manus: good morning from a middle east headquarters in dubai. this is "daybreak: europe." covid restrictions bite into growth in the world's second-largest economy. asian stocks trade mixed, up in the air, ryanair's earnings the tank. the official holiday season

coming up. g20 leaders sign off on a disappointing claimant deal leaving hopes of a breakthrough at cop26 we are live to glascow. janet yellen is speaking in the function of treasury secretary. she has news for you, stop worrying about the implosion of the yield curve, because the worry is not necessary. she sees a strong and solid the recovery, stop worrying about the biggest one-day move of flattening in the treasury market. that from the treasury secretary, that is a red-hot headline from janet yellen. what we're hearing from his guidance and terms of quality of the recovery and a new slope with regard to how jay powell had handled the ongoing news flow around his trading. let me bring you to ryanair,

praising powell's response and the fed to the controversy around a number of members and their trading. profit up to hundred $25 million -- $225 million, lighter than the estimate that i had. second quarter, letter perhaps than -- like her perhaps than -- lighter than the market had anticipated. ryanair is thinking of delisting. this would have to do with brexit, which is where do you want the listing of your stock given the differential? rising stocks, jet fuel edging,

approximately 60% of its edging done for 2022. profit after tax comes in lighter then the market and -- had estimated. we will put these questions to the ceo. where are you considering delisting? we went to note what the booking is like. santa claus is coming, is it going to be a bumper christmas for ryanair. this is what we want to know the ceo come will get to that. the reason for delisting is a material decline in share volumes in the wake of brexit split and the european union. covid cases are rising in the united kingdom. could there be a risk of another orders being reestablished again

because of covid? we will ask michael those questions when he joins me shortly. let me show you what bond vigilanteism looks like. the australian government bond market, three standard deviation moves down into guilt this morning after a bond vigilante attack on australian bonds, likewise around the rest of the body markets, because the rba decided not to defend the 2024 bond yield target, 1%, that moved eight times higher on friday. was that a dereliction of duty by a central bank? you had violent reactions all the way i read the australian government bond market, i take you to janet yellen's commentary

, flattened by 13 basis points on wednesday, the biggest one-day move. let's look at the 210 chart and you see the catastrophic implosion this out on wednesday, the biggest one-day move since the year 2000. there was enough ending in the short end of the curve. this is what you must consider. as vigilanteism takes hold in the bond market, are you looking at a bar shot? such a violent move in the currency, this is what they are asking, is to that bar stock? this is the closest we can get to a distressed market. about two back in, let's rounded up and talk about the data. chinese company -- economy weakening in october as we had power shortages and surging prices also editing with covid

curves cutting into holiday spending. let's get to our chief asian economics correspondent. i looked at the data. what with the negative piece of news in the status we? >> i think it is the official number, the second month of contraction and the manufacturing sector is feeling pain from this energy shortage running for a couple of months now. we had manufacturers tell us there only allowed to operate certain days a week, and to build up in raw materials, caused a squeezing them as well -- cost a squeezing them as well and the manufacturing sector is under pressure. there are signs that is spilling over the services side of things , and the consumer, given the aggressive strategies you can think of it, but we should say while there downward pressure on china's manufacturing sector

overall exports is holding up. it is question whether it will get over that once we get over the pivotal stretch into christmas season, but the big takeaway remains, official pmi, consecutive negative reading and there is downward pressure on trent's economy. it is a question of how weaker it gets premier. manus: see if it gets further and what officials will respond. the latest on the data. switching to japan, we have reports indicating lpd eliminated the worst case scenario. let's bring in our guest and tokyo -- in tokyo. why is the stock market so pleased with kishida's victory?

