dani: good morning, this is

"bloomberg daybreak: europe". happy friday, i'm dani burger in london. a brutal week for markets, treasuries sore and stocks slide amid fears of rising rates. goldman slashes its s&p 500 target. italy goes to the polls as meloni vies to become the first female prime minister. credit suisse proceeds with its second restructuring in less than a year. he made it to the end of a long week, market still trying to grapple with what it means after more than a doesn't central-bank decisions, the bulk of which hiking interest rates. generally what we are seeing is everything falling in the face of a stronger dollar.

risk assets are under pressure, the s&p continues to slide, goldman slashing their s&p 500 target. they see the deer ending at 3600, another 4% decline. we are seeing the outcome as we go from inflation concerns to earnings. talking about $3 billion worth of cost cuts. japan closed for the day, we will not have treasuries trade until 7:00 a.m. u.k. time but futures under pressure as we saw a front and dries the 11th consecutive day. also pressuring the treasury market was an announcement from the boe yesterday, 80 billion pounds of active qt selling gilts. that punished gilt markets and punished treasuries. euros swayze, we finally have

europe exiting negative rates. even with a 75 basis point hike from the snb, the swissie has declined the most since 2015. and again, 142.24 after gaining with the boj intervention coming to the fore. let's get your check on asian markets with juliette saly. juliette: a public holiday in japan today but seeing a yield spikes similar to wall street reflected in the australian market, as it plays catch up after being closed yesterday. the two year up 26 basis points. the hong kong market holding at a to -- at a 2011 low.

china's market under pressure, too. nomura cutting their 2023 forecast for china's economy, and a stronger than expected fix from the pboc is seeing a weaker offshore yuan. let's have a look at equity pain for asia because we are on track for a sixth weekly decline. when you look at rsi in equities, it looks oversold but you have seen huge drawdown in asian currencies along the back of king dollar. dani: it is incredible how the stronger dollar is decimating everything. as always, juliette saly on singapore's. let's get to our top stories from reporters, on the dollar story we will have mark greenfield. francine joins us from rome with a look at the italian election,

and patrick has the latest on credit suisse. fueled by hawkish fed policy, the dollar has battered global currencies. japan is the latest country tapping their dollars stockpile to fight the greenback. mark, much has been made about this idea that this is unilateral intervention that won't be long lasting. but what can countries actually due to combat a weakening currency in the face of a stronger dollar? mark: you can follow what japan did and time you intervention privately. it worked well yesterday, and they were strong in the amounts of money they used as well. it is unknown but likely runs into several billion dollars. they waited until the bank of japan held a press conference after meeting yesterday.

because they said the bank of japan was going to hold unchanged, dollar-yen rose close to 146 while chief kuroda was speaking. that meant you dollars were coming into position. when the minister of finance gave the order, it was ideal timing because the market was caught upside and they had to push dollar-yen down dramatically. we had a six-figure range yesterday which is rare for dollar-yen. we were more than 2% lower at one stage. on an intraday basis, -- it was pretty effective in the short term. the fundamentals between the u.s. and japan don't favor the japanese yet but it is unlikely the mof will leave it there. typically, once they start intervention to buy or sell dollars, in the past they have unleashed three or four rounds

of intervention. we would expect to see more, a great time would be monday morning. traders hate that on a monday morning, it rings their whole week. don't be surprised if the first week of monday morning, bank of japan is in their selling dollars again. dani: nothing worse than volati lity intervention on a monday. a group of people who do not have the weekend to rest, italy goes to the polls this weekend bringing fresh uncertainty for investors fretting over rising interest rates, energy crunches and potential recession. someone who does not get rest, francine lacqua in rome, i hope the jet lag is not too bad. what are we expecting in terms of the election this weekend? francine: how can anyone have jet lag with this is castel

