tom: this is "bloomberg

daybreak: europe." i am tom mackenzie in london and these are the stories that set your agenda. the swiss central bank provides credit suisse with up to 50 billion francs of liquidity, hoping to draw a line under the crisis. we are live in zurich. backstopping sentiment. european and u.s. futures climbed after credit suisse taps the swiss national bank for funds and looks to buy back debt. treasury yields rise. plus it is ecb day. the recent banking chaos drove the rate hike down, but with the snb rescue, markets are on the fence on predicting a half-point hike from christine lagarde. in an attempt to stymie a crisis of confidence, credit suisse is set to borrow up to 15 billion francs from the swiss national bank. they have also promised to

repurchase debt, can a buyback of up to 3 billion francs of dollar and euro denominated debt. the crisis has sent shockwaves across the global financial system with banks and traders looking to cut counterparty risk. then humans -- ben emons says credit suisse for now is on life support. shares are in full force after the saudi national bank chairman made these comments to bloomberg. >> the answer is absolutely not for many reasons outside the simplest reason, which is regulatory and statutory. we know nine point -- we own 9.8% of the bank. if we own more than 10%, more regulations would kick in rather by the dubai, swiss, or european regulators. tom: that was the saudi national bank chairman ruling out

investment more in credit suisse. let's take a look at these markets on the back of this news around liquidity support from the swiss national bank. some relief as you look at the european futures after losses yesterday of close to 3% for the european benchmark. uterus pointing to gains of a little over 2% -- u.s. futures pointing to gains of a little over 2%. the focus still on the banking sector, particularly in hong kong and tokyo and any linkages to the turmoil that is emanating out of europe and predominantly from credit suisse. euro-dollar at 1.06 as we look ahead to the crucial decision from the ecb. do they go with 50 basis points that they have flagged strongly or do they take a step back given concerns about financial stability? we will keep across all the asset moves. let's get our reporters around

the world. credit suisse front and center for us. we have oliver crook with the latest out of zurich, maria tadeo out of frankfurt for the ecb decision, and we have russell ward and mark cudmore on hand to break down the market reaction. credit suisse planning to borrow as much as 50 billion dollars from the swiss bank as it seeks to whether a collapse from the markets. let's get to oliver crook. what is the latest? oliver: as you say, the news for an the market moves the last 24 hours have been incredible on credit suisse, but we should say the market moves on credit suisse have been fairly muted. you had the sentiment from the saudi national bank, but overnight, over the last 12 hours, we heard from talks from regulators that the moves on the markets were so intense that something needed to happen, and

then we got the fruit of those talks. the question going forward, is this going to be enough to turn around sentiment? this is the only precedent for this is 2008 in the financial crisis, and the speed at which all of this happens is unbelievable. you have the saudi national bank chairman speaking this morning saying that the panic is unwarranted, so trying to step that back, but this morning, what we will pay attention to is how the market opens. tom: the context important, since 2008 we have not seen this kind of action from the swiss national bank. what is next? oliver: we had the statement overnight from the ceo saying these measures demonstrate decisive action, we continue our strategic transformation. thanks to the snb and finma we can understand why. this speaks to the heart of the broader issue with credit suisse, which is what is the plan and will it be able to

execute? inter-trans to the market open because the market has been the judge, jury, and executioner -- attention turns to the market open because the market has been the judge, jury, and executioner for credit suisse. this saga has played out over many months and years and have we reached a point where something serious needs to happen? tom: on that saga, remind us how we got to that point. oliver: it is hard to pick a decisive point, but you can reach back to 2019 when the spying scandal which claimed the then ceo, and then you had greensill in 2021, rk goes lost their chairman also because of covid, quarantine violations, than the unacceptable results from last year. it was the huge outflows last year of 110 billion francs, so

all of this adding up and culminating in the last 48 24 hours to what is a crisis point for this bank. tom: a great recap, and update from oliver crook on the ground for us. meanwhile, the european central bank will give its latest monetary policy decision later today. we go to maria tadeo on the ground in frankfurt. what can we expect from the ecb caught in this storm of market volatility? have they boxed themselves in on 50 basis points? maria: this is an ever-changing narrative going on. you remember a week ago the idea was that this was a central bank on autopilot, 50 basis points, core inflation sticky, and they have to continue. they would have to continue to hike aggressively. we have seen the chaos in the banking sector which has brought this debate of will they go softer 25 basis points? we have had the swiss comes in