>> as you mentioned, there was scenarios positive beforehand, but we are looking a little bit negative for kishida. kishida is not a super popular choice for prime minister and were a little afraid of what kind of performance he would bring when people went to the polls. he not only avoided the worst case scenario but keep didn't quite impressively, he lost 15 seats. a lot of predictions were expecting they would lose a lot more and the main opposition party had a bad day at the polls as well, so markets are happy to see the continuity. at the moment it is going to remain. the next thing we will look at will be the stimulus package. we should have more clarity on that by the end of the year. manus: ok, let's see when he

delivers. kishidanomics, let's see what the difference was. it is day one at the u.n. climate summit in glasgow. the meeting follows on from the g20 in rome where the claimant deal fell short of what some nations were pushing for. it is not up to the negotiators -- it is now up to the negotiators at cop26. francine lacqua is up early tracking all of the moves. we spoke just 10 minutes ago, it was hardly what you would call overwhelming or setting a bullish stage work cop -- stage for cop. >> it was disappointing. 80% of emissions are admitted -- emitted by g20.

it did not have a lot of the details. we talked about coal. there was no specific target for individual countries to cut down. methane, we have an agreement it was not that global pledge which would cut methane emissions by 30% by 2030. the lack of detail means it will be very hard for countries to find an agreement that can really reduce the temperature to 1.5 degrees set at the climate in paris just five years ago. they failed to agree on a precise date to rule out fossil fuels. they did not say they would reduce it by 2050. they said something more vague commitments midcentury. a lot of testing in if the government center, this is where

we are now. we are expecting to hundred heads of state to negotiate, overall 30,000 people in and out of the conference center. manus: we have had a huge run up to cop. biden is going, putin is not, a number of other world leaders. in your estimate who has the strongest negotiating end to push it along? all of the reading i've done is biden is not exactly armored in the strongest weight going into this? . >> this is the problem, if you look at the world and the country splitting the most they are not showing up. we are expecting new pledges from a country by delegation joining us at cop26.

we do not have the chinese president or the indian prime minister and this hurts the negotiations because they are the one think into the most. there are financing that can go to a lot of these countries to make sure the transition is viable, but what we could see at cop26's may a breakthrough. you will have around 200 diplomats working around the clock. the leaders come and say this is what we want to achieve and it is up to them to negotiate. you will have a lot of private companies that show up. on wednesday it is a big finance day, and this is where you could see a big pledge on the electricity grid, electric vehicles. the leaders and countries will always give the big theme in the big push but a lot could be done on a corporate or business level. boris johnson is saying if we do

not achieve anything now it's a suspect years. manus: you are tracking, great to have you with us this early in the day. enjoy glasgow. a great city. we have got a week coming to you from glascow, we will speak to axios, plus the u.n. special envoy for climate as well as pain's prime minister. you do not want to miss the bloomberg coverage of cop26. let's get you first will news, annabelle droulers is in hong kong. annabelle: the u.s. and eu have reached a truce on steel and aluminum removing tariffs on exports each year.

the suspension will last for two years, during which the parties will work toward a broader global deal that will penalize companies not meeting low carbon targets for production of the metals. the white house press secretary says she is tested positive for covid-19. president biden's top spokesperson to rebuild her diagnosis while the president was in europe to attend g20 talks. she says she last saw biden on tuesday sitting outside and while wear a mask. biden most recently tested negative for cocaine on saturday. elon musk says he is willing to sell some of his stock holdings to fight world hunger if the yuan can approve $6 billion -- $6 million would solve the problem. he put in a response -- musk's network is about $311

billion. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. manus: thank you. coming up on the show, a huge week for central banks. the fed, the boe and rba. we dig into risk for more vigilanteism. our guest joins us, a potential delisting from the u.k. this is bloomberg. ♪

manus: it is "daybreak: europe." a massively procedural base, the rba, the fed, boe all coming into play. the fed will announce it kick tapering probably on wednesday. the bank of england's decision with the fate of a potential rate hike according to two dividend governors and the rba faces huge pressure heading into tomorrow's policy meeting. we saw australia's worst bond rate since 1994. it is a big around -- pivoting around. hone into column three at the very top, this is the bond market repricing again. he went vigilanteism in the bond market on credit with two, 5, 10 all moving higher. i move three standard deviations

