nejra: good morning from westminster. this is "bloomberg daybreak: europe." i am anna edwards. nejra: i am nejra cehic in london. -- china and the united states will hold paid discussions in the coming weeks, another week of risk on. rejects borist johnson's demand for a snap election as a bill to stop no brexit gains momentum. -- haslieve he because become the first leader of a non-opposition in the democratic history of our country to refuse the invitation to an election. nejra: we speak with riksbank

governor has the central bank is expected to lower its rate path. anna: this is "bloomberg daybreak: europe." let's talk about what been going on overnighting westminster. i am live on ground as we discussed another night in the commons and house of lords. a deal to block no brexit has made steady progress through the house of commons and into the house of lords. overnight, there was a fear it would get weighed down by all wrecking amendments put forward by the government but that doesn't seem to have been the case. things moving faster than expected to see the approval of that bill that will block a note

of brexit. could boris johnson forced to go to brussels and ask for a delay, something he said he would not do? would he not deliver brexit by the end of october? he said he would do that, do or die. timing will be everything. jeremy corbyn has said he won't give the prime minister the general election is looking for an he's assured the passage of this bill. we will look at what the labor position is. for the moment, it seems as if the prime minister is cornered, stuck essentially. nejra: you asked the question whether the markets were expecting this because of cable. elsewhere in the market, the focus is on the latest in the u.s.-china debacle or trade war. officials will be meeting in the coming weeks. october looks to be set for low-level officials meeting.

u.s. futures, up 1%. s&p 500, nasdaq, and dow. the u.s. ten-year treasury yield up four basis points and in the meantime, three banks lowering their 10 year yield forecast. ubs, bnp paribas and jpmorgan doing that on lower prospects. dollar-yen, 106.54. havens for safe relenting for now. johnson's made to trigger a general election next month has been blocked by mp's. he suffered a string of heavy defeats. johnson was thwarted twice in the house of commons in attempts toryposition party and rebels to block a no guilt brexit easily cleared it second and third reading. he failed in his attempt to force a snap general election.

the motion he tabled calling for an early poll was supported by 298, well short of the two thirds required. until theabstained risk of a no deal brexit is off the table. to offer an election today is a bit like offering an apple to snow white from the wicked queen. he offers the poison of a no deal. >> i think he has become the first leader of the opposition in a democratic history of our country to refuse the invitation to an election. speculate as to the .eason behind his hesitation the obvious conclusion is he does not think he will win. nejra: joining us, the head of

u.k. rate strategy at ubs. great to have you with us. what is the path forward? the strongcase is majority in parliament against no deal in favor of an extension is going to get its way. way seems to be the things are moving but once we get the extension confirmed, it is high probability there will have to be an election. parliament is stuck. we have a government pushing toward a harder brexit and a majority in parliament will do anything to stop that so we need to change the dynamics in parliament to get any progress, it seems. anna: good morning. a lot of unknowns, different paths this could take. could you put percentages on outcomes at this point? could you say what percentage chance of brexit not happening at all? the percentage chance of a no

deal at the end of october has gone down a lot. the probability of brexit not happening at all, that would take a pretty significant change of administration and a majority pro-remainongly prime minister, probably having another referendum. a very low probability of that. what has the highest chance is the general election and how things pan out after that in terms of the composition of mps in parliament. will affect the pop abilities. -- probabilities. the tail winds of another revocation, those sorts of things are all going down. the probability of no deal certainly in an absolute sense has gone up and that partly explains why sterling has been weak but we do think we need a general election before anything crystallizes and that needs to happen next. nejra: it is the general election you are watching for. news,ot to break some

naming a new ceo with immediate effect. that is crossing the bloomberg. he is the head of personal banking at nordia being named new ceo. let me show you the new chart i have been keep an eye on this week which shows the one year, five-year forward on gilts, b unds, and jgb's. dip intoem briefly negative territory. we've come back with a big jump in gilt yields. earlier, the ten-year gilt yield could move negative on a no deal brexit and secular stagnation. is that something you are watching? the 10-year gilt yield turning negative? as itour new forecast will end this year at 25 basis points. the is partly because economy is slowing down and headwinds, the possibility

central banks will have to do more, which could include asset purchases and you are seeing yields lower. we don't see a scenario where ten-year yields go negative but it is not impossible given the low levels we are at. anna: are we going to be thinking about what other u.k. governments might do on spending plans in the days ahead if we are heading to this general election and a timing, uncertainty. i will be speaking with john mcdonald. i wonder if someone who knows a whatbout the gilt market, are your thoughts of the labor spending plan? john: the first thing is those concerns become relevant in yields on yields if there is a labor government and polls don't suggest that is likely at this point, anyway.

