>> i really think the market is reinvesting how confident it is in the growth outlook. >> it is getting shifted from the u.s.. >> the data is good right now. the problem is not good enough. >> it will end up doing what it has to do. it may be late. jonathan: from new york city and our audience worldwide, good morning, this is "bloomberg surveillance." i'm jonathan ferro. equity futures at 52 on the s&p, a break at 4300. we have to start with this market. real yield 1.2 five on the 10 year. i'm not sure how any people had that on their outlook. tom: we have a guest coming up with some color to this.

it's about taking two yields together and looking at the steepness and flatness of the curve. this is a fixed income market readjusting to a legit growth scare. jonathan: you look at the equity market. we've been talking about rotation on and off. now we are talking about risk off. risking in a way we haven't seen in quite a while. tom: i looked at a bunch of charts and i will call it range bound right now. if it goes further, you are right. we forget how far and fast we've come. n$e-i will call it within the r. jonathan: you take the price and build a narrative. romaine: the narrative is some people are looking at the exit, not necessarily rotating out of this. when you look at the drop we've seen, i'm talking about the number of participants we've been seeing in these record highs every day, it's been getting smaller and smaller.

this is a small corner of the market and that's it. tom: did the ecb move this market? jonathan: not at all. we can talk about that later. we are at 42.94 on the s&p 500 futures. the year-end medium forecast is 4300. -- 4294 on the s&p 500 futures. the year-end median forecast is 4300. tom: the bear case is about gdp slowdown sooner rather than later. that's the question for later this year. jonathan: deceleration is certainly the thing right now. we've got a squeeze and then you have this whole narrative around deceleration and then you have the emphasis shift around the federal reserve. romaine: i don't think you necessarily -- it necessarily needs to be a bear case versus a

bowl case. the idea you won't have much of a catalyst moving higher, you talk about some entry points. if you're already invested at this point you've already done well. why would you go further on the spectrum? jonathan: he's not invested in this market. we are down by 57, negative by 1.32%. negative on nasdaq 100 futures as well. likewise on the russell. the bid is just relentless. yields are lower again by five or six basis points. 1.2612. you know the year-end forecast is, 1.88. that's where the 30 is right now. jonathan: you've got to blow it

up today to do a better show tomorrow. jonathan: negative real yield. shaheed joins us. there's only one place to start isn't there. 1.26 on tens. what's going on? >> a lot in bonds. they led some of the most recent moves. mzmz ever since liquidity and ongoing qe, and another is a much deeper lying demand situation then was appreciated earlier. this comes from two things in particular. one is u.s. corporate pensions were much better funded with higher rates and better spread entire equities. secondly and perhaps more importantly's demand from banks. banks are somewhat challenged

with the influx with liquidity, the amount of liquidity in the system and finding its way into bonds and rates. tom: i love your note and the way you look at the spread market. you've got a great phrase called calculator patients. -- calculated patience. what i want to know is what is the narrative? my history book says that does not happen. shahid: it's difficult to think about it in a world of markets. particularly in fast-moving economies. we've gone from a unique shock and a unique fiscal and monetary response. the scale of both the shock and recovery are unprecedented, they become even more short than they were.

and even more difficult to wait or frame patience. the fed has told us they are talking about paper, with a foot -- they put in for 2023 and thinking about liftoff eventually. they've done this well equities are still broadly close. bond yields on the long end certainly the lower end of the spectrum. one might flip the script a bit and suggest that the fed may have gotten away with a hawkish tendency without causing any type of tantrum in the market. in itself buying time in terms of financial condition to get to the exit point, perhaps with paper and now since september tom: tom:, inactive next year. romaine: -- september, inactive next year. romaine: some of the rotation

we've seen has been relatively orderly. it's not people rushing for the exits. people may be repositioning for whatever the new normal is going to be. do you think that will be effectively the playbook going forward? do you think there is a supply -- a surprise, a shock out of the fed and other central banks? shahid: do i think in the near term, i think some of it moves forward. i think you will be waiting the evolution of labor market data and perhaps evolution -- data through the summer to exit through qe in terms of liftoff to probably 2023. in terms of how the market trades and what could be important to it, if the fed is possibly or probably not expected to move things to move the needle in july.

