curve is flattening, it is consistent with the fact the u.s. economy is going very well and the cycle is maturing. i do not see any abnormality there. have u.s. equities in haveg higher, does it anything to do with where real yields are? >> there have been some extremee anything to do with positive optimism around u.s. equities, they have been doing well. showingporate's are some fundamentals.

u.s.ackdrop is pushing equities. war [indiscernible] we may have a elevation it will lose situation. nejra: do we get a correction in u.s. equities but we see equities fall elsewhere because of the risk to global growth from an escalation or do we see close move from the u.s. to emerging markets? >> because lose situation. the risk has already been pricing elsewhere, the risk of seeing a.m. equities falling again is i would say limited. it depends on how long this will carry on. nejra: when you look at the emerging-market world as a basket, will it outperform or is it about a selective?

>> it is all about being selective. on quality or countries. because when you look at etf flow, investors have been looking beyond the aggregate. basise seen in a global outflows from emerging markets when they -- and we are seeing some inflows coming back in india and china. economically challenged countries -- the rest of e.m. is providing economic backdrop with strong growth. p.m., theyomentum in have been losing momentum but both the extension threshold and corporate earnings have been good. but we have seen in terms of inflation is inflation is still subdued in many parts of developed markets whereas we have been seeing it rise a

little bit more in emerging markets. what does that mean for your outlook in terms of flows at how investors should allocate? >> it is due to a long trend. the outer point of inflation is tied to the old prices which should remain [indiscernible] and also to tariffs. tariffs, increasing of tariffs will push of inflation. now looking at emerging-market in particular and inflation, the past couple of weeks have been driving some optimism because is turkish central bank taking measures to cope with inflation and to stabilize the country. overall in the past couple of weeks it has been positive on an economic point of view but also sentiment point of view which is key in the trade dispute environment.

nejra: it is good when fundamentals and sentiment come together. our guests stays with us. one of the functions we have on the terminal is news trend go. you can search how often news trend have been mentioned. something interesting to bear in mind when you look at what people are looking at, get colleagues another people in the markets. --hear rate amounts once seeuncements and we will more at 10:30 a.m. u.k. time. this is bloomberg. ♪

nejra: it is 7:17 a.m. in london away from42 minutes

the european equity market open. let's get the bloomberg business flash from dubai. bond's favorite marquee is valued as much as 5 billion pounds when it ipos in london. it will also announce its final pricing on october 3. amazon is considering a plan to open as many as 3000 new amazon go cashierless stores. according to bloomberg sources. the extension would threaten convenience chain like 7-eleven and subway and purebred. -- panera bread. hastrump administration persuaded volkswagen to comply with sanctions on iran and -- and almost all of its business in the country.

the final details were hammered out on tuesday after weeks of talks. the german carmaker will be allowed to do some business in iran and humanitarian exceptions. that is your bloomberg is the/. -- business flash. the eu has offered no indication they can break the brexit deadlock. told bloombergs the eu has the negotiations are not progressing sufficiently. >> how close are we? to getting a deal. >> zero of 210. >> five. five is hope. >> i do not think we are any toldcloser to an agreement. i cannot report any progress.

[indiscernible] provide for an orderly exit of the u.k. was on thereporter ground with the latest. good to see you. we here in the past couple of weeks that a deal is realistic in six to eight weeks and now we hear it is far away. which is it? maria: it is deadlocked. i want to tell you to recap because a lot happened yesterday .ight minutesmay spoke for 10 , just 10 minutes and this gives you an indication of the u.k. position going into salzburg. she said she thinks she has made concessions, now it minutes , just 10 minutes is time for the eu to make more concessions on their side. big obstacle is the irish border. she said she cannot take any [indiscernible] that would make ireland different to the rest of the u.k..

they will tell you this is a technical detail that we have to get through. you cannot get to keep a backdoor into the single market. there is no backstop and no deal. bit of breaking news, theresa may does not get invited to the eu lunch that will take lace later today but we understand that she will meet the irish prime minister today alongside -- at the summit. saw in the sand we played earlier, the irish prime minister saying that there had been no progress since march. the bottom line is are we closer to a deal or no, will we get a deal by the special summit that was supposed to happen in november? murrieta: it will take place in november. move fromne has in october to somewhere mid-october -- november. owning -- there has been no progress since march.

clear and is becoming this is why this is so difficult to get through, the irish situation is a political problem. they will tell you know u.k. prime minister will ever accept any -- anything that looks like we're breaking up the u.k., for the european union it is a technical detail. barnier is in charge of negotiations and is not willing to make any concessions yet. nejra: thank you. guest is still with us. e, is the question how the decay parliament will do with this? morgane: it is the timing. if the deadline is pushed after november, on technically basic, it would be difficult to ratify.

to ratify the deal. of the deal will matter. investors will scrutinize the deal when it happens to see what thehe probability parliament will ratify. the devil is in the details and it is about the timing. have timing and the trajectory of boe rate hikes, we got some data yesterday. we were talking about global inflation a few minutes ago. given where the u.k. inflation part is now, should the markets be pricing for more rate hikes in 2019? : we have to discriminate if it is a sustainable increase or a one-off and this is much from the boe to decide. it is something they should be

worried about. i would say that it consists more of the inflation time back to target in the u.k. and given the political uncertainty and the economic uncertainty, it seems there is a low probability of increasing interest rates rapidly in the u.k. we have news flow coming in from italy as well, how is the political uncertainty affecting etf flows in general? obviouslyt is sensitive to economic news. we have seen from the european the nets been more on outflows. it is minimal. the point being said by it is minimal is even the net outflows. it is minimal. it it varies from outflows, the market

sentiment is not that pessimistic. from what we can see from the flows. nejra: were our markets most optimistic? is that where the most inflows have been recently? positive onkets are it it the u.s.. we have seen some rebounding and that is where we are seeing some flows coming to some emerging-market countries. the u.s. is probably the place investors want to be. nejra: has there been any change in terms of emerging markets becoming less cyclical? emergingif you look at markets most investors look at it beyond the aggregate. they see it as a less [indiscernible] share ofuse of the emerging markets and global gdp and also the thing is when you look at emerging index equity index -- indices, energy and mining sectors were hunting for

that one third of the index whereas now it is just above 10%. it was suggest -- would suggest that emerging markets will not be that sensible to take hold of them. nejra: thank you so much. thes look ahead it -- to european equity market. we saw a little bit of a mixed picture when it came to asian equities, the gains not as pronounced as we have seen in the past couple of days. the msci asia-pacific index is up and looking at when europe opens, the stoxx 50 futures are flat. struggling for direction. ftse 100 futures and cac futures on the front foot, dax futures flat but one of the big things we have been talking about, that is massive is the 10 year treasury yield not just above 3% but holding their on a three of

six handles so not that far off from that high that we had in basis points on the 10 year treasury yield. that is it for daybreak europe. the european open is next. when you're traveling to work 10 into bloomberg radio. ♪ this isn't just any moving day.

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anna: i am anna edwards alongside matt miller in berlin. matt: a rally in asian stocks weakened as treasury yields threaten to pose a fresh test for equity investors. the dollar held its decline against most major peers, the cash trade is less than 30 minutes away. ♪