we need to see what the manifestoes say. if we get to an election and we will form our view after that. it seems in the medium-term, if you had a labor administration, you would probably have higher borrowing and more importantly, that is what market investors would conclude about until we get to the point of election being a fact rather than speculative. it is hard to put any quantified numbers on that. nejra: is all the bad news priced into sterling? john: no. a no deal brexit is the worst case scenario in market's mind. the probability of it by definition is going off when you have a prime minister who is willing to go down that route. if it crystallized, sterling would go lower than it is today.

anna: was there anything -- it was a busy day in westminster. john: spending the next fiscal year, yes, on the margins it has implications but by far, the -- that will have more impact on public finances than anything the chancellor said yesterday and the composition of the government. who is making the spending plan into the medium-term? that comes back to your point about a change of administration. greaterl have implications for public borrowing than anything announced yesterday. nejra: in terms of your strategy around trading the guilt curve curve, how does the potential of no deal brexit affect what we have?

john: we have a price cut in the first quarter of next year so we think the market is fully priced there. that means the front and should be stuck where it is now. fall so thewill curve will flatten in that scenario. we had an announcement about longer-term reform to the rpi index or the way gilts are calculated and that unsettled along index gilt. all ofend of the day, the yields falling, all assets ifd to to move together and something is an outlier, ultimately investors will move toward them because they offer some pick up and yelled. those reform -- yield. line, yields falling further, curves flattening further and that thirst for duration and yields moving people further down the yield curve. john wraith from ubs stays

with us this hour of the program. let's get the first where news with annabelle droulers in hong kong. u.s. areand the holding the next round of trade talks in early october according to china's commerce ministry. the u.s. treasury confirmed minister level talks in the next few weeks but didn't specify when. the two sides are trying to end their more than year-long trade war as skepticism on both sides any real progress can be made. kong chief executive carrie lam says withdrawing the extradition bill is only the first step to address unrest. she said the decision was made independently by the hong kong government. protesters have largely dismissed the withdrawal as too little too late. they plan to continue demonstrations. the central people's government took the position

that they understood why we have to do it. view, and theymy supported me all the way. it is the earliest stages of processing the bill and withdrawing the bill yesterday, this is the same position. a surprise rebound in economic growth in south africa is on track to expand this year according to the country's central bank chief. he says he is comfortable with the forecast for 0.4% growth. that would be the slowest full rate of expansion since 2016. >> price stability is a necessary condition for balance and sustainable growth but in no way a sufficient growth. monetary policy is still

accommodative. annabelle: global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. in hongnabelle droulers kong. asking ourre question of the day on the markets live blog. the question is, what will investors need from the u.s. jobs data on friday to extend the stocks rally? we've done a good jog of -- job of kicking another leg up of jobs but what can the payroll numbers come friday? onn the debate, ib + tv the bloomberg. coming up on bloomberg, we will speak to a number of newsmakers from key events today. summit be at the banking . speak to theill

ing ceo and goldman sachs german ceo. you can catch all of those interviews on bloomberg from 10:00 a.m. london time. coming up, trying again next month. the u.s. and china set to have trade talks in october face-to-face but can build that role progress be made? we will talk about the implications. tune into bloomberg radio on your mobile device or dab digital in the london area. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london. i am anna edwards in westminster, keeping track of the u.k. political story. juliette saly is in singapore. juliette: well, certainly risk on. we had positive tailwinds from wall street overnight. the rest of asia, still to come up -- catch up with the euphoria

in hong kong stocks and then the news the u.s. and china are likely to hold talks in early october. the nikkei with its best one-day gain in february. a little upside in hong kong but not the gains yesterday. msci hong kong indexes paring some of its gains after jumping the most since 2011 yesterday. china's shanghai composite continuing its good run. it has had a four-day gain of 4% above 3000 points and we are seeing strength in currency on the back of the news we heard that the u.s. and china have agreed to talks. also, we are hearing word there could be another rrr cut this week. let's jump into my terminal because of news coming from the state council calling the timely use of tools including broad and targeted rrr cuts. the last time we had a statement like this was in december and the pboc followed suit with a rrr coming through in january,

the purple line. theyanalysts expecting will follow through again, which means you will see the purple line tech even lower. this coming as we hear forecasters scrambling to cut their forecast. a warning that the current approach to stimulus has proved insufficient. markets setting up for a potential rrr as early as this week. nejra: setting us up with the asian markets, thank you. let's get the business flash with annabelle droulers in hong kong. annabelle: apple borrowed $7 billion in the first bond sale in nearly two years. cheap funding costs already flush. a 30 yearering was security yielding 1.03 percentage points oabove treasury.

announced its galaxy fold will go on sale tomorrow and south korea following a month-long delay caused by a severe defect in the original design. tests including by bloomberg found the screen to have severe reliability issues. theung previously said phone would relaunch in september but didn't give the exact date. porsche has unveiled its first all electric sports car. is an aim to unseat tesla. the top turbo s version will be valued at $185,000. the standard version will be rolled out later and is expected to below $100,000. fore kick off an initiative infrastructure and we could combine other companies like bmw or the other brands. the infrastructure will grow with the upcoming volumes. annabelle: that is your

bloomberg business flash. nejra? nejra: annabelle droulers in hong kong, thank you. china and the u.s. will resume talks in october. officials in beijing will go to washington to meet their american counterparts after weeks of uncertainty and escalation with the latest round of retaliation resulting in both sides raising tariffs on september 1. has the trade war bites, china's cabinet has signaled further monetary easing to slow its economy -- help its a company. anna: as the trade war rolls of norway'seo sovereign wealth fund says the dispute makes it difficult operating business globally. >> we try to look into this issue and global value chain, and it is a lot more difficult than the first sight.

it means that you will have very concentrated production pathways and that means there is huge upside in keeping the production chains together and as large as they are at the moment. anna: john wraith from ubs is still when us. overnight -- with us. overnight, a market rally and the market seems captivated by the news there will be trade talks but coming later than expected. are you surprised the extent of to positivity in markets talks later than had been anticipated? nejra: we are having audio difficulties. john and i are unable to hear anna at the moment. she was pointing to a rally in risk assets and saying the market is captivated by the

latest development in trade talks. no furtherase is escalation but also no deal before 2020. what does that mean for risk assets? pushed about day by day by headlines? john: you seen this relief rally, the minute the talks are confirmed and in the wider picture, the more this situation has deteriorated, the more the outlook has suffered for everybody. there is mutual damage being caused. on one hand, there is the political imperative to try and keep fighting the fight and getting the upper hand, but there is also this desire to try and resolve things. for us, we have already seen a significant rise in tensions. we think we have reached peak tariffs in what has been announced and hopefully, things will stabilize and start to move in a more benign direction. nejra: -- anna: why do you say peak tariffs?

percentages can go up. is this based on the timing of the next presidential election? john: ultimately that will have a big herring, yes. motivated by are various things that politics has a big part and as we can see, it is harming these economies. cabrera do things at play, but one of the reasons we and others are forecasting more downside for yields, more easing for central banks in china, the u.s., or elsewhere, the impact of tariffs economically and ultimately, the imperative to try and improve economic fortunes because of politics and alsoions on one hand but improve people standard of living. ismeans this tariff war ultimately one everyone would like to bring to an end. nejra: you mentioned your 10 year yield forecast, trimmed to 1% from 1.25%. also getting a signaling

a further monetary easing with the economic headwinds. what are you expecting in terms of chinese stimulus and how much do you expect it to offset effect of the trade war? hopefullye tariffs, we are reaching the peak of the escalation. it will still bite and it bites mostly in the first half of next year so that is where the economy slows the most in the u.s. and china. the reserve rrr, requirement will come down 100 basis points further this year and again next year but even with that, we think growth in china slows around 5.5% next year and that is why they are engaging in monetary stimulus to spend -- stem the pace of decline. nejra: lots more to discuss, including the change in 10 year yield call. coming up, we speak to the riksbank governor stefan ingves after 10:30 a.m. london time. coming up, anna will talk about the fed. anna: the fed's dilemma,

officials are warning the u.s. consumer is carrying the economy as the trade war chills, business confidence. we will preview the fed meeting and talk to john wraith about his call on treasuries coming up next. this is bloomberg. ♪

this is "bloomberg daybreak: europe." i am nejra cehic in our london studios. am.: and i westminster we are keeping an eye on the brexit latest. boris johnson's bid to trigger an election next month is boarded by mp's. he was stored it twice in the house of commons -- he was twice in thewarted house of commons. later, he failed in an attempt at snap elections.

nejra: it fell well short of the two thirds required. 34, the number that was needed. labor mp's abstained. >> the offer of an election today is a bit like the offer of an apple to snow white from the wicked queen. what he is offering is the poison of a no deal. >> he has to become the first leader of the opposition in a democratic history of our country to refuse the invitation to an election, mr. speaker. i can only speculate -- i can only speculate as to the reason behind his hesitation. >> mr. speaker, the obvious conclusion is that i am afraid he does not think he will win. nejra: what's really interesting is that we are seeing boris

johnson really hamstrung by the same mechanism that his predecessor was as well. yesterday, a lot of questions flying around about what happens next. one analyst said it is as clear as mud. in terms of the timing of a general election, perhaps what we learned last night is that it is more likely to happen now after october 31. in terms of the prospect of no deal brexit, whether it is more or less likely, what do you reckon? anna: things are -- i don't know what's murkier than mud. we talked about mike yesterday. things are even -- mud yesterday. things are even murkier now. it looks as if we are moving slowly towards a general election. interesting to see overnight that the s&p, there could be the signs of ruptures in general alliance. things could change.

we will find out more as the day goes on. let's talk more about the brexit story. chris curtis is political research manager at yougov and joins me on set at westminster. good to see you so early in the cold. it's getting colder, isn't it? chris: it really is. still an october temperature. anna: let me ask you about the latest polling. 10 percentage point difference between labour and the conservatives. this is giving boris johnson the confidence perhaps to call this vote, but theresa may fell into this trap and lost a majority. chris: boris johnson should be confident but not as confident as he currently seems to feel. translate intold a conservative majority. he could not -- cannot take that to the bank yet. he still has to survive for a general election campaign. theresa may went into the last general election campaign

starting with a 24% conservative lead and that evaporated. the numbers look good for boars at the moment -- boris at the moment. nejra: good to speak to you this morning. what is your polling telling you about the public's view of boris johnson's approached brexit right now -- approach to brexit right now? approachris johnson's to brexit and boris johnson himself are not particularly popular. whilst it is not popular amongst the entire public, it is quite popular amongst lead voters. boris johnson strategy is trying to win over as many lead voters as he can -- league voters as he can. vote that, the remain liberaled behind the democrats, labour party, and to extent, the green

party. even the league -- either the league vote needs to divide again or the remain boat needs vote needs to- unite. pollingve us the latest around them and the on again, off again relationship between the brexit party and the tories. chris: boris johnson does not necessarily need a formal packed with the brexit party but he definitely needs their voters, particularly those who supported the brexit party in the european party election. so far, tentatively, it looks like actually he has done a fairly good job of winning those voters. he has squeezed the brexit party down in the polls to the low teens. most of that is either going back over to the conservatives and it's the main reason he holds this fairly comfortable lead in the polls.

nejra: we keep talking about how uncertain everything is now. clear as mud was one phrase used by strategist. what is your outlook in terms of what happens next? mean, clear as mud is a fairly good description of it. it feels to me that it is now completely inevitable that we hit a general election. will it be in october? will the labour party have to push it back into november, host -- post a delay brexit? it feels to me that we are heading towards a general election. the big question is, is that league vote going to remain united behind the conservative party. is that remain vote going to remain divided. it seems like yesterday was a little bit of a turning point. boris johnson had a very bad day and jeremy corbyn had a very good day and will be looking over the coming days to see if that starts to change these polling numbers.

that will obviously have an impact on how politics unfold. anna: a lot will depend on the clarity of the labour party's position over brexit essentially , what message they put in the manifesto, what message they take to the country, how focused that message is and how much they try to sell it in different parts of the country, how diluted it becomes. and has been so confused. chris: the majority of the public tell us they think the beent brexit -- has unclear. labour down 25% in the polls. the reason they are really struggling is firstly because of the brexit issue you just mentioned, not being able to come up with a consistent position. the second problem is around jeremy corbyn's personal popularity. 10 ofat of 10 -- seven of the public have a negative view of him.

is, you know, we are against a no deal brexit. jeremy corbyn stoney's to increase his personal popularity -- jeremy corbyn still needs to increase his personal popularity. , politicals curtis research manager at yougov, thank you for joining us. joining us from our bloomberg our guest.mumbai is great to see you. have markets put the weaker gdp data behind them? be -- good morning. may be the globe is helping. we need the globe to help. maybe this could be a short-lived uptick. it is also weekly options. two days of a small rest.

not many people -- arise -- rise. not many people are thinking of this today. n asked byreports of a actgovernment of india -- by the government of india. i somehow think that will not be the case. back to you. nejra: thanks. you. get to >> good morning. it's all about the u.s.-china trade war and the optimism potentially we are seeing that is driving these markets this morning. asian equities are set to have their best to date again since june -- best two day gain since

june. china's vice premier said to be heading to washington in october. you can see across asian equities, we are seeing risk on sentiment. japan up to more than 2%. csi 300 up more than 1.5% and or exchange, swiss franc, japanese yen getting hit -- foreign exchange, swiss franc, japanese yen getting hit. in sovereign bonds, we have the treasury spelling, to year yield up nearly five basis points -- two year yield up nearly five basis points. upn ore of one point -- 1.5%. china is iron ore's biggest destination. oil quite steady this morning. wti trading on $56 per barrel, brent under $61 per barrel. yesterday, the biggest gain in almost two months.

three things impacting the price of oil. one is a trade war. china is the biggest consumer of crude so any sort of optimism that we are going to see some sort of deal coming to the table is risk on for the oil price. on top of that, we have the u.s. adding more sanctions on iran. the special envoy sing more could possibly come on the week. finally, russia saying they are going to finally comply with the opec deal come this month. all of these are risk on if you are able in the market. nejra: seems to be a cross asset hurrah. let's get the bloomberg first word news now. annabelle droulers has it in hong kong. china and the u.s. are holding the next round of trade talks in early october. that's according to china's commerce ministry. the u.s. treasury confirmed ministerial level talks in the next few weeks but did not specify when. the two sides are trying to end their nearly too long -- two

year long trade war. hong kong chief executive carrie lam says withdrawing the extradition bill is only the first step to address the unrest in the city. she also says the decision was made independently by the hong kong government. protesters have largely dismissed the withdrawal as too little, too late. they plan to continue demonstrations. the central people's government took the position that they understood why we have to do it. they respected my view and they supported me all the way, so whether it is in the early stages of processing the bill and then suspension of the bill, then withdrawing the bill yesterday, this is the same position. hurricaneake -- dorian is making its way up the east coast -- u.s. east coast after sweeping its way through florida.

and has lost a lot of the force it brought to bear on the bahamas, where it killed at least 20 people. forecasts say wilmington or the outer banks of north carolina could suffer hits from the hurricane. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ejra? nejra: thank you so much. fed officials are weighing two competing forces in the economy, the resilience of the consumer and the fallout from weaker growth. although manufacturing is weakening, consumers are now caring much of the weight for growth. the dallas fed president echoed the sentiment, saying he is watching for the psychological effects on the consumer. eric rosengren sees rising risks that are not yet a reality. anna: this comes as the global

yields grind lower and lower. ubs, bnp paribas have all cut their forecast for the citing year yield, further federate cuts or weaker growth. markets have not priced in five rate cuts between now and january of 2021. john wraith from ubs is still with us. thanks for waiting patiently with us. i want to ask you about your rate cuts call and treasury call. one of the biggest risks to this is that we see an abrupt change in stance or peace breaking out really in this trade spat between the u.s. and china. how much of a change would that make to the calls that you currently have in place? john: a sizable one. we think growth in the u.s. and china suffers the most in and around the first half of next year. that is largely a direct impact from the tariffs coming through and that are still in the pipeline.

where those to be reversed or not to happen, clearly it would prospect.e growth we think the rates are going to be cut five times by the fed and we think it will come sooner than january, 2021. we think they will have enacted five cuts by september of next year. in that scenario, there is more scope for front end yields to fall further. that is why we think 10 year treasury yields will head down below 1%. duration isor pushing investors further down the curve. we don't think that trade tariffs are going to escalate any further, but we don't think they are going to ease off any time soon. we are still rather down below the outlook for the u.s. economy. nejra: on your call for the number of fed rate cuts, jeremy they wait for consumer spending to weaken, it might be too late. chris: i think both and -- and like john: i think both investment -- john: i think both investment

and consumption are starting to so signs of stress. growth, wethe weak see the unemployment rate rising 4.3% over the course of next year. that is one of the reasons we think the fed will have to inject more accommodative monetary policies into the situation. nejra: john, talking about the u.s., the question of the day is, what payrolls number is going to sustain the risk rally? tell us what you're are looking for on the job front in the u.s. and how that will play around -- into risk assets. john: for now, we are looking for signs that the labor market will remain robust. if this fresh easing of some of the trade tensions or fresh optimism that at least they may be talking again face-to-face in a not too, that creates something of a tailwind for risk assets. if you are getting this slightly

more benign backdrop to the trade situation, hopes of face to face talks, but at the same time we are seeing signs of weakness grow in the u.s. economy, that will act as something that upsets any hope for risk assets. we need to see strong data or data that is holding up but also some resolution to the trade conflict. nejra: in terms of weaker growth, the real yield in the u.s. now negative as we see inflation expectations crumbling as well. should we expect a deeper move into negative territory for real yields in the u.s.? john: i think about the real yields and breakevens tend to fall to differing degrees. we are looking for 50 basis points. it will come off both breakevens and real yields. those breakevens are important, because they point to inflation. might potentially be softer than the fed would like them to be and that's what informs our view in part, but the fed is going to cut rates a little faster than the market is pricing in. they need to get those inflation

expectations to pick up a bit or stabilize. the more they decline, the more the federal come under pressure to ease policy. stays with usaith on the program. bloomberg takes to the skies as we speak to another of airline executives live at that world aviation festival in london. we will be getting all of the latest industry news from the likes of ceos of jetblue airways, and the coo of virgin atlantic. anna: don't miss those conversations at 7:30 a.m. london time on bloomberg tv. coming up, the president of zimbabwe tells us relations with the u.s. are the best they have been in decades. we will bring you our exclusive interview next. this is bloomberg. ♪

♪ anna: this is "bloomberg daybreak: europe." i am anna edwards live in westminster. nejra: and i am nejra cehic live in our london studio. this world sees the world economic forum for africa hosted in cape town. manus cranny joining us. . . great to see you. this forum comes at a critical time for south africa. give us a sense of the political business climate you are seeing. manus: a very good day to you. yes. world economic forum africa 2019 comes more to bite protests -- comes marred by protests. there is a huge amount of angst in this town. there are protests outside of west africa yesterday taking place. peoplebic attacks on from south africa. nigeria has recalled their high commissioner back.

we understand there will be a very limited attendance if at all from the nigerians. the attacks are mounting. this country is dealing with the power generator for 95% of the country ballooning in debt and struggling to maintain the debt rating with moody. they are one step away from junk. speechsa do to give his some quiteckdrop of substantial political, financial, and social angst. anna: good morning. business leaders and heads of state are at the event. the zimbabwean president spoke exclusively to you, manus. you know one thing i love about coming to these things? he arrived three days early. we sat down, had a conversation. he's been in power just under two years. he is indeed trying to bring zimbabwe in from the cold back

into international relations. ground zero for that is the united states of america. witham happy that dialogue trump is ongoing. i have met several of his berries -- various --. i have met them. that thispositive will continue to yield positive results towards the removal of -- manus: could that happen in 2019? or is it a 2020 event? >> i do not know the timeframe. what is particularly important is that we are engaging. we are seeing a positive response from some of them. we still have some members, some

hocks who are still very -- hawks who are still very hard on zimbabwe. manus: one of your biggest supporters when you came into power was the british lord. he says that zimbabwe economy must train on its promise to rebuild after mugabe. the risk is that there is a global perception that you have not moved far enough and aggressively enough to reform. what do you say to those detractors. ? >> we cannot remove at the pace of an individual in another country. we are moving at the pace of what is possible in some bublik. -- zimbabwe. we must not leave anybody behind. parliament. do,the changes we have to we have to go through all the

parliamentary procedures. some field pace is slow -- some feel that the pace is slow. we cannot ignore everything demanded by our constitution or laws in the country. what is critical is that we know where we want to go. we want to liberalize our economy. we have met the economic reforms. the president of zimbabwe speaking to me exclusively yesterday. 270%.ion, 230, ladies, good morning. >> good morning. manus cranny at the world economic foreign in cape town. great coverage. again --, boris be in beaten again. what does it all mean for the brexit end game? we will discuss that. john wraith has been our guest hour.his

we will talk more about brexit next and the market follow-up from the discussions between the u.s. and china and the prospect of more trade talks. risk on is what it is. this is bloomberg. ♪

nejra: good morning, i'm nejra cehic. anna: and i'm anna edwards, live in westminster. this is "bloomberg daybreak: europe." , china and thelk united states will hold trade discussions in the coming weeks. the news sparks another day of risk on. wma, parliament rejects boris johnson's plans for a snap election as a bill to stop a no deal brexit gains momentum. leader of the opposition in the democratic history of our country to refuse the invitation for an election.

and is staying dovish. we speak with the rich bank governor as the central bank is expected to lower its rate past. -- path. welcome to daybreak europe. nejra: risks rally on the secondary prospects of a meeting. that seems to be the dominant theme but we are on absolute tenterhooks in terms of what happens next in brexit. have said an election is inevitable, is that where we stand? anna: somebody saying this just has to be unlocked, this gridlock we have reached. it has to be unlocked by some kind of democratic event.

the timing will be crucial. last night, we saw the government once again embarrassed and backed into a corner on their brexit strategy. losing the vote brought by the , all coalescing around a plan to block no deal. that plan was successful. they also lost on their request to trigger a general election. others in parliament are saying not so fast, we want to nail down our objection before we give you permission and they need and the other side's permission to get around the timing set out. they need the permission of others to do this, they need two thirds of the house to go along with a general election. so we wait to see how this becomes unlocked, we will speak to john mcdonald a little bit later on and asked him exactly what the timing of things is going to look like. it does seem to look

increasingly inevitable. yeah, and markets are perhaps not moving as high today. in terms of futures, we are seeing a clear picture of risk on. futures movings. higher, the ftse dax and cac 40 to all on the front foot. the risk rally is seeming lee triggered -- seemingly triggered by the prospect of talks in october which will be preceded by lower-level talks as well. we are seeing the movement reflected in the bond market as well. the 10 year treasury yield is moving up several basis points, but that said, a number of analysts lowering the 10 year yield forecasts. see that jpmorgan cutting 10 ubs andld or cast paragraph cutting to 1% because the global gloom is still out there. but today, we're seeing the

yield take a little bit higher. , yesterday wely saw quite a strong rally in bcp's. that looks like it could continue today if it does not steady and bund yields are tracking what treasuries are doing. yesterday, we saw gilt yields jump, we hit a record low. so we will wait for the gilt market to open at 8 a.m. time. -- 8 a.m. london time. anna: let's check in on the markets in asia. juliette saly is in singapore. of his a look at all green on the world map function. we are seeing a risk on session as we would expect. of course, we are still getting tailwinds from wall street. the shanghai composite is up by over 1.25%, getting its best four-day rally since june.