back. they did not defend they'll go target of the two year paper, and how much of a mistake was that? let's ask a senior strategist. thank you for joining me, i watched the bond market on friday, the biggest move since 1994. howell fawley -- how folly was it of the rba to not allow paper and spiraling out of control, the yield retching -- ratcheting above eight times the target? >> i believe it was quite a folly. just to the beginning of last month the rba promised it would stick to its go target, and now

it has given that up without giving any signal, in the indication, and the volatility we see now is something that banks tend to avoid, because it is extremely difficult for risk managers to manage. this is something that will makes usually went to avoid so will be interesting to see what the rba will communicate tomorrow or justify would it did. manus: how do they regress -- regrasp the authority and calm these markets down? >> i will say they will justify it as now they have new targets because of the economic framework, inflation risks.

overall the tightening by the rba is assigned of the global trend. it is the weight they have communicated to the markets but not communicated to the market so far. that is a problem i think. manus: where do you stand? on the aussie, letter this morning, repricing around the curve. when you look at china data slowing, iron or slowing, -- ore slowing, how do you look at the rate environment? commodity effects? >> we are seeing a private

disconnect. we see some movement in the aussie dollar, but there is far less volatility on the fx markets, and that tells me markets are reacting to the liquidity effect on the bond markets, and exchange rates is not necessarily [indiscernible] or what will happen to policy rates. it has brought afford rate hike expectations in australia. this has move the aussie, but the market has not necessarily brought afford its policy expectations -- brought forward its policy expectations.

as long as that is the case in the rba does not signal that it will bring a rate hike, i do not think it should have too much impact on exchange rates. manus: we have got a huge week. thank you so much, we have got a lot of risk on the table. a bank analyst with us this morning. aramco's big oil rivals may offer slightly better dividends. we discussed the aramco response next. this is bloomberg. ♪

manus: one company benefiting from the surge in global oil prices is aramco, numbers are in

and they have jumped the earnings by 158 percent, making it the world's most profitable company. let's get to our energy and commodities reporter in dubai. these are splendid numbers and we have more breakdown on the details between the upstream and the downstream. >> it was thanks to higher production. it continues to do extremely well, and saudi aramco eased a lot of its cuts in the second quarter, and with put prices being higher that transmitted to numbers in the upstream. it made a profit of $4 billion and a quarter but not as good as the second quarter, so for the downstream margins are shrinking and it is being affected by supply-chain woes.

it is not necessarily good for the downstream. manus: it is interesting how all of the companies have huge capex plants going into 2022 and to what extent can they do that and will that cause further constriction in terms of supply? they went from paying down the debt -- for paying down the debt rather than upping dividends. >> it is still above their for target of 5% to 50%. we'll see what investors think of aramco keeping the dividend. if you look at the yield, it is lower than the likes of bp and shell and chevron so it is thought that attractive a stock to foreign investors especially. manus: definitely in the oil market, paul wallace.

next step, the man himself joins us. why are you delisting moving is a handful. no kidding! fortunately, xfinity makes moving easy. easy? -easy? switch your xfinity services to your new address online in about a minute. that was easy. i know, right? and even save with special offers just for movers. really? yep! so while you handle that, you can keep your internet and all those shows you love, and save money while you're at it with special offers just for movers at xfinity.com/moving.

manus: good morning from our middle east headquarters in dubai. china's power crunch and covid restrictions bite into growth as the world's second-largest economy slows. stocks trade mixed this morning. ryanair post its first quarterly profit since the start of the pandemic. the biggest budget airline in

europe sees a strong winter ahead as recovery and short-haul travel gathers apace. g20 leaders sign off on a disappointing climate deal, leaving hopes of a breakthrough to cop 26 negotiators. we are live to glasgow. welcome to i suppose the reality of what bonds can do between friday and monday. the is trillion yeild curve specifically. let's have a look at the gmm. a three standard deviation move by australian yields back down by 20 basis points. this all goes to the heart of the issue. friday, the rbi drew a line or lacked defending the line on the sand. they stood back from defending that yield and the market took it up by eight times the target. call it dereliction of duty or just some of the phrases being used.

what will the rba do to fight back? on the left-hand side, you can see indian equity markets. we should do the g20 board. really this is just jesus -- a soucent of what is going on. boosters and a budget before christmas. the bond market is what we are concerned about. the yield curve had a red-hot headline from janet yellen warning the markets not to take too much -- pay much attention to the volatility. an explosion in the yield curve of america flattening by 30 basis points since wednesday. the single biggest move since the year 2000. the rba, the fed, and the bank of england will all be in play this week. what will they do to shift the narrative? market is pricing in a nice

probability of a rate hike by the fed in june of next year. what you saw the past four days of trading according to deutsche bank is nothing short of what they do sign -- what they define as the closest thing to a vast shock. -- a var shock, where volatility ramps so aggressively you have to adjust your positions on all parts of the portfolio. that is a self-fulfilling doom loop for markets. one airline which is far from that at the moment as europe's biggest carrier. ryanair returning to profits in the second quarter. demand for air travel surges. results come in as the group is considering delisting from the london stock exchange. the ceo is michael o' leary. thank you for joining me. you worn it is going to be a tough time this winter, but i want to get a sense from you just how much capacity will you add?

going into this next quarter. >> good to talk to you. we are very emboldened. the europeans roll out the very successful digital covid certificate. we have been reporting 80% plus load factors during the key summer months of july, august, and september. as you see, a dramatic recovery. june, we covered only 8 million passengers. september, that jumped to 31 million. we think we will do somewhere between 31 million and 33 million in each of the last two quarters as well. yes, we have been discounting to encourage people back to flying. traffic has doubled, but revenues have grown by 83%. but the real stand out as the costs have only grown by 63%. we have taken enormous swaths of the cost and i don't think in my

30 years in this business i have been at a point where i am so excited about the growth opportunity in the next five years. we are taking delivery of 210 aircraft from boeing. already we have been adding 500 new routes for next year. the demand for low-fare air travel in europe is extraordinary. manus: that is bullish rhetoric, but do you expect to get above 90% capacity in the next quarter? >> yes, we are already operating about 90% capacity. lately lower load factors. we are operating currently at about 82%, 83% out of 91%, but through this winter, we will be just about 90% of our previous covid capacity and in the spring we go above 100% with the new aircraft deliveries. excuse me. manus: where are your strongest

booking risks going into this christmas period? i have been through a number of airports. some of them at home in europe. just a colossal wave of people arriving -- people around me. what are your strongest roots? >> the last three months, particularly last week, extraordinary midterm break. i have never seen volumes. as we look forward to christmas, we see a huge return of visiting friends and relatives. we are seeing strong bookings into the christmas period. ireland, spain, the canaries, spanish domestics, people who have been locked up the last 18 months are determined to visit friends and family this christmas. and we see our forward-looking

-- forward bookings for christmas are stronger than they were. that is repeated again for summer 2022. our forward bookings are slightly behind where they were in 2019, but the bears are -- the fares are noticeably higher at this point in the booking cycle. manus: bullish on the outlook on the pricing. i know that you like to take a -- but the full year loss stands at 100 to 200 million. that's what you have given us. is that your worst-case scenario, or is there a risk -- what does it take for you to get to breakeven? >> i think breakeven is unlikely this year. last year during covid, we recorded a loss of 850 million. if we get close to 200 million

this year, in essence with almost no traffic in the first quarter, that is close to breakeven. it is not a number i would lose any sweat over. i'm really focused on your. -- on next tee year or -- next year. next year we jump forward way ahead of our pre-covid number which is 149 million passengers. you're going to see strong pricing and proper recovery next year. so much capacity has been taken out of the european system. there is a huge swing for capacity and disappear. ryanair is one of the few but not the only airline pulling significant capacity back into the market next year and capitalizing on extraordinary growth and recovery data from

europe's data reports and europe's governments as well. manus: you mentioned covid. the u.k. has the highest cases since the start of the year. have we passed the point where there is a risk of close down? is there still a risk of temporary halt? is that the biggest risk to the outline you have just given to me? temporary injunctions? >> yes, there is a spike in case numbers which were expected. it is not translating into a symbol -- similar load of hospitalizations. i worry about governments. we should maybe expect more disruptions this winter. i hope not. we are looking at 90% plus vaccinations in the adult

population. most european countries will be rolling out booster jabs. our health services will have to cope with more case numbers. case numbers are not translating into serious illness or are hospital systems being overwhelmed or flooded. people are wearing masks on board our aircrafts. we are taking all the safe steps. the biggest -- what we take most from the last four or five months is that people have gone back flying. we are restoring confidence in flying particularly within european short-haul. the long-haul recovery will be more delayed. that sets us up for a very strong recovery in summer of 2022. we have -- we are just around $60 a barrel for fuel.

we have low costs. you're going to see us bring back very very strong -- ca spring back very very strong. manus: what is it that will take you over the line to delist? what is the advantage to the shareholder if you do that? >> it is an inevitable consequence. most of our trading since brexit has moved toward the stock exchange in europe and brussels. as trading in our stock in london shrivels, it does make sense, we have a regulatory obligation to ensure we continue to be european majority owned and controlled. we have taken away the votes from non-european shareholders. the first quarter we were about just over a third eu owned. we need to move that gradually

toward 50%. the two main instruments would be more forced sales of non-eu holders and delisting from the london stock exchange. i will be sad to leave the london listing, but it is an inevitability in the next six months. because of the regulatory strictures, we must be eu owned and controlled and delisting a reasonably small initiative in the strategy. manus: let me close off with a couple very quickly. do you need any cash to be ready to get your hands on a deal if it comes along? do you need to raise more cash? >> i don't think so. we closed the half year with over 4.2 billion in cash.

we had so much cash last week we paid the u.k. government loans, i think the first airlines to repay five months early. we are still north of 3.5 billion in cash. we were in talks with boeing and out of nowhere, the worst downturn in history. they announced they were going to raise prices. i would hope to see them restart at some point in time. i'm not sure boeing are going about the recovery the right way, putting up prices post-covid is not going to sell a lot of aircraft. that is why so many customers have announced airbus orders. boeing need to get their act together. whenever the pricing is right, we have the cash for an order. manus: i do not want the pr line which is the greenest airline were customers can reduce co2 emissions by up to 50%. but we are going into cop. you have dealt with the green

agenda for a long time. what is the biggest risk to you, or what can you do as a ceo of one of the biggest airlines in europe to continue to cop 26? >> the most meaningful thing we can do is invest in new technology. i'm so excited by the boeing max aircraft. we are taking a fleet of 210 aircraft deliveries over the next five years. these aircraft carried 4% more passengers. they burn less fuel and they reduce our noise emissions by 40%. not only do we make huge fuel savings -- cost savings, but we have lowered emissions. there is no doubt as an my mind that what aviation must do in the next decade is invest in new technology and new engines. there is no other way of -- the airlines can't to anything else in the next decade.

but reduce our dependence on fossil fuels, lower our noise emissions, and make flying as green as we possibly can. manus: pleasure as always for you to join us. the very latest on the numbers. take care and have a good christmas. michael o'leary, ceo. coming up, the g20 leaders signed off what is being deemed a disappointing climate deal. that leaves hopes of a breakthrough to cop 26. we are live in glasgow for the first day of the u.s. summit -- the u.n. summit. this is bloomberg. ♪ ♪

manus: it is "bloomberg

daybreak: europe." day one of cop 26, the u.n. climate summit in glasgow. the country stuck a climate deal that some would say fell short, well short of what some nations have been pushing through -- pushing for. it is up to negotiators at cop 26 to achieve a breakthrough. one woman who will likely get the headline is francine lacqua. no pressure, you only have one red headline to get, which is cop 26. >> no pressure. manus: but no better person to get it. how does the agenda look to you? >> we are right next to the plenary where all the heads of state will walk to and from. maybe we will get some kind of scoop. what we are expecting this week is pretty subdued just because of the failure of the g20 to communicate targets.

we did have something about coal, but it did not go far enough. we had something on how to keep an ion methane, but it did not give us the exact timeline. what we are expecting a cup 26 is before 200 countries show up, that is about 180 more than we had at g20. focus will be on private investments. it will be interesting to see the body language between the heads of state as they arrived in about two hours from now. i don't know whether we will manage to get some kind of agreement, given we did not get it at g20. we are hoping to have a bit of greater action to limit global warming, maybe with more detail on capping net zero. again, unclear whether this will come this week or next week. the way this goes as we have two days of leaders, they will show

up. there will not be china and india, which are crucial, but we will hear from the emerging markets that have not much to do with climate change. then we have the corporates and finance showing up thursday. negotiators meeting next week. manus: there is a great story on the terminal this morning. boris johnson warns it is one minute to midnight as cop take software you are. you say the emphasis could be on the seas in terms of what we can expect from glasgow. run me through the ambitions. francine: the ambition actually is putting first of all money to pledges which we did not get at g20. the premise of the cup 26 as they would have this free meeting -- cop 26 is they would

have this meeting. it's really the countries that could have made a big business -- difference. without them on board, it makes it harder for cop 26 to have teeth and come up with something. i like the way boris johnson positioned this with very simple words. he said this is about coal, cash, cars, and trees. if you are china, they did not pledge to cut coal usage domestically. cars, maybe we could see some progress on the car front, using more ev's. there was cash, but the devil is in the detail i when you figure out what the g20 did. yes, we are pledging cash, but we don't know the amount and we don't know who it goes to. we could see on the tree front, a plan to plant more trees. without brazil, because the amazon has been depleted, it is

hard. we are expecting something, but maybe not the hail mary moment where everyone does their best. it seems it is going to be a lot slower than we were hoping. manus: brilliant analogy. who are the leaders who have the clout? who has the ability to move the dial there? francine: it is the leaders who are not here. india, china, and others, including the brazilian president. we are expecting a pledge from brazil because the president is sending quite a big delegation. we are expecting pledges to come through from brazil, maybe even being announced today. leaders including mario draghi and president biden will give a speech. they are likely to do some kind of press conference. i'm not sure the message will be that much different to what we heard yesterday.

leaders did press conferences there, but there could be more warnings. we need to do this and i'm prepared to put this money. other leaders i'm watching, of course, these countries that don't emit much but who could be underwater in 40 years. there pleas -- their pleas and pledges could make a difference from the private side. manus: francine lacqua in glasgow, have a great week. we will bring you coverage from the cop. we have ceos, from man group, rio tinto, plus the u.s. special envoy for climate. don't miss the conversations on bloomberg. ♪

manus: let's take a look at what is on your trading agenda for the week. francine is at cop 26. a huge week for rates. rbi, what will they do to re-grasp the narrative from violent moves in the bond market? the fed moves in and the bank of england. a meeting thursday evening as joe biden chides saudi arabia and russia for not producing more oil. friday, definitive for the next couple months, u.s. jobs data. get ready for kishi to -- kishi

danomics. this nice move on dollar-yen. you are seeing some would say a reverse capitulation on australian rates.

anna: welcome to "bloomberg markets europe." the g20 climate field falls short. a watered-down communique from the world's biggest conference in need of a big breakthrough. a steel and aluminum trade deal. allies will renew tariffs