it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. yousef: good morning. this is "bloomberg daybreak:

middle east & africa." i am yousef gamal el-din and these are the stories that set your agenda. starting off with the rba, they pause but warning that further training may be needed so inflation returns to target in a reasonable timeframe. bank of america and citigroup challenge the fed's projections for their future income after their own estimates differed from the central bank's results. plus, chipmakers in focus as china restricts exports of key metals escalating the tech standoff the united states. welcome to the program. happy fourth of july if you are celebrating. cash u.s. equities and treasuries will be closed but we do have plenty of other important indicators of economic data to cut through, starting off with the s&p 500 mini.

originally lower and the two-day performance on the s&p 500, we saw u.k. bank stocks rising and giants lift dividends after the stress test. we sawtek once again outperforming. let's get to treasuries. we have a raging debate between morgan stanley and bill dudley over what is going to happen with the bond markets. we have one view of dudley saying they are looking at 4.5%. morgan stanley thinks the yield curve is on course for 2% or 3% while some describe the bond market selloff is far from over. we call it the long end of the two is the parent -- of the tooth. we are parsing the language that came through from the ecb's novel making it clear that the series of interest rate increases is not finished yet. upside risk to the inflation outlook are seeing -- seen as

predominating. we are at 1.09 on this. let's get to asian equities because they are pulling lowered the session. charlotte joins us from hong kong. what is weighing on the markets over there? >> the session is not looking upbeat. we see a rally and regional equity stake in a pause in a lackluster trading with japanese equities. in japan we have the nikkei down and and south korea they are in the red. chinese equities are unsure and slightly higher as investors seem to be shrugging off concerns with the country's latest restrictions with two key measures that could restrict parts for semiconductors and electric vehicles. the export restrictions are the most serious countermeasures for the u.s. and europe. investors are turning ahead to

look at expecting more details from janet yellen's visit to the country. we also saw the chinese yen strength and for the third day after the chinese central bank set stronger-than-expected signaling it could provide more support to the country's currency. we see the australian dollar decline and stabilized after the central bank had interest rates unchanged. equities swap to again. yousef: thank you for the updates. that is bloomberg's charlotte yang there. time for a roundtable with lizzy burden and kristine aquino. let's start with you in terms of the reserve bank of australia because that has kept interest rate on hold but left the door open to future rate hikes. that is what the markets expected though economists were divided. take it away then, lizzie.

lizzy: philip lowe has reiterated that they are in data dependent mode and that is why we have this staccato tone in terms of the hikes. it has been hikes in february and march and a pause in april. hikes in may and june and a pause in july. the door is very much open to more hikes. yousef: it kind of all adds up if you think about it, this roller coaster ride from the rba and in terms of where that leads us, christine in latter part of 2023, it is anybody's guess. there's no clear to be on the next month or two they month. dashboard to. kristine: they are at the forefront of the various undercurrents and changes to monetary policy. they are a small open economy and have a lots of external factors that they have to take into account in addition to the

domestic situation where governor philip lowe is saying inflation is very much still too high for the bank to tolerate. they have undercurrents from the global trade situation as well. we have china very much still a factor in the australian economy as well as what is happening in the u.s.. it is, the rba its policymaking on steroids. i cannot nv the position that the bank is in at the moment because they are dealing with so much. you can understand why they have had to go back and forth so much over the past few months. lizzy: bank of america and citigroup said fast -- the fed's stress test got it wrong. city says it is too gloomy and bank of america says it is too rosy. yousef: look, when i think about what happened the bank stress test what stands out to me is this whole struggle with getting

clarity and visibility on the health of the financial system in the united states. that story is far from over, and this debate between the fed and citigroup and bank of america needs to be sorted out asap in a year we have already had plenty of surprises right, christine? christine: absolutely and it is difficult for banks let alone policymakers trying to get a handle of how it will shape out for the next six months because at the start of this year, the narrative was that we will all end up in a recession across major economies by the end of the year. then temporarily we had a narrative of perhaps there will be immaculate disinflation that happens. a soft landing or no landing scenario. now we are back to contemplating a bit of an economic slowdown especially in the u.s. we are seeing signs of a bit of cooling