sant'angelo where popes used to leave the vatican in times of difficulties. remember, this is a vote on sunday, the prime minister will have a lot to grapple with, higher inflation, cost of living, i know we talked about energy day in and day out, but italy was so dependent on that russian oil and gas. we can't talk about the polls, but we are expecting a right-wing coalition head up by georgia meloni. the party has fascist roots, she tries to portray herself as a conservative mainstream politician but if you are europe, you will pay close attention to what she does next. we were at the last rally of the right-wing coalition, we saw

silvio berlusconi he was on fire, and we saw georgia meloni giving very feisty speeches. the market will look at two things. does she go back on promises mario draghi put in place? they have access to 1.9 billion euros by december as long as they stick to the rules. will she spend to make sure people don't starve over the winter? this could well be needed but where does she find the money? look out for anything she says on fiscal spending and debt, and that eu fund, she said she will not change anything but wants to negotiate at the margins. dani: francine lacqua in rome with that beautiful backdrop will be joining us throughout the show to give is updated. credit suisse has denied it is exiting the u.s. market after a

reuters report that it was mulling a withdrawal of its investment bank. patrick, there has been speculation what sort of shape of restructuring credit suisse will do as it travels -- grapples with crises, what do we think the future of this was bank will look like? patrick: there has been so much speculation that has been building in recent days. yesterday, there was a report they would be exiting banking in the u.s. that would be a huge move, employees have been denying this. the last couple of months they have had the same quote about speculation for restructuring. they reported they are looking at another capital raise, the backdrop is credit suisse will probably see several thousand jobs going, and that would

require them to pay for that restructuring. if you look at the rest of the bank, it seems like almost everything is up for sale. bloomberg yesterday reported about the bank looking to sell part of its latin am well for business -- latam welcome business. and another story last week on how credit suisse dealmakers are potentially being offered equity in the cavity. there are so many different rumors. next month is the key date, the bank will have results, we may know before then. dani: i want to ask about the overall banking environment. this week we have been transfixed by the citrix that story, and concessions banks have had to take. there is talk of dealmaking slowing, what is the back half of the year look like for global investment banking?

patrick: what we've seen last year is generally banks hiring, investment banking looking good and wealth management looking good. assets were on the rise and global orchids looked nice and pg for them. this year, a bit of a retreat. what we might see is bonuses lower, goldman was the first example early this week looking to cut jobs. the outlook looks gloomier, that affects credit suisse which has had its own specific issues. the fact that the outlook for investment banks generally is looking less rosy won't help them as they continue this restructuring. dani: thank you very much, patrick winters our banking editor. an ecb governing councilmember is speaking to latvian tv, saying faster rate hikes have

weakened the euro and they will continue raising interest rates. on other central banker on the impact of faster u.s. policy and strong dollar, snb talked about this yesterday as well. they might consider extraordinary meetings to combat this. raise rates faster to make sure your currency doesn't weaken, or as the mof of japan intervened. let's look at other things, a whole lot of pmi data out. 8:00 p.m. u.k. time france, germany, euro area and u.s.. kwasi kwarteng is likely to announce a cut to national insurance contributions and scrap a cut to corporation tax. and chair powell is scheduled to speak at an fed listens event at 7:00 p.m. u.k. time.

it is every nation for itself as the almighty greenback batters global currencies. we will speak with parisha saimbi from bnp paribas. and more on the u.k. mini-budget later on the show. ♪

>> i think it's giving a signal but they are uncomfortable with how quickly things are moving with this intervention with huge moves in yen but i don't think this is going to be effective. >> the reason for that is every central bank is competing with every other to bring inflation down quickly. >> the bank of japan and ministry of finance is actually fueling liquidity in the market,

and as a speculator i am bleeding today, but i will take back all those positions and i personally think 155-160 is still on the cards. dani: bloomberg tv guests speaking about japan intervening to support the yen. let's talk further with parisha saimbi of bnp paribas, yesterday the snb hike to 75 basis points yet the swissie gets decimated. sterling and euro lower, everything struggling against strong dollar. same for the american economy finally collapsing, is there anything governments can do to have stronger currency versus the dollar? parisha: i think that's a really tough question, simple banks are raising rates aggressively.