the story around the debt ceiling particularly with respect to the level of liquidity in the system, what we are talking about here is the amount of reserve. it has found some type of a sterilization through the domestic rip program. the question for the second half is how does the outlook for liquidity look like? if it continues to grow with a few hundred billion we have in q2, that argues for a continuation potentially in-depth fixed income. however there are potential turning points and it could be treasury, cash is no longer at a four. and therefore can actually rise and that could take away

liquidity. it could be a liquidity paradigm , the change may stop going up. jonathan: we are down about 1.3%. we are down five basis points on the 10 year to 1.26. if the federal reserve is going to start moving towards tapering, is that bullish or bearish for treasury? shahid: we think ultimately it is bearish for treasuries but a lot less bearish and messy then it was in 2013. i think we need to watch the breakevens. we have a little localized risk off in equities overnight. real yields remain low. breakevens remain high in the range. financial conditions remain

positive and we haven't seen major signs of tantrum or broad risk response and neither do we expect them this year. relatively tantrum-less tapir is what we are calling for here. -- taper is what we are calling for here. jonathan: down six basis points. the break of 1.88 on a 13 year yield in america. -- 30 year yield in america. jonathan: the different -- tom: the difference in focus on the yields. we are just giving it up. we are giving it up on a growth scare. i'm sorry. i didn't -- jonathan: can we do football

now? tom: it's too much. sterling was sterling. jonathan: you went out on twitter saying he hadn't seen sterling dive that much since 2016. he has been the player for this tournament and it's such a shame he ended that game by doing that. the way that game was won will leave a bitter taste in the mouth of neutrals. tom: if somebody on the chicago bears had done that it would've been beaten to death in green bay. romaine: i think so. i don't know what's happening on the show. tom: italy, england, who's going to win. jonathan: you want me to choose live on air? when it comes to nations, my loyalty is split.

when it comes to football, when you grow up and your family is italian, the blue jersey goes on and nothing else comes close. when it comes to sunday, football exclusively. coming up in the next hour, jonathan of credit suisse. from new york city, breaking down 59 on the s&p. a bit into the bond market, yields lower. a risk off thursday morning. get your summer trading. tom: how come he gets to score on the rebound? jonathan: inappropriate tone this morning. focus. the big bowl on wall street. this is bloomberg. ♪ >> police reportedly of shot and killed four suspects in the assassination of the haitian

president. according to the associated press, to others were arrested and three officers who were being held were freed. no word on who the assassins were prayed japan may be moving closer to a no -- olympics. they are proving a state of emergency in tokyo for the entire summer olympic games. fans would be banned from attending events. bloomberg has learned european central bank policymakers have agreed to raise their inflation goals to 2%. they will allow them to overshoot when needed. in soccer, england will play in a title match for the first time in 50 years. they converted the rebound in extra time to get the win over denmark. the english return to wembley sunday to play italy for the championship. global news 24 hours a day on air and on bloomberg quicktake,

powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta, this is bloomberg. ♪

>> we pay for our entire plan to

make the tax system fair for all americans. we will get it done. we are going to reimagine our economy and what our future can be. and show the world just as importantly will show ourselves that democracy can deliver. the people in america can lead again. jonathan: good morning. lisa abramowicz will be back on monday. romaine bostick with us for the next couple of hours paid equity futures down on the s&p 500. it's a breakdown by 1.5% on the s&p. on the back of the bid into the treasury market over the last couple of weeks. yields are down by six basis points in this move is taking crude with it. wti, 71.53. tom: the velocities to the

downside. the vix goes out to 20.90. jonathan: lows in the equity market and yields are low on the session. tom: we will watch those data checks today. that right now in washington, anne-marie, the washington post is followed the moderate and left of the democratic party for decades and he has a blistering note out this morning that there is no left-wing adventurism here. in new york city in the last three weeks we've seen no left-wing adventurism. how was the left-wing doing in washington as they adventure out into the end of july? >> they are certainly putting pressure on the white house when it comes to the human infrastructure bill which we saw the president try to get more of a pr campaign in the trump counties of the midwest especially yesterday saying that