overnight to change the sentiment. is that going to bring back the 50 basis points back on the table? i would point to the words of the european central bank and those who calibrated this basis point guide to the markets where she said this was a strong determination and will not change unless something extreme happens. the question of what is going on credit suisse, is extreme enough for the european central bank to change course? that is the fundamental question going into this meeting. the other point also has to do with the sequence going forward. up until a week ago, this whole idea was that march is done and we have to focus on may. this -- is she going to be now in a position where she can recalibrate the market about the next two months,, or is this an idea where they have to tone it down? there are too many moves going

on right now and we are not in a position to give any specific guidance going forward. tom: the ability to adjust in this environment. and you talk about the caveat she gave herself, a slight window to be able to react around that 50 basis points commitment. the banking stops in europe fell eight point 4% yesterday, another brutal session. will there be a message to call markets from the central bank? maria: another brutal day. you had names that were dropping more than 10% for a second consecutive day. these are big moves going on in the european banking sector. have not heard from the european on this issue. the reasons are clear and their deliberations are ongoing. this is a quiet period and decision day is today, though we did have reports that the ecb had reached out to banks to figure out the exposure they have from credit suisse or would have to credit suisse.

on monday when i spoke to the head of -- regulators were already on the case with respect to the silicon valley bank, but today we have seen the swiss repeating the point that they are ready to provide liquidity. that might change things in the swiss banking system, but you also need a strong voice and it comes to the european banking sector and this has to come from the head of the european central bank. i expect questions on this and a challenging communication exercise from the head of the ecb who needs to instill confidence in her own market and make it clear the contagion risks are indeed contained now. tom: the language of central bankers is always waiting, but today, extra prominence. verio tadeo on the ground in frankfurt ahead of that ecb press conference from madame lagarde. we will bring you live coverage of the news conference later today. global banking shares continue

to take a beating as it worries over the health of credit suisse. combated concerns by the sudden collapse of silicon valley bank. let's get more with russell ward in tokyo. what has the market reaction been to credit suisse's move so far and the support coming through from the snb? russell: the market reaction initially was positive with the european stock futures rising as you mentioned earlier, but in asia, bank stocks again fell and this reflects a hard sentiment in the banking sector globally, how it has been crushed by these crises. first the three failures of the banks in the u.s. and now the issues surrounding credit suisse. given it is a crisis of confidence, we are looking at many things going forward in terms of whether this latest effect will turn things around.

one of those is the issue with the client outflows that oliver mentioned earlier. it is crucial for credit suisse given that it has hinged its future on the wealth management franchise it manages to retain these wealthy clients. with this groundswell of negative sentiment out there, it needs to reverse these outflows. we had the ceo ulrich koerner earlier in the week saying that even on monday with the collapse of svb, they saw some inflows, but whether that will be sustained going forward is a big question. the other thing is just how credit suisse's shares and bonds will trade in a few hours during the open, whether they will reverse the declines we saw overnight. tom: indeed the bumps certainly in focus given the hit they took yesterday. russell ward, thank you. we will be watching the moves in terms of stock price and the

credit suisse bonds on they start trading. let's see what is trading in global markets as the impact of the credit suisse turmoil plays out. running us now for more is bloomberg anchor mark cudmore. how are global markets reacting to this instability at credit suisse and what is going to be in focus for them? mark: as you can tell, it is the complete chaos and carnage in markets. that is the main takeaway. funds are hurting, people have lost money, so even the people who think these moves might have overshot in the short-term, they do not have the appetite or ability to fight this. risk measures have blown out, therefore lowering people's ability to take risk. the assets that are most broken outside the banking sector directly are rates my gets. with the ecb today, we will get a direct impact on those, whether the ecb perceives 50 basis points, but that market

has the most readjustment to come if we do have stability. have we found that point of stability? with the swiss national bank coming overnight, we potentially have, but important to remember this is a nervous market so one small scary headline can bring the market a long way. there is not the risktakers willing to stand in the way of what seems like a truck of risk aversion. where do we go from here? a week from now we will see yields higher, markets calm her -- calmer, but this is the first wave of pain from the hiking cycle and that is the move for the next month head, but it is only the first wave. tom: bloomberg mliv managing editor mark cudmore in singapore, thank you for that. as we look through the ecb decision later today, how much of its plans have been upended by the latest market action at credit suisse? we will discuss that next.

this is bloomberg. ♪

>> it should be contained to zurich, but just like the fed was, the ecb has technology they have got terrain fence things and make sure they are putting enough firewalls in place to

give cs more time and to ensure there is no chance of this attracting attention of other banks and people pushing on them. >> i do not think it is a lehman moment. this is really bad and it can get out of control, but i do not think central banks or anyone else will watch this. >> the silicon valley bank and then credit suisse, the banks now have a better understanding of that liquidity playing a critical role in presenting -- preventing the market freezing. >> it highlights the impact of monetary policy tightening. the strong will get stronger and the week will suffer. >> we understand they might be too big to fail but too big to be saved. >> this has been a huge downfall for two years, so there are clearly problems within this institution that predated what happened with svb. >> i think it is going to be challenging in the short-term term because we do not know where the next shoe to drop

could come from. >> the great financial crisis, there was a lot of this that was about cross counterparty credit risk. that is not what this is about. >> i think this is the tip of the iceberg. there is a lot more consolidation, a lot more pain yet to come. tom: bloomberg tv guest sharing their thoughts about the risks to global markets from credit suisse. let's bring in another expert on these markets. fabiana fedeli, cio of equities and multi-asset at m&g. good morning. is it your sense at this point that the snb has backstopped the liquidity it will be providing to credit suisse and the bond purchases will be enough to draw a line and ring fence the issues around the bank? fabiana: good morning. it was definitely necessary. we needed the snb to come out and put a backstop to this, and

that made the lifeline that they extended. it was helpful and you so markets reacting to it, but we do not know. we do not know what else is needed. this is not a credit risk issue at this point. liquidity in cr suisse is still good. it is a lot about sentiment, so how far the central banks can go to shore up sentiment is going to be key for markets. tom: and on sentiment, we heard yesterday from the likes of lack rock's larry fig questioning whether the dominoes are starting to fall, ray dalio saying that svb's collapse is potentially the canary in the coal mine. is this the first wave of many? fabiana: this is one of those tricky times in markets where investors have to take a step back, not make rush decisions and assess what will happen ahead. if you take svb as an isolated

case, there was a blind spot in the regulatory framework and poor asset allocation decisions. credit suisse, this has been going on for a while. there has been a restructuring at the bank, so it looks like these are isolated cases, but once we get more than one isolated case, that also impacts sentiment. sentiment is a powerful driver of markets. it could be something we are able to shore up two weeks from now and we could feel that everything is calm her -- calmer. tom: when you look at the actions of the likes of bnp paribas and santander, even traders in south korea trying to reduce their counterparty risk to credit suisse. how significant do you think that risk is at this stage, particularly the vulnerability of the european banking space? fabiana: we are in a better

space than we were in 2008 because the reactions you see from the counterparties stem from their. we learned what to do when something happens in order to avoid counterparty risk and avoid a domino chain reaction. for now, it does not look like this is a fundamental issue. it does not look like there is a credit issue. it looks like balance of three rules were implemented because we are seeing those issues being implemented to the fullest at large banks, but again, sentiment is a powerful driver so we need to make sure the central banks offer enough safety nets and also enough comfort to investments -- to investors that they will shore up, whatever downfall there will be. tom: would you buy european banks at this point? fabiana: again, right now is time to stop, assess what is

happening in markets, not make rash decisions, and try to understand how much of this will be fundamentally driven and how much of this is something that is sentiment and probably going to leave in one or two weeks. tom: and briefly, where are you taking shelter? are you staying in cash, looking to extend long-duration credit? where are you putting money to play in this volatile environment? fabiana: we have been saying to our investors that in this kind of market, we need to have a diversified portfolio. right now from an outside allocation standpoint, -- asset allocation standpoint, we are underweight on equities, very selective, very practical, and a long-duration position stems from the longer end of the u.s. treasury curve because we feel there is some insurance factor in their. it is just a matter of being extremely selective and tactical, looking at long-term

themes rather than making rash decisions on what the latest bank of the day is. tom: selective, tactical, taking a breath and a positive we get more clarity. fabiana fedeli, cio of equities and multi-asset at m&g. thank you for joining us with that perspective. coming up, we take an in-depth look at jeremy hunt has passed fiscal budget. the u.k. watchdog still sees a radical fall in living standards. that is next. this is bloomberg. ♪

tom: welcome back. the u.k. chancellor has put economic growth at the heart of his budget announcement.

joining us for the details is lizzy burden. the main takeaways from the budget announcement? lizzy: in the first phase of his chancellorship, hunt was focused on stabilizing the economy. now he is under pressure to grow the economy, so he has thrown the kitchen sink at it. the main features he is focused on, plucking the holes in the labor market, but even though the office of budget responsibility says the u.k. will avoid a recession this year technically, the economy will still contract. so hunt is scrambling that the measures will pay off by the time of the next election. the other issue is he have -- he has left himself little headroom. i was speaking to the chair of the office for budget responsibility yesterday and he says it is the narrowest margins for any chancellor in five years. we have seen way more than a rise in 20 billion pounds

recently in the shocks. since these forecasts were made, you have had the svb crisis, credit suisse market turmoil, so the forecast is already out of date. tom: an important conversation with the head of the ob are. when it comes to the dividends and politics, is there something from the tory party? lizzy: there are tories that wanted more tax cuts. there are complaints that the complaint -- that the pensions reforms to fit the rich more than the poor. tom: thank you. coming up, we will dig deeper into the credit suisse story after lender taps the central after - [announcer] imagineal bank having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in

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tom: this is "bloomberg

daybreak: europe." i am tom mackenzie in europe and these are the stories that set your agenda. this was central banillion fran, hoping to draw a line under the prices. european and u.s. futures climbed after credit suisse caps the swiss national bank for funds and looks to buy back debt. treasury yields rise. plus, it is ecb day. the recent banking chaos drove rate hike bets down 25 basis points, but will the snb rescue markets? investors are on the fence of predicting a half-point hike from christine lagarde. let's check on the markets. some modest relief. the question is for how long that lasts. we will be zeroing in on the stock trading around credit suisse and its bonds when those start and open for trade. for now, getting a recap of the

asia session. the msci asia-pacific currently down 1%. the banking sector in focus out of tokyo and hong kong. pressure remains for the counterparty risks. futures in the u.s. pointing to modest gains of .3% after the losses on wall street yesterday. european futures gaining almost 2%, the context being almost down 3% yesterday. there is the swiss seen that you can see, gaining versus the u.s. dollar on the back of the news that the snb will be providing funds and liquidity to credit suisse. in an attempt to stem that crisis of confidence, credit suisse has arranged to borrow up to 50 billion francs from the swiss national bank. this sends shockwaves across the global financial system with banks and regulators looking to cut out counterparty risks.

let's bring in francine lacqua as we speak to the key executives as this bank. a wild day yesterday. liquidity problems for credit suisse. is the backstop from the snb enough? francine: at the moment, yes, but if you look back at what happened the last 48 hours, it was crazy. a lot of times we were looking at ourselves and saying, what happens next? this is not as -- svb, this is a bank more embedded into the financial system but also a bank that is well-capitalized. if you look at the difference between svb and credit suisse, it is quite healthy in terms of liquid assets, has access to a stream of central-bank facilities, so the snb came in and said, if you need more because they wanted to put a floor on the panic, and we also heard from the chairman of the saudi royal bank that started all of this and saying we will

not put an extra penny to this, saying that he thinks it is fine. what he was trying to suggest as they did not want to go above 10% as a shareholder because that means a lot more regulatory concern, but there is something in the markets -- and let's be clear, this is not a good bank, but it is not a disaster bank at this point either. because of the panic in the markets, it spiraled. into something that is phenomenal. tom: and the saudis pointing out that they have made these comments before and saying there might've been an overreaction within the markets, but we can read into that what we will. you spoke to the ceo of credit suisse this week. he talked about the fact this is a three year plan, give us time, we see some inflows, i am paraphrasing from him earlier in the week on the back of svb. what are you looking for next and what are executives telling you? francine: i do not know how he can deliver on the strategy. you have a difficult interview

and lasted 10 minutes on wednesday, and 20 said makes sense. he said i have a strategy, i cannot do anything about the share price other than what we are trying to deliver. i am not sure if that is for confidence or not because it is difficult to see what credit suisse becomes. if the next day your main shareholder also causes panic on the markets and the share price ends up 20% lower, what does that mean on execution? we need to know about the outflows. if they have seen a massive leave of outflows, you remember in december that they had billions of pounds that left, and it could be tricky for credit suisse funding. the other thing is what that means for market reaction. you have the shareholders, clients, you need to see what happens with both of them. tom: francine lacqua, thank you. we will continue to be across this story for us that is taking up our attention and focus. let's get more analysis with alfonso peccatiello, founder and

ceo of the macro compass. the outflows from credit suisse the potential focus. do you think the relative calm, and there is a lot of weight being put onto that, on the back of the backstop from snb, do you think it will hold? alfonso: it is hard to say, but i want to step back and grow the perspective on the european banking system, which yesterday focused on credit suisse. people are worried about the need that banks have to sell their assets to meet stressed deposit outflows. in europe, there is already a regulation called the rcr, who forced european banks to own a large amount of assets to meet these outflows. the problem is the value of these assets because interest rates have gone up rapidly and people are questioning whether banks can sell these assets easily and get deposits quickly.

when you look at the unrealized offices and some of these books, especially bonds that held to maturity account were losses are not coming through capital or through the s immediately, people are getting scared. the balance sheet of the bank is not only bonds but also loans, mortgages, and on the liability side, it is funding. the interest rate risk on the european bank runs is the net of the assets and liabilities against how they hedge the risks. irrbb, it is the organization publishing the results, and the numbers are clear. the rise in longer-term interest rates generally takes about 5% to 6% of the capital of a large european bank. it is about 50 or 60 basis points from year one going down. that is it. tom: so there is some

resilience. the question is for the ecb when it makes its decision later today or at some point as to whether or not they continue or indeed they look to offer further liquidity to european banks. whether they market to some holdings or looking to emulate the fed. what is the ecb response? alfonso: i think the ecb today will still hike by 50 basis points. when it comes to the value of the collateral, you are raising a great question. the federal reserve is doing the correct response. if the value of assets is questioned, we are talking government bonds, the safest collateral in the world, the world runs from treasuries, and treasuries are used for repo transactions, everything we know for our system, so if we start questioning the value of that collateral and it comes to meeting liquidity requirements, then we have a problem in the

fed has said, if the treasury is running at 80 cents on the dollar, you can post it to me and i will give you funding pretty cheap. if there is a need for a response like that, other central banks will follow suit paid what happens there is that basically there is a bifurcation until that settles and the bifurcation is the strongest balance sheet companies benefit because you will see the cost to flows. they will see the treasuries continue rallying because that is the safest form of collateral, but you saw yesterday absent and there to plug off the audio and aviation sales issuance once the credit markets buys up because you do not want risk exposure to the counterparties. this is the most important step, making sure the banking system holds the entire system is based on actually holds up. the fed wants to make sure that happens in the market is also reacting such with treasuries

rallying hard. tom: that is interesting in terms of the longer-term applications and we will see whether the ecb takes a page out of the fed's playbook when it comes to market. when it comes to the bifurcation in terms of the counterparty risks, we have seen this from the likes of bnp paribas and others. how much of an unwind to do you expect to see? how significant do you see this being? alfonso: bilateral country party risks in the banking sector is less than 2007. interbank lending markets will arrive at much lower volumes than they had heading into the great financial crisis. most of the lending are on the secure basis on the repo market nowadays. obviously there is some bilateral exposure, and this is

what i mean when we have bifurcated. everyone is getting tapped on their shoulder from their risk manager saying to cut your exposure to any small bank in the u.s. because these guys do not have strict regulatory requirements, so god knows how they will be running the risk management. the same with credit suisse. you will have this reflexive nature of trying to cut your exposure to any of these potential problem lenders, any weak balance sheet exposures, and this will lead to some dry up in credibility for this part of the sector, which also means that on the other end, money will flow to where you are feeling safe, and that is treasuries, bonds. these are the kinds of assets that will see inflows this week. tom: supersmart analysis. alfonso peccatiello, founder and ceo of the macro compass. thank you for joining us on this important day for the global banking system. we look ahead to the ecb rate

hike decision at 1:15 p.m. u.k. time today. the question on everyone's minds is pretty five basis points or 50 and how they address the financial stability concerns -- 25 basis points or 50 and how they address the financial stability concerns. this is bloomberg. ♪ and it's easier than ever to■ get your projects done right. inside, outside, big or small, angi helps you find the right so for whatever you need done.

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tom: welcome back. the european central bank's plan to hike rates by another 25 basis points today has been thrown into question by this week's banking turmoil. it is down from previous estimates of 50. the challenge is to battle elevated price gains whilst maintaining financial stability. let's bring in anna titareva, european economist at ubs. thanks for coming into the

studio. do they go 50 basis points? they almost boxed themselves in, the language from adam lagarde and others, around 50 basis points from this meeting. can they commit given the shutters running through the financial system? anna: the financial concerns have given a new turn to the ecb meeting today with the ecb facing a difficult task of balancing two contradictory objectives of price stability and financial stability. our baseline going into this meeting as they stick to the commitment of 50 basis point hikes, but we acknowledge significant uncertainty and risks around this, and perhaps more importantly, regarding their communication on future policy rate path. tom: maybe they come through with 50. in dovish terms, the terminal rate for the ecb, do you change your forecast for how high they can go? anna: we have not changed it so far. we still expect after the 50

basis point hike at this meeting they will deliver another 50 in may and another 25 in june, but again, we stressed significant uncertainty on the risks around this call and we do need to see how concerns around financial stability develop over the coming weeks. tom: i'm financial stability, do you expect them to be digging through the toolkit to come out with something to address concerns emanating from credit suisse? will they look, for example, to emulate the fed when it comes to the question of how they value these underlying assets or the treasuries, marking to path versus market to market? anna: the response by u.s. authorities has been generous and forceful, but we think replicating this response at the eurozone level is going to be tricky given risksharing concerns and broader hazard concerns. against this backdrop, we think

the first line of defense for the ecb would be easing in terms of collateral requirements and also liquidity provision measures in the form of term funding or potentially emergency liquidity assistance. tom: what is the disinflationary impact of what we are seeing in the banking sector? if loan conditions are tightened, if liquidity starts to ease, broadly lending to the wider economy, is there a disinflationary impact the ecb will have to factor in? anna: a number of ecb speakers have mentioned tightening in financial conditions is a requirement for monetary policy to lead to disinflation, so it will be an impact, but it is hard at this point to give a specific number of what events over the last week means in terms of inflation. tom: what are your current forecasts at ubs for ecb, european, and eurozone?

anna: we are expecting an average of 8.8% and headline inflation will drop to 520% in terms of average, and by the end of the year, it should drop below 3%. tom: certainly uncertainties when it comes to the market sentiment around what is looking like increasingly a banking crisis. we have a sense of the economic toll that this could take under various scenarios on the eurozone economy? is that something you are addressing now were looking at as a team and how it affects your projections? anna: again, it is difficult to say given the noise and volatility we have seen the last week. the crucial point for us, we need to see whether it will be a short-lived relatively contained crisis, or it is going to have broad moves lower. in that case, it could have implications in terms of the growth inflation forecast. tom: switching focus to the u.k.

and the boe response, the budget yesterday was described by the chancellor as a growth budget. does it change your views on the ability of this economy to grow? anna: in general, our take on the budget was the spending pledges were more generous than expected. in terms of potential growth, if you look at the obr forecast, they are optimistic in terms of roof potential. tom: do you align with those? anna: we expect a bigger contraction for this year, and then we expect modest recovery over the next year and a half. of course, we need to question potential growth of the u.k. economy given the negative impact of the aging population. tom: on u.k. inflation, goldman sachs has made a call suggesting if we have further support in terms of energy for households, we could see inflation back down below the 2% target by the end

of this year. is that overly ambitious? do you think we get to that point of inflation in the u.k.? anna: it is not our baseline. we still think inflation will remain above the bank of england's 2% target until 2025. tom: how high above that? anna: by the end of the year, closer to 3% and gradually declining to 2% by the end of 2025, but i have to stress the extension of the energy price guarantee that was announced yesterday on its own effectively means we are not going to get the 20% increase in gas and electricity bills, and on its own, it is worth 90 basis points on headline inflation. tom: anna titareva, european economist at ubs. thank you for walking us through the expectations at the ecb and the boe budget. we will have full coverage of the ecb policy decision at 1:15 p.m. london time. let's get the bloomberg business

flash now with madison mills in dubai. madison: social media stocks rallied in post market trading following reports the u.s. government may ban tiktok. sources say the u.s. has told the app's chinese parent company bytedance they need to sell their shares or face a ban. the u.s. has raised concerns about china's influence over the app. tiktok saying the divestment will not resolve national security concerns. and virgin orbit is said to be halting its operations and furloughing nearly all staff due to funding issues. bloomberg sources say the company is planning an operational pause. earlier this year, its first launch out of the u.k. failed to reach orbit in mishap they blamed on a faulty fuel filter. and volkswagen has unveiled an affordable electric vehicle model that is ready for the european market in 2025. the carmaker says the ev will cost about 25,000 euros and is

just as spacious as its golf model. building and ev affordable enough for the mass market has been the auto industry's main focus with batteries remaining expensive and ev production still scaling up. that is your bloomberg business flash. i am madison mills in dubai. tom: thank you. coming up, we will take a broader look at the continuing fallout of the crisis at credit suisse. stay with us. this is bloomberg. ♪

tom: welcome back. let's take a look at some of the key things markets are watching out for today.

at 11:00 a.m. u.k. time, the office for budget responsibility briefs on yesterday's budget. shortly after, benjamin netanyahu and olaf scholz will meet in berlin, expected to discuss security issues as well as judicial reforms deeply controversial as in israel before holding a press conference and our later. that 1:15 p.m. u.k. time, we get the ecb's rate decision and any language from madame lagarde around the financial stability risks. economists expect a 50 basis point hike, but 25 is also in play. all eyes on that press conference at 1:45 u.k. time. investors looking closely for any clues on the central bank's next moves and their view of this banking crisis. credit suisse said it is planning to borrow as much as 54 billion dollars from the swiss national bank as it seeks to whether a collapse in market confidence. to dive deeper into the market

impact of all of this, let's bring in valerie tytel. how do you characterize the effect that this story has had on the global bond markets and what does it mean for the decision and paint decision for the ecb? valerie: absolutely phenomenal, the reaction on the front end of the german curve yesterday to the fallout of credit suisse. the two year yield on the german curve moved more than we have seen in the last three decades, more than the global financial crisis, more than anything seen during covid, and more than anything seen during the sovereign debt crisis in 2011. it goes to show how much the conviction was in the markets that european banks will struggle on a higher cost of funding, but we need to remind ourselves that the ecb has one mandates, and that is inflation. they do not have a grote mandate -- growth mandate. how far are they from the policy mistakes they made previously?

they hiked right into the 2008 global financial crisis, also hiked right into the 2011 sovereign debt crisis. how scarred are they from the two policy mistakes previously? we way that up versus how it emboldened they are now that this bailout of credit suisse has been announced. does that embolden them to continue on the rate hiking path or not? tom: the historical context for the ecb as they way up the critical decision. bloomberg's valerie tytel on the massive moves in the bond markets. the ecb will be focused on what happens in terms of fund flows. futures in europe pointing to gains of 1.8%. this is bloomberg. ♪ go. go green. go wind turbines. go gorgeous reliable grid.

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tom: