florida sees record deaths from the virus. new cases in the u.s. top 60,000 for the first time. paschal donohoe is the new euro group president. in k rebuked -- china stock rally cools as the state funds start selling, a sign the government wants to start to slow the surge. this is uber surveillance. i'm francine lacqua in london. tom keene in new york. tom, a lot of the focus is on what we saw in china. we saw that incredible rise in stocks with chinese authorities saying maybe slow down a bit, and the focus on the euro group, and what we are seeing in the u.s. with the number of deaths rising by the day. tom: the virus is front and center in america. it is extraordinary to see the different stories, geography. the polarity, disneyland outside

los angeles is closed. the employees have just said no. and the magic kingdom in disney world, they are attempting to open it, even with the virus in florida. when i am looking at the markets, without question, is the de-risking going on? the u.s. yields have really come in in the last 48 hours. francine: you reminded me in the last hour, there was a big move on u.k. guild. let's get to first word news with ritika gupta. ritika: good morning the coronavirus milestone keep piling up in the u.s.. the number of new cases has climbed over 60,000 in one day for the first time, and texas, california, and florida, all with a record number of deaths. in new york city, large events that require permits like street fairs have been canceled through the end of september. the u.s. is set to take the next step in a response over taxes on technology giants. bloomberg learned the u.s. will

impose tariffs on up to $700 million in french goods including wine, cheese, and handbags. the duties would be delayed until friend starts collecting tax later this year. joe biden has laid out a plan that he says will make america's economy better than it was before the pandemic hit. produceidate wants to manufacturing and encourage innovation. big-ticketing proposals like the green new deal. the international energy agency has warned that the recovery could be derailed by a resurgence of coronavirus. in the monthly report, the iea says the collapse in fuel consumption during the second quarter was not as bad as originally thought and checks demand could bounceback shortly in the next three months. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more

than 120 countries, i'm ritika gupta. this is bloomberg. francine? tom? tom: equities, bonds, currencies, commodities. i am focused on the yield market today. it sort of slipped in this week, no question about it. yields lower. the two-year u.s. yield comes in a full basis point again this morning. that will be a real breakdown if we can reach through the level we are at right now. the curve flattening, the vanilla spread, the difference in yield between the 10-year yield in the two-year yield has really flattened down dramatically over the last 24 hours. it is expressed as well in stocks, a little bit soggy today. maybe the nasdaq 100 will go down today. the other thing i look at is currency markets, a resilient dollar all in all. that begins strength. francine: we need to spend a bit --time with what we saw

european stocks are turning higher. they are looking past china's stalling equity rally, and they are looking past the coronavirus to focus on some of the positive corporate news. i'm also looking at treasuries on the dollar rising, and oil -- i wanted to mention oil for two reasons. first of all, a warning that there was oil demand at risk because of the resurgence that seems pretty much intuitive, but lifted aa's noc has measure on oil exports. there is no question, i am glad you mentioned this, francine. this is going to be fascinating across all of the asset classes, equities, bonds, currencies, commodities, this idea of how demand destruction full's into their microeconomics. all of this is a pulling out of the gdp report, the v-shaped thing that has disappeared for q3 and out to q4 as well.

let's come back. we are in london and new york. i want to make clear coming up of an important conversation fiscal stimulus worldwide. peter gaspar will join us from the international monetary fund. please stay with us on this friday. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom, we were talking about the markets, talking about some of

the things that have come out in the last hour, the iaea saying oil demand recovery is at risk because of the virus resurgence. let's talk about the possibility of virus resurgence and what this means for gdp forecasts worldwide. with janet henry, hsbc global economist. great to have you on the program. there are a number of issues. we don't know with the virus resurgence where it will hit, and we don't know what kind of scarring the virus will do on the economy. give us a glimpse on how you think about these two issues? number one, you mentioned how government themselves responds to the resurgence. what we have seen with the likes of australia is at the first sign of the rise in s, with a rise in

levels the state is closing down the whole state. what we are seeing in other regions of the world, yes, localized lockdown, but it is very different in the case of the u.s. in terms of where we go from here, a lot about how consumers respond to their fear. again, it has been quite different. you have seen it in the u.s. you see the number of people under -- seeing these activities, and florida, texas, california. but in new york, they are still going out to restaurants. whereas in australia, it seems to have a nationwide effect. and so at the moment, what kind of recovery are you expecting? i think what we have seen in most countries, and in asia

and we are seeing it in europe as well, is that the initial recovery is v-shaped. 90% ofet back to 80% to the economy just by production on the streets, consumer goods consumption coming through, it is getting that last 10% or 20% improvement to come through, even in the best case that is going to be more protracted until the pandemic is contained globally. there are certain parts of the economy that won't come on stream. the lingering effects coming through will continue to way on labor markets. the pace of improvement thereafter is going to be much more onerous. a friday want to, on in july, to say that hsbc research has just been on fire. your accuracy has been breathtaking. we have a steve major bond market. i would love for you to comment

on mr. major's outrageous and correct call of lower and lower yields. do we have a 10-year yield with a negative interest rate? janet: in the u.s.? u.s., yes. look where we are this morning. the long-term interest rate globally is the interest rate that balances global demand forsavings, global demand investment. at the moment, we have seen a surgeon corporate bonds issuance , but companies are saving because they don't know how much worse things are going to become. individuals are saving. of u.s. has a savings rate over 20%, but it is quite clear for the foreseeable future, we are in a lower for longer world. and the global economy is -- globally, with how low interest rates are going to be. tom: i cannot emphasize enough

the importance of dovetailing -- bond ands barred market analysis with dr. henry's market analysis. beautifully. how does society move forward with nominal yields so low? i don't understand what retirees do. then't understand what actuarial assumption in a pension plan is in two years. how do we move forward with rates this low? janet: with difficulty, but in terms of how retirees respond, i think we have already seen it playing out over the course of the last decade. in the united states you have already seen larger banks of over 65 still being in the labor force. u.k., you have seen it go to about 10%. when we first came out of the financial crisis, if you look at

france, it was maybe 1%. that has moved higher. soapy burn -- people know they will be working longer. with a high unemployment rate coming through, there are many certainties about this crisis, but we know that higher unemployment will be one of them by the end of 2021. but we are also in a demographically challenged world, and i think great participation of older workers, thate working for longer, doesn't address the problems for pension funds with future liabilities. biggest effecte on the economy from the job market? janet: i think it is. also with away policy -- also the way policy is delivered can affect improvement not just in the short-term but over the next few years. at the moment, especially in

europe, they have been paying theirees 60%, 70%, 80% of salaries to stay on payroll. the approach in the u.s., initially some people were better off by being unemployed. the next rise of policy stimulus in the u.s., he will be when we get higher unemployment therance or if it is -- risk as we go further down the road, if you just keep people on life support, especially if they are a zombie companies or zombie jobs, they don't get redeployed into the new jobs that will next five or 10 years. so with the economy in the near term, it might actually slow the pace in which people are redeployed into new productive jobs, higher productivity jobs a bit further down the road. this gets back to interest-rate questions. if they are ever going to get into a world of higher, long-term interest rates, we need higher long-term real

growth. we are only going to get there if eventually we have higher productivity. inncine: will we be able to -- to avoid disinflationary pressures? ofet: there has been a lot discussion in this pandemic that , theupply and demand impact of that on inflation. but we need to think about what i would call good disinflation and bad disinflation. --re is all kind of demand there are supply shocks that push up prices in certain areas, that squeeze pending power, impact on growth. driven kind of demand deflationary pressure coming through, and in the short term that is very much what we got in place. my longer-term concern is that -- particularpply with protectionism in the mix might lead to a worsening trade-off.

goesadlight inflation lower, growth is the consequence of adding some of these prescriptions into the global economy. the growings concern, and it is disinflationary. tom: janet henry, thank you so much, with hsbc. we are going to drive forward this discussion, lots of discussion on markets, do a little bit of politics as well with an important election in singapore going on. later on this morning, mohamed el-erian will get us into the weekend. this is bloomberg. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance," from london and from new york. behind me, and you will see it in a little bit with the sun rise across the hudson river, it is new jersey. new jersey confronted the virus early. even with that, over 20 deaths announced yesterday by the governor. let's listen. >> you're absolutely right, and the toll has been enormous. over 13,000 confirmed deaths, probably another couple thousand that are expected to pass from covid-19. that is the awful tragedy.

our numbers have gotten a lot better. as they got better, we made the decision based on the facts and the science to begin step-by-step reopening our state . so we knew when we were doing that, doing it responsibly, that we would take on more risk in terms of increasing the potential for transmission. we were comfortable with that risk. was we were not expecting the explosion in cases elsewhere in the country, and so the rate of transmission has gotten a little bit uncomfortably high for us, just over one, today it improves slightly. so we put a travel advisory in place for folks from new york and connecticut if they are coming back from a hotspot. are nowident, we requiring face coverings outdoors. those are two steps that we have taken over the past 10 days or

so. we have held off on indoor dining, which brings me no joy, but it is quite clear that this virus is a lot more ins -- is a lot more lethal inside than it is outside. we are watching this minute to minute, and again trying to make the decisions at every step based on the facts. david: we have to get to the school.but then we have president trump has pushed to reopen the schools. to what extent are you planning on people being in the classroom as opposed to remote learning? murphy: our department of education and department of health put out standards a couple of weeks ago, very comprehensive, largely defining the parameters and the basic principles and leaving it up to our districts to develop their plan and come back for our common agreement. our bias is to get kids back into the classroom. that is the starting point.

but we have to do it responsibly. i think the toughest nut to crack is going to be preventing the unwitting passing of the virus from an asymptomatic young, healthy kid to an older educator or administrator or someone with underlying health challenges. so the whole notion of capacity constraints, social distancing, face coverings, lots of hyper hygiene, etc., doing things outdoors wherever possible, those are all going to be elements of what you think it will look like. david: give us a sense of the desperation. i understood that your budget is balanced through september 30. that sounds like you have time to work with. gov. murphy: balanced because it is a constitutional requirement. but we had to cut or differ $5.2 billion of expenses. defer $5.2 billion of

expenses. the amount of -- that is how overwhelming the crisis has been coming in expenses that have exploded and revenues that have fallen off the table. david: are you going to have to borrow money? if so, what does your access look like to the municipal bond market? new jersey has not always had the best credit. gov. murphy: we will have to borrow money. we will probably have to put some revenue raisers on the table. the first place we will go is to the federal reserve, the special program that was set up, and that will be the first port of call, and we will go from there. but this is going to be and both, borrowing i'm sure in the billions, and meeting -- needing federal cash assistance. and we are not alone. this is an american challenge right now, and sadly we are seeing this virus explode around

the country. the other states are in our prayers. we wish nothing but a speedy resolution, but it is a reminder that we are all in the same boat together. was new jersey governor phil murphy. european stocks are fluctuating this friday. investors weighing positive news against china's stalling of the equity rally, and we saw a rising number of coronavirus cases. we are looking at treasuries jumping, five-year yields near a crude low, and nymex trading around $39 a barrel. tom: it is important to go through the bond matrix right now. the two-year yield, four-digit, a stunning -- that is a huge deal on this friday morning. .1389 on the two-year. the 10-year was a 65 on -- lisa two daysz talked about

ago, .5727. and the four year bond, down to a 1.26 on the 30 year bond. thennot say enough about demand for bonds. the curve flattening isn't -- is extraordinary. a major source of conversation through the morning. coming up, on europe, the future, wolfgang munchau. please stay with us. from london and from a beautiful sunrise in new york, this is bloomberg. ♪

tom: good morning everyone, "bloomberg surveillance," from london and new york.

interesting day. , justnd market extraordinary. regime ofout a new disinflation. with us, someone who has followed regimes of europe over the last 30 years, wolfgang joins us. thrilled. what is the chancellor's biggest headache? she seems to have a rally. 14 years into her term. what is the biggest challenge? wolfgang: european recovery fund. she has a week to get agreement. week,it in brussels next the first time in person, not just teleconferencing. they hope to get a deal. possibly 500

billion euros. at the moment there is no agreement. machine. a dealmaking optimistic they might get something. it will depend on whether they can get the netherlands to agree. that is the problem. netherlandses the -- tom: does the netherlands listen to france or germany? wolfgang: they listen but they are self-confident. they have developed their own brand of europeans, different from france and germany. thingsch can hold two together to say they are pro-european but they don't want more europe. for them, that is not a contradiction. they like this in the market.

-- the single market. there is no majority in the netherlands for this type of action proposed. parties, number of especially the government. francine: good morning from london. what can the commission and individual countries offer to the netherlands? are they looking for a rebate? are they worried where this money gets spent, in italy and other countries? wolfgang: i am hearing their working on decision-making, to compromise. fundneed the money, the itself but the dutch will get the right to every disbursement. that has not been offered. offered is a

qualified majority vote for each disbursement. that is something the dutch want. they want to involve their national parliament. have vetoike to rights. this would be the mechanism, every country has to agree. the dutch parliament has to agree. they want the same procedure. meane moment, it would austerity and all the stuff they crisis,ring the euro that might just happen again. that is where the battle is fought. francine: what are the chances there is an eu recovery fund by next week? if they don't do it next week, will they agree at some point? unpalatable it is

for italy to agree to troika like submissions. wolfgang: exactly. there has to be something accountable. there will be a needle on some kind of reform and committees will have to be firm. i doubt there will be a troika to basically test -- [indiscernible] it will bell be, invasive to some extent. but dots will have to compromise on decision-making procedure. -- the dutch will have to compromise on decision-making procedure. this week it is touching go. -- touch and go. [indiscernible] there are a number of other issues. who gets the money? what are the economic keys?

what are the data points they use? complicated stuff. the commission is made the proposal. it is basically on backward looking data. the fund does lots of things. it is a transfer mechanism, investment fund, a covid recovery fund. it is not anything specifically. the leaders will have a go at that as well. munchau,fgang lunc europe, europe, europe, and we forget the u.k. is still a part of this. can you give me an update? and the dog days of summer we have a pandemic. how are we doing? wolfgang: we are not doing great. brief outbreaka

of optimism at the beginning of the month after the deadline for the trade extension expired. months, theyee could push it to october if necessary. been -- there have been signals from both sides they could move under circumstances but the eu is saying the first round did not go anywhere and the impression is that the u.k. is not trying to push -- they're really not i think the eu withes very unreasonably the ecg on the u.k. the u.k. has been behaving

unreasonably. [indiscernible] people have put up artificial barriers and they will have to come together quickly. they have one month. it has to happen in september. if it is in the same position in september, i would say, prepare for no deal. there are a lot of elements in disagreement. there will be small trade deals. tiny. tariffs, butero not a lot else. it will be minimum. the difference is not so much between no deal and deal, the differences between a minimal deal, we are likely to get and the kind of deal we could have had had they negotiated

negotiations on services and other sectors, which are more important than tariffs. that is a shame. francine: thank you so much. , talkinget back to you about brexit and the letter to the chair. let's get to the first word news. ritika: coronavirus on a rampage. texas, california and florida all record numbers yesterday. hospitals filled up the icu beds available last week. the number of new cases in the u.s., over 60,000 in one day for the first time. president trump's former lawyer is back in prison. refused the terms of home confinement, including

restraints on talking to the press. is serving three years for campaign finance violations and other crimes. he was allowed to return home for fear of catching coronavirus. breaking with the president. the chairman of the joint chiefs told congress it should take a hard look at renaming bases. he called the confederacy an act of treason. president trump has threatened to veto legislation that would mandate name changes. rodriguez reportedly bidding to buy the new york mets. stephen cohen has made an offer. to prefer thed rodriguez group. global news, 24 hours a day, on

air and on @quicktake from bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thanks. coming up, important conversation for perspective on this virus sea to shining sea and then arkansas, the mayor of little rock has his hands full. we will speak to french hill, the representative to congress. stay with us. this is bloomberg. yields lower. ♪

francine: this is "bloomberg

surveillance," tom and francine from london and new york. conversation with wolfgang on europe and brexit. shiftsu look at massive in foreign policy because of the economic shift due to covid-19, we also have a u.s. election coming up, how will the relationship between the u.s. and europe change depending on who is president next year? wolfgang: the relationship has been in a crisis even before trump became president. by otherershadowed relationships between president obama and other leaders but there are structural issues that have nothing to do with personalities, with the exception of france, other countries are not spending what they promised on defense.

there are trade disputes that are primarily related to the on theor example, refusal to allow cultural imports. views on different china, within the eu and across the atlantic, on iran. whatever will happen in november, these countries will , some will no doubt proclaim the transatlantic alliance is back. the u.s. is looking more toward asia. the eu has yet to develop foreign policy. germany has not criticized china over hong kong, even after citizens criticized the chinese

kong.ment, in hong the response of the u.k. was completely different. positioning would not be the eu. france had a different view. the italian view would probably be close to the germans. i think the transatlantic conflict relationship is not in a good state and is not primarily related to trump but obviously this president has made it worse. francine: how should europe deal with china? there are a number of things with supply chains, the belt and road initiative but if europe gets stronger and out of the virus and we see recovery, do they have leverage to become a closer partner to china? wolfgang: they have leverage to

be a closer partner and put up opposition to chinese policies. the eu -- [indiscernible] -- it is not just the eu being strong and united. the recovery fund would certainly help. more a symbolic, not a big economic thing. it would be a symbolic move that the eu is holding together. that is important. i still see no chance of a united position on china. italy has things going with china. italy is a member of the belt and road initiative. france is not. there are very different views about china. francis trying to repatriate supply chains from china. is trying to repatriate supply chain from china. jeremy is not. this -- germany is not.

this is still a national thing. i don't see any conversion in that respect. italy has exploited those european divisions. pipeline.e , there are europe different views. [indiscernible] no matter what happens. tom: what is the lesson learned from sweden, stockholm? they took their own path on the virus. everyone was riveted, worldwide, about the stockholm experi ment. wolfgang: people have very different views on the lockdown. i watch it like a science experiment.

happened is not so clear-cut. sweden has aasons higher death rate has been the failure to protect -- [indiscernible] -- the u.k., which had a lockdown. stats in sweden, which is adjacent to copenhagen low,nmark, it was very lower than copenhagen. it is very uneven. average numbers in sweden are higher. the swedish experiment did not succeed in keeping the economy going. sweden is part of the global economy. everyone went down. so did sweden. it was kind of something, with hindsight, probably they should have followed everyone.

[indiscernible] there was not that much difference in reality. tom: fascinating. theory about the game attending sweden's experiment. thank you so much. greatly accretion. appreciate it. we will continue the conversation. we will catch up with david westin. u.s., stunningly lower this morning. price up, yields down. from london and new york, this is bloomberg. ♪

francine: this is "bloomberg surveillance," tom and francine from london and new york. singapore goes to the polls today, grappling with the virus outbreak. juliet is in singapore. first of all, how strong a

mandate can we expect from the ruling party given the focus of the election on the pandemic and how it has been dealt with? reporter: they have said they are looking for a strong mandate. this is a party in power since 1965. to drop in support compared 93%, will they got likely lead to soul-searching, such as in 2011 when they had their worst ever result, 60% of the popular vote. this is during a global health pandemic. fear of job losses comes to the four, unemployment is the most on record. the pandemic has seen orders shut. there was a two-month lockdown from april to june. they might suffer the worst economic contraction since

independence. it is important. they would want to hold on as many of the 93 seats on offer as it can. fractiouss a geography for singapore. it has been that way for centuries. what do the adjacent nations want? indonesia? what is the best outcome for malaysia? vision they have 1965,nce independence in of course, long in power, but it is trying to show they are still moving forward, incredibly important in the southeast asian economy. 4gere campaigning on this power. on climate change, ai, trying to

ensure the city state remains stage,nt on the global one of the richest economies in the world. byncine: will the defection the prime minister's brother have an impact? reporter: this is one of the most colorful parts of the campaign. joined the opposition party last month but stopped short of other things. p.o.p. is no longer representative of the party his father formed and it has lost his way. you have the prime minister saying this is not about family but about the people of singapore. there are 10 opposition parties. it is unlikely they will get very many seats at all. there is a bigger sway to the opposition parties, leading to

soul-searching and the government saying how they will move forward into the next leadership seen. -- theme. tom: thank you so much. much more coming up, with a backdrop of stunning higher prices for bills, notes, bonds. the yields coming in. full update on data in a moment. just extraordinary on friday, where the u.s. opening credit yields are. this is bloomberg. ♪

tom: this morning, what we need

our society to function, so says the governor of florida, he wants schools open. deathas the rate of accelerates in miami. in orlando, the magic kingdom will open. the arm's-length hug from mickey mouse. into the weekend, amazing, yields persistently lower and in hong kong things are "complex in developing," with authorities effectivehools monday. francine, it is extraordinary to see in the u.s., the pandemic story, state to state, city to city, but indeed,