dani: good morning, this is "bloomberg daybreak: europe". i'm dani burger in london with the stories that set your agenda. the ecb follows the fed with a 50 basis point height, but a third of the council pushed for 75. >> interest rates will still have to rise significantly, at a steady pace, to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our two medium-term target. dani: the bank of england also raises even as it says inflation may have peaked. governor andrew bailey warns a tight labor market may keep price growth elevated. the eu package of sanctions over vladimir putin's invasion of ukraine targeting moscow's

access to drones and banks are now at the richest tycoon. happy friday. humidity the end of the week, and the weekend, which we are all going to be watching the world cup to help us set up for the weekend. we have someone very special in qatar, is it lionel messi, no, it is our very own manus cranny practicing his football skills i see. manus: i have got skills you have never seen, dani burger. we will let you see those a little later on. 45 billion bucks to fill that up. 80,000 people will descend on the final between argentina and france. there are two more flights getting here to support lionel messi. we will have the facts, the figures and the $300 billion trade. see you in a while. dani: coach, put manus cranny in

the game please. we will get back to you in a moment but first let's get you set up for the market this morning. you survived 40 eight hours of unapologetically hawkish central banks. really the most hawkish of wish coming from the ecb yesterday. european stocks were decimated. the fifth worst day of this year after christine lagarde and crew said they will keep hiking 50 basis points, despite the fear of recession. we are looking at a comeback but it was such an ugly day. not strange to see consolidation. a slight drop in s&p 500 futures, barely .03%. it is really the last liquid day of trading grade we have a triple witching. msci asia pacific is down .7%. looking at the cross asset

picture, the dollar has been interesting. the dollar gained yesterday but we're going to have to contemplate for 2023 as these recession trades take hold, are we looking at a dollar which is weaker this morning, as a haven? or does that interest-rate differential finally make a difference? yields in the u.s. come down six points, currently trading at 3.47. german yields moved the most since 20008. btp's moved most yesterday since they have this year. certainly more action when it comes to the european bond market. iron ore is falling, at one point it was down 2%. china is going to form one bigger estate power, that means they will get a cheaper price. nymex fruit is down .2%. let's get to our report is around the world. for more on these stories, jana

randow gives us her ecb's s coop from frankfurt. allen wan is in china with the latest on covid cases. let's start with the ecb though. a bloomberg scoop shows more than a third of ecb policy makers favored a 75 basis point rate hike yesterday. this comes after the bank increased rates a half percent. lagarde signaled there is more to come. let's bring in economics reporter jana randow for mark, everything we keep hearing about this decision seems more hawkish. the latest, perhaps more members wanted to go more than 75? >> we were quite surprised there was such a big number that would have favored a 75 basis point move. but it ended up being a big

compromise, that had a bit of everything, and somehow strangely the hawk still managed to win, if there is a winner that is. we saw that 50 basis point rate hike slowdown that match what other central banks did over the past days. that is a clear win for the doves. they were concerned the ecb is underestimating the weakness of the economy. that inflation may slow faster than expected. the forecasted and show that. the forecasts were revised up significantly for inflation. the rate hike was in line with expectations, it was lower than before but what the hawks managed to get was a commitment that this is not the end of. more is to come, and signet can rate steps are going to come.

-- significant rate steps are going to come. the market priced amount is not enough to bring inflation back to target, that means we are the next couple of days going to see repricing i am rate bets as well -- in rate bets as well. quantitative tightening will start. and we got a lot more information on that than expected. it will start in march. there will be an initial cap of 15 billion dollars per month until the end of the second quarter. that is half of what expires on average over that period of time. and then there is going to be a reassessment on whether those caps are needed going forward. that is a big win, now we just have to get through the end of the year to see where the ecb is headed. dani: maybe a small move

initially from qt, but still a 30 basis point move in btp's, this market as you say is repricing. let's look at some of that market reaction to the central banks. let's get to mliv strategist garfield rouse. can we start with this move in the european bond market? half a percentage of the bond market of the balance sheet from the ecb is what they will unwind. these are tiny amounts yet all that hawkish is presenting itself in a very big move on in this european bond market. >> there is a reason why the ecb was among the biggest and broadest quantitative easers out there and why they have been so reluctant to move away from that. that is because a lot of bond markets are exposed.