as we've seen in europe, it's not really a ship higher in interest rates that is prompting the currency to move. there are geopolitical factors at play, certainly with the conflict between russia and ukraine. that is dominating the energy price markets which is what seems to be driving the euro at this stage. unless we see a big shift in geopolitical risks not only from russia, ukraine but the likes of china seeing her rebound, it seems likely dollar will be stronger not only because of hawkish fed. but also wider risks around the world remained downbeat at this stage. dani: when it comes to japan, we were hearing from saravelos at deutsche bank saying this will not help strength in the yen, especially again intervention which is expensive. why intervene in that way, why

not just raise rates for japan? parisha: i think the government understands the boj's stance, if the boj were to raise rates, that can have harmful effects on certain sectors in the economy. so they have decided to go the route of fx intervention, yesterday it came as a surprise since the past few months we have only had verbal intervention. but we think this is just them trying to do a smoothing operation to curb excess volatility. we don't think this precludes a move higher still in dollar-yen which fundamentals are supporting but we think this can induce more two-way risk in japan. dani: does it make a difference whether japan is trying to support the currency via selling treasuries or using fed reverse

repo facility to do so? parisha: i don't think it makes a significant amount of difference, treasuries will still be supported for the currency. or whether they are doing get through other repo operations, ultimately there is still some dollar-yen and selling flow that will go through markets. that will keep pressure on dollar-yen to move lower. but the fundamentals at the end of the day, divergent monetary policy stances, and factors keeping the dollar elevated with ongoing geopolitical risk and a hawkish fed. and the central bank chief suggesting 145 is not a line in the sand to be defended. dani: all of this means we have developed economy spending $2

billion of fx reserves to combat stronger dollar, what is the risk if we have countries continuing to drawdown reserves? parisha: it is a risk. there is only so many reserves one can use, and i think the numbers for japan are one trillion in reserves. they have to keep a comfortable buffer of navy six hundred billion dollars. if the boj keeps their stance, there is a risk they could run out. these moves cannot be sustained forever. that is another reason, together with -- we don't think this can preclude moves higher in dollar-yen if the fundamentals continue to warrant stronger

dollar. dani: last time we spoke, you talked about being negative on sterling. not much has gotten better, if anything, it has gotten worse. we have a u.k. mini-budget on the way today, likely not to see more tax hikes, and boe announcing 80 billion pounds of active guilt sales, how much lower dose sterling go? what will it take you to abandon a short position on sterling? parisha: rather than abandoning positions, we just reloaded our exposure and put out a new sterling-aussie trade. we are high conviction on the bears u.k. outlook for the reasons you mentioned. on top of that, you have the bank of england now conducting

active guilt sales. we think these things will keep u.k. risk premiums elevated, if not rising are there. -- further. with no light at the end of the tunnel, we think the pound can continue to push lower. dani: i want to get your take, if it doesn't make sense for the u.k. to keep hiking rates, and rising unemployment is worse than inflation, the argument is to take a step back and see if the shock subsides. what are the consequences of a boe that ceases interest rate hikes? parisha: there are a couple of factors. first, u.k. has low levels of real rates. that is a problem for the u.k. considering the u.k. is reliant

on foreign financing. with the low real rates and significant supply, it poses concern as to how u.k. can find its current account deficit. those rates will remain at low levels, that may pose challenges from a financing perspective. dani: finish your thought. parisha: at the end of the day, we have big geopolitical events that are weighing on pound. and a lot of u.k. 80 a syncretic risk with the amount of government borrowing, as well as political risks. ongoing negotiations with europe on the northern island protocol. a government introducing a lot of fiscal policies to change sentiment. polls suggesting the labor could

