>> this is bloomberg daybreak: europe, i am in london. these are the stories head of your agenda. manus: force johnson survives the confidence vote, but the mutiny suggests his days as prime minister will be live -- numbered. the rba hikes rates by a jumbo 50 basis points, pointing to inflation spiraling higher-than-expected, even a month ago. ozzie yields a surge. -- aussie yield search. supply constraints, the war in ukraine, easing coronavirus curves in china, bringing commodity index to a fresh all-time high. good morning. it's jumbo hikes away.

a soft landing can be ugly for investors, but of course, corporate's are not the consumers. good morning. dani: happy jumbo day. it's another 50 basis point hike falling in the footsteps of the fed him of the boc and the boe. when it comes to the equity market, some of the ones out of it are being taking out of deals as yields move higher. you're going to look at the aussie yields a moment. hong kong tech was up more than 1%. it is now up .4% in the u.s. session, chinese listed chinese stocks that hit her highest level since april after reports that the didi investigation was starting to wrap up. it is all about this yield story for this equity market. s&p -- euro stoxx futures moving lower .8% -- down half a percent. we changed yesterday.

verily up as you'll start to creep up about 3% for much across the curve of the u.s. bond market. let's show you what apple -- limit show you what apple did. we have the world developers conference for apple unveiling its biggest changes to the laptop, also having other software services like the buy now pay later service. not exciting the market up .2%. these announcements do not move apple shares much but they will move me to buy you a new macbook manus. manus: well, i will be happy with just the old ipad. jp morgan singh a recession in the -- is unlikely -- sing a recession is unlikely. they're calling the bear market rally, it is not a bear market rally for them. let's look at those rates, three your paper, spikes up 19 basis points at one juncture. australia joins the fed and the bank of canada in the jumbo

hikes of 50 basis points. the aussu -- the aussie, you see this knee-jerk reaction, part of it is the upgrade to inflation, increasing to 7% instead of 6%. rates are spiking higher. crude is up, goldman sachs makes their move with her: oil -- there call on oil. after july you're going to need oil to rally further, to solve the deficit. we are not in a demand implosion, bitcoin down .6%, after making it through the $35. we have a skittishness to where we go in yields. let's get the team assembled around the world. at downing street for the latest on boris johnson. dani: we've also got juliet bringing us all the details on the rba hike. we're going to turn our

attention to commodities as andrew, as rum attentional -- material source to a record. starting with boris johnson surviving a confidence vote within his the party. the scale of that mutiny against him does suggest a danger that his days could be numbered. >> the vote like favor of having confidence in wars johnson was 211 votes and the vote against was 148 votes. therefore, i can announced that the parliamentary party does have confidence. dani: let's get to downing street were leigh-ann standing. boris jensen clinging to power for -- but for how long? >> good morning to you. the party is still on downing street. boris johnson one the confidence vote last night. you heard all of those cheered, when it was announced. the honest question is those

numbered -- those days are numbered. 211 have said they have confidence in the prime minister. 140 said they didn't. that is a 63 majority. that is much lower than theresa may got three years ago when she faced a confidence vote and she only lasted six months after that. boris johnson and his allies essay now is the time to draw a line under this party gate standard, deliver policy, start again as a good uniter. now he's got. >> how does he govern, he is not necessarily in power, what does he need to do to ensure he is the leader that takes into the 2024 election?

>> two years as a long time in politics we have not even gotten an inkling that this was going to happen so he is waking up bruised. he is waking up wounded. but we do know that he is one is confidence vote so technically, according to the touring party, laws, he is in power for another year. crucial things are coming up in the horizon for boris johnson. how is he going to unite these rebels and two crucial elections coming up soon, june 23. a traditional labor seat, and a lib dems seat. polling suggesting he could lose both of those. those imminent losses may change the tide for him. we do not know. >> we will certainly be tracking those elections closely. garin is on the ground -- she is down on downing street. the rba delivering above a 50 basis point hike.

joining the jumbo club, juliet has the latest. the adjustment of the rba, what do you make of it? >> is every central bank is trying to do at the moment or most of them is trying to rein in inflation. this book about the concern and pain to households. a number of price pressures, not only in terms of electricity which is something that is global. food which is global. australia had a lot of flood so they are seeing upward pressure on food prices and they have a very tight labor market as well. the rba delivering this 50 basis point hike which is seen by three out of the 29 economists surveyed listing to a .5% and suggesting we could see bigger moves ahead as they try to get a lid on inflation this as we saw a further decline in unemployment forecast by the rba. they are still seeing this tight labor market. let's have a look at what the asset moves were. a fix by coming through,

particularly in the three year yield, up by 19 basis points on this move. the aussie dollar has given back some of its gain. they had a big spike and rose against the kiwi in august 2018, and against the yen. a bit of a movement, for the aussie. this is placed heavily into the banking stocks as well. they are weighing the overall asx 200. another big movement for market washers -- watchers in asia, the japanese yen it is at a fresh two-year? -- two decade low. the finance minister and we have heard from the governor in the last couple of hours think they need to enhance financial stability. this as we see diversions with the boj. they are staying in terms of that easing mode. dani: thanks very much. we will be talking to simon harvey in a moment about all of those fx moves. bloomberg's commodity spot index

has also hit another record, a record high. attracts prices for 23 rom materials last peaked in april. food and energy supplies afield the strain of ukraine. let's bring in bloomberg's energy commodity edward -- editor. it was all about food prices but now it is all about energy. >> that's right. the gains today were natural gas. there's a lot of pressure on both energy and food at the moment. the two big things at the moment is china putting the worst of the virus behind it. demand is going to come back there. also the eu is increasing sanctions against russia. that is going to augment the lack of refining in the u.s., which has pushed the gasoline prices there. in foods there is a whole host

of things that is pushing up prices right now. the war in ukraine, fertilizer costs, we have some extreme weather, heat waves, also, rising protection, there is a whole bunch of reasons, which are continuing to put a lot of upward pressure right across the commodities complex. >> thank you very much. some of the sub index moves are phenomenal. energy up 90%, and -- thank you very much. let's quickly take a breather. we want to talk about twitter. look at these lines from johnson. it sounds like he is readying. to shift the narrative. he is going to commit on measures to cut childcare costs. this is the morning after, but

now it is down to serious policy, isn't it? dani: it is, who knows how long ago the bunting is there. the prime minister singh they're going to set out their vision in the coming weeks, and he's also going to bring together the cabinet on tuesday. it has this feeling of coalescing the party together to bring about that unity, or lease cup -- keep what remains of it. manus: if we reflect back on what was said, who stays on that cabinet? who does he corral around him to secure his tenure for the next year, that is if he makes it? there is one other leader which we have to talk about. it's twitter. the package just rolls on, with elon. he is upping the ante. i love the story. he is creating an audit trail, twitter is fording his information rights. dani: look, first elon musk complains that twitter is a

problem but what the problem with that is that is not a material adverse event, enough to walk away from the deal. what could be is what is in the covenant of the contract they signed. twitter needs to supply elon musk with information. this new filing from his lawyer says, information you have given elon musk does not live up to the contract with which you signed. you need to give more information, if not it is possible for elon musk to walk away. that is what the lawyers are arguing. manus: if you look at the off-price $54.20, the market is diving. you look at b.i., at $44 billion, that gives the value of the twitter user at around $200. he needs to get that price tag down. but, it is going to be a hard one to wiggle out of. dani: it really is. this is something we are going to be watching throughout the day. let's get to some of the key

things the markets are watching out for. it is a big one. today's, germany's industrial production data falls on the weakness in factory orders. it reflects a shortfall in supply of critical components, not necessarily demand shortcomings. on wednesday it is another rate decision, india's rate decision. we have many rate decisions this week. we have gdp and unemployment information for the euro area. manus: get to the ecb, the oil import decision and it will be what this lady says to the market rather than anything to do with rates. it's about scheduling, timing, rhetoric and nuances of the forward guidance. jobless claims ahead of the cpi on friday. that is all on the right this week. russia's rate decision this week. we will keep an eye on that. let's dig into the fx with simon harvey from monex europe. dani: could inflation be

peaking? three key surprise hike factors driving higher prices? we are going to have that discussion also coming up later this hour. this is bloomberg. ♪

manus: it is a daybreak europe. the aussie dollar and three year yields have spiked on the back of the rba, delivering a 50 basis point hike. let's get to simon harvey, head of fx analysis at monex europe. when you look at this jumbo move, that joined the bank of canada and the fed, the more worrying part is that the guide to inflation 7% instead of 6%.

they are not seeing this narrative that we are building, that peak inflation is here. >> yes. the rba is not down in europe. that is what they want to make sure everyone takes home. do not rest on your lows, do not believe too much what they are saying in each meeting because they have the tendency to surprise. it is part of their monetary policy function, they like doing it as well because it ties financial conditions, more than what the actual hike does itself. inflation has got further to run. but, it has in most economies. the rba is catching up to it. what is interesting is that they are focus -- their focus is shifting to which focus. -- wage focus. dani: you talk about in your notes that this environment, it pays to be per cautious. howdy square that with these

jumbo rate hikes -- how do you square this with these jumbo rate hikes? >> the idea of being cautious has shifted. to all of a sudden actually taking out insurance policies, we argued back from the bank of canada and 50 basis point and led the g10, trained on the larger rate hike. they are taking out insurance policy. at the moment monetary policy makers are having to tackle the effect on the environment. they have no idea whether the post-pandemic or late markets are looking like. they have no idea what the new neutral ranges looking like. , they have guesstimates but they don't understand what the post-pandemic environment is. they are taking up these big aggressive front loaded which are insurance rate hikes to purely keep inflation expectations anchored so they do not have a situation where in a years time a comes back to bite

them. the idea of being more conservative, with your policy, all of a sudden has changed the narrative from what we previously expected which was very slow, forward guiding, 25 basis point rate hikes to something a bit more aggressive. manus: the question for the market is this, how much more expeditious does the fed need to be? larry summers and a number of his peers have done some analytics. they requested the data -- we crafted the data from the 1980's. the cpi was -- we are already in inflation. you want to get back to 2% core, you will require the same amount of disinflation achieved under the chairman. that says to me, not just three sets of 50 basis point hikes, but maybe we need to return to considering something more

substantial. do you think we will need to see something more expeditious than three clips of 50? >> if larry is right, most of the market is positioned wrong. as i said, we cannot take incidences from previous cycles 10, 20 years ago in regards to what these more longer-term structures of the economy looks like. it's all well and good saying we have an inflation problem, has some prayer laws to what was happening -- parallels close happening 20 years ago but the playbooks are not the same. what i would argue is that if we are talking three or 5% from the federal reserve, the market is definitely in a position for it. maybe a few individuals are but on a whole, we are not pointing to this. i would highlight briefly -- dani: if i could just get into this quickly, i want to make sure we cover it. one extreme positioning you can say is certainly the yen, continuing to drop to beyond a

20 year low. you look at aiming to keep powerful easing, it's not just the gap fueling the yen. how does this shakeout with the boj that is committed to the project of easing? >> and does lean back into the previous topic. if larry summers is right, it is not about the interest rate differential, we are seeing 4% on the 10 year, 5% on the 10 year it will be. we will start talking 30, 150, big figures. if the bank of japan stays on course. what i was leading to is the narrative shifts quickly in this market. we go from prioritizing inflation, and low growth concerns. we are changing the narrative, it changes quickly as well and that is a case of ok we have to focus on inflation.

we go, hang on a minute, maybe we see inflation in a minute. maybe we start talking about how quickly the u.s. economy is going to slow, how quickly the other major economies are going to start slowing under these tighter financial conditions. all of a sudden we go back to the narrative of have we seen ? ? u.s. rates there is a pressure taken away from the dollar, we are back below 130. for the bank of japan it is a case of differentials monitoring the fundamentals. at some point they have to step in. if it starts to blow up the pace begins -- of depreciation comes in. talk is cheap. there will be a case if we do not do such high u.s. rates they need to put their money where their mouth is. manus: can i just ask what is so different for your -- 40 years ago? supply chains, trade wars,

energy is up 90%, agriculture 42%. what is different? >> that is a question we are all asking ourselves. how do we draw these parallels? it's easy to say headline inflation are pretty similar. the labor markets are at historic lows. the labor market has been preaching lower lower for unemployment over the past decade. yet there still was not a rage -- wage growth. especially in japan for example, the fundamentals are different, because of globalization, if that starts to revert. the problem is we do not have a very quick and easy reliable read on the labor market and the patients in which. . wages are growing as soon as we get that, the path for policymakers becomes clearer. we. can discuss rates at the moment we cannot. manus: i'm afraid we will have

to leave it there. simon harvey head of fx analysis at monex europe. apple has released a flurry of products, including a new macbook revamp, up next. this is bloomberg. ♪

dani: we are here at apple headquarters, where double wdc was held in person for the first time in three years. emily: while this event, is about the software we have big hardware updates as well. apple unveiled the new m2 chip that will define the next generation of apples computing. this chip is in two new devices, a macbook pro and a macbook air which we saw here in person.

we got a host of software updates for the ipad, iphone, mac, home. . and car the ipad coming looking -- looking more like a laptop. the iphone, one of my favorite updates the ability to on send and edit text messages after you send them. we saw a big fintech announcement, apple pay later which will allow you to pay for things in installments and this move towards apple wallet, more things being held in apple wallet so you do not have to carry it around. we did not get that big ar/vr reveal some people were hoping for. as always, apple likes us to keep waiting for that one more thing. emily chang, bloomberg. manus: that's the latest on apple.

manus: it's bloomberg daybreak: europe. these are the stories that set your agenda. dani: down but not out, boris it survives a confidence vote, the mutiny suggests his days are numbered. no holding back, the rba hikes rates by a jumbo 50 basis points, setting inflation higher than expected even a month ago. aussie yield surged. record upon your record of a supply constraints, the war in ukraine and easing supply -- covid constraints, is jumbo rate hikes again, this time from the rba. not just upsetting the bond market but seeing some reaction across the different asset classes. manus: because the view on inflation we will talk about whether we see some incremental peak inflation a bit later.

across the assets you saw the aussie role rampant. you saw on the fx base, 7% inflation and set of 6% the aussie dollar gives back its gains in the first instance because, they are on a trajectory for high rates. capital economics says 3% is on the way. at a 20 year low, and possibly further to go, the yen. that is something -- policy tightening still is not on the table. crude up. goldman gets frisky, $135, 140 in the third quarter, you are going to need more to rally to solve the market deficit problem for them. negative growth impulse remains insufficient to rebalance the market. bitcoin adding volatility. she made it up $31,000, we are

back down to 29 and a half. volumes are lumpy up 75% on a normal day's trade in the overnight on the crypto. dani: bitcoin just refusing to stay above 30,000. perhaps it is reflected the negative risk appetite this morning. equities are doing on lows for most of the indexes this morning. hstech has been more -- up more than 1% now it is down more than 1%. yields are moving higher off the back of the rba decision. . . nerves in this market heavy in the equity session, previously hstech has been high calling hopes of easing restrictions and scrutiny over didi in the u.s.. it goes down nearly 1%. s&p futures down 8%. deutsche bank says equity markets are priced in a slow down not priced in a recession. manus: let's return to our top

political story of the day. it centers on downing street. the u.k. prime minister hasn't survived this confidence vote within his own party. the scale against him suggests his days may be numbered. >> the vote in favor of having confidence in boris johnson is 211 votes and the vote against was 148 votes. therefore, i can announce that the parliamentary party does have confidence. manus: let's get to downing street. he is clinging to power, 40% of his party voted against him. can he stay the year? >> that is the million-dollar question. last night we just heard cheers from some conservative allies, when the vote was announced that they still have confidence in the prime minister. he is waking up behind me this

morning, still in power. after he said, the big question 148 of his own mps voted no saying they do not have confidence in the prime minister. this was a bigger mutiny than a lot of people were expecting yesterday. no one really knew how the confidence vote was going to go. boris johnson is waking up bruised, wounded, and if history has anything to go by, theresa may, she also want to confidence vote, by a bigger majority than boris johnson, theresa may was out within a six months. the reality is force johnson needs to bring those rebels back into line and he needs to get his policy done. he says he is drawing a line under this. but detractors are saying, how on earth is he going to govern 141% do not want him in power? dani: boris johnson singh 30 minutes ago that he is going to hold the cabinet together --

saying 30 minutes ago that he is going to hold the cabinet together. clearly, he is trying to retain the leadership, but can you leave the party in the 2024 election? >> technically speaking, he has one this confidence vote. he has another year in power. that is how it works. we know what theresa may she one and lasted six months. we have seen that boris johnson is going to bring the party together. new policy will be on the horizon to make sure he assures is up support from the electorate. 2024 is a long time away, two years. we have seen in 24 hours how much politics can change. the confidence vote came after a lot of mps went back to the constituencies for the jubilee bank holiday, obviously spoke to people. the big question now, has boris

johnson lost his magic with the electorate? is he going to win the next election or even survive until then? dani: thank you very much. let's get to the worst -- first word news. >> russia has indefinitely banned at 61 senior u.s. officials and executives from entering the country in retaliation for what it calls constantly expanding sanctions. the treasury secretary and blackrock are among those on the list. the ukraine says it is in talks with the u.n. on ways to export grain from ports blocked by russia's military. the president says has government will cut interest rates despite one of the world's worst inflation problems. turkey central bank has kept its benchmark rate at 14% since december. last month saw the countries inflation rate accelerate 73%. bloomberg has learned that india is eager to take on a discounted

oil from russia's -- russia. state own refiners are in talks with new six-month supply contracts which will be on top of the existing shipments from other oil deals with russia. india refiners are looking to deal, directly with russian companies as international traders cut ties with moscow. global news 24 hours a day on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries around the world. this is bloomberg. manus: thank you very much. rounding the news up for us. coming up on the show, the chinese economy has turned positive this week after covid restrictions were eased. this story next on bloomberg. ♪

manus: it is daybreak europe. could inflation be peaking? we've got three key supply side factors driving prices higher. what does it mean for a little bit of relief for shoppers worldwide? the woman in charge of the charts, our senior asia economy reporter. i love your story and i was shocked when i looked at these three charts. talk us through, justify yourself. good morning. >> it is a bit difficult after our colleague james was talking about the bloomberg commodity index, seeing further rises. we are getting those reports about. record highs and dips in inflation. the stories meant to say there are three signs that supply-side pressures are easing, we could see these things filter through to the consumer eventually. we have been talking about this for years and the great inflation debate it is a matter. of timeline a degree.

these are meant to show for three broad categories, for memory chips that go into digital electronics for shipping containers that have affect on everything, all of the container goods around the world and for fertilizer prices that were a good barometer of food prices. all of these things have shown signs of easing. we may see these things filter into the consumer eventually and let's hope we will see peak inflation being passed us. these are encouraging signs but of course a lot of factors are at work in the broader debate. dani: encouraging signs, i what point can we say, all right it goes past encouraging, where actually passed peak inflation -- we are actually passed peak inflation? >> and might be a while. we have the cp reports out of the u.s. and china, it will suck a lot of the attention into the debate. the ppi report out of china as well. all of these things will feed the narrative that the worst is

not over. we are trying to say, there are three signs that a few months down the line we might see using a pressure on consumers in these three broad categories. of course we will be looking at all of that. the news of the day on jumbo rate hikes will -- we will have to see how the central banks, around the world with one notable exception in turkey and others, and whether they are moving in the right direction. all of these factors we're looking at. china slow down, how that effect on the prices, they might be turning around, there is a whole other trip story around prices there in the tech slowdown. a lot of things to watch. one big nice sign, these three indexes we could see some easing. dani: thank you very much. our senior asia economy reporter. highly recommend you check out her story this morning. joining us is fredric neumann. fred, we had our reporter

talking about some sign that the peak of inflation has passed. do you take any solace in that? >> it just about peaked. the question is how quickly does it come off? is it going to be a two-year process or a 12 month process? there are signs of a shift in inflation pressures to service us now. they're still going to be a delayed impact on some sectors of the economy. we think it is going to take a while before you get inflation back into target. as these lingering price pressures that are still coming through, yes peak perhaps but it is going to take a while to see inflation normalize. manus: good to see you this morning, welcome back to the store -- show. larry summers has we're going to need a shock to get us back into trend. do you think that narrows -- narrative is going to build again after larry looked at the numbers, in the 1980's and said

if you want to get back to 2% you're going to have to wake up and it is going to take a lot. do think we're going to be talking about that beyond the 50? >> i think it is much in play. you need to have a more aggressive response to really bring inflation back down. a lot will depend on how the labor market reacts. if wages continue to push higher, the larry summers scenario comes into play, which is we need to have much more aggressive and sustained tightening and monetary policy. everybody's watching the u.s.. the u.s. leads the rest of the world. asia, what we saw with the rba this morning, is that the rba is now thinking also about the labor market, potentially bigger wage gains coming through and it is acting preemptively. everyone is watching the u.s. and saying what is happening there? i think, there is this view that we are not out of the woods when it comes to monetary policy.

dani: clear watching china and reopening's and easing of lockdowns in beijing, for what that means for the inflationary picture for demand. we have a grasp on what the impacts will be to get china back online? >> it is a double edged sword when it comes to inflation. china's reopening help supply chains as we heard with the bloomberg story. there is some easing of pressures. shanghai opening up again the ports. remember it means china's demand is coming back. you are going to see increase in demand for commodities coming through to chinese steel consumption is going to go up, consumer demand is going to go up. that may deliver an inflationary impulse in the third quarter if china's opening up. be careful what you wish for. dani: this comes as we are looking at that index at bloomberg at a record highs well. manus: it's cranking away.

you have energy, commodities revving up over 40%. can we delve a bit more into the china story? on the front of the china securities which is a mouthpiece for the government. we are looking at rhythm and elasticity, shanghai ports are back to 95% of their normal levels. are we potentially underestimating a growth rebound in china and and easing in supply chains? when we get back to 100% of a port availability, we slapped the rest of the world to take the containers -- we still have the rest of the world to take the containers. what are we missing in the china story? >> we are underestimating the degree of policy stimulus that is going to hit the economy. the chinese have made it clear that they do not want to see a further decline in economic growth. they pulled up all the stops to get growth back up and running. over the course of this month and into the third quarter, we

are certainly going to see the economic numbers tick up strongly. that is going to raise concerns about global inflation pressures. the big unknown is to what extent does covid-19 come back at some point in the next few months and require a renewed and slow down? that is unknown. we don't know how the virus behaves. all we know as the chinese are going to take a very dim view of allowing the virus to come back. the stimulus part, that is put into place now. dani: you're worried about how this is an investment driven growth, it is infrastructure spending. is that enough to push the economy forward if there are more covid cases? >> not on its own. if you have zero covid-19 and you have stringent restrictions, and consumer spending does suffer, that aside, the infrastructure part is going to be very powerful in the next two months. what is also going to be

critical is going to be the housing markets. here, behind-the-scenes the chinese have done quite a bit to stabilize housing. we would not be surprised if we go into the third quarter, the sequential growth momentum is going to be quite strong. the impact on global commodity prices could be stopped -- substantial and stabilized. as china comes back into the global markets that is going to push pressure on commodities. manus: what is it going to do to the bank of japan? 20 year low. i love tail risk. a place to my inner side of angst perception of global markets. i want to know the risk, that we are not pricing, from the bank of japan. could they give us a tail flurry before the end of the year? >> watch the currency. if the yen continues to depreciate. there is an argument to be made

that there is going to be a downward pressure on the currency, at what point does the boj say we need to signal to the market that perhaps we are not too happy with the depreciation. we round 132 were so, what if the currency goes towards 140 for example. just in that direction. then, the boj will have to do something. widening the tenant year jgb trading range, that is going to be the next step in that could be on the table if the yen depreciates further. dani: fred, thank you very much for joining us. that is the cohead of economic asian research at hsbc. we're going to focus on commodities, potentially even more pressure should the chinese infrastructure spending really boost the economy to what -- we have rum material gauge, that soared to a fresh record -- raw material, that soared to a fresh record. this is bloomberg. ♪

dani: welcome back to bloomberg daybreak: europe. bloomberg's commodity spot index hit a fresh record high. the gauge track rices for 23 raw materials last pete -- rises for 23 raw materials last in april. this time, it for -- is all about oil. let's bring in bloomberg's energy commodity editor in singapore. gravity does not apply in this index. >> that's right. we saw a very large gain on monday. we saw gains in u.s. natural gas. those have been the immediate things in the last day or two. oil is the big factor of the moment. goldman sachs came out with the forecast talking about 140 in

the third quarter. chinese demand coming back, as -- also the increasing european a sanctions on russia. when we talk about the chinese demand story, it is not just oil. it is metals. we were coming back strongly on all of the stimulus china has been talking about for the last couple of months. they're going to deploy this as the lockdowns have come off. also industrial metals like copper and aluminumand food of course. we have a whole bunch of factors which are driving up prices, including fertilizer costs, a lot of these indirect effects of the war in ukraine. a lot of pressure across the board. manus: what about russian oil? the chinese have been buyers of it. there is a risk of china

diverted buying attention elsewhere, we would have even more upward pressure on the rest of the oil market. is that part of the narrative? >> yeah, well, we just had a story out saying india was trying to buy more russian oil. china have been buyers. the bigger picture is it becomes more difficult for russia to sell into europe. part of the sanctions package also includes bans on insurance which will make it tougher to buy oil in asia. it is looking like the russians are finding it more and more difficult over the next few months to maintain exports and production at these levels. that is one of the big factors driving oil right now. manus: let's see who buys out russian oil. andrew james with the latest on

the mind-boggling blow in commodity. it is worth reflecting on where we are with risk. breaking news above 3%. i love the title of what she put out this morning, bonds put the buff in the bear market rally. do you believe this is a bear market rally or do you believe there is something more malevolent at play? equities are lower, nearly 1%, tech was under pressure earlier in asia. we are down 1% in the nasdaq. we stepped lower across the board in terms of the risk off us -- recession. dani: it's interesting deutsche bank says recessions are priced into u.s. equities. adding to the complications if we're talking about bonds upsetting the equity market, it is the aussie bond. the aussie dollar has been fascinating, strengthening very severely, after the decision it has come off of that. according to some traders, using that opportunity traders are

using it to sell their longings. three year yields up 50 basis points. manus: the question is, 3% given the inflation outlook, that they have got from the rba, is going to be 7%, there lies the point. we have debated it, larry summers says -- does not so you're going to need -- he defines the volkick era. it is the hugest conundrum for the bond market. dani: we are talking to simon harvey earlier, he says you need those 50 basis point jumbo hikes to get the market to tighten. manus: somebody is awfully wrong, if larry is awfully right. bloomberg markets europe is up next. we will see you in the morning. this is bloomberg. ♪

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