it is the heart of the european project. the bond market is it different manner. whether they are in euros or other currencies, greek bonds are going to play out something different from german bonds, for example. even though most of the bond market did see a pretty significant jump, i'm looking at 10-year yields across the european space, those are the ones up by the most. italy up more than 30 basis points over the past week to germany up a mere 14 basis points. the key contrast is what's the market that has the biggest decline in yields? canada is down 14 basis points but so is the u.s. dani: you saw yields after that

bad sales data in the u.s. bad news is bad news again. >> bad news is reinforcing their expectation that the fed is going to help create a recession. we are going to have a big come down in both inflation and activity. it's also interesting, the expectations for the terminal right now in the market have jumped. we are seeing pricing for something like 5.4% as potentially where the fed rate will be in six months. more solid pricing is around the 5% mark, that is still pretty high. treasuries in particular. and more importantly, difficulty for the global economy. so, there is a little bit of a return to treasuries being your best haven right now.

because with what's going on with the ecb and the war in ukraine. dani: maybe we're bringing that 60-40 portfolio hedge of equities to bonds back to life. giving it much-needed resuscitation. bloomberg's garfield reynolds there. bloomberg understands the border between hong kong and mainland china is set to fully reopen early next month for the first time in three years. this is happening as the commonest party rolls back covid restrictions to bolster the faltering economy. joining us now is bloomberg's allen wan. this is the bumping us of this reopening. it is happening fast, but that also means cases are rising. there is excellent reporting from you and the team that beijing is basically like a ghost town. what are things like trying to get a handle of loosening restrictions that is resulting in higher covid cases? >> one of my buddies in beijing

is calling it a ghost town. he is seeing fewer people out and about now than before loosening. there are obvious indicators, fewer people in restaurants and offices. and a lot of data to confirm that fact. subway average ridership is approaching lows seen during the spring in beijing when the city was under partial lockdown. and congestion is actually approaching levels one third of where they were back in january 2021. the situation has calm down a little bit. we have seen desperate images of people at clinics and pharmacies looking for medicine. beijing has been opening more clinics, and telling people to stay home if they have mild symptoms. a lot of people are relegating

themselves to the fact that they are going to probably get covid at some point. dani: allen, thank you very much. it shows why this market is hesitant to price everything in given that if there are that many covid cases, resurgence of demand for goods and services will not be that strong if everyone is at home concern. bloomberg's allen wan they are. we are just two days away from the world cup final in qatar where argentina and france will face offer the ultimate prize in football. manus cranny is outside the stadium where the finals will take place on sunday. i love this because the powers that be finally convinced you to care about football. what's the atmosphere like there right now, you must not be the only one practicing their football skills. manus: i will give you a shameless hussy plug, which is

go to my linkedin. i've got knee skills, ooh yeah, there is a feast on instagram. shameless plug but what the heck. downtown it is hustle and bustle, a real melting pot. a huge number of people have descended on qatar, the first couple of weeks 760,000 people arrived for football. that was less than anticipated. a lot of people hopped out of dubai but have a look at this, dani, this thing is 45 billion bucks worth of stadium. it will take 88,000 fans. and it's expected to be pretty full come sunday night. world cup on your terminal if you like the odds. we are expecting a mass converging on the stadium. dani: i can only imagine.

i was in france yesterday and the day before when france played morocco, they were the true underdogs. it will be sad to watch them play the consolidation game, which always feels cruel. but where are the tom cruise shades? i saw you wearing them before the show, you are in a hot place. manus: i don't know where the shades have gone! we're gonna have a look. there you go. i don't think technically i have to wear shades anymore on bloomberg. there you go, it's the money shot. you'll get me in trouble, dani. dani: all over the name of fashion, manus cranny in qatar. we will come back throughout the show gearing up for the big weekend. coming up first, less than 12 days before christmas, the ecb follows the fed's hawkish stance. we will discuss the market

reaction next. this is bloomberg. ♪

>> we judge that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target. our future policy rate decisions will continue to be data-dependent and follow a meeting by meeting approach. dani: madame lagarde speaking at the press conference after the bank raised rates of 50 basis points. it was one of the most hawkish central bank press conferences of her 10. joining us now is ann-katrin petersen, senior investment strategist at black rock investment institute. what an insane 48 hours, you have the fed committing to 50, raising the terminal rate in

their dot plot, christine lagarde a series of 50 basis points. has the risk reason of central banks over tightening? ann-katrin: we continue to think central banks will over tighten into recession. when looking at this major week of central bank meetings, three things stand out. slower pace of rate hikes should not be confused with a dovish signal. central banks are heading now for higher yields for longer. yields heading higher and rate staying higher. second aspect to watch here is inflation will prove to be sticky. when looking at euro area projections, the ecb projects core inflation will not only

rise next year in 2023, but also come in double its target. and last but not least, central banks are starting to acknowledge that in order to tame inflation which is rooted in production constraints, supply-side constraints, they will have to crush both. and they will likely engineer recessions. the ecb for the time being is forecasting a shallow, short-lived one. the fed is still avoiding the r word. but when you look at the growth forecast for 2023 of 0.5%, this may well include two quarters of economic downturn. dani: i wonder how it factors -- it's become a cliche at this point but i will say it anyway, this is the most well broadcast recession in history. everyone sees it coming, even jay peak a lot of edge is --

even marco a lot of edge is turning into a bear. so much of this bad news potentially priced in. ann-katrin: i would question that recession is price in markets. there are still areas in markets where recessionary risks have still to be priced. the downside for earnings in particular. we think earnings expectations for both the u.s. and europe are still too optimistic. this is one of the reasons why heading into 2023 we are still underweight u.s. and european equities. we see more room for disappointment here. what i also find puzzling when looking at a fixed income is that despite the clear messaging by jay powell, the u.s. fed

chair, treasuries still do not fully reflect that rates will not only had higher, but stay higher with u.s. money markets still hinting towards fed easing by the end of 2023. so these fed rate cuts need to be priced out in my view in order to become more constructive heading into 2023. and also that disappointment we can observe in earnings. the earnings season at the beginning of next year will be a key litmus test for these assessments by markets. dani: if stocks are going to give us the juice they have had over the past decade, if bonds still need to reprice, i wonder if we could get the same return from commodities?

goldman sachs thinks that commodities could return 40% take a listen to what he had to say. >> what happens when china, the largest commodity consumer in the world, the largest oil importer in the world, begins to rebound significantly in the first part of next year? it will tighten all these markets tremendously and put a lot of upward pressure on prices. dani: commodities have been the only thing that have been performing, although they have not as of late given global growth concerns. in this environment you are describing, we hike into recession, can commodities be the source of outperformance? ann-katrin: as with equity markets and fixed income markets, you will have to be more selective in commodities in 2023. to provide an example, in the very near term, the reopening of

china although complex when taken by itself uplifts demand for certain commodities. and certain commodities have in the past been a hedge against inflation risk. as we discuss, this week has shown central banks are seeing we will have to live with higher inflation. looking into the longer-term some commodities will benefit more from structural strength such as the transition towards net zero. on thinking about industrial metals, lithium and so on. i wouldn't make a call on broad commodities here, but a call for being selective. dani: you certainly ripped up the playbook for 2023. thank you for joining us, enjoy the rest of your friday. ann-katrin petersen, senior

investment strategist at black rock. socgen's ceo does not see then need to follow wall street's recent job cuts, we will hear in an exclusive interview next. this is bloomberg. ♪

>> i think we are seeing at this stage signs of slowdown of the pace of inflation. i'm sure the central banks will carry on to deliver their monetary policy. what is being done is needed. but i don't think we are facing the same kind of scenario. there is a lot of uncertainty. external shocks can create a problem. but in the absence of an external shock, we are having miner slowdown that we can absorb. dani: what sort of shock?

what would hit the level of changing things to erase that optimism? >> geopolitical crisis, evolution of the conflict in ukraine. the way we will fare in winter. and gas reserves being preserved as much as much as possible will help in terms of gas prices. there are many parameters which could play a role in inflation. wage evolution also. at this stage, i see also companies which are trying to avoid entering a cycle where wages are increasing too much. they want to preserve the future. so again, every month we will see how it goe

danny mack good morning, this is "bloomberg daybreak: europe". hawks ascended, the agb follows the fed with a 50 basis point hike. over one third of the council were said to have pushed for 75. stocks are lower. >> we judge that interest rates still have to rise significantly, that a steady pace, to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target. danny mack they also raise rates even as they say inflation has peaked. a tight labor market may keep prices elevated. plus, the eu backs a package of sanctions over vladimir putin's invasion of ukraine. access to drones and banks.

the u.s. levy's penalties on russia's tycoons. we are also just two days away from the world cup final in qatar. maybe not tons of trading go on as we gear up for that. argentina will face france for the football's ultimate prize. let's get back to manis cranney who is in qatar. i am sure you are excited you have got two days to gear up for this. talk us through some of the highlights. the big showing, it is finally here. manus: it is finally here. it is a feast of football. the agony, angst, ecstasy. five goals in this world cup, it will be his last one in the stadium. verses come rinaldo, benched. one of the greatest footballers of all times.

there is this divergence between the personalities of the football society as winning and that really delivered a long-standing shark in the opening rise they had. -- shock in the opening rise they had. argentina is just a little bit ahead in the voting as far as the bloomberg are concerned. argentina just have it by a small margin. i think there are certain moments, morocco, making it all the way through last saturday, the jubilance in the streets in dubai was palpable as morocco won last saturday night. it wasn't to progress any further this week. dani: i don't know what is wrong with me, but i feel like i have gotten so emotional watching this world cup. i kid you not, i might have shed a tear when morocco lost. i am feeling very strangely emotional about all of this

greed but also, let's be honest. it is a business, there is big money and play. the stadium behind you is grand, it is huge. qatar has spent all this money. manus: the overall span over 10 years is by 300 billion dollars. there will be a boost to gdp in the short term, boost to the population. will that all fade away? i think when you look at legacy, often times people talk about legacy. one of the stadiums is called 974. that is the dialing code for qatar. the imagery is fantastic. it is being dismantled, 100 and 70,000 seats from eight stadiums around qatar will go to developing nations. eight stadiums in total. this one behind me will be turned into a multipurpose and multiuse hotel, etc.. think about the old arsenal in north london turned into apartments, turned into an entire community before they

moved on. six others will be turned into hotels and malls. i think it is also important that we consider, what did qatar really get from posting this? we know they got litigation pending in january in the united states, so i think, how do we define success? is one of those intangibles where, again, global reputation, isn't it? dani: of course, in hosting the world cup, it is usually this air of legitimacy that you are entering the world stage. it has been a world cup that has been mired in controversy. manus: it has. i will just reinforce the fact that we are spending -- we are trying to spend like 2014 and 2018, by many double-digit multiples. there is controversy. for the lgbtq community, the captains not being allowed to wear the one love armband. i don't think it is a changing

of the rules and alcohol, everybody can live for three hours without a beer. it is the principle of how you change and communicate with the world. there is another sign which i think you at home, in america, and another faces, don't see. that is the governor rising of the gcc. sitting with the all counties. on morocco, the north african north -- nation, rallying. the arab nations around those. we can spend a lot of time, and we should continue to talk about those big issues. worker write, death certificates, lgbt rights, there are many, many things that the world should continue to talk about, not just here in qatar but if saudi arabia goes for a bed with the world cup. what will top the agenda done? success is measurable in

dollars, but there is also the imagery to the world where we are. dani: you see ads for setting tourism. the whole goal of that conversation is happening. i know you told us, the terminal clients, they might have a slight preference of argentina winning. but i have to ask before you leave, who is your money on? give us your heartache and your prediction. manus: everybody who watches this knows that i am not a football bluff and i have never professed to be that. hence the reason i got this small ball at 60 rial. you have to say, lionel messi, that is not moment of agony. kind of like a daybreak of editorial show. it goes like this -- where nobody is listening to you.

he is a mesmerizing footballer. five goals in the championship so far, what damage can he do? to the french? [speaking non-english language] i used to say. dani: i can't decide whether you are a giant with a normal sized ball or whether it is just a small one. so great to see you in qatar. victory -- the lionel messi of daybreak arab. from football to the economy, let's turn our attention to the crazy week that was tightening and more tightening. the fed to ecb and doe all hiked by more than 50 basis points, continuing the hawkish stance. >> we have a 2% inflation goal. we will use our tools to get inflation back to 2%. we are getting close to that level of sufficient --

sufficiently restrictive. >> we judge they still have to rise significantly. at a steady pace. to reach levels that are sufficiently restrictive. >> we expect inflation to start forming more rapidly, probably from the late ring onwards. there is a risk. particularly because the labor market and the labor supply in this country is so tight. that is why we had to raise interest rates, because we see that risk as quite pronounced. dani: the chiefs themselves, all talking about they -- their respective rate hikes. thanks so much for joining us, and i. i wonder if this was a big shift, this idea that perhaps the synchronicity of central banks just doing whatever the fed is doing is over, that there is more divergence now. do you get that sense in the past 48 hours?

>> when it came to the bank of england meeting, there weren't any surprises as expected. they hiked by 50 basis points areas there wasn't also any changes in terms of the language or any substantial change. it did surprise us in terms of the communication. as expected, 50 basis points was expected. the communication and the rates guidance and projections were definitely more hawkish than what we expected. dani: anyone who thinks this is a pivot for the ecb is wrong. christine putting it in very clear terms. don't you dare talk about a pivot when it comes to the ecb. is it right that they are so hawkish at a time when europe is still struggling? it has finally gotten cold this winter and expectations are for a recession? >> kristi noem the guard was very strong in her language. she also explicitly said they have got more ground to cover them for example, the fed. when we look at activity versus

inflation in europe, activity is weakening worried we do expect a mild recession. the ecb forecasts are also showing slower activity over the winter months. however, inflation is very high, unacceptably high for the ecb. when we look at the projections, which did surprise us, they are not expecting any significant downturn in activity. they expect inflation to stay high for a very long time. on the basis of this forecast, they did have to act and communicate very strongly. dani: they also unveiled the blueprint for qt. that is less than 0.5% of the balance sheet. at the same time, you had italian btp's, the front-end, rise by about 33 basis points. what does it say to you that even with such a small incremental amount announced

that we still have spreads blowing out? the biggest move of the year. >> when it came to the market reaction, we thought it was more reflective of the guidance regarding rates rather than announcement regarding qe. when it came to qt, it did surprise us in a sense that they gave more details that we anticipated going into the meeting read 15 billion, as you said, sounds like a small number read in terms of share of reinvestment as christine said, it is actually about 50% of reinvestment per month. dani: at the same time, we have the tpi protection tool. the safety net is supposed to be there for italian bonds. does this just show us it is a market that is very ready and willing to test that? >> before yesterday's meeting, markets were actually relatively calm when it came to italy. potentially now, with this very

surprisingly strong guidance around rates that unsettled markets somewhat. dani: the ecb does have a different market environment, as does the u.k., where labor is really the question. it is a very difficult labor market. how does andrew bailey's task different when it comes to that? what is the fine needle that he needs to thread? given how extremely challenging this labor market is. >> one of the contrast on the market versus the u.k., i think the key difference is that we saw the pickup in wage growth in the u.k. coming through much earlier than we did in europe. the part of the story is the fact that participation rates were essentially available in the u.k., and it has shrunk more than in the euro zone. it still hasn't recovered to pre-covid levels. the tightness in the labor market in the u.k. seems to be more acute. this is exactly what comes

through in the communication of the bank of england, where they are raising concerns about labor market tightness, wage growth, and what it means for persistence and inflationd. adani: andrew bailey and the rest of the crew seem more hesitant to hike as much. there is wage price spiral fears. there are more structural drivers beyond just energy adding to inflation in the u.k., yet, andrew bailey seems to be more hesitant to hike into a recession. >> going into yesterday's meeting, we thought there were three key factors that would allow them to slow down. one is that we do start seeing some signs of easing in terms of demand for labor, so vacancies are now easing. secondly, inflation expectations, both from companies and consumers have slightly eased as well. they do stay at unacceptably high levels, but they have eased. third factor is that there is no

current raising concern across the epc, and there is still significant uncertainty about what that will have on activity. dani: i am afraid that is all we have time for. thank you so much for coming in early. european economist at ups. let's get you your first word news. adrian, take it away. adrian mack -- beijing is rapidly spreading covid outbreak has turned the chinese capital of 22 million people into a virtual ghost town. stores closed and restaurants empty. residents are hunching -- hunkering down at home, because they have the virus or are scared of catching it. many stores are still open for essentials, but they are facing delays with workers out sick. about 200 chinese companies no longer face an immediate threat of being booted off american stock exchanges. the u.s. public company

accounting oversight board says the inspectors have been able to sufficiently review all the documents from firms left to the u.s.. a major breakthrough in a long-running dispute. and, twitter has suspended accounts of rival service, mastodon, and several prominent journalists -- late last night, reporters from the washington post, new york times, and others were listed as blocked with most telling the posting of his real-time location quote, basically assassination coordinates. the standard twitter bana for disclosing personal information also known as dioxin, -- global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. dani : i was prepared for you to call

me a different name to get back at me. adrian wong, thank you so much. coming up eu member states back and sanctions on russia, this time targeting drone imports and banks. that story next, this is bloomberg. ♪ introducing the new sleep number climate360 smart bed. the only smart bed in the world that actively cools, warms and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number.

dani: the european union is said to have agreed to a 9% sanction on russia. they are planning to ban direct exports and drown exports to moscow and countries like iran which would sell them to russia. they understand the sanctions are expected to target banks, media outlets, and individuals accused of abducting ukrainian children read joining us is bruce einhorn. live from hong kong. so bruce, yet another round of sanctions. what are the details this time?

bruce: this would be the ninth round of sanctions from the european union. according to people familiar, this is an agreement that european union ambassadors reached on thursday evening. in brussels where they were meeting. and would cover more than 100 individuals and entities. those individuals include several -- i think seven governors in russia accused of abducting ukrainian children. that is something that the russians denied, they say they are just moving the children to take them out of harm's way. in addition to the sanctions on the individuals and the entities, there would also be sanctions on more russian banks and more russian media companies . also, sanctions to ban the export of engines that could be used in drones, both to russia as well as to third countries, which is very important because

russia now husband owing a lot of drones that it has gotten from iran. these sanctions would cover the export of drone engines to those countries, as well. dani: domestically, there is this ongoing debate of the europeans trying to debate on a not gas price cap. the debate seems to be centering on how high or how low to make it. are they any closer to reaching a deal on this? bruce: we are closer to reaching a deal and that they issued a statement at the summit yesterday saying, we need to reach a deal. they instructed ministers who are going to be meeting next week to finalize and -- an agreement. we still don't know the details of that. there is still a lot of disagreement within the eu on what the price level should be that would prompt an intervention. there is a lot of pressure from

some of the eastern countries, such as poland, romania, others, for a lower cap. with the brutal cold weather that is now hitting europe, there is going to be even more pressure for the countries to reach some sort of a deal or risk a backlash, especially at a time when inflation is so bad. dani: we have survived up to this far, but the weather is finally turning, finally below freezing in the u.k. and elsewhere in europe. thank you so much. global business reporter for limburg and hong kong. coming up, we will talk again about the ecb hiking interest rates by 50 basis points. we are warned there is more to come. the most hawkish speech next. we will discuss next, this is bloomberg. ♪

dani: the ecb hiked 50 basis points yesterday. and presidents comments that followed was undeniably hawkish. it got our own valerie titles attention. it was surprising how hawkish it was. it seems like a clear tone changed from them the guard. valerie: a lot of them were spooked. they had a new forecast that came out for 2025, they're forecasting inflation still being above the 2% target. we also had meaningful revisions to 2023 and 2024. they are clearly saying that inflation is the problem, we are not really focused on growth at the moment. and then you go into the discussion on qt. i think some of us had a hope that she would almost handoff to qt to do some of the tightening for them they clearly made the

point that that is not how we see it. we are going ahead with qt, 15 billion per month for it and we are going for a series of 50 basis point rate rises. dani: let's talk about this market reaction. this initial announcement, even though we still have tpi, even though it wasn't necessarily that big, this is a big reaction. valerie: swanson's march 2020, during the pandemic. that day we shed -- she said we are not here to close it spreads. i think it is notable, they have almost spent the last few months upping the market for this announcement via talking about the tpi tool. we still have these jitters in the market going on. i think this is a big warning flag for them that the series of 50 they are trying to go forward with, the bond market is going to have a hard time absorbing that, even though they have announced this tool.

dani: how much of this is just a plain and simple recession trade? we have seen this and stocks. valerie: the move yesterday, down three and a half percent, mirrored a lot of what we saw during the russian and ukraine invasion. i don't think that is something they want to see. but, if inflation is the enemy here, i really think that the periphery that bonds are vulnerable to that fight. dani: finally maybe that correlation breaks apart from itself. great stuff, as always, thanks so much for joining. coming up, we will have bloomberg markets era. we will continue the central-bank conversation. hang tight in this holiday like trading. this is bloomberg. ♪

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