come into power if we had an election today. that should keep uncertainty in the u.k. high, so we think the pound will continue on a weakening trend. dani: that is parisha saimbi, g10 rates strategist at bnp paribas. we will return to francine lacqua in rome for the latest. this is bloomberg. ♪

juliette: you are watching daybreak europe. jonathan haskell on the u.k. ratesetting committee says the plan to raise rates raises difficult issues. the chancellor is expected to announce a package of tax cuts

later today. japan is to abolish many covid border controls in a move to revive terrorism. the prime minister says individual visitors would be allowed to enter with a daily caps on arrivals removed. the prime minister of pakistan has made an appeal for debt relief as they grapple with catastrophic floods. he says his government has signed an agreement with the imf with tough conditionality's. 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. to finally lose 80 pounds and keep it off with golo is amazing. i've been maintaining. the weight is gone and it's never coming back. with golo, i've not only kept off the weight but i'm happier, i'm healthier, and i have a new lease on life. golo is the only thing that will let you lose weight

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dani: good morning. this is "bloomberg daybreak: europe." i am dani burger. treasure yields sore and stocks slide again. goldman sachs slashes its s&p 500 target. georgia maloney vies to become the nation's first prime minister. we are live from the capital. quit suisse denies putting the market as it proceeds with its next restructuring in less than a year. we continue to grapple with the fallout of a more -- of a few central bank decisions. yesterday had nonstop decisions. just when you thought they were

over, we get japan announcing that they did intervene in markets. we are in a market of stocks down and bonds down. the only thing they can do better is the dollar. we are now grappling with what it means for corporations to not only have inflation but compression. what they need to do to prioritize cash flow. they announced yesterday that they would/about 3 billion in costs -- that they would slash about $3 billion in costs. japan market trading is closed. continue to see the 10 year bond future under pressure. front end of the curve has the longest streak of higher yields in three decades. 10 year yields are the highest level since 2011.

more active sales coming from the boe. finally, euro versus suisse is pretty steady after the biggest fall since 2015 despite s&p finally hiking despite negative rates. it is only erased two or three weeks of losses. a lot of skepticism of how long it can hold. not too much action this morning. japan is off-line. the other big development, italy is going to the polls. the energy crunch and a possible recession. let's get out to francine lacqua in rome. how are we set up going into the selection?

-- this election? francine: the markets are expecting a right wing coalition. we could take a few days going into the polls. it looks like there could be a leader of the next government. a little bit and a lot. we know that she was extreme right wing in her youth. we know she is becoming a moderate politician. many see it as two faces, she will state the right things to some of the investors, to brussels. she wants to renegotiate. she wants to keep debt under control but the concern is that when she speaks to her public, the italians that will vote for her, she is italy first and replicates some of the things we hear from donald trump.

she keep saying that she will tell us. she is trying to get the vote through value. she is anti-immigration, anti-lgbt. once she gets into power, can she hold everything together? what kind of prime minister she will be, not a lot of answers at the moment. dani: we are looking at the ecb continued to hike rates. debt piles. francine: i would imagine that markets will vote on sunday and then on monday we have some results. we do have a bit of a bus stop -- bust up over the summer. there are three questions, what do we do it debt? if we see a government about fiscal policy.

that will be problematic for markets. what she does in terms of the recovery fund. she will have access to 1.9 billion euros in september. if she six to 55 points, she could decide that this is not the right time to stick to europe. there is an underlying euro skepticism. it is unlikely they will govern on their own. yes, they are still going strong. the rhetoric is very pro-italian, anti-nationalist. they are fed up with the rules. the market will have to assess and see what is next. dani: thank you so much. with us now is daniele antonucci , chief economist and macro

strategist at -- bank. you say clear outcome, unclear strategy. what is the biggest unknown? daniele: the outcome for me. it is clear that markets are expecting the largest -- so that is roughly clear. what is unclear is what happens next. fiscal policy, here's budget. it is about what happens with commitments to secure the extra in the recovery fund. there are other questions as well about brussels and the eu. this is what investors will look out for. so far, markets are moving more

in line with global drivers. 10 year bonds are enough of 4%. the spread, more or less fits the summer. the recession is going to be deep. i think it could wait. dani: this is what i mentioned, at a time where the ecb is involved in hiking rates. given the idiosyncratic risk, is the backstop, is not enough to prevent the worst case scenario? daniele: it depends on what it is as a worst-case scenario. i think in the context of italian policies, i think it can go some way. perhaps it becomes a little more forceful in backstop.

if policies are misaligned, that gets a lot more difficult. we all know the ecb is starting to raise rates going into a recession. italy is not alone but is an eight vulnerable group. i actually doubt that it can stay as is going into next year. they are frontloading this. i think things will likely change. dani: are you willing to take risks, to buy things like italian banks? daniele: you want to be bold. it is not time to be brave i think. it would be risking portfolios. not yesterday but over the past few months. we have that high-quality fixed income exposure and we reduce

the equity exposure. it is not the time to take directional views. dani: this is not an italian call, it is global. daniele: yes. we are reducing our exposure. dani: what about u.s. equities? daniele: i would prefer u.s. equities versus eurozone. it is a different trigger behind the slowdown. in the u.s., it is monetary policy driven by the fed. when it is under control, the fed can slow, stop it from hiking. over time, it can scope to lower interest rates. not now but it is easier to control. when it comes to the euro area,

gas is not flowing. the dollar is not much one can do. i would expect that should it come, when it could come, the recession in the u.s. will be on the mild friday. in the euro zone it will be deeper. that is why we say u.s. over europe. dani: despite that nervousness. if there is a recession they cannot keep hiking. i wonder if we can go back to that same playbook. we are in a different regime. it was at 16 trillion, now it is below. can we go back to that same playbook even if it stops? daniele: some are beginning to fall into place we are not there yet. some are not happening right

now. you want to look at more attractive valuations and we are not there. not for the u.s., not for that eurozone. you are looking for extreme positioning. perhaps you do have or it is beginning to happen. you also look for macro capitalists. the level is still very high. you look for a possible decline. i don't think it is the time just yet. dani: we were talking about perhaps a pivot. what are you looking for to say, ok it is time to reposition now. daniele: that news will often be good news. you need to see the economy for more joblessness to rise to a

higher level. by and large, i think the central banks will want to do the same mistake twice. right now, they will probably want to tighten more and doubt it is the time to stop. dani: do you think that is what they are about to do, overdo it? daniele: chances are we will see more tightening than warrants. it is not about taking inflation. they want to see on a downward trajectory and we are not there. dani: thank you for joining us. daniele antonucci chief economist and macro strategist at quintet private bank. let's get to the bloomberg business flash with juliette saly. >> credit suisse has denied plans to leave the u.s. market following a report that it was considering a withdrawal for its investment bank. the story says it is sounding

out investors for a possible raise. it is undergoing its second restructuring in less than a year. any report it is leaving the u.s. market is categorically false. boeing is willing to -- the settlement includes a probe about key information in a flawed software system leading to crashes of the model. the former ceo has neither admitted or denied the challenges. singapore is ranked top asia financial center and third in the world according to the index. that is your bloomberg business flash from singapore. dani: thank you so much. coming up, dk government is set to unveil its many budget to stem late the economy. more on that, next. this is bloomberg.

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dani: welcome back to "bloomberg daybreak: europe." i am dani burger. u.k. set to unveil its many budget. it comes after the b.o.b delivered a second consecutive half-point interest rate hike in its battle to bring down inflation. let's get out to bloomberg's lizzy burden. what do we know about what will be in this fiscal package? >> a lot of it has been leaked. we are expecting measures centered around tax. liz truss has said that she wants simpler lower taxes. we are expecting a constellation

of the tax or even a corporation tax. we are expecting a reversal of the pay rise tax. that has already been announced. we could see the property tax rise. we are expecting measures to boost budget. all of this is intended to boost growth. we are expecting parting at the growth target. the worry from economists is that this is not going to hit the growth target. it will lift inflation and will add to borrowing at a time when the pound is weak and interest rates are rising. dani: markets are pointing out that there will be an update from the debt management office. today, bloomberg says it will be some 60 billion pounds worth of issuance.

this is all on the back of your very long day yesterday with a 50 point -- 50 point basis rise. how does this change everything? >> the bank of england could open the door. it has left it open to bigger rate rises. they see 75 basis points in november and december. the reason economists .2. in this decision. what they will do with the latest edition voting for 25 basis points. there are three members voting for 75 basis points including haskell. he spoke after the decision and says that the fiscal loosening -- while the economy does not have much capacity for it. i will also point you to the guidance issued alongside. it says that it is prepared to

respond forcefully. it has added to that saying that they could come from stronger demand. this sounds a bit more like the fed and leave the door open to bigger rate hikes down the line if necessary. dani: they might have been divided on the rate hike but not going with active qt from october. 80 billion pounds worth over the next year. what is the impact of that going to be when foreigners are not really buying guilt and the government is about to embark on mass spending? >> i had a fascinating conversation with the former bank of england policy maker yesterday. he is known as one of the more levelheaded of the policy committee and said he would voted for 75 basis points. he said that that many budget is going to lead to a run on the pound.

he pointed to the phrase that we rely on the kindness of strangers to find our debt. we rely on the vested interest of strangers pointing to those concerns for guilt. if you think about it from the bank of england, they are going ahead with that but they have been so criticized and it was perceived that they were monetary financing. they do not want to look like they are in lockstep. andrew bailey has made it his position to shrink the balance sheet after all these years. dani: thank you very much. lizzy burden there. coming up, it has been a big week for central bank decisions. this is bloomberg. ♪

>> we have got to get inflation behind us. i wish there was a painless way to do that. there is not. >> inflation has been higher than projected. it has increased rapidly in the past few months. that is also why a large policy rate hike was more there than this time. >> we do not believe the interest rate hikes are necessary. >> to prepare price pressures from going this way. the impact of the supply side pressures. dani: central bankers from around the world speaking about the decisions and their respective economies. it has been a busy week.

helping us do that is michelle jamrisko. i do not even know where to start. a whole lot of central bank decisions. it was insanely busy as well. were there any main takeaways from the never ending slate of decisions? michelle:they seem to keep going. we are still talking about some of those decisions. the size of the rate hike is one thing but what we are looking at yesterday are the currency plunges and grow outlook. -- growth outlook. 75 basis points but not the 100 dark or outlook. gross projections are deafly what we focused in on. especially with powell's overtone.

the recession might be deeper than they thought. all about peak dollar. still a lot of that story will be played out on whether japanese authorities can stabilize the economy. there and elsewhere it was the name of the day. we heard them talking about the pace of the weakening. it is clearly having an impact. we saw about 100 basis emergency hike there. a lot to take in. considering some surprise decisions. even after the big day yesterday. dani: everyone looks behind the curve in the face of the fed that continues to be aggressive.

as you have been discussing. we are seeing central banks having these emergency meetings. perhaps not what is on the schedule but are -- what are we watching in the weeks ahead? michelle: a few things. the mounting talk of global recession of course. we were mentioning earlier in the week, next year, it deafly feels like a global recession. certainly a lot more policy makers coming out saying it is much of a probability now. we heard it just being talked about how the bank of england was raising that red flag. third, what other tools do central bankers employ? dani: michelle, after jump in. just out of time. thank you for joining us. michelle jamrisko. that is it for us. this is bloomberg. ♪

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anna: