>> good morning, this is "bloomberg daybreak: europe," i am tom mackenzie in london with

manus cranny in dubai in these are the stories that set your agenda. manus: crisis management in the u.k.. chancellor jeremy hunt appears to have cut markets, ditching liz truss's economic plan. liz truss admits her faults. >> i recognize we have made mistakes. i am sorry for those mistakes. manus: u.s. futures point to an extended rally on wall street as asian equities broadly higher after downing street's reversal and positive earnings. tom: -- manus: plus sources say credit suisse is considering divesting its u.s. management business and make it interest from private equity firms. good morning, tom, good to have you on the early shift. this headline that there may be a pause in you take until the -- in qt until the gilt markets

calm. but it is pervasive across all risk markets. tom: adding onto the risk on sentiment, we saw that very strong close for the nasdaq and s&p and we will break that down in more detail. as you say, the ft reporting that the bank of england has again delayed or is planning again to delay quantitative tightening, it did that at the end of the month and now a further delay. we did know there was pressure on the bank of england to consider this. the financial times saying officials at the bank of england said they came to the decision after looking at the gilt markets and concluding they remain very distressed. manus: yes, let me take you back to one line from dario perkins from lombard, he calls for more on risk premium from u.k. markets. there is a mini you and there is still a risk of recession.

aberdeen are still short but in reduced size. a mammoth move in 30 year paper. it is the beginning of earnings season, you got brian moynihan, all of the bank big boys and girls, and now you have rush on pharma. let's take into the numbers. 14.74, we were looking at 15 .25 billion swiss francs on sales. pharma sales underestimates. the diagnostics, in a little bit ahead. you've got the outlook as well, have you? tom: this is the redhead, you got ahead of the team. they are saying they are confirming their outlook for 2022. another earnings headline, this time from -- hurricane ian claims about 1.3 billion and sees a third quarter loss, that

is swiss re. that is a red head across the terminal. manus: i wonder to what extent roche, how that plays into their numbers. we can break that down a little later. let's look across the markets. we are showing gilt and sterling. the dollar is down, a massive risk on rally across equities. it is having a little bit of a cap this morning. european gas futures down nearly 10% yesterday, 92% on full on storage. nymex up 9/10 of 1%, maybe just in response to the concern about tightening supply. tom: just to recap the action on wall street yesterday, again on the back of pretty decent earnings and we are not yet close to that recession, not in a recession state.

mike wilson, a famous bear in these markets, saying we could see a 15% upside. the nasdaq closed up around 3.5% and the s&p added about 2.6%. futures looking to build on that, s&p futures getting 1.8 percent, and nasdaq futures up 3%. in europe, gains of about 1.3% as well. it looks like we are set up for another very solid session. let's get to our reporters around the world. lizzy burden front and center when it comes to all things u.k. into the political saga. charlie wells is with us in the studio with the latest from credit suisse. manus: and we get all of the action in asia from juliette saly, on intervention watch. she could be there a long time. let's dig into the u.k. story. chancellor jeremy hunt hasn't ripped up the playbook of liz truss, her controversial economic plans.

the effort to restore order to u.k. public finances. let's get to lizzy burden, still at downing street, she could be there as long as jules is waiting for intervention. jeremy hunt, has he done enough to stabilize the economic situation? bloomberg says he still has more to do. good morning. lizzy: good morning. he certainly did a lot in a day. he has managed to calm markets somewhat. he has plugged 32 billion pounds in public finances by taking away some of the stimulus the bank of england -- stimulus. the bank of england and treasury and less of a tug-of-war. but as you mentioned, the boe is still considering the delay to quantitative timing. but without the sugar rush, the recession risks are heightened. even though he nuked most of

truss-onomics, he still has to pay what is called the more on risk premium for all that liz truss managed to do in three weeks. it means higher borrowing costs, our economists reckon to the tune of 10 billion pounds per year through 2025. one guest on bloomberg tv defined this as on steroids. in a sense he has to be, he has to be more fiscally disciplined to compensate and that means spending cuts. the labour party has already seized on the idea of austerity 2.0, and the appointment of rupert harrison to the council of economic advisers is a bit of a risk. respected as he is in markets, welcome as it is that truss is listening to economic orthodoxy so much, because he is a link back to osborne. he was osborne's right-hand man through austerity and unions are

already threatening a winter of strikes. tom: manus is obsessed with the more on risk premium line. that is when we can meditate on. you've been bumping around between downing street and the houses of parliament, you are in front of the houses of parliament, we can't keep up. you can came up -- you can keep up with the prime minister. can this prime minister survive? lizzy: she is going to be meeting with her cabinet this morning. she will have hoped to reset the situation yesterday. what she says is she is going to lead the tories to the next election and she has made an apology. listen to that bbc interview. >> now i recognize we have made mistakes. i am sorry for those mistakes, but i fixed the mistakes, i have appointed a new chancellor, we have restored economic stability

and fiscal discipline. what i now want to do is to go on and deliver for the public. we were elected on the 2019 manifesto and i am determined to deliver on that. lizzy: but the reality is that she is hanging on by a thread. it is win, not if, according even to ministers and aides i am speaking to hear. they can't decide who would replace her or how they would bring them in. they seem to be waiting for the herd to turn against her. so far only five mps have publicly called for her to go. she seems to be clinging on for now. tom: lizzy burden outside the houses of parliament. thank you. let's switch to the banking space, credit suisse considering the sale of its asset management business as a strategy revamp approaches. middle east sovereign wealth funds are said to be weighing whether to put money into the

investment bank. we are joined by charlie wells. what are the details? charlie: we are just over a week away from a big restructuring announcement from the troubled swiss lender. in dribs and drabs we are getting a sense of what that might look like. there are three big developments we are hearing, all from people familiar with the matter. it is the potential sale of the u.s. asset management arm. interestingly, that arm offers a platform that allows investors to invest in collateralized loan obligations. the thinking is private equity might be interested. this is in line with the strategy we are seeing, some sales of some of these credit suisse assets, including their securitized products group. who is interested in credit suisse? what we are also hearing is the likes of abu dhabi and saudi arabia are interested in putting some money into the investment bank now that prices are depressed. it's looking they could do that through their sovereign wealth funds. this is also very much in line

with credit suisse's history of bringing in wealthy middle east investors. what we are also hearing is the investment bank ceo is set to leave and that is likely to be announced in the october 27 reshuffle. he is an interesting -- industry veteran, he could go to another institution. in line with what we've seen the past few weeks, this is another exit of top talent. manus: the question is, do they strategically reconsider the direction of their career or is one considered to strategically reconsider the direction of one's career? i am familiar with the line. charlie wells in london. the risk mood continues to build this morning in asia despite china's gdp figures being delayed. yulia saly is in singapore. you are on intervention watch, we have this big boost from a cutie delayed story -- qt

delayed story. is it transferring to you? juliette: it is a very risk on session and we got the boost in the last hour or so as you were breaking that news from the ft over the potential movement from the bank of england. that has seen a big movement and bonds. look at the yield on australia's tenure, down 11 basis points and supporting this risk on move we were seeing across asia to spot -- despite the delay in the gdp figures from china. a lot of momentum in tech players, boosted by what we saw in the nasdaq overnight and byd coming through with a strong third-quarter profit. never far from intervention watch, as you say. a stronger again today, team japan staying pat with the likelihood they will continue on their monetary policy path, 150 is the level we are watching for. we haven't seen a dollar-yen at that level since 1990. let's look at the broader china picture, we were supposed to get third-quarter gdp figures today, we did not get that. what do we read into that?

was the data that that that they did not want to release it during the party congress, or is it insignificant when you are focusing on the party congress? we have seen some weakness coming through in the economy, and this time china dollar junk bonds have fallen to a record low. concerns we have in the property sector as well reflected, when will we get further support in terms of tangible support for the property space? we are waiting for that gdp print to come through. manus: jules, thank you very much, you are waiting for a lot of things. juliette saly is a very patient lady. in the next hour, we will catch up with the roche ceo, that is at 7:30 a.m. and they missed on the headline sales, the question is the covid-19 antigen test were a big part of their business. they had to -- that will fall

this year probably to about 2 billion from around 5 billion. that is one of the key questions for that interview. tom: yeah, that will be a really interesting conversation with that drugs maker. another conversation, jeremy hunt is seeking to reassure the markets and arguably he had some success yesterday, but the u.k.'s of finances are sustainable but has the new chancellor done enough to keep this going? we will get the details later. stay with us. this is bloomberg. ♪

>> no government can control markets, but every government can give certainty about the sustainability of public finances. that is one of the many factors that influence how markets behave. for that reason, although the prime minister and i are both committed to cutting corporation tax, on friday she listened to concerns about the many budget and confirmed we will not cut the corporation tax as announced. tom: u.k. chancellor jeremy hunt on reversing most of prime minister's trust'-- liz truss's budget. manus: we still got a lot to deal with jumping the program. this ft line has shifted the risk narrative. let's take that ft line to our guest.

the pound was lit up on the dumping of truss-onomics, huge reversals, then you have the qt story, that the bank of england may delay qt because of stress in the gilt market. these temporary valleys of the pound and in gilt, are you wary of the rallies? >> i think we are seeing a massive mess in u.k. policy letter of two on a terry policy versus fiscal policy. what you are seeing right now in the pound specifically is a reallocation back into the pound after previously when the first announcement of the budget came out. you saw a dumping of sterling. we are seeing rebalancing back into the pound, looking for recovery, as opposed to parity end sub parity, your sing a reallocation and covering shorts. i think it will be short-lived and we could see a balance back to 117, 118. i would definitely be on the short side again, primarily

because looking down the line, i think the u.k. has a challenging path. the bank of england is hawkish and hiking. inflation is on the way. the main mandate right now is inflation. now we are seeing the bank of england taking a step back. there is a little bit of contamination of monetary policy. the bank of england are doing this at the behest more or less of the government we are seeing a situation where the bank of england is trying to prop the markets, they won't comment on pensioners funds could this is not sustainable down the line for -- down the line. we will see fears kick in and the recession will kick in and we will see the market reverse back to risk aversion in the u.k. manus: that is breathless, tom jump in. tom: it is fascinating, you talk about the boe and the reason to step back is to raise rates and tackle inflation.

the governor has talked about that. what needs to come through to push that risk premium on u.k. assets lower? saed: i think what you would need to see -- one of the main issues we have to look at is the future of liz truss. if the p.m. stays liz truss, we will see considerable pressure on the u.k. as the integrity of the p.m. has been threatened. we haven't seen a government full apart so fast as far back as i can remember. there is an issue of confidence in her seat. there will be challenges to her seat. we need a more prolonged program of growth in the u.k. and have some risk removed. manus: do you think she stays? my favorite line is about what they have done in terms of the mess they have delivered, called moron risk premium.

removal of the current prime minister and her chancellor have gone. if they are removed, does that create a flaw or does the recession outweigh any change in the political landscape of the tory party? saed: i think on the face of it, you need to see a change in leadership. the damage done to leadership i don't think is recoverable by truss. that will buy you three months of time of stability, but looking down the line toward 2023, recession is there, and the bank of england must make policy moves to fight inflation. we do need to see a change in leadership, a regaining of credibility in the leadership that is now absent. tom: i want to take your focus to u.s. equities, this call from mike wilson of morgan stanley saying we could be set up for a bear market rally, maybe 15% to 17% because earnings are holding up and you don't yet have a full

recession coming through for the u.s. he still characterizes this as a bear market rally. is that something you would position for? saed: we have kept our view that basically we have gone from buying a dip to selling the rally as a risk strategy. obviously right now we are getting to levels were basically -- we have captured quite a bit of risk, the fed inflation risk, ukraine, energy. the market is pricing in quite a bit of risk and obviously if earnings don't falter, we will see somewhat of a rally. i would expect the rally would be capped somewhat in the 10% to 12%, i would not expect that to be out of scope. i think down the loan as you position into next year, i think the core view is to maintain a short position heading toward the fed terminal rate. that is the magic number, is it going to be 4.5%, 5%?

if the fed doesn't see inflation continuing on a prolonged basis as opposed to the transitory period, i think markets will readjust. as we close in on the end of the year, we have two more hikes on the way in the markets will begin to price in the end of your rally that is expected. tom: ok, saed, thank you very much indeed, with that call on the pound, 117. that is the call. coming up, the santander executive chair weighs in on the turmoil in the u.k.. why she still has confidence in beleaguered britain. we will bring you that interview next. this is bloomberg. ♪

ana: we are a big lender in the u.k., one of the top mortgage lenders, and with a very low risk portfolio. clearly what is happening in the u.k. is affecting consumers and businesses. i would say the world is living through a period of unprecedented economic stress, added by -- you know, the geopolitics and national politics. what is difficult at this time -- at times like this for governments and businesses is getting the talents right, fighting inflation, and making sure we are laying the foundation for growth. of course fiscal policy has to be aligned with monetary policy. i think that is the balance that was not right in the u.k., that is what markets were telling us. in the end, i am very pleased by the steps that were taken, i think it is important to give stability and confidence as much as we can, not just to markets but to consumers and businesses. we are a big investor in the

u.k., i have high confidence in the strong institutions of the country. it is a very attractive place to do business, it attracts talent from all over the world, so i think the steps taken are in the right direction. david: you talk about the global situation economically, i know you just attended the imf bank meetings in washington. give us a sense at santander of where we stand globally. we have a lot of inflation, a lot of droppings raising interest rates, slowing economy and war in europe. how does that come together because imf is warning about a recession now. ana: we were at levels of inflation we haven't seen at equities -- in decades. we have -- this has profound implications so getting inflation down is important. i like to say this is a disease

that requires antibiotics. it will not be curative with vitamin c -- cured with vitamin c. so making sure they are not going one against the other is important. manus: a great line, the executive chair of santander speaking inclusively to bloomberg, it will take more than vitamin c. look at sterling, she is up this morning, but saed wanted to reassure her. tom: coming up, interviews are coming millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save by talking to our helpful switch squad

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manus: this is "bloomberg daybreak: europe," i am manus cranny into by with tom mackenzie in london.

these are the stories that set your agenda. tom: u.k. chancellor jeremy hunt appears to have calmed the markets by dumping liz truss's economic plan amid a report that the boe could delay qt as liz truss admits fault. >> a recognize we have made mistakes, i am sorry for those mistakes. tom: u.s. futures pointed to an extended rally on wall street with asian equities broadly higher after downing street's reversal and positive earnings. plus, a sale in the cards? sources say credit suisse is considering divesting its u.s. asset management business and make it interest from private equity firms. -- may get interest from private equity firms. manus: tom? tom: those are the key stories, i think front and center again will be the gilt markets on the back of this report. there was a pause, a delay.

but the boe are delaying qt. yields fell at 1.50 basis points yesterday, the long end of the curve we are looking at. manus: the second-biggest move in the gilt market on record, the fuel has been added across the spectrum this morning on this ft story that there could be a delay to qt. monetary policy giving the government breathing space. it has also added a little more momentum to the pound, it has rallied more so on the junking of truss-onomics, and what you have is for example bluebay cutting their short positions on u.k. government debt, seeing yields in the short end of the u.s. dropped because of this new narrative from the bank of england, maybe delaying qt. crude up a 10th of 1% on supply shortages. we understand the uae oil minister will have a press conference later on today. and it is important to say while

there is no huge liquidity in the gas market, it is down because storage facilities are 92% full and we are waiting to hear what the intervention will be from the european commission on prices. tom: dynamic pricing, that dynamic price cap that maria tadeo was breaking down yesterday. as you say, expecting a decision from eu leaders toward the end of this month on the back of that. futures building on solid gains yesterday, the s&p closing at about 2.6%, futures pointing to further gains and nasdaq futures up almost 3.5%. currently futures pointing up around 1.8%. the earnings coming through pretty decent clip so far, and even mike wilson pointing to what he says could be a bear market rally, maybe 15%. the s&p as well, worth pointing out a bounceback from that 200 week moving average, some

suggesting maybe that suggests further upside at least in the near term for the s&p until we get confirmation of a recession or drop in the earnings could so far earnings holding up. a decent session in europe as well, continuing decently in asia. manus: swiss stocks will be in focus, we have roche missing on headline numbers. credit suisse is also potentially on the move this morning. another story, another day. this is what they are considering, sale of the u.s. asset management business. part of a strategy to revamp the bank. the other story, middle east sovereign wealth funds are said to be waiting putting their money to work in the swiss lender as valuations drop. charlie wells is with us. good to have you with us. what do you think is the bigger story to focus on, capital injection from my part of the

world or the asset sales, which i think is maybe what the market wants to hear more about? charlie: yeah, i would go with the latter. we are hearing that credit suisse is likely going to need a lot of money in order to conduct the restructuring we are likely to hear about on october 27, and have been talking about a long time. we've heard from people familiar with the matter that the bank's ticking about selling some of its assets in order to help with this restructuring. we know it's securitized products troopers under consideration, you know that apollo is looking into that. what we heard recently is the u.s. asset management firm could potentially be up for sale as well. that is a business unit that allows investors access to collateralized debt obligations, which could potentially be interesting to private equity clients. this is very much in line with that potential strategy of

trying to sell off some of these assets to pay for the change. the question is, how much can they fetch for these assets, will they get a good price? tom: what are the sovereign wealth funds potentially looking for? what would be attractive? charlie: this is the other story that manus was talking about, it is looking like abu dhabi and saudi arabia are interested in putting some money into the investment banking unit of credit suisse, potentially other businesses. what they seem to see here is what i was mentioning with some of those other business lines, a good bargain. this business under stress, could potentially be a good investment for them. credit suisse has a long history of using money from the part of the world where manus is. this is very much in line with drawing on that part of the world. tom: i'm going to shift focus to the arguably healthier balance sheets of u.s. banks and what does that mean in terms of reporting this week. anka of america, the latest a

big lender to paint a rosier than expected picture of the u.s. consumer. >> the credit quality at bank of america in our consumer books is very strong across the board. payment illiquid sees are much lower than pp and m it, much lower than -- payment are much lower than pre-pandemic. consumers are employed, they have good credit. manus: let's bring charlie back into the conversation. it's interesting when you look at what brian moynihan says consumers are spending. jamie dimon says consumers are in good shape, and jane fraser, the u.s. economy is resilient. no crack's in the façade of the u.s. yet. what do we learn from bank of america? charlie: yet is the key word. we saw on brian monahan's face, he looks pretty happy, bank of america had a pretty good day reporting earnings yesterday.

what was striking was net interest income, really good returns with j.p. morgan, on friday, a record. give america also set a record. -- bank of america also set a record. they brought in 13.8 billion, a good sign and a higher interest rate environment. tom: you've also talked about the restructuring at goldman sachs, what can we expect? will they post similarly robust earnings? or is it more challenging? charlie: goldman is reporting later today and there will be a big elephant in the room, which is the restructuring. it is looking like they will try to simplify the bank into three buckets, trading and investment banking, asset management and wealth, and than a catch all with tech and other operations. wells fargo has some interesting input, they said this could help goldman find efficiencies, help transform the bank into the global bank it has been trying to do. when you look at some of the estimates for what earnings can

be, you understand why this is happening. revenue expected to be down 16%, fees from banking down 54%. there is no surprise that a big restructuring is happening. or supposed to be happening. manus: i think these numbers really personify the crunch, the flow on the trading side and steadiness of the consumer. is there any other take away? net interest income is the bulwark, isn't it? charlie: yes, when consumers start looking at other products because they are not getting enough in their savings account, that is what they wanted think about. what did we learn about the u.s. consumer, they are in good shape, how long will it continue? that's a question you asked. anything about credit card debt, consumers are still borrowing, maybe spending at a slower pace, they are still paying back

loans, and car repossessions at bank of america are down more than in a long time. right now it looks like the u.s. consumer is holding up. manus: charlie, let's hope they endure with mortgages coming in at 7%. that might change the narrative. charlie wells in london. juliette saly is in singapore with the first word news. juliette: let's check in on the first word news. we are looking to the u.k., liz truss has apologized for her mistakes but vowed to remain prime minister for the national interest. this comes after new chancellor jeremy hunt reversed most of her economic plan. it leaves truss in office but without the power to proceed with her taxcutting agenda. >> now i recognize we have made mistakes. i am sorry for those mistakes, but i fixed the mistakes, i have appointed a new chancellor, we have restored economic stability

and fiscal discipline. what i now want to do is go on and deliver for the public. we were elected on the 2019 manifesto and i am determined to deliver on that. juliette: in germany, chancellor schultz has ordered an extension of the country's three remaining nuclear plants until april 2023. the decision is designed to end a standoff between his two coalition partners. the greens ideologically are opposed to nuclear power but the business friendly free democrats argue germany should use all the generational capacity available to tackle the energy crisis. chinese junk dollar bonds have dropped to a good low as the property crisis is showing few signs of improving. the notes are dominated by real estate firms and the average price fell below $.56. it has hit that level before in august before government support fueled a rally. 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. this is bloomberg. tom? tom: juliette saly in singapore,

thank you. coming up, french energy companies face fuel shortages and disruptions as a union calls for a nationwide strike. more on that next and the implications. this is bloomberg. ♪

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with angi, you can connect with and see ratings and reviews. just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done. tom: welcome back. german chancellor olaf scholz has ordered an extension in the life of the countries three amending nuclear plants, a

dramatic reversal of an earlier decision by the economy minister as the country contends with an unprecedented energy crisis. for more, we are joined by maria tadeo. an important decision from the german chancellor. they came to this despite disputes within the coalition government, which are many. the significant win was over the greens. maria: what a u-turn, we listen to the german chancellor, saying we need to do everything we possibly can to get through the winter crisis, this is a very serious situation. what it does is puts an end to the psychodrama going on for months, will they do it, will they shut them, will it be two out of three reactors? now we know it is three out of three until april of 2023. politically, it is interesting because there is something for everyone in the coalition. olaf scholz can say, and the chancellor, have the authority, i am doing every thing i can.

for christian lender, this is the best thing for the ftp, he was campaigning for this openly, saying we need to keep them on until 2024. for the greens, i guess they can blame everyone else and so we are against it but we got overruled. manus: maria, good to have you with us in the studio in london. take it to the broader level. i'm talking about price caps from around the world, talking about intervention in the gas markets, and we saw a big fraction gas markets yesterday. what can we expect? maria: it is a whole thing, and the end of another psychodrama. today we will get the commission finally with this intervention, that ursula vander line promised a month ago, and it is a combination of things. the dynamic price cap to put limit on volatility on a daily basis, also use the power of the

market to get a better price. which friendly at this point almost seems like a no-brainer. there will also be a discussion about the storage. briefly, when i talk to people in brussels come up what they tell me is i am now less concerned than i was in september, when it seemed the market was going to break. the real headache will be the next season, it is a very complicated spot because you don't have russian gas anymore. manus: no, and that is the risk, we have another set of sanctions in december and product sanctions if they come to bear, and these are ifs in the spring. thank you, maria tadeo on the ground in london. french energy companies face dental disruptions today with cgt union calling for a nationwide strike to push for higher wages. gas prices jumping after russia

's dwindling supplies to europe, there have been weeks long walk up scrimping oil refining and vision across france. it is a double edged flesh wound to the industry of france. caroline, talk us through what we can expect today in terms of strikes. caroline: these could turn into a black tuesday in france because the refinery strikes are extending to other sectors, public, transport, health and any other sectors. for example, truck drivers transporting dangerous cheerios are also striking in solidarity with the truck drivers transporting fuels. one in two trains could be affected across the country, some teachers could walk out and protest in major cities in france today. also at a time of energy crisis,

not the best time, but one in two nuclear sites could go on strike. this according to the cgt union. the temperatures are mild at this week but obviously not great at a time of energy crisis, and we expect big protests, big marches across the country early afternoon. tom: what does this mean for the reform agenda of president macron? caroline: these protests are against the cost of living crisis, but also against the pension reform that the government has not even started yet. you can imagine how difficult this is going to be for emmanuel macron in the next few months. it isn't so much -- there isn't so much the government can do. the government has already requisitioned some workers at the refineries, and a strike has ended at the exxon mobil refinery.

i tried to catch up with emmanuel macron yesterday, but he did not really say anything on the strikes, he only said he was standing side-by-side with his compatriots. the good news for the president is the strikes are not so popular in public opinion. about half of the french do not support today's movement, do not support general strike, and about two thirds of the french think the refineries workers should accept the pay rise offered by total energy and go back to work. tom: caroline, thank you, in paris monitoring the strife on the ground in the french capital. coming up, we turn our attention back to the u.k. has the government done enough to reassure investors that the u.k. finances are sustainable? we will check on the markets

next. this is bloomberg. ♪

>> my message is we should be focusing on delivering for the british public. we are in difficult economic times, we are in difficult international times with the war being perpetrated in ukraine. now is the time to focus on delivering, making sure we are delivering on our energy package. before we stepped in, people were facing energy bills of up to 6000 pounds and we have put in place the energy price guarantee, reversed the national insurance increase, and that is what i am thinking about as prime minister. tom: u.k. prime minister liz truss defending her agenda.

her premiership is coming under mounting pressure. we are also looking at what all of this means for u.k. markets as we weigh up the ft reporting on the boe. manus: absolutely, and the last straw of her defense on friday, the news conference, she defended her energy help for any -- help for everybody that was the last vestige of truss-onomics. the pound is on the march, all in reaction to the new perspective that jeremy hunt has delivered moving to eradicate all of that. let's take a listen to the new chancellor. >> i have held extensive discussions with the prime minister, cabinet colleagues, the governor of the bank of england, the opr, the head of the debt management office, treasury officials and many others. the conclusion i have drawn from those conversation is we need to

do more more quickly to give certainty to the markets about our fiscal plans. and show through action and not just words that the united kingdom can and always will pay our way in the world. manus: look, when we look at what bloomberg intelligence have written, they still say there is a 36 billion pounds hole and we expect 75 basis points hike in november, but that changed this morning about the narrative around where we go with tightening, not necessarily rates but the ft story as you said, which is qt delayed to give the government breathing room. tom: delayed, not denied, and reporting at financial times is saying the boe came to that decision after assessing the gilt markets remained distressed. we saw a strong bid for gilts yesterday, ending the session at around 437 on the 30 year.

the focus will be when they reopened today. still a long way from the 375 level. that's the work that needs to be done to get the yields lower. manus: or maybe one could say to a certain extent, 30 year yields as you see there yesterday, four point 37, the differential between that and where we were based before truss-onomics is the moron risk premium, not my words, but dario. that throws into question, can the big giving lynn really raise rates? the swaps market 2.5% by may, 300 basis points of rate hikes. can the u.k., will the u.k. be able to bear that kind of rate hikes scenario? tom: this was the take from some as well, looking at the boe,

that this gives them the space to raise rates, and enter bailey in washington, d.c. eight clear that's what he wants to do, that is the appropriate mechanism forgetting inflation down. the markets starting to reprice on those hikes yesterday. looking at earnings of course also. manus: roche missed on the topline number, read headline. question for the seo is the guidance uncovered related testing kits. he said that will peter out this year, but how much of a drop has that been? he joins the bloomberg team shortly to discuss his numbers. ♪

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anna: good morning and welcome to "bloomberg markets: europe." i am anna edwards i