manus: a very good morning from our middle east headquarters in dubai. i am manus cranny, it is "daybreak: europe." janet yellen says higher u.s. interest rates would be a plus for the fed and society. stocks waver as u.s. yields and the dollar tick higher. a landmark deal, g-7 nations

agree on a minimum corporate rate at 15% on foreign earnings. and china's trade boom continues , fueled by strong demand as economies reopen. a warm welcome to the show. we are going to the higher land in terms of tax and rates. the message from the treasury is how do you take the tantrum out of the upcoming taper? you embrace the higher rate. we are in exceptional times. this is as treasury secretary, not as head of the fed. we have had too low inflation and too low rates for too long. this woman is a four reducing the tantrum style of the taper to come. we will talk about the tax rates and what has the g-7 really

concluded? to the markets, there is the 10 year government bond yields, fairly pragmatic. cpi is a do this week, expected to hit 5%. will that shake the bond market? has it janet yellen put a floor on the bond market rate? the dollar is languishing at a three month low. oil markets are off their highs. opec-plus say they are firmly in control of the oil narrative. some of traders are talking about a tightening narrative. brent down for tens of 1%. -- 4/10 of 1%. i said we were traveling to the higher land of tax and rates. the g-7 has agreed to a minimum corporate tax rate of at least 50% on foreign earnings. the landmark deal -- at least 15% on foreign earnings.

the landmark deal may collect more earnings from big digital firms. >> the g-7 has taken steps to end the existing harmful dynamic, making commitments today that provide clement this momentum toward achieving -- provide tremendous momentum toward achieving a tax rate of at least 15%. >> the principal of fairness is what we've achieved, assuring a level playing field for all types of companies, whether it is people operating in tax havens or digital companies, we will inject the principle of fairness into global tax systems. manus: joining me now is our brussels correspondent, maria tadeo. there are important nuances in this proposition from the g-7. talk me through the idiosyncrasies and why they matter. maria: that is a very good

point. we talk about the level playing field, a new tax system for the 21st century, that was the tagline at the g-7 in london. but when you look at the risks moving forward, it is important. 15% booking, some of the prophets, that sounds great, they would need to go to the g20 in july and the oecd. so implementation rate is really high and you can imagine countries like ireland will push back, it could make them less competitive than they have been in the past. even if there is an agreement by the end of the summer, there is implementation and legal risks that could play out in the future. the europeans are keen to say this is a victory, they have been pushing for this for years and the biden and attrition

changes the dynamics, but the implementation risks remain. manus: the 12.5% tax rate in the republic of ireland. for many, it has been a godsend, a savior of the irish economy and property market, to say the least. what has been the reaction to the deal from the big tech firms? they were not singled out but it was made clear, this is about a coalescing around big tech. maria: exactly. you make a good point because this was very much about the digital companies and this idea that for many years now, they have been not paying the amount of money they should, especially slipping some of the sales to countries where you pay less tax like ireland. over the weekend, there was a positive reaction, and it was quick, we heard from facebook and amazon saying they would welcome the deal.

to some extent they have become aware they will have to pay more taxes, and public opinion is calling for this, and politicians want to tap into this. the fact there is an international agreement means it is clear for them how much they need to pay. they say we want to have clear rules, and there is a global agreement that makes this easy for us and we would agree for that. manus: maria, thank you very much, doria taddeo with the latest -- maria tadeo with the latest on the g-7 taxes. janet yellen says if the fed to raise rates it would be a plus for society. jane, the inner broker in the want to get straight to the fx narrative, but i am duly bound because of my job, doesn't tax

matter to the fx markets? jane: well clearly it does not necessarily in an art -- on a near-term basis. it matters to the macroeconomy but it is not something fx traders are going to worry about too much. this is a real, long-term fight, really, europeans need to clarify the rules on how they will tax amazon, etc. what we know in terms of tax is g-7 have come to an agreement, but the g20 might not agree with that. this is still very much in the beginning of some sort of new regime and not something i think will impact the fx markets today or maybe even next month. manus: no, but let's get to

janet yellen. i would put it on the table that what janet yellen really did wasn't not only did she get a kite out in her hand, she proudly held it up and said let's get higher rates. i would say she takes some of the tantrum potentially out of the taper. what do you make of that in her comments? jane: i think you've got to perhaps view her comments in context, and that is, wouldn't it be great if we had a u.s. economy running at early a nice level of growth with just a moderate level of inflation? that's what we all want and i think that's what she was referring to. she was referring to normalization, not to quick, panic, inflation is out of hand. she was referring to a normal situation that will ultimately be good for everybody. i think that's what we've got to try and work out. when we see yields going higher

and the yield curve steepening, is that for the right reasons, i.e., a good level of growth? we should be happy with that. manus: i think to a certain extent, we are also scarred and rushed with free money and liquidity that the slightest hint that the status quo will change has much outsized movements. does talk about something that could move the market, choose cpi to it is due this week, they think it will come in at around 5%. the bond market, the curve has been reasonably well behaved in the eye of rising inflation. is the we -- is this the week where fx vol could be moved? jane: i think it could be moved, but what we have seen particularly since the start of the second quarter is the fed really getting ad over their

argument, which is that these inflation pressures are transitory. i think many people will agree that some of these pressures will be transitory and some may not, but for the time being, the fed seems to have a good control over yield and that argument and i think actually it will be a little bit longer. maybe we have to wait for jackson hole in august to see a real increase in the fears about tapering. for now, it seems to me that the fed is in control of the argument and their argument that this is transitory is having a lot of sway on the market. manus: if and when the taper comes, jackson hole, jackson -- i should have been clear with my question. the dollar is at a three month low. dollar volatility is at a 15 month low. my more pressing question is, in a taper event, well flagged and

well communicated, what will that do to the dollar? jane: i think the dollar can serve -- firm yields firm. assuming we have good communication, we don't get scare mom, we have a moderate increase in yields, the market is happy this is coinciding with good levels of growth and inflation levels under control, i think in that situation we can see a moderate rise in the dollar. but when you take away some of that blanket of liquidity, that comfort blanket if you like, that is coming in with huge levels of liquidity, it is likely volatility will start to rise. hopefully not in the manner that creates panic. i think we can have the dollar rising if yield rises. what we don't know is the timeframe. i think this concentration about jackson hole in august, the timeframe for that and

conversation about tapering does seem to be correct. manus: jane, stay with me. jane foley is my guest. let's get your first word news headlines, some on foxman is in doha. simone: the u.s. health secretary says it is too early to say whether a planned evening of coronavirus restrictions on june 21 can go ahead. ministers are continuing to weigh the threat of the variant from india. the government says it is about 40% more transmissible than the previous strain. china's exports continued to surge last month, fueled by strong bubble demand as more economies around the world open up. exports grew almost 28% in dollar terms in may from a year earlier, below the pace in april but still well above the historical growth rate. imports soared 51%, the fastest

since march 2010, driven by higher commodity prices. exit polls suggest the party of president lopez ever door took the lead in mexican elections, but the survey suggests his ruling coalition will not maintain the two thirds majority needed to pass constitutional reform. a runoff vote in peru's presidential election is still too close to call, according to an unofficial quick count. a leftist a former schoolteacher has 50.2% compared to 49.8% for an investor favorite, according to an estimate. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus? manus: thank you very much.

coming up, the u.k. health secretary says it is too early to say whether a planned easing of coronavirus restrictions on june 21 can go ahead. more on the story. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe," i am manus cranny in dubai. an opponent to angela merkel has ensured his victory. this after leadership of the cdu got off to a rocky start. in the u.k., the health secretary says it is too early

to say whether planned coronavirus restrictions will be lifted on the 21st of june. this as they weigh a fresh wave of the pandemic and britain sees the so-called delta variance. jane foley is my guest. let's look at the potential for a delay of the reopening. i was watching the news over the weekend. there is the increasing hesitancy. would the july on the june 21 reopening in any way hinder some of the very much implied bullishness in sterling and the economic outlook? jane: i think it would certainly be a delay. we have been looking of course at the confidence numbers, footfall figures, and in retail sectors in the u.k., it is a little bit disappointing. generally speaking, we've had put a good data since the other

restrictions have lifted in the last few months, but footfall is still down and i think you have negative psychological effects of the consumer, they are worried about going to that restaurant, they don't want to sit there in case someone else has coronavirus and they have to self-isolate. there is the negative confidence effect and i think if the lifting of the restrictions on june 21 or delayed, it would be a negative effect. but i don't think that in itself would push sterling lower. i think all that would do is delay sterling making further gains, potentially against the euro. manus: where could that trajectory take us to? if you are focusing on euro-sterling. let's focus on where you perhaps have a stronger u.k. call on its

own. jane: i have been of the view back -- that by the end of the year we could creep down to 84 in euro-sterling. we had the big gains in the first quarter, a big relief after we saw the bank of england in february. trending lower in the first quarter. but since then, it has been more rangy and there is a lot of confidence in the market about the euro zone economy and how that can lift potentially the euro. there's a little bit of a battle between the euro and sterling. i think the sterling might have further gains to make but it will be a bit of a battle and i think it will be pretty slow or difficult for sterling to make headway. manus: jane, when do you see a taper from the bank of england? janet yellen flying the kite for the treasury in terms of normalization.

give me your timeline for the bank of england. there's been a great deal of debate over the taper timeline in the u.k. jane: there has indeed. one thing we can be certain of is it will be a while for we get anything on rates. as we look at the taper business, i think we will get perhaps more language on that, maybe by the end of the year. as we look back at the last couple of months, the bank of england very much wanting to avoid the use of the word taper, they had some technical adjustments and they have been successful at saying this is a technical adjustments that is similar to what you might hear from the ecb this week. they want to avoid tapering. i do think that as we reach toward the end of this year we will hear a little more about that. manus: ok, jane. we have run out of time. if you look at the ecb confidence, at a three year hi,

we have factory prices up the most since 2008 and inflation technically above target. that will be some like it hot. jane fully, my guest this morning on fx rates. coming up on the show, china. china's exports continued to surge in may but at a slower pace than the previous months. we will dive into the numbers next. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe," i am manus cranny. china exports continued to rise in may, fueled by global demand as economies around the world open up. juliette has been tracking the data.

imports also soared, so a double boost, but wasn't good enough? juliette: a double boost but showing some signs of perhaps moderation down the line. certainly when we saw the import number, 51.4 surge in the month of may from a month earlier, the fastest pace since march 2020. these numbers coming off of low base effects and exports up by almost 28% in dollar terms in may from a year earlier could this left a trade surplus for the month. we are seeing strong overseas demand for chinese goods, particular when you look at south korea. south korean exports jumped the most in mason's 1988 when the olympics. we are seeing strong demand and the commodities picture. and we have seen china's imports of iron ore and concentrate up by about 84.5% in the first five

months of the year. copper ore and concentrates up i more than 54%. the question is what happens next? bloomberg think there could be external demands starting to moderate and that will play into what the outlook is like for the second half of the year. manus: thank you very much. juliette saly in singapore. jane foley is with us. the effort has been made to quell exuberance, so to speak and restrain the yuan. have we hit the buffers of what they will do because people are saying to me, we are about to roll over on ppi and growth. how would you describe where we are at with the pboc? will we tilt to hawk or neutral? jane: they made it clear that they don't want the renminbi to

strengthen much further. it was a strong signal that this has perhaps gone far enough for now. they want to slow it. now, i think you -- if you are betting on a rise in the chinese currency, you know you will be going against the pboc. that has changed because a few weeks ago there was an article published, one of the chinese papers, which was then deleted. that was about you might need a stronger currencies to offset the cost of the importing price of raw materials, which we know has gone up hugely. that post was removed now -- removed. now we know they are concerned about the rising currency. but they have to be careful because if they do too much to stem the rise, we could have the u.s. saying they are doing too much in terms of currency manipulation. they are at a delicate point. manus: yeah, you know the tax

manipulator tag, i wonder what that really does any nation that gets tagged with it. i want to go back to the ecb. you thought maybe we've got the ecb this week, unlikely to do anything now, but you have a vision about the summer. jane: the market consensus used to be they will keep the pandemic emergency fund going at the current rate, what we think there is a small risk they could actually reduce the purchases, the pace of the purchases. this of course will raise the question of are they tapering? they will be pushing against this and saying this could be a technical adjustments. one of the reasons we think this could happen is if you look back historically, there has been a tendency to reduce the purchases of their normal programs during the summer just because of

liquidity. manus: jane foley with the risks of a technical taper from the ecb. next, a landmark tax deal at the g7.

manus: good morning from our middle east headquarters in dubai, i am manus cranny and it is "daybreak: europe." janet yellen says higher u.s. interest rates would be a plus for the fed and society. stocks waiver, u.s. yields and the dollar tick higher. a landmark tax deal. g7 nations agree on a minimum

corporate tax rate of at least 15%. -- 15% on foreign earnings. and china's trade boom continues, fueled by strong global demand as the world reopens. janet yellen has merely reminded us what it would be to normalize and have rates back at normal. i put it out there, this is the treasury secretary of the u.s., in a different language and different guys. she is really trying to take some of the tantrum out of the taper. she talks about it would be a good thing to raise rates for the u.s. and the fed. with us fighting inflation and low rates for too long, we want them to go back. this creates in many way a flaw in the rate market and i would say deflates to a certain extent the taper narrative, we just had jane foley saying the taper will

take place in the jackson hole timing. to the markets this morning, what impacts have the g7 and yellen's comments had? fairly unchanged. we are going to have cpi this week. the oil market is reportedly well-controlled and anchored. we give a little bit back as the dollar turns higher. hedge funds slightly long on this market, three-month high in terms of positioning. the g7 has agreed that their tax rules will be revamped. they include a minimum corporate tax rate of at least 15% on foreign earnings. the landmark deal will keep countries with the ability to collect more revenue, especially from digital firms.

our next guest says the deal is anything but ambitious and is a worrying direction for corporate tax. let's ask why. i don't get the sense that you share the feelings on the g7 deal. why the cautionary note? good morning. >> good morning and thank you for having me. first of all, the deal is not very ambitious. it was to stop corporate tax rates from dropping to zero, and with 15%, we will be dropping to the minimum instead of the bottom. in terms of the fundamental revamp of the corporate tax systems, most are essentially the same and we see they are not working in this is concerning. manus: what would you expect to see? that is quite a disappointing

response to all of the glowing headlines. what would have made it a stronger deal in your opinion? what would you have liked to see? >> first of all, we need a minimum corporate tax rate close to the level where we are now on average so that we are going to stop the drop in the corporate tax rates. that would mean we have to be at around 25%. but there is another sensitive topic, who gets this money? where is it going and which countries will collect it? the g7 is a collection of the world's wealthiest countries, so they have said they should get it, where these corporations have their headquarters and we have large amounts of consumers. but we wanted to deal that takes into account the world's poorest

countries in this deal does not. manus: let's break some of that down. many people are saying what this does not specifically name, facebook, microsoft, apple, google, etc. it is potentially the start of a rebalancing of a tax on huge global tech. is it not the start of something constructive in terms of the money earned by the kind of companies? tove: that would bit the conversation started. the europeans were frustrated at seeing large american digital giants making arch profits and paying low tax rates, especially in the rest of the world outside of the united states. we have now and compromise on what to do with the digital

giants, and that is a new, special tax on the largest corporations in the world, he they digital or not. this was not where the original discussion was. the original discussion was we should have a corporate tax rate where all corporations, regardless of whether they are multinational or small or medium enterprises, everybody pays the same and the system is working. right now we still have a tax a system that is much harder on a small and medium enterprises than on multinational corporations, since they will still have loopholes in the future and that is concerning. manus: and certainly just to verify, if you look at the blogs we have going this morning, the total impact of this deal, about 15% on overseas earnings is .1% of gdp.

i want to dig into the details more. the proposition is those companies which have morgan's above 10%, you will get a 20% tax on the earnings above the 10% level. is it your concern that we then see creative accounting, adaptable accounting and ability, let's say, to be creative and how you display return above 10%? is that a risk and what we should be more focused on, the accounting side of this as well as the tax? tove: indeed. that is a very important aspect. we have not seen the rules. we have seen one paragraph in a communique from a g7 meaning. if tax continues like it has been so far, there will be a lot of devils in the details and there is a high risk that the political speeches and headlines we have seen this weekend will not be translated into a solid

rules framework. we already know that we will be running a system that has a lot of loopholes and does not work well already. this is a system that goes on tax principles that are almost 100 years old. the system we are running our out dated and it will be a big concern how this gets translated into reality. manus: do you think my home country, ireland, is blocked? tove: this is a curious thing. while it was the g7 countries, they invited different countries as well and ireland was at the meeting as the president of the euro group. ireland was at the table. but the vast majority of the world's countries were not and

that has raised concerns. ireland, when it comes to tax, is a country that has attracted a lot of concerns and worries. we have well over 100 countries, especially developing countries, that have very much on the margins of this whole discussion and not really been included. there is a whole big question of will they accept this deal? and if they do, will they stop taking unilateral matches? this is a danger for corporations and everyone else. if it turns out this deal doesn't give countries a lot of extra money, we risk going back to where we started, where countries will advance their own way of taxing global firms. and that spells chaos, unfortunately. that is the risk of the future. manus: thank you so much. there is a phrase in irish, it

means myself. let's get to johanna -- doha and simone foxman. simone: in opposition to angela merkel has boosted his chances. he led the cdu party to 37% of the vote, according to projections. the far-right alternative for germany was a distant second in the former communist region with 24%. qantas has been asked by australian authorities for details of a recent intelligence report that suggests it has been infiltrated by organized gangs importing drugs. local media said the report found as many as 150 of the employees could be linked to

organized crime. the claim was called disturbing and the airline says it follows vetting procedures. saudi aramco has hired banks to issue its first ever dollar-denominated islamic bond. bloomberg understands they may offer three tranches in 3, 5 and 10 years as it seeks to raise cash to fund its commitment to pay out dividends. the bonds comply with religious teachings, including a ban on interest. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus? manus: thank you very much. the oil market slipping a little bit. about $70 for the first time since 2018, a robust rebound in the pandemic driving prices by more than 40% this year. down one half of 1%.

the world's biggest independent oil trader says opec-plus seems to be in control of prices. they say there is little competition to the effort by the producers and group to manage the market. let's get to our energy reporter. this is a strong message, but what is the outlook for opec-plus's management efforts for the rest of the year? prince psalm on dutch the prince was very reticent the other day. -- the prince was very reticent the other day. anthony: we don't have much guidance going forward other than typical opec caution. they are looking at a lot of other factors in the markets. we will see some easing continue through july, as this is part of the plan to bring back some production that was agreed at previous opec-plus meetings.

the group, which includes saudi arabia, russia, kazakhstan, they had agreed to continue easing production and they decided to go ahead with that plan at the beginning of this month. but they did not give us any real outlook on the rest of the year. some of the technical reports the opec ministers looked at show that the market is tightening. there is less oil coming into the market than buyers are using and that is causing people to take oil out of storage. it is an overhang on prices. that is kind of why we are seeing a jump in prices to 70 and wti still flirting with 70, because they are taking up that oil in storage, getting rid of that, and it is helping balance out the market. opec has all of this dry powder, 6 million barrels of oil still held off of the market, they can bring back.

they are in the driver's seat because they are the ones with the main amount of spare capacity they can put back into the market. manus: when it comes to, what is the dynamic keeping opec-plus in charge of the oil market? is it there is a reticence of banks to lend to the fractures? -- frakkers? morgan stanley said when you get into the 70's, you run the risk that shale comes back. anthony: that is the fine line opec is trying to thread here, keeping shale out of the market. the pandemic took shale out of the market, oil demand crumbled, producers stopped pumping. now that prices have recovered, they are making up ground to pay down debt, payback shareholders, conserve their cash. i think before those producers want to get in there, they want the price sustained high, and

someone was saying that a lot of people in the shale patch are hedging. they are making money on the spread of 40-50 with a breakeven and the 70's where we are now. so they might just take those gains for the next couple of months. opec is a different story. we heard earlier about saudi arabia selling bonds to pay for their debt. this is a nice reprieve for some of these persian gulf states, but they have very high breakeven costs because they are supporting government funding and they need to put the money to transition their economies away from oil because we will see oil peak in some estimates, this decade, i some others in 20 30's, but they've got to get ready for that. manus: the other issue is when will iran do a deal with the u.s. in terms of returning to the jcpoa and what impact that

might have in terms of supply? everybody we have spoken to says supply ratchets up probably not until the backorder around the end of the year -- back quarter come around the end of the year. anthony: it's looking fourth quarter at the earliest. potentially even not until december. we did see a delay in the talks last week. iranian officials were saying they hoped to reach an agreement i august, -- by august, which is when the administration will leave office. still, if they don't get a deal until august, that gives them a couple more months that it will take it to get the production increased and get the barrels into the market. that gives opec even more leeway to draw down these inventories, and alter that price until iran comes back. we are looking at the later part

of this year. manus: anthony, thank you very much. giving a little bit back this monday morning for oil markets. coming up, most cryptocurrency dropped over the weekend. the goldman cio survey shows crypto hesitancy among hedge funds. we discussed. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe," i am manus cranny in dubai. bitcoin and most other top cryptocurrencies fell over the weekend, there was concern about another crackdown from china. weibo suspended some crypto

related accounts, after chinese authorities recently cautioned on crypto trading. let's get to our team leader. joanna, for all of the excitement at the conference on crypto and winklevoss twins extolling its virtue, weibo took actual -- action on a number of accounts. what is the significance? joanna: it reminds people that china is a question mark in terms of crypto and regulation. they suspended some accounts and we don't know if it was a broader thing or isolated accounts people noticed. it definitely is a reminder, given all of the cautions about energy usage for bitcoin mining and cautions on crypto trading, etc. that is a big uncertainty for crypto right now. manus: thank you very much.

volatility is the byword on crypto. the winklevoss twins still say it could be worth $500,000 in a number of years. joanna, thank you very much. to the u.k. the health secretary says it is too early to say whether the planned easing of coronavirus restrictions on june 21 and go ahead. anna edwards joins me next. this is bloomberg. ♪

manus: it is "daybreak: europe." moving to the u.k., the health secretary says it is too early to say whether a planned easing of coronavirus restrictions on in 21st can go ahead. the ministers are continuing to weigh the threat of a fresh wave of the pandemic, as britain sees

rising cases of the so-called delta variant. anna edwards is with me. here we go. it is really close, isn't it? it is the sixth of june, seventh of june, and full opening on the 21st. there is a great deal of hesitancy. what can you tell us about the rationale by hancock? anna: the question is whether the u.k. will fully open up, lose the pandemic regulations on june 21. they are planning to make a decision just before that date, a week before. we will have to wake -- wait a little longer. this is going from full lockdown -- we are not going from full lockdown to know lockdown, we have been gradually easing over the winter, so this will be the final stages. opening night clubs, allowing people to queue for drinks at

pubs, and allowing large weddings to take place. it would be signs of normality but it is too soon to say whether it can happen. the u.k. got off to a flying start with the vaccine rollout and the u.k. still is ahead of many of the big eu countries in terms of the percentage of the population that has been vaccinated with 68 million doses given out. but we still haven't vaccinated in much of the u.k., many people under the age of 30 because of the strict way it has been done, age group by age group, and we have the delta variant, which is a 40% more transmissible than the previous variant. that is apparently all in the thinking when we see june 21 on the calendar. manus: and that, the delta variant and the transmissibility, are they arching more toward a

conservative approach given the mauling they have had politically. let's pivot to what it means for businesses. you say we can go to the football and maybe the theater and maybe even dancing together -- there is a thought, you and i having a boogie. [laughter] on a more serious note, what are businesses saying? anna: if you can get back to london. in terms of the business side, there was a piece out today talking about concerns of smaller businesses have about further lockdown measures. no one is talking about going back into a lockdown, apart from the fact that health authorities have said there could be a need for some thing over the winter. but we will go into the next winter given that in a much better state. -- will go into the next winter in a much better state. manus: anna, enjoy the next

couple of hours. equities are touch and go between the red and green at the moment. this is bloomberg. ♪ ♪

♪ anna: good morning. welcome to bloomberg markets. i'm anna edwards, live in london. the managing editor joins me in singapore to take us through the market. janet yellen says higher u.s. interest rates would a plus for the fed and society. stocks waiver as u.s. yields and the dollar tick higher. g-7 nations agree on main