college to promote and explain why we need that second package, but interesting you see progressives riding to the white house when it comes to things like china, let's not go too hard when it comes to things we don't agree on because we need them on board when it comes to climate. but you will see more of these bills come to the floor, there will have to be the democrats between the progressives and moderates, to a stance to get anything done. tom: is that really the -- they give the window three weeks. is it three weeks for where they end up? >> as you say, three weeks, is that enough for to get done because many of the progressive say nancy pelosi has said she will not take up the info structure bill unless it's in

tandem with the softer human infrastructure, the multitrillion dollar spending. romaine: there is still a lot of talk bill work through congress. more traditional infrastructure needs that we have in this country, that there is a little bit more support out there to get this done, if not necessarily support for how to pay for it. >> there has to be supportive you consider the fact we have midterms next year. very hard for a politician to go home to constituents and say i had a chance to vote for this new bridge, fix of this road and i decided not to do it. it will not be used as leverage. we will vote for that part infrastructure as long as we get a little bit more when it comes to the human infrastructure package. romaine: how much political capital is being expended on this particularly when we know he has a relatively aggressive

agenda he wants to get done. >> a lot of political capital is being used in terms of aids going back and forth to the hill. also you can see where the president has been making his trips recently. it's all been in the midwest, all two areas that are conservative and back the republican campaign. he is making his pitch as to why his goals for softer infrastructure in that human infrastructure is needed. last week on friday when he was talking about all the efforts they made the goal and the progress after the jobs report, when he was asked about foreign policy in afghanistan, he did not want to talk about that. it's very much focused on the domestic play right now. jonathan: let's talk about this market. down about 68 points on the bond market. we are back to levels we are

back to levels we haven't seen since february. downing dcf heard from secretary yellen, i know she's been saying supposedly she supports the job chairman powell is doing. what is the next step? where's that conversation at? >> it does seem to be support to confirm chairman powell. it is pretty much the way of washington that you would keep the chair fed in the position paid the only time we didn't see it was with former president trump, but it is to maintain that independence of the fed. right now we have a great scoop on bloomberg news talking about the fact there are other governors. those vacancies potentially is where the administration could start to move the dial in terms of the kind of enactment they want to see on the fed. things like climate and banking,

it's those vacancies potentially. there does seem to be support to keep chair powell where he is. jonathan: let's pick up on what's happening in this market. down 66 on the s&p. it's a session low. bond market yielded a session low. it is not just a u.s. move, you see it in the u.k., bond yields in germany down. tom: i would lead with the yield on that one. i look at the swiss 20 is a benchmarking europe and it continue to deteriorate and nicely into negative territory. with that said you've got to look. we've got to get a handle on where the range is when you have a moonshot market like we've had particularly for the nasdaq. i've got the chart up here, >> i

think you can say last couple of weeks have been a monster position squeeze. establish a narrative and extrapolate out through the cycle. my issue with that story is we are 50 basis points south of where we were at the end of the first quarter. this move is not fresh. it's been developing for the last several months. tom: it has and i go back to what the experts have told us and there's a school out here that says it is the when of it. going back to potential gdp under 2% growth. that's the market -- that's what we are debating this morning. jonathan: cyclicals going into year end, your 10 year yield, a more earnings and they keep going with the 10 year yield and not earnings. romaine: you talk about all these moves you saw that in the cyclicals, you saw that in the small caps over the past couple

of months. under performance of the russell. jonathan: your equity market lower, your bond market yields, 1.25 on tens. for our audience worldwide, this is bloomberg. ♪

jonathan: here is the price action. equity futures falling, we declined by 1.85%. the nasdaq down by a similar amount. session lows in the equity market, session lows with bond yields. your 2 -- 10 year yield, a break of 1.25. down by about seven basis points prettier 30 year at 1.8653. if you look at the consensus year-end forecast in our survey for a 10 year yield right now, end of q4 21 is 1.88. there's some real repricing going on here and it's one heck