higher,ei is closing one of its best sessions we seen since february. the aussie market is up by about 1%. worth noting the hong kong is starting to give back a little. the hang seng is tracking weaker and we have seen weakness. not that surprising giving the run-up we saw to those stocks. we are also seeing strength in the on short currency in china. but let's have a look in terms of what we have seen in chinese equity markets and the fact that they are running quite hot suggests are couple are getting into overbought territory. index and the china tech index are both reading around 70 in the composite is close to that level as well. this is on the back of news we heard the state had canceled more easing. we continue to see

his upside, it will have all four indexes in overbought territory in the last time that happened was in march. much. thank you so trigger ason's bid to general election has been blocked by mp's the prime minister was thwarted twice in the house of commons in an attempt to block in no deal brexit. , he fails in his attempt to force a general election. johnson accused the opposition of fearing a snap poll. thee is, to my knowledge, first leader in the history of our country to refuse the invitation to an election. anna: that was westminster. in brussels, michelle barnier officials negotiations

are stock. they have seven stocks" in a state of paralysis. that's after boris's chief negotiator failed to provide any proposals to break the deadlock. joining us now is the head of swiss growthgy at thing. i wonder if you can give us your thoughts on the very short-term move in sterling. with no dealas if at the end of october, there is upside to be found in the pound, and if so, how quickly? >> the market is trading sterling on expectations it's likely to be a further extension in terms of the relationship between the u.k. and europe. believetion is, do you hard brexit is going to happen on october 31 or not? every time there's a new cycle,

it increases the likelihood of something will delay it and we see an improvement in sterling. every time we go back to no deal, sterling sells off. to updateve just got our viewers that hong kong exchanges halting its derivatives market for the afternoon. just to carry on with the brexit conversation, in terms of cable, were not seeing a whole lot of movement today. ,f we were to look at the pound which you prefer to trade against the dollar or other currencies? the yen is probably my favorite to trade against the there is a clear relationship or sterling and yet sits in the benefits yet in the current scenario. so going short is probably my favorite. , there is an exhaustion in the marketplace and fx traders are less likely to trade a scenario.

what is driving the economic data in the u.k. is less the expectation that brings it might or thathe economy broader macro headwinds are pushing the u.k. into a session, but the uncertainty and lack of business investment in the weather in construction orders are manufacturing, is slowing down the economy there but as soon as there's some uncertainty , we should see the sterling improve. i was fascinated by one colleague who suggested pound volatility was set to drop. because of all of this brexit can ticking, do you think that is likely? or should we be on guard? >> be on guard. considering how dynamic and fluid of the situation is, we should expect volatility to spike. it is very difficult to say what

will happen next and things have theyned so quickly that if are able to kick the can significantly down the road, yes, you have a decline in sterling volatility. anna: what is your take in the prospects of a no deal brexit? is there any inevitability to no deal brexit? peter: i don't think anything is inevitable and it silly to take something off the table. it is extremely complex. not only do we have a level of exhaustion, having looked at the situation for over two years, but the complexity of a clinical hard makes it incredibly to avoid what happens next. anna: if we do see a general

election, the polls don't suggest jeremy corbyn will win. some have suggested it is the brexit no deal risk that outweighs concerns about a very left of center socialist agenda. what do you think about jeremy corbyn and the pound? peter: i would definitely lean towards improvement in the pound and the fact that no brexit is probably good for sterling. all of this with a significant and heavy hand pinch of salt. just looking back at the 2016 election, in everybody's mind, a donald trump presidency would just be terrible for the economy and equity markets and the reversal we saw within a few hours of trump being elected president was significant. so predicting how corbyn would , it's verynomy

difficult to say. anna: we have factory order data from the top of germany. a bigger drop than expected. how much more downside could we expect in the euro? peter: a lot of it is expectations for the ecb. i'm not sure the weakness in europe, per se, is driving this one. this probably the key driver what we are trying to do. is, the ecb has exhausted most of their key channels, especially changing the negative and deposit rates lower. so using currency as a primary tool to rejuvenate, especially an economy like germany, is critical. so i think it is the

expectations of what the ecb is likely to do that is driving the euro lower. nejra: peter stays with us. now let's get first word news in hong kong. in china and the u.s. are holding the next round of trade talks in early october. that is according to the commerce ministry. the u.s. treasury confirmed ministerial level talks in the next few weeks but did not specify when. the two sides are trying to end the more than year-long trade war but there is skepticism on both sides that any real progress can be made. hong kong's chief executive carrie lam says withdrawing the extradition bill is only the first step towards addressing unrest in the city. she also says the decision was made independently by the government. protesters have largely dismissed of the withdrawal as too little too late and plan to continue demonstrations. essentially, they understand

why they have to do it. they respected my view and they supported me all the way. so whether it is in the earlier stages of processing the bill and then suspension and then withdrawing yesterday, it is the same position. a surprise rebound in economic growth miss south africa is on track to expand. he is comfortable with the forecast of 0.6% growth, but that would be the slowest for your rate of expansion since 2016. >> price stability is a necessary condition for balance and sustainable growth. is by no way a sufficient condition for balance and sustainable growth. we believe that, from where we are standing, we not have a lot of policy room.

but monetary policy is still accommodative. hurricane and dorian is making its way up the east coast after sweeping past florida. sustained winds have strengthened again to category three. it brought a lot to bear on the bahamas where has killed at least 20 people. it could suffer hits from the hurricane. global news --global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you so much. konga reminder, the hong exchange has halted its derivatives market for this afternoon and after-hours trade. prolongede to connectivity issues. we have heard that in an email statement.

in exchange will provide further updates. but for now, halting the derivatives market for the afternoon and after-hours trade. anna? anna: we will watch that would interest. let's tell you -- with interest. but sorry what's coming up. we will be speaking to a number of newsmakers. we will be speaking to this german publication in frankfurt. nejra: what a lineup. the ing ceo and goldman sachs germany ceo wolfgang fink. you can catch all of those interviews from 10 a.m. london time. up next, china again next month the u.s. and china are set to hold trade talks, but can any real progress been made? radione in to bloomberg live on your mobile device or on

digital radio.

, 40a: 7:19 in london minutes to go until the start of the trading day in europe. this is "bloomberg daybreak: europe." anna: i am live in westminster. nejra: and i'm nejra cehic in our london studio. let's get the bloomberg business flash. >> thanks, nejra. ubs is preparing a shakeup of its investment bank. to executivesg it to oversee dealmaking around the globe. they will be put in charge of investment banking, including advising on corporate takeovers and raising funds to stock and bond sales. the appointments are not official yet.

norway's state-owned oil and gas producers, the first charge will start today as ecuador looks to boost its flagging share price. it also announced production will start a month early. nordion bank has named its new ceo. the previous ceo who plans to retire. the lender is pushing to restore revenue growth after years of painful restructuring. he was previously head of personal banking at nordion -- nordea. porsche has unveiled its first electric sports car. is parent company volkswagen attempting to unseat tesla. the version will be priced at $135,000 and rolled out later. it is expected to be priced below hundred thousand dollars. >> we have to take off

initiative from infrastructure. at the end, we could combine other companies like bmw. the infrastructure will grow with the upcoming volumes. that is your bloomberg business flash. anna: thank you. now let's talk about trade. china and the u.s. will resume talks in october. officials in beijing plan to visit washington next month to meet with their american counterparts. comes after weeks of uncertainty with the latest round of retaliation resulting in both sides raising tariffs on september 1. meanwhile, china's cabinet has signaled further monetary easing. forstake council has called use of reserve ratio cuts. is the trade war rumbles

sovereign ceo of the wealth fund says the dispute makes it difficult to operate globally. >> we try to look into the issue and the global value chain, it is a lot more difficult to break . , just think about producing an iphone as opposed to being out there in the whole world. it means you have very concentrated production patterns. it means there is a huge upside in keeping production chains together and as large as they are for the moment. nejra: with us still is the head of market strategy at swiss quote right -- bank. trump's holdident of his base will deliver a win in 2020 because they remain unmoved by the economic outlook.

do you actually expect a further escalation of the trade where from here, never mind getting a deal? peter: it's very likely. there has been a narrative that trump and gdp growth are inevitably lost together and therefore trump will make a deal to support the u.s. growth situation and such. but we think that is probably against his best interest to make a quick deal. first of all, the longer he delays, the more likely the fed is going to cut and that will help boost equity markets and have a sense of richness third number two is that headed into a cycle,lt 2020 election to be able to make a deal and have lower fed interest rates to give of the u.s. economy a real boost. i think it's way too early for trump to play history card.

the other thing is, what we are not seeing is, when we get u.s. data we get u.s. data we're not seeing his popularity go down. if you look at farmers particularly, the ones on the front lines for the u.s. china trade war, their support of trump has actually increased recently. so it's not going anywhere. he can rely on his court should be there, regardless of how the economy is doing -- his core to be there, regardless of how the economy is doing. nejra: to that point, i was surprised to hear president trump the damage he is doing. reportersressing talking about how the dow would be a lot higher if it weren't for his trade war. , wonder how that plays into it the fact that he realizes this and still the path remains the same. peter: he has characterized

himself as sort of a saintly figure, that somehow his holy war on trade is benefiting the long run of the u.s. economy and not short-term wealthy people's gains and i think that is a miss characteristic. he is also doing a good job of characterizing the fed is the custodians for the health of the u.s. economy and putting it on their shoulders, saying that they have to cut interest rates and that it's his job to handle the day-to-day operations and nuances when it is really the fed that is important to the economy. this makes it more and more difficult for them to be a political and keep their independence. joining us, you for peter, head of fx strategy at swiss quote brink -- bank. the hong kong index extends its drop to 2%. we have that news from the hong kong exchange. futures trading would be halted

and we are seeing declines in the market. that's it for "bloomberg daybreak: europe." the european open is up next. anna edwards would pick it up -- will pick it up with matt miller. ♪

anna: welcome to "bloomberg markets: european open." i'm anna edwards, alongside matt miller in berlin. matt: good morning. today, the market say even a slowdown and europe's engine cannot dampen our mood. german factory covers come in a below estimates but the risk on a party keeps features in the green. the cache trade is less than 30 .inutes away ♪ an: