thanks -- >> good morning from bloomberg's european headquarters in london. >> this is bloomberg daybreak. >> trump like trades in the u.s. economy. are stillt rates accommodative. we will gradually move to a place where they will be neutral. we are a long way from that. the yield on ten-year treasury notes jumps to the highest since 2011. after touching

the highest level since 2014. we bring you our exclusive with russian energy minister, -- with the russian energy minister. ♪ manus: a warm welcome to daybreak: europe. the market is rewriting its view of the fed. 10 year government bond yields are ratcheting higher. we talk about the 30 year government bond spiking higher. warns the proclivity for japan and germany is dissipating. nejra.rning,

nejra: let me show you what the 10 year yield is doing. will this test the patience of ene bank of japan, when the y is rebounding from an 11 month low? euro is on a seventh day of losses. equities, ftseo futures are lower. we sought u.s. equities flirt with record futures yesterday -- saw u.s. equities flirt with record futures yesterday. up, we have a guest joining us for an exclusive interview at 11:30 a.m. but let's get to the markets in asia. ette: we are seeing asian stocks down for a fourth

session. hangseng was closed on monday. it has lost about 4% in the three days it has been open. a lot of moves coming through in yields across asia. the nikkei down by a third of 1%. the yield on a 10 year jump above that level. india, there is a little bit of a bright spots coming through in the australian share market today. let's have a look at some of the stocks. we have heard in the last hour that toyota into softbank will team up in terms of a ridehailing app. i was talking about the strength you are seeing in metals. aluminum has a joint venture without collecting sydney -- with alcoa in sydney. it is up by over 9%. this has fallen nearly 14%,

re pacific, with fewer chinese coming in during golden week. the federal reserve chairman says the central bank may reserve interest rates to a toel where they begin restrain economic growth. these comments come after policymakers braised rates last week for the third time this year. his prices have flirted with fresh record highs and the gilt on ten-year treasuries have reached the highest since 2011. >> we are gradually moving to a place where they will be neutral. way to neutral -- from neutral at this point. is adding to the pain of the u.s. treasury route that lack of

foreign buyers at these levels lead to lower treasury prices. his comments come at a tough time for bond bulls. yields are searching to multiyear highs on ten-year treasuries. the concession to the european union for 2.4% gdp in 2020 and is in response to the coalition spending request from the european union. -- italianent government says details will come today. u.s. senator public have started the proceeds for a -- process for a make or break test vote tomorrow for brett kavanaugh's nomination.

the fbi has not interviewed him ford, accuser, christine because it does not have clear authority from the white house to do so. prices have jumped this week over concerns on targeting markets, with the worries of losing another customer, the uae russia's energy minister says the market may be overdone at current levels. >> current levels maybe a little -- may be a little bit high. ae market is trying to reach balance that is stable and acceptable for users. president has spoken about a range of $65-70 five dollars --

$65-$75. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. manus: thank you. juliette saly with the latest on the markets. this operates in 30 countries. it is a dutch company coming to the market in amsterdam and brussels. one big investor is based right here in the uae. and is along with the gic the dutch pension fund. they are all getting their exit plan. is 750u are expecting -- million-800 million euros.

be a dividend payout ratio of 60%. the offer is expected to take place in the coming weeks. et's take you to the global perspective and get to singapore with our bloomberg mliv strategist. the team has put together a question of the day. >> we are asking about when the higher oil prices will impact developed market equities? there has been much talk of $100 a barrel in oil prices. we have seen emerging markets suffer from this kind of pain. higher oil is squeezing consumer spending. most developed market equities are immune from highs.

when will this lead into when oil crisis, when this will be taken seriously and really hurt stocks? cudmore, thank you for joining us. you can follow insights from mark and the rest of the team at let us know when higher oil prices become a risk for developed equities. message the rest of the team by hitting tv go on your bloomberg. we have a guest on set we could put a question to later in the hour. powell has been talking policy once again. this is the fourth time he has spoken in as many days. tois raising interest rates levels where they begin to sustain economic growth.

>> they are still accommodative. we are gradually moving to a place where they are neutral. past neutral, but we are long -- a long way from neutral at this point. nejra: jay powell, speaking in washington. us now is the head of european equity strategy at jpmorgan. the 10 year yield is having its highest since 2011. -- 30 yearrope's yields are also hitting a 40 year high. is this a game changer for equities? the fed is moving from outright extreme accommodation still accommodation.

powell is implying they are not even neutral yet. rates are still stimulative. i think we need to get to positive territory for real rates. manus: we've put together the rerating by tehe market. it's beginning to price a slightly more aggressive path into next year. fed is being too u.s.-centric and not global enough. would you agree? .> it's interesting is a comedy easing

gas is characterizing an extraordinary accommodative -- extraordinarily accommodative monetary policy. there are few signs of strain in the system. it's something we need to be aware of, given the dollar has strengthened so much this year. >> the two-year yield is also hitting its highest since the pre-crisis level. we have private payrolls -- we did we get such a spike offset data -- off that data? will be stay above these levels? we are already above the year

end medium forecast. difficult to talk about what causes the spikes in the short-term. the tax concessions available to pension funds investing meant you might see some pressure on yields. this is to say yields should trade in line with nominal gdp as a rule of thumb. on -- we're on the move, working on our capital fees and 2019 -- in 2019. i don't think this will be a particular restriction on growth. manus: the mliv team talks about global breakevens

rising around the world. do you agree we are underassuming the inflationary impulse next year? we are at a five-year high on breakevens. curve slightly behind the in our equity assumptions when it comes to inflation? you think about global not clear thes output gap in europe has closed, markets.rging you could argue this gap has although the u.s., powell made a point to not talk about the output gap. it's conceivable you could see inflation picking up in the u.s. one thing that has not happened is expansion.

there has not been a pickup and productivity. -- in productivity. if you were optimistic, you would sketch out a scenario in which productivity would begin to recover. labor cost will not be driven up because productivity is rising. -- great point. great to have you with us. you stay with us. fed, this manthe told us he favors a slowdown. nexrtee this year, two year, two the year after. i have not seen any celebration of inflation yet. -- an acceleration of inflation

yet. i don't but we have to crush the acceleration process going back to neutral -- rush the acceleration process going back to neutral. unemployment, 200,000 getting hired every month. would you come push by waiting -- what did you accomplish by waiting? do you accomplish by going sooner rather than later? there is some risk i worry about when it comes to yield curve. i would like to slow the pace. >> bond rates are low. are you having any effect at this point raising interest rates? going into december, what it matter?

-- would it matter? i don't know the answer. financial conditions are very accommodative. i still think we can take our time and move the rates up. that was the federal reserve bank of philadelphia president patrick harker. peace up, italy's offering to the european union. ater, the general manager of the bank of international settlements and former mexican federal bank chief. this is bloomberg. ♪ >> the u.s. 10 year yield is

above 3.2%. s&p 500 flirt with

records yesterday. s&p futures pointing lower. let's go to the bloomberg business flash. signs thegrowing money laundering scandal to hit bank represents a small slice of europe's dirty money machine. there was as much as $235 million of nonresident flows 2015.n 2007 and this represents less than a quarter of cross-border transactions that passed through the country. monthlys eliminating bonuses and stock awards for warehouse workers, coming after

the company pledged this week to raise pay to at least $15 per hour. giants for the e-commerce were eligible in the past four incentives that could total hundreds of dollars a month. andon says operators customer service step -- staff will see total compensation in proof. giant ceo says test models will be in the air next year, in an exclusive comment to bloomberg from boeing. flying theseto be vehicles within the coming year. juliette: that is your bloomberg business flash. focus on italy. the country has set next year's

deficit target at 2.4 percent gdp with a commitment to reduce it in 2020 and 2021. there is pressure on the finance minister to contain spending plans. there is thought the premium over german debt could blow to 200 basis points. we have our guest this morning. where does this risk on the jpmorgan asset management monitor for you this morning? >> if you believe the italian problem is soluable, these rates will be attractive.

my view is that it is. the issue you face with any government is that you are dependent upon the price of credit being offered. whatever you are spending will be dictated by the price of the market. the move in spreads is troubling the bond market as a policeman on italian spending. we are below the 115 handle on the euro will be see a rebound. rebound?we see a i am hearing from so many people this is not a contagion. when the euro was strengthening, it is supposedly a threat to europe in earnings.

it is now weakening. if we think about the integrity ozone, do the ambitions of the italian government threatened the integrity of the eurozone? no. most governments have been unanimous in saying italy has no ambitions to leave the eurozone. there is a benefit to being a member. 25 years, italian government debt was very elevated. the rate they were paying was 10% or 15%. it is now 3.5%. there has been a huge benefit to the government from being a part eurozone. manus: they may have a personal haveective, but they also an italian perspective, which is

about participation. do you build a defensive position or an opportunity position in italy? how do you look at europe for the back quarter? -- there is aa significant derating of the market so far. 2019 earnings should move farther ahead. as people start focusing on these, the valuations should be more attractive. u.s. earnings are growing this year by 22%. the europeanad of equity strategy at jpmorgan asset management stays with us.

we want your thoughts on our mlviv question of the day. when do the -- does the rising oil prices start to hit developed nation equities? this is bloomberg. ♪ >> brent crude is now up more

than 50% over the past 12 months. we want your thoughts on this. is the destination where you can join the conversation. rising oil prices start to hit developed nation equities? know onow on -- let us mliv go. let's check into the markets.

sebastian: stocks in asia are dropping for a fourth day. we have the surge in treasury yields overnight. data throughout the u.s. is making the case for more rate hikes. we have the top picks in japan rising amid a weaker yen. hanseng in hong kong is contributing to those losses. i want to take the treasury story and apply it to currencies. we have the jpmorgan dollar index in the white line and the ten-year yield in the blue line. you can see how these lines diverge. when you get to june of this this is playing out in stocks over a much longer time. this is about $76 a barrel,

slightly weaker. we have production, saudi in the white and russia in turquoise blue, going back to 2005. there are lots of concerns about iran from when the sanctions kick in. you can see that drive into the oil prices. if you look at the end of the cart, -- chart, you have that uptick, with investors focusing on the iranian story. nejra: let's get the bloomberg first word news. te: the u.s. federal reserve chairman says the country's central bank may raise interest rates to a level where they may restrict economic growth, after policymakers raised rates last week for the third time in one year.

-- stock prices have flowed with fresh record highs. the yield on the tenure treasury has reached its highest since 2011. tweeted -- bill gross that foreign buying at these levels are likely leading to lower treasury prices. and 30 year year treasury's searching to multiyear highs, and his comments come at a tough time for bond bulls. italy has committed to reduce .4% gdp deficit in 2020 % gdp deficit in 2020 and 2021. five days after the projections were two to be released, the government is still has not published its economic growth forecast. come s those details will

to u.s. senated republicans haveay. brett kavanaugh's supreme court nomination. if it succeeds, he could be confirmed at the weekend. the fbi hasarned not interviewed him or his accuser, because it does not have clear authority from the white house to do so. plans being drawn up for a brexit deal to be drawn up through parliament in an attempt to stave off opposition from within her own party. the divorce treaty would be accepted or rejected by the beginning of december. may's office declined to comment. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

has halted gains near a four year high on emerging concerns prices have rallied too fast. there are concerns over tightening markets, with iran at risk of losing the u.a.e. russia's energy minister says the market may be overdone at current levels. >> it is reacting to fundamental things. that are various factors outweigh fundamentals of supply and demand. uncertaintiesk to that are connected to sanctions -- of of uncertainties that are connected to sanctions and a lack of gdp on this topic. think that there's little chance such market sentiment would change the next month, at

least until we have clarity at november.ing of there will always be the risk of sanctions affecting supply and demand more. do you not think the market is pricing and the fact you are at record highs? lookingould not only be at russia's capacity, but the market is looking at shale oil production growth rates, north declines, andion overall spare capacity, which the market has. only by looking at the picture can we understand what the market is doing. >> we always talk about prices. there is always a range of

60-70. some say it could be 100 at teh nehe new year. are you worried about prices being too high? >> these concerns have some grounds to them. high due to aoo embeddedctors being into the price. lowerlevels are probably than what we see today. timemers at the same ensure enough cash flow to reinvest. russian's energy minister speaking to annmarie

hordern in moscow. dubaig me now on set in is our middle east energy reporter. --s comes down to the line "we'll do whatever it takes." how much do they have to do? have they got that capacity to sent outtweet overnight? >> the market is not impressed. oil is at $85 a barrel. they have added about a million barrels since the meeting in june. about a million barrels needing to be added in june. qe are again in october -- here the are again in october. we are still at one million

barrels. if we look just at the supply, they were saying they needed a million barrels more in june. in october, we have that. we are facing iran coming down in the future in november when the sanctions will be imposed and we will be imposed and people see more iranian barrels coming off the market. when we look at the market, we track the exports by country and we see the gulf producers not exporting enough to make up for that scaling back in russia. talk to me about the moving oil today. we are softening just a little bit. technical indicators a show the wti could be overbought at this point. what are the dynamics moving the price today? from teheling back

four year high. >> we will see an increase in the spread between brent and the wti as we go forward. when the storage tanks get full, wti will fall. ist happens because there not enough capacity sometimes to get that oil to the gulf coast. when you're relying on the brent-linked crudes, and most of the middle east prices based on brent, those crudes will be more scarce in the market and prices will go up. as we see that shortage in the middle east, the market could get more concerned about spare capacity, which we saw mr. novk talk about. we will watch that later on in the year. nejra: thank you. we wanted your thoughts on our whenquestion of the day --

does a rising oil price start to hit developed nation equities? of european equity strategy at jpmorgan asset management is still with us. you have heard the question. some comments are saying european equities could be most vulnerable out of developed markets. what's your reaction? stephen: commodity prices are inversely correlated with the dollar. that has happened with industrial metals. oil price looks like a bit of a standout. the oil price in euros, if we think about that, the rise has been greater because the dollar has strengthened during the year. there has been this market fear

that europe is going to go through deflation. inflation is rising. it's not impending -- impeding consumers' ability to buy. real incomes are rising. there doesn't seem to be a pressure on consumption. at this point, people are choosing to go from working about -- worrying about too little inflation to too much. to 2006, 2back thousand seven, to give you a year where oil price -- 2007, to give you a year where the oil price was a concern. it was at $130. at $180 today, it's still not that much of a concern. stephen, you made a point about where we are politically.

the personification of market risk this morning, this function. turkey, is lower in more so on the finlati -- inflation story. -- currency is under pressure as the market rerate where they think the fed will go. you are seeing the indian market under pressure. the ten-year yield we put up there because of the benchmark, with the 322 handle. currency is above the 325 han dle. the two year yield is its highest since pre-crisis. we are seeing dollar strength along with that. the rupee is hitting a record

, perhapsw record low to do with the oil prices we have been talking about. manus: let's bring stephen back into the conversation. we talked about a rerating of o il in the markets.emerging markets are linked to what happens with the fed next. have we overdone the e.m. pacing we've taken? stephen: it is difficult to know for sure. policy reactions we have seen from the emerging markets, bearing down domestic growth is one of the things that will succeed in narrowing the deficit. as the dollar strengthens, that may mitigate it. what i was saying about a lot of theses,

emerging markets are commodity sensitive. commodity prices have not been -- oil commodity prices of not been helpful to them. i was saying the real rates are negative at the short term in the states, only moderately positive at the long end. is still healthy in the united states as a result of tax cuts. i don't think there is an overrun of fed policy. i think there's a genuine concern from the fed markets haven't fully priced what the will do in the next two years. the moving yields could be an adjustment to that -- move in yields could be an adjustment to that. nejra: perfect way to end.

coming up, we will speak to the equity continental portfolio management at goldman sachs about what is next for emerging markets. this is bloomberg. ♪ bloomberg. ♪ manus: emerging markets have

resumed their decline in the wake of the selloff in treasuries. yields have jumped. emerging-market investors are facing challenges in light of higher oil, monetary policy by the fed, and trade tensions between the united states and china. we have the head of fundamental equity portfolio management from goldman sachs asset management. it is great to have you.

when we look at the rupee, rup iyah, timely. upiah, timely. emerginge look at markets and what has happened this year, the market down close to 8%, this has to do with underlying market fundamentals at the corporate level. if we break the decline down, you see a negative 12% decline in the multiple and a 6% decline relating to em equities on the f/x side. corporate fundamentals have contributed 12% to that return. big shift inn a sentiment and we are concerned around trade, but the underlying

corporate dynamics are pretty good. we have seen earnings growth for the first time in a number of years. and we are seeing decent signs this is continuing. nejra: you talk about the fact that it is those corporate earnings that have been the driver in your research of equity performers -- corporate earnings that have been the driver of equity performers in your research. tihis time?en >> the dollar is always a challenge for equity returns because it is a translation issue. if you go over the last 30 antipathy has typically outperformed in a normalizing rate environment. the only time the e.m. has

struggled with fed normalization is when you have some idiosyncratic crisis. to say, maybeart trade and protectionism is that idiosyncratic crisis. maybe it is a little bit overstated at this stage. manus: the one topic we've been featuring is oil. we just had a conversation it.t when we look at what the price of oil is for some emerging-market countries, it is way worse than it was a number of years ago in terms of peso and rupee and the turkish lira. it really is a double punch. you have oil marching higher. motion. the fed in

how much is oil part of the story? having a huge impact from the country level. when we think about equities, it is maybe not the oil dependent asset class it may be was 10 years ago. the commodities space in emerging-market equities represented 40% of our index data. it is not driving the underlying market in the same way it might have done historically. that secondary impact. oil importing countries are struggling against the rising oil and pricing dollar. -- rising dollar. you have to think about how this plays into political agendas. as the oil price has risen, you forcingng governments the holding of prices.

it affects the minority shareholder and you are suffering for that overall cause. inra: what characteristics emerging-market corporate student you want to invest in? define growth into isolated within emerging markets. ina minority shareholder these businesses, it is crucial we focus on the governments, what management is doing and and soeir interests are, it is very challenging for us in emerging markets when you have becauseate ownership, those are companies that utilize more for the general benefit of the economy, rather than the minority shareholder. you are not seeing the cash flow generation. you are seeing a way of managing the economic transition. manus: this is a new feature we have launched. you are the guinea pig of

bloomberg! all of our viewers can join in and ask a question. when does a rising oil price start to hit developed nation equities? we just spoke about the emerging-market consequence. guests an ask our question. rs can ask guests a question. this probably has a negative feedback loop into emerging-markets, doesn't it? >> it's a risk, it is not something we are overly concerned about. we think oil will be somewhat range bound, somewhere in the $60-$90 range.

are is not something we particularly focused on as one of those existential risks we've been at 410 or 11 years. -- for 10 or 11 years. the u.s. oil price environment is different to what we see globally. considering how that flows into were equity universe is quite important. you like health care and consumer staples in terms of industry groups. you think this is a good entry point for emerging markets, but why not wait until we fall back to that 2016 low? >> it is there. as long as this trade and protectionism discussion continues, it will affect the market more in the way we have seen this year. when we think about in vesting investing in e.m., we are thinking long term. we see growth improving and earnings growth accelerating. nejra: thank you.

i'll morning we have been talking about the risks from higher oil prices. we have been asking for your views on our mliv question of the day. ♪ this is bloomberg.

manus: good morning from dubai. i am manus cranny, and this is "bloomberg daybreak: europe." nejra: i am nejra cehic. these are today's top stories. manus: make the fed great again, the central bank chairman heaps trump like praise on the u.s. economy. >> we are gradually moving to a place where it just rates will be neutral. we may go past neutral, but we are a long way from neutral. manus: could investors get the message on the 10 year treasury note? asian equities and currencies think. -- asian equities and currencies sink.

the government commits to a lower deficit target in 2020-2021. there is more blonde trouble ahead. nejra: good morning, welcome to "bloomberg daybreak: europe." 7:00 a.m. in london. bonds,text globally for the 10 year treasury yield is up. the two-year yield is approaching 2.90. we have money out of treasury today. yesterday, we saw a little relief in these btp markets. the italian government conceding a little, so we saw the 10 year drop 15 basis points by the end of the session. the decline could continue

today. we pulled back from the five-year high yesterday, we will continue pulling back today. bunds look like they yields will follow the 10 year yield. we have seen that reverberate through the markets in asia. it looks like it could happen in europe today. there is no doubt about the relief rally in italy. is open,d germany everybody got it right. germany returns the market, a little extra catch-up. , selling more assets ying. bargain buyers are we can find them. whererket is re-rating

the trajectory of the fed is. the relief from italy is being trumped by powell, and prepared to go beyond neutral. that re-rates the market. keep an eye on japan, the dollar-yen at a year low. the european markets at the moment are a little lower. bloomberg dollar index rocking it out for the sixth day in a row. juliette saly roxette out every day. out.cks it juliette: we have seen the nikkei close lower on these yields. the hang seng index has lost 4% over the course of the week and was closed on monday. australia's market is tracking higher by 0.4%. asian stocks down for a fourth day in a row. the dollar strength in six

sessions in a row. the onshore closed as china is out of action for the holiday. the singapore dollar is at a july 2017 low, and we are seeing weakness from the indonesian group here. its lowest level since 1998 financial crisis. let me bring you the bloomberg first word news. demand from overseas investors is adding pain to the treasury route. fund, unconstrained bond these are likely leading to lower treasury prices. these comments come at a tough time for bond yield. italy has set next year's deficit target at 2.4% of gdp

with a commitment to reduce it in 2020 and 2021. tos comes after pressure coalition's spending request. the government has not published the economic growth forecast underpinning its plans. details will come today. u.s. senate republicans have started the clock for a make or break test vote tomorrow on brett kavanaugh's supreme court nomination. if it succeeds, it could be set for the weekend. the fbi has not interviewed him north his accuser christine blasey ford because it does not have authority from the white house to do so. minister's officials will rush the brexit deal through parliament to head off a rebellion from her own party area theresa may once the final

agreement ratified within two weeks of signing divorce terms with brussels. may's office declined to comment. oil holds gains on a four-year high on concerns prices have rallied too fast. is at the risk of losing another customer, the united arab emirates. , russia's energy minister says the market may be overdone at current levels. >> current levels may be high. what we think the markets are striving to reach is balance, and these levels are lower than bank what we see. aboutesident has spoken $70.ange of $65 to

24 hours alobal news day on air and on tictoc talk and twitter, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. manus: thank you very much. btp's on the march this morning. we are getting lines coming italy government target has in mind. 1.6% in 2020,, and slowing to 1.4% in 2021. these have opened in terms of trade. was 2% --ing what 2.4% next year. teachers are lower by 12 pips.

btp's, following through today, 10 year yields are steady now. we are seeing spread tightening on the btp's bund spread. jay powell has been talking policy again, this time about raising interest rates to levels where they restrain economic growth. >> interest rates are still accommodative, but we are gradually moving to where they will be neutral, they will not restrain the economy. we may go past neutral, but we are a long way from neutral. nejra: that was jerome powell speaking at that hellenic festival in washington. is thu lan nguyen , fx strategist, commerzbank. as we see yields move, the bloomberg dollar index is hitting new highs.

will we see dollar strength and yields rising? thu lan: i'm not sure the market is taking too much in powells comments. to a neutrall move level of interest rates, that is the point of normalizing monetary policy, and obviously they are becoming more active in their monetary policy, unlike in the past. the whole point is to counter inflationary pressures. in order to do that, you have to move above the neutral interest rate levels. it is not entirely a big market reactedhe to it. they are talking about the end of the rate hikes, and they are taking his comments as a sign that this may take longer than

bank they have indicated. that is positive for the dollar, but i would not jump ahead and say they will hike throughout 2020. lan, good morning. i put something together, the market is now berating what -- re-rating what they expect in 2019. , given therating speeches from paolo, and the data, are you re-rating what happens for rate trajectory next year? we have been forecasting three rate hikes in 2019 for some time now. the market is moving in our direction. the question is if there will be more than that. peakfed is indicating the

of the rate hikes will be around three points. the question is if it may be higher than bank that. higher than has a market expectations, stemming from the labor markets, which have been performing extremely well for a long time. cautious, and i would not look at revising our dollar forecast higher, because there is a lot to understand about inflationary dynamics. 10 or 15 years ago we would expect inflation to be higher than it is right now. i do see some uncertainty here. nejra: the move higher in u.s. yields have reverberated around the world. the yen reversed its

earlier losses, so we are seeing yen strength in the early sessions. what are the dynamics for the dollar-yen from here? boj meetinger the in the summer, we actually .evised our yen forecast higher we are expecting an appreciation of the yen against the dollar because we took it as a sign that the bank of japan is preparing an exit from its monetary policy. the difference to other central banks, there are no inflationary pressures mounting in japan, and the combination of permanently low inflation and high interest rates is an extremely positive , and weor a currency are expecting the young to appreciate over the medium to long-term. we see the dollar-yen moving below 100 by the end of 2019. , fxs: thu lan nguyen

strategist, commerzbank, on the btp's one of the focuses on the market. italy has offered to cut the budget deficit from 2020, but they are holding firm, 2.4%, the budget deficit for next year. that is what draws the ire of the market. turmoil, whenthis the hurly-burly is done, there is much more trouble to come. it seems a little like btp traders are struggling for direction. we are seeing the 10 year yield up one basis point. brent crude is pulling back a little, $86 per barrel, and up 50% over the last 12 months. we are asking for your thoughts,

when does a rising oil price start to hit developed nation equities? run tv on your bloomberg and hit questions. this is bloomberg. ♪

nejra: let's check in on what is trending across the bloomberg universe. hundreds of millions of dollars were stolen from international since 2014.2014 -- manus: the purchasing power of bitcoin has skyrocketed since its creation, but it is unclear if the currencies will transform global payments or burst like a bubble. stories,r most read

and their place, amazon eliminating bonuses and stock awards for its warehouse workers, after raising wages. in second base -- in second, deutsche bank. jerome powell said interest rates may be gradually lifted to neutral levels. that has been our big discussion point. with yields rising across the u.s. curve? manus: yes, and we have re-rated moment,s a pivotable especially on 30 year bonds. market, we have bullishions -- he is about the growth trajectory for the airplane business. hechina's demand rises, says free-trade remains key to

the success of the industry. bloomberg spoke to emily chang, and about the company's position on trade tensions. >> aerospace is a thriving business. the strongest industrial business in the world. 43,000 neweeds airplanes over the next 20 years. of the world's population have taken a single flight. the amount of growth ahead of this is extraordinary. it depends on free global trade a movement of people to be successful. we are very engaged in the trade dialogue. the good thing about aerospace, you take u.s. and china, both economies thrive on a healthy aerospace industry. it is a great generator of manufacturing jobs in the u.s. as china grows, they need 7000 new airplanes over the next 20 years.

we have a mutual interest to find a trade solution. emily: how long are you bracing for this to be prolonged before that solution is reached? >> it is not clear what the duration will be. we are very much engaged in a dialogue. we are at the table and having conversations with the u.s. and china, and we are trying to find solutions that benefit both countries. ,here are certain challenges discussions around trade more broadly, and we all want a world based on free and equitable trade rules. at the same time, we will make sure those solutions are win-win. that was boeing ceo speaking exclusively with bloomberg's emily chang in seattle area now to italy, they have set next year's deficit target as 2.4% gdp with a

commitment to reduce it in 2020 and 2021. onance minister tria spending plans. what i find interesting is when we get reports in the papers that we will see lower deficit targets, we see such a relief rally in btp's. now we get confirmation from the government, and the tenure btp yield is up over two basis points. why? >> people are focusing on this 2.4% deficit next year, that has been the bone of contention, and they continue to be so in the future. that is the number that the european commission will be looking very closely at. else are we, what waiting to hear from the government?

you have this narrow confirmation they will go to 2.4 percent next year, and that is what is hurting the market, they are not complying to the big european move. is that it? kevin: yes, and right now we are waiting for the official economic forecasts from the italian government. those forecasts are needed to support the deficit goals they announced last night. nejra: when can we expect more detail on that? plan is supposed to be formally presented today to the parliament, that is what we understand. we hope it will be made public then. with luck, we should see those figures today. manus: the other thing i was markets, thisthe is something we can bring to all of our viewers, it is quite them at theou have start of the debt crisis, but

there is a difference here. ones,d cds's and the new and this is about the repricing we are seeing, the new cds's issued in 2014 are more aggressively priced relative to the old ones. the possibility of changing currencies when it comes to a whatnment's debt, tell me is the conversation in the newsroom in italy and around you in regards to the realistic possibility of italy having a referendum to leave the euro, or is that media hype? kevin: it is pretty much media hype. the eurosceptics talk about it. even they realize unilaterally pulling out of the euro for italy is pretty much a pipe dream for them.

any kind of referendum might be held, but it is a long way off, and it would have to be a many long years process. nejra: thank you so much. the u.s. federal reserve chairman has said the central bank may raise interest rates to levels where they restrain economic growth. that is some ways off. -- bloombergcome spoke to charles evans who said -- he alson commented on the possibility of a december hike. hikes this year would indicate one more this year. i am comfortable with the expected path embedded in the medium of sep's. i think my own take on a neutral rate is 2.75%.

getting policy to a restrictive setting, 3.25% would be consistent with the strong economy and inflation we are looking at. : you like the idea of a december hike? >> i am comfortable with that, yes. guy: it is sometimes nice to play with the rules. in terms of the data, there is a slight softening of late, does that concern you? >> i think that inflation picked up in a nice fashion, we are at 2%, a touch under given monthly data movements, but it has improved significantly in the last couple of years. i have been saying for quite some time we need to provide accommodations, we got to 2%, so it is completely fine. you go above 2% for some time, we ought to average 2% or be

above, getting inflation up to 2% is quite an accomplishment. i think we are well-positioned to continue with inflation at our objective, perhaps a little above. manus: some would say that commentary from the chicago fed president evans speaking to guy johnson yesterday was repositioning. one thing that has happened on the back of jay powell talking about going beyond the neutral rate, you have 10 year government bond yields at levels not seen since 2011. and the dollar is big for the six day in a row. nejra: those moves in treasury yields are reverberating, those have been rising today. the yen on alongside it as well. you wonder if the boj can handle

it. the euro is unchanged. stocks pointing lower as we go to the market open.

>> good morning, welcome to "bloomberg markets: european open." we are live from the european headquarters. i am anna edwards, the cash trade is less than 30 minutes away. anna: bonds selloff from the u.k. to japan off the treasury yields spike. asia, what will this mean for european equities? even as thee rout, government makes concessions on the budget deficit plan.