of a position squeeze in this bond market. switch up the board and finish on real yields, going back. this is where the move has been. there's a minor side with a one next to it and that's the story in this bond market. negative real yields. i'm trying to work out the best way because people are looking back at this as a growth shock. with a growth shock at the start of this year. a positive growth shark -- growth shock. now the narrative seems to be deceleration. maybe it's the reverse growth shock we saw. certainly this captures quite nicely over the next five months. tom: this is so important. we have moved to basis point on the real ty yield from 101 out o 104. -1.04. the worst big negative yield was

a -1.11. has anybody we talked to friday afternoon, has anybody framed a -1.12, i don't think so. jonathan: a lot of people only believe this is a monster position squeeze. after what happens when you get this dynamic is you get the movement price, the narrative comes out people extrapolate out that narrative through the cycle. we will work through this together. if you look at the consensus forecast for this year for gdp growth in america, and next year and the year after, you go from four down to two. you focus on the levels and the cumulative gains for this economy over the next three years or do you focus on the deceleration. this market at the moment is preoccupied with deceleration. humility of gains through the next three years which are important because the cumulative games will eat away at the

market and that's the dynamic, at the moment that dynamic is not -- this summer. tom: you heard from abby joseph cohen yesterday. the idea we would not see wage inflation as we see employed america. we get lucky on bloomberg surveillance. one thing we've done when built this platform is get us to guess and we've done it. lee massively locked out by saying we need to speak to rob carnell of ing. they have abandoned him to singapore but for years out of london for acute monetary analysis, worked with treasury, and iconic work. we are thrilled rob would join us this morning. with your expertise on the ecb, why don't you bring in -- bring him in? jonathan: the price mandate at

the ecb, it is close to 2%. that set to change today reportedly to 2% with a tolerance for an overshoot. does that change anything whatsoever for central banks? rob: what it does is get rid of low but close to. it gets rid of that horrible lack of certainty over what the actual mandate was. they replaced something close to the low with effectively to and you can perhaps go over for a bit. what we are doing is what the bank of japan did when it moved one to two. you shift it. , it's all about credibility. i don't necessarily think this will change. >> on cpi, 1.9 for this year,

1.4 for the year after. even with any interpretation of the mandate, even with the changes in 25 minutes time, there still forecasting deceleration cpi at 1.4. if it starts wrong, they've zero credibility to achieve it. >> you have to wonder whether these targets are sensible. why not 1.5? we don't seem to be able to achieve it. this year we have the benefits looking back at last year's terrible price level. it makes it so much easier. we have had up until now it little bit of a push coming from opec-plus giving us the sense it might do something with supply, that's not can happen anymore.

credibility is a tough one. why pin those to a particular number? tom: is this a different germanic response or is it going to be the same old same old? rob: i think the german responses been mellowing over the years. it's very much been bundesbank over the years. a lot of stuff the ecb is doing from quantitative easing. but that has changed. they seem to be mellowing as well. it will retain a germanic hawkish miss but i think they can see the merits to pragmatism within this given those previous policies simply haven't worked. tom: i'm going to steal from the good people at -- this morning.

they make from the acronyms -- make fun of the acronyms. how big a flop is this going to be? >> what they can always do is wrap this up with also's of other things as well. plenty of other stuff they will be talking about. they can talk about whether or not they bring in more environmental targets and even if they're thinking about different type of inflation measure, perhaps bringing in house prices. in talking about to the need to think about headline rates. they have absolute no control over whatsoever. there are other things they can do to try and minimize the focus on the fact that what they are doing is tinkering around the edges. romaine: what about the other components of this review? how does that fold in to the

inflation outlook as well? rob: it's a very interesting question. one of the things we noticed pre-pandemic was there was next to no relationship between the unemployment rate and what was happening to wages growth. we are seeing something now, an interesting lesson to what's going on there. there can actually be a relationship. we still don't know whether this is for keeps or if this is simply a one-off price level adjustment as we adjust to the new norms of post-pandemic world. it's entirely possible in two years time we still have a point where the economy is running ok. unemployment rate hits rock bottom and you still have wages growth. a complete change of viewing unemployment for the fact it would be helpful.

>> when you look at the lessons we learn from the shift japan made into a certain extent the shift in tone we saw out of the fed this year, how does the eu and more importantly -- ecb and how does the collection of -- evolve to a certain extent different goals and economy, how does the outcome of this if at all and up different than what we are seeing in japan in the u.s.? rob: it might not. the one thing we are doing at the moment is we focus more and fiscal policy. if you accept a lot of monetary policy around the world has run out of --, it's been running out for years. then you have to look at something else. it is a story we've begun to hear about finally from europe as well. japan has already run that race.

i think that's where we head back and that's what we'll things along. you can just print it and chuck it around. it has to be put to useful production uses. jonathan: good to catch up. a big focus on the ecb. we will hear that new strategy review, the results of it in about 20 minutes time. we will hear from christine lagarde. we've got some news. jonathan: wrote tom: road trip. -- tom: road trip. jonathan: the uk2 allowed vaccinated residents to return without quarantine. if you live in the u.k. and have been vaccinated in the u.k. you can travel now. you can return without quarantine. here's the issue, if you are a

u.k. residents and try to come to the united states directly you cannot,, that's the problem. we do not have a reciprocal relationship with the united states of america and this is the problem right now. from july 19 if you are vaccinated you can travel to europe, back to the u.k., no quarantine. my personal example, if i fly to the u.k. today before july 19, i would have to quarantine for a short while. i would not be able to fly back directly to the united states. i would have to find a third country and stay there for two weeks. what a fantastic time of the transport secretary of the united states this morning. why do we have no reciprocal arrangement with the europeans, with the u.k. ready to go for this summer to help out these airlines? the cdc told us the delta strain has become the dominant strain in america. tom: it is. i think it will be very good to

speak to secretary buttigieg about this. to me, what is so important here is you are vaccinated, you have a card, why should you be restricted? jonathan: they haven't worked it out still. we'll catch up with the johns hopkins center for health security. euro-dollar, 1.1830. we are down six or seven basis points, equity market down. this is bloomberg. ♪ >> the survivors of the collapsed condo in south -- the search for survivors of the collapsed condo in south florida has shifted to recovery efforts after reporters -- officials concluded there was no signs of life in the rubble. 86 people are still unaccounted for.

in china, the government has signaled the economy needs more than the central bank. it could make more liquidity available to boost lending to businesses one way to do that, cutting the amount of money the banks keep in reserve. it has shown signs of faltering recently. in china, tesla has unveiled a cheaper version of its locally built model. this after a string of negative publicity may have hurt consensus towards the electric car pioneer. it's about 20% less than the original longer-range model y. 36 states have sued google, accusing it of abusing its power. they say google used anticompetitive tactics to thwart competition. the company says the lawsuit gets it wrong. global news 24 hours a day on

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>> you have severed the link between infectious -- infection and disease and death.

a 30th of the deaths we were seeing at an equivalent position in previous waves of this pandemic. >> he has taken all protections off in one go. that is reckless. jonathan: that was boris johnson, the prime minister and the u.k. leader of the opposition. from new york city, good morning. together with romaine bostick, futures markets. equities down and with it, we take a dive on treasury yields. yields on a 10 year, a break of 1.25. we are down by six or seven basis points. we just keep rolling over and this is risk off this morning with crude down 1.4 percentage points now to 71.50. jonathan: out through a 20 -- tom: we will see where that goes as well. let's discuss as we bring in jennifer of johns hopkins.

united kingdom removing quarantine on tourists from the u.s.. jonathan: the u.k. to allow vaccinated residents to return without quarantine. theoretically if residents of the u.k. were allowed into the united states to travel directly from the u.k. they would be able to return and not quarantine that there is no reciprocal arrangement. there is no arrangement for you and i who have been fully vaccinated to travel to the united states directly from here and not quarantine even when this is brought in. this is the second headline, the way of removing quarantine on tourists from the u.s. and eu. you and i fully vaccinated they still don't have a plan to let us in without quarantine. tom: we will talk to the trent -- secretary of transportation about that. jennifer, i'm going to cut to the chase. we have passports, why don't we have certification of vaccination to make your life

and professional lives easier? jennifer: i think we should be doing everything possible to incentivize people to get vaccinated. telling them because you are protected with vaccines doesn't mean you're -- doesn't that is counter to the goal of getting people vaccinated. but the secretary says about this is how we actually establish vaccination proof. it probably has to be on the national level. it's probably not sufficient for international travel. the fact of the matter is if you are vaccinated, you are protected. tom: i look at this moving target. when does it get fixed? maybe the secretary of help us. do you see a timeline where this gets done quickly? jennifer: we know there are

deeply inequitable distributions of vaccines. it's a matter of international politics when there's a handful of countries have used more than 75% of the vaccine administered worldwide. we also worry about the penalty that places on countries that want to vaccinate their public but haven't been able to get vaccines. this would be another setback for them. on the individual should not be telling people they need to quarantine after they've already been vaccinated. jonathan: the delta variant is quickly becoming the dominant variant in the united states. what is the scientific rationale to still have these travel restrictions in the united states? jennifer: i think it comes down to the fact that not everybody who needs to be is vaccinated and we are still dealing with that. i think we do have to sort through the fact we shouldn't be this incentivizing the people

who are vaccinated and telling them it's a restriction for them. but we are going to see very likely we are already seeing half of states reporting case increases. largely in states that have lower than average vaccination coverage. not exclusively paired any state with a pocket of acceptable individuals could really see pace increases in the coming weeks. this is a delegate time and it sticks to the urgency of getting people -- getting as many people vaccinated as possible. been a proponent of making the case for why vaccines change everything. >> you refer to the incentives there. if we could put the incentive to the side, and interested in the science here. away from behavioral science or the incentives, i want to understand if a delta variant is already prominent, what's the

use of shutting the border to people coming from the u.k. or from europe? how does that help? jennifer: i'm not a huge proponent of travel restrictions. i've never seen a change in the epidemiology. at best it buys you a few weeks time. it when you look at australia which is entered into lockdown in its largest city, they had very strong restricted travel including not allowing their own citizens to come back because they were concerned about keeping the delta variant out. that clearly didn't work despite aggressive efforts. you won't hear me championing travel restrictions is the way to keep a virus from entering a country. clearly we have many examples of where that has happened despite the travel restrictions. country sometimes think they will gain a few weeks to prepare , but more often than not they usually squander that time. romaine: what about testing?

it seemed like that had been pulled back a little bit and now with the emergence of the delta variant you are seeing some governments try to step up testing back to levels we saw during the height of the pandemic. jennifer: the u.s. testing capacity has greatly eroded and i am concerned about this. we saw testing around thanksgiving level off. it's very confusing because the u.s. went into one of the biggest surges sort -- shortly after thanksgiving. states had to pivot their attention to rolling out vaccines and they can only do one thing or another. so what was driving the pole back in testing. i used to get weekly text messages for my health apartment reminding me to get tested. i don't get that now. i had to get tested not because i was sick and it took a long time to figure out where to get tested. this is worrisome. we spent the year building up capacity and infrastructure that is no longer there.

we may not be as ready as we need to be. tom: sunday, as you look at italy and england, i can only assume that you will be looking at the giant from napoli, what i be right? jonathan: are you trying to cause trouble? tom: i'm loving it. jonathan: i think that's where he is going. jennifer: i'm a peacemaker paired my mom was born in the u.k., my dad's family is from italy. they are both winners in my book. tom: sitting on the -- jonathan: sitting on the fence a little bit. jennifer from johns hopkins, committed to other things. i'm committed to my pure italy. i think we have a lot more going for us in midfield and i will also say the transition from the

back to the forward is so fast. you saw that goal a couple days ago. that move from the goalkeeper to free up the players in the front happened so quick. tom: romaine and i are watching the dodgers. jonathan: equities down by 1.4%. ♪

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>> if you have confidence in the economic outlook, equities are usually the best place to be. >> i think the market is reassessing how confident it is in the growth outlook. >> growth acceleration is getting shifted from the u.s. >> the data is good right now. the problem is it is not good enough. >> the fed will end up doing what it has to do but it may be late. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: wanted: 20 -- 1.25. this is bloomberg surveillance on tv and radio. your equity market, 4295 on the s&p. lisa is out of the building. romaine bostick helping us get through the price