in the manufacturing sector and a little bit of cooling in the job market as well. that remains very robust. i understand clearly why there are so many different interpretations. we have seen a lot of banks step up their watches in terms of preparing for a possible downturn while still hoping for the best in terms of a softer landing when it comes to the economy. at this point, it is anybody's guess. there are so many factors for them to take into account that have yet to play out completely. lizzy: go back to the macro headwinds, out of china, the tech trade war between china and the u.s. and europe is heating up before the u.s. treasury secretary janet yellen has to beijing. you have the wall street journal reporting that the biden administration is preparing to restrict chinese customers access to cloud computing services like amazon, microsoft

but that if they shot back at china for imposing restrictions on exports of two metals that are crucial to the semiconductor and telecoms and ev industries. you have gallium and germanium. that is from the first of august and exports will have to apply for licenses from the commerce department and say who is buying the metals and for what end. yousef: this is not about a limited supply of these two metals around the world. this is about high processing costs in the west getting reliant on china to produce these metals and deliver them at low cost. it raises the bigger debate about the u.s.-china tensions which there are investors out there who keep pointing to the large trades between the two countries and saying there is a need to resolve this one way or another. but these surprises that we get day in and day out how a different story. kristine: absolutely. i am looking at this in exchange and thinking inflation.

the inflation alarm bell is ringing in my head because we are seeing i think more trade restrictions that could potentially result in higher prices because the companies are involved in the crossfire. they have to deal with more red tape and more regulation. i fear that will result in higher costs that have to be passed on to consumers. that will be another thing to watch out for in terms of the economic impact they are and politically speaking as well, when the two biggest economies in the world are not necessarily on the same page when it comes to trade and there are tensions there despite the secretary of state of lincoln's visit to china -- secretary of state antony blinken's visit to china, that is bubbling underneath the service. this will be a bit of a wildcard in the second half of this year in terms of market applications so definitely one to watch. lizzy: speaking of export

controls, saudi arabia says it is going to extend its oil supply cut of one million barrels a day all the way through august and potentially further in order to prop up prices while you have got russia cutting half a million barrels a day. june production for opec was up almost 80,000 barrels a day but supplies are expected to fall this month and you have the opec+ meeting in vienna this week. yousef: there is no shortage of drama with these opec+ meetings or ahead of them. the optics are off for russia and saudi arabia to make a unilateral decision like that hours before the opec+ outcome. it doesn't look good. kristine: it will be interesting to see how that meeting plays out because as you say, unilateral decisions just before a group meeting usually do not bode well. i'm very curious to see what the group outlook is on the state of demand at the moment for crude.

that will be interesting to watch out for. if you look at the saudi's unilateral actions, you would think they are starting to play defensive here and kind of preparing for a worst-case scenario in terms of demand. russia's following suit as well although if you look at some indications of the market, that is not necessarily the case. it is not an outright negative story in terms of demand. i'm curious to see what the collective take is and whether they are bracing for a bit of a pullback in the second half. yousef: absolutely and let's get you a snapshot of what else is on the agenda for the remainder of the day. it is the fourth of july in the united states, a market holiday. the cash equities and treasuries are off-line. they return back to normal business on wednesday but the rest of the world is going to be full on were going to get data out in terms of earnings. sansbury is going to report their numbers as well and we also got spanish unemployment to

get through. i am open to any commentary on any of these issues from you or lizzy. let's start off with any strong views? lizzy: the sainsbury will be interesting because grocery sales have been driven higher by inflation rather than volumes but it is a tough rockets out there. the cost-of-living crisis they you cap -- in the u.k.. the price is profit margin for sainsbury and two states in the game they had to get their hands dirty to cling onto market share. kristine: it is interesting because groceries in the u.k. are very much under scrutiny for their pricing practices. we have seen u.k. mp's growing supermarket representatives a couple of weeks ago and talking about what they are doing to try to keep costs low for consumers.

it makes you wonder really what other industry is going to be in the firing line politically speaking in the u.k. as far as getting them or putting them to task in terms of pricing practices and helping consumers really deal with the cost-of-living crisis that is very much happening in england. yousef: it has been a fascinating exercise. that is bloomberg's lizzy burden and markets today managing editor kristine aquino. let's get you a preview of what else is to come. u.s. factory data set the yield curve near the most inverted level decades. more details on that next. this is bloomberg. ♪

yousef: welcome back to

"bloomberg daybreak: europe. u.s. factory activity contracted in june. that sent a key segment of the treasury yield curve toward the most inverted level in decades. traders are pricing in it for the fed. there is a raging debate on the way. morgan stanley strategists are clashing with bill dudley on the outlook for bonds. the former new york fed chief expects deeper losses on the tenure. morgan stanley believes you might see a rally. bridgewater's co-chief investment officers has investors are too optimistic about the economic growth prospects. he told bloomberg's odd lots podcast that the fed is more realistic than the markets but what it will take. >> my view issue end up with growth is appointing a bit and inflation disappointing on the high side a bit ending up probably bad for bonds and a little bit bad for equities and generally week -- weak growth.

yousef: let's get an additional view from mark cranfield. you have taken a closer look at the technical and fundamental drivers of this extreme situation in the yield curve inversion. run us through what stood out to you. mark: you've got so many moving parts in this one. obviously, there are people who are still concerned that the fed is going to keep rates too high for too long. that will cause a hard landing in the u.s. economy and possibly driving the u.s. into recession and that is partly why you have such an inverted curve at the moment, the most we have seen in many years. of course, expectations of the recession in the beginning of the year and that has been pared back a bit now. they had been pushing that way into the next year and we have not had signs in u.s. data that a recession is imminent. but people are maintaining that

position in the long end of the curve of this discrepancy. you also have a lot of people targeting yields on the long-term investment basis. we have not seen 10 year yields in the 4% area for such a long time that you have a number of funds around the world to what to lock-in -- want to lock in that return. if you see 4% yield in treasuries, the corporate bond space will be even higher between 5-6% between what credit category you're going to. a lot of people are loading up and fixed income investments in case yields fall suddenly again. as we have seen many times over the past two decades. you have both factors at play in the fed to be more hawkish in the past few months adjusting rates can go higher than the 5.5% threshold. yousef: the ecb is not far behind and i was listening to commentary from welcome naugle

-- joachim nagel saying there's more work to do. how do you factor that into the valuation around the euro-dollar as it stands or european bonds? mark: in terms of the currency, people see that the fed has been the bigger threat and it is more likely to come through with any movement in rates. jerome powell last week saying there could be two or more rate hikes to come. the credibility of the fed's and that respect is a bit higher. people can see that european data is not meeting expectations and is below par. if anybody is going to get -- give in first, it is more likely to be the european central bank who do not follow through with rate hikes have been talking about. from that point of view, the upside the euro is hard work. it does not mean they cannot rise but traders will be more skeptical that the hero can go up against the u.s. dollar because of the outlook for the

relative interest rates. yousef: one of the things you wrote about this morning's the dollar yuan pair that got a smack down. how is the pboc going to proceed in light of what we see from the fed and tv? -- in the ecb? mark: the chinese central bank has done this axing. we have the daily yuan axing and they will set a rate -- fixing and they will set a rate to where expectations are. they set a value on rate well below expectations, more than 300 pips below but what we saw last year as they needed to keep this up for a long time and did it for a few weeks. eventually, we had fixing that were 900 yield estimates. we are only at 300 at the moment. there could be some way to go. the chinese central bank wants to slow down the weakness in the currency but have not yet drawn an absolute line in the sand.

they're holding back from telling the traders that we cannot take this anymore. these are big warnings in the market is taking notice. we are seeing a bit less activity in dollar yuan trading but for now, the pboc has not yet said that is it and we cannot stand this anymore. yousef: mark, can i get you to a and on the bank of america and citigroup story that there is a debate between them and the fed around the stress tests and what they should be measuring and why the results are not matching up? mark: yeah, one of the issues here is for some reason, some of the banks did not think enough about raising interest rates. this is part of the whole problem going back to even the issues we have had with svb earlier in the year and banks in general. for some reason they were focus on the fact that the u.s. economy may be would slow down

abruptly. there might be extend inflation, but did not take into account weekly rising interest rates which has been probably the most damaging factor for the banking sector overall. people are trying to unwind what it means for the future particularly as we are not sure if interest rate cycle is finished yet. this is what is complicate in the issue for people as how much further interest rates are going and how much did they miss estimates from before about when they should be putting the cap and should be a 5%, 6%, or higher? where is the top for short-term u.s. interest rates? yousef: we are looking at the numbers now in the difference for net income before taxes, the differences are meaningful and we will see what comes from these discussions. that is bloomberg's mliv strategist mark cranfield. let's get a snapshot of what else is on the agenda. the central bank of australia

holds rates. we will take a look at that in market moves. this is bloomberg. ♪

yousef: welcome back to "bloomberg daybreak: europe." let's take a look at crypto assets. we are seeing quite a bit of resilience in bitcoin and etherium. bitcoin at $31,000. it was a lot news flow coming through the prices of nfts baird they collapsed over the last week as prices of major collections tumble. according to the crypto data platform parsec, floor price for a suzuki collection dropped last week and the board eight yacht club and mutant eight yacht club and pudgy penguins have dropped.

on the other hand you had blackrock which refiled paperwork for u.s. regulators to add new details to his proposal for an exchange traded fund that invested directly in bitcoin. documents filed the nasdaq indicate that coinbase global will provide market surveillance in support of the proposed etf for the world's largest asset manager. fidelity and invesco are among those who applied for a spot bitcoin etf. france has seen relative calm on this six night a protest over the fatal police shooting of a police made fewer than 160 arrests on monday down from over 700 the day before. authorities cap 45,000 police and special forces deployed to calm riots as president crime will meet mayors of 220 towns affected by the unrest leader today. israel has launched its most intense military operation in the occupied west bank into decades. it carried out a series of strikes and sent hundreds of

tubes on an open-ended mission into what it calls a militant stronghold. nine palestinians were killed and wounded. a quick update on yahoo! as well. one the biggest names of the 90's.com boom should return -- could return to the stock market. the ceo told the financial times the tech company is ready to list again seven years after it was acquired by verizon. progress was made in sri lanka and the investor reaction a big pop in stocks. this is after a three day holiday and the imf agreement in place. i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey!

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all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> good morning this is bloomberg daybreak: europe, the

stories that you are waking up to. it hawkish because the reserve bank of australia keeps its interest rates on hold but leaves the door ajar to future hikes. they say inflation is still too high adding household consumption is one of the key areas of significant uncertainty. two of wall street's largest lenders challenge the fed's projections for their future income, bank of america and citigroup say they are in talks with the central bank after its annual stress tests show results are different from their own forecasts. the fed projections was rosier than bank of america's but gloomier than some of citibank's forecasts. china is striking back at the u.s. and they are escalating their trade war with export curves on chipmaking from august exporters of gallium and uranium will need to apply for the commerce ministry licenses. they will be required to report details of overseas buyers. plus saudi arabia is expected to extend its unilateral output cut

for another month as markets remained pressured by economic fears. plus russia also announced fresh curbs on exports hitting 500,000 barrels a day in august ahead of an opec-plus meeting in vienna this week. remarkable events, it is july 4 a public holiday in the united states. if you are celebrating, congratulations. the rest of the world still plenty going on. this get you a snapshot of broader risk appetites. cash equities and treasuries in the united states are closed, this is the performance over the last two days. we sought u.s. bank stocks rising with some of the giants lifting the dividend after the stress test, there is a big debate out on the treasury markets and i want to show you where we stand with u.s. 10 specifically. you've got morgan stanley challenging bill dudley on the view that the bond market losses are set to deepen, instead of heading to 4.5% which is the view of dudley, morgan stanley thinks the yield is on course for a range of two to 3%.

the selloff may be far from over but they disagree, they call it long and the tooth. u.s. 10 euros 385. i want to get to the other important board here in the fx markets this is your euro-dollar trade as we reflect on the commentary from the european central bank saying there is still quite a bit more work to do and there are risks to the inflation outlook to the upside. euro-dollar taking a marginal leg lower by about a fifth of 1%. let's stay with the central bank theme and get to australia because the rba has held its key interest rate at 4.1%. they are saying the pause would allow it to assess the economic outlook and some of the risks. for more we are joined by bloomberg's mark cranfield. this is hardly a surprise, what would you point to is of significance to help us understand what the remainder of the year could shape up to be?

>> some people are calling this a hawkish hike from the rba although the australian bond yields have come down since the decision was made so it does look as though bond traders believe that. i can see their point of view, if this was meant to be a hawkish hike they needed to put some new language in the statement to suggest they were going to be more aggressive in the future. that was not there it was almost a repeat of the previous statement so although they have left the door open to higher interest rates they have also been quite neutral in the way they have addressed that. from that point of view given that their communication equities are not that great i think traders will really not be taking any major decisions based on what they have heard today from the rba. they will be watching the data coming up there is a quarterly cpi report that comes out in two weeks, that is extremely important for the australian market. last week we saw the monthly cpi came in below expectations so if this quarterly number is a benign number if it comes in

somewhere close to where expected people will start thinking the rba is done. they have reached their peak rate of 4.1 and they are going to be holding it there for some time. they certainly have the bond market -- it's how they are interpreting this decision. if that is the case it will lead to more downward pressure on the australian dollar as we go to the next fed hike because the difference between fed rates in the rba is starting to get wider again. >> i was going to follow up on that in terms of the trajectory of the aussie dollar. ultimately you have treasury yields on the short-term side of things that are running higher than the aussie dollar curve, what else could play a prominent role in determining where we go short-term? >> obviously you have got the fed speakers, the language they come out with, anybody else from the rba who may come out to speak. really it is where traders think the inflation curves are going to go from here.

there's probably more chance of the australian inflation curve more stable than the u.s. curve. if there is going to be any accident coming in the next few months it's more likely to be from the u.s. particularly as they have been so prone to putting cap downs on chinese business and putting themselves in a difficult position in terms of the tech sector as well. i'm australia's point of view they are probably seeing the worst already, they've got a more stable employment situation with numbers coming out from the u.s. in a few days date -- days time. they are likely to be strong, if you look at the divergence of where data is going in the near term it's more likely to favor the u.s. dollar than the aussie dollar. >> i know you have a lot going on so thank you for making time and staying longer to reflect on the rba. that is mark cranfield there. let's get to the tit-for-tat technology clash between china and the west because that is escalating. beijing will impose export restrictions on two metals

widely use in the semiconductor industry but also telecoms and electric vehicles. furthermore we are joined by our asia government reporter. talk us through the significance because it is not so much the availability of the metal but the fact that it is produced at a cheap cost in china. that is the issue. >> absolutely china does dominate both of these two key metals. something like 94% comes from china, 84 for 8 -- your -- 84% for geranium. if they are important when it comes to supplying these models at a cheaper cost. the risk here for china is these types of measures backfire in a similar way to what happened when china tried to restrict its export of rare earth metals back in the 90's. essentially supply chains diversified away from china china's market share significantly diminished.

that is the risk here particularly for these types of sanctions. more broadly i think it is significant that alongside this tit-for-tat retaliation elements that analysts are pointing to their is a broader signaling from china. that china is increasingly willing to fight back and willing to push back against these attempts by countries that explicitly label china as a strategic competitor. you can see that, in the news that came last week about china's new sweeping foreign policy law that essentially brings under all a single framework. it china's attempt to push back against the u.s. and its allies. >> came as a surprise to me that these metals aren't available on their own in nature they are a byproduct of illumina and zinc's of the mainstream refineries, in terms of the trade relationship. the wall street journal is

reporting that the u.s. is seeking to restrict china's access to cloud computing what do we know? >> absolutely, there were whispers of this towards the end of last week but not a lot of detail. that was partly why we saw that pain by nvidia, some of the other u.s. chipmakers. we now know according to the journal is reporting that the u.s. is considering limiting access of cloud computing services to chinese firms that will include potentially the services provided by amazon and microsoft. it is interesting, there is a similar risk for the u.s. here that when you introduce these types of broad restrictions that actually it incentivizes the target nation or companies that innovate and find ways to get around these types of restrictions. there does seem to be an attempt or focus on some of china's dual use technologies. it does not seem to specifically outline military or defense

industries, again pointing to this area that the u.s. has struggled to target. it chuckles big emphasis on defense of military technologies that originally originated in the private sector in civilian uses to. >> excellent analysis, thank you very much for joining us. bloomberg's rebecca jane williams, let us talk about saudi arabia. they are going to prolong the unilateral oil output cut of one million barrels a day through august. warning it may extend further to prop up oil prices. the opec-plus ally russia also announced fresh curbs on exports, cutting 500,000 barrels a day over the same period. for more we are joined by bloomberg's christine burke, when i go to the gym i do not see this much muscle flexing. what is going on? >> that is an interesting point. saudi arabia and russia are flexing their muscles at an interesting time because we are

going into the second half of the year. this is a period where global oil markets are widely expected to tighten, the iea is forecasting we will see a self ply deficit of 2 million dollars a day emerging over the next six months. the fact that saudi arabia and russia are now announcing these extended supply curbs at this time, it just goes to show how committed they are to their effort to prop up the oil market. when we look at what this actually means for supplies, saudi arabia has extension of that unilateral curb of one million barrels a day into the month of august means that the kingdom will be producing at a level of about 9 million barrels a day. that is some of the lowest levels we have seen from the kingdom in the past several years. rbc has also said that extension of that cut means that opec production levels will be the lowest since 2021 over the third quarter. when it comes to russia it would be all good and great if we do indeed see a reduction in

exports and production but i think there is some question around that. i think now the question is does russia follow through and what does the actual supply demand dynamic look like. >> i have a different question here and it is about the lack of response in a repricing in brent and wti. they are pulling out all these barrels from the market and we are barely holding up here, what is happening? >> it is quite interesting the way the markets have been reacting, saudi arabia making some bold moves and not really seeing the results that it wants in terms of a financial gain. i think the markets yesterday got that initial pop in response to the news when it dropped but then those gains completely fizzled out. brent and wti both finished the session lower and today you are seeing pretty modest gains. i think what that underscores is we are looking at a market that is more concerned with the

global macroeconomic backdrop then they are with supply demand fundamentals at this point in time. there is so much doubt out there about the path of interest rates and what that means for global demand, and china specifically. i think the reality is that continues to dominate, maybe let's see what we get out of the opec seminar that is kicking off this week in vienna. see if anything comes out of that that may boost the market or drag a lower. >> it is not about whether anything comes out of it, something will come out of it and it's probably going to be dramatic and something we can't script. of course we will check in again with you. that is bloomberg's christine burke, i will get to another important story here getting a lot of traction around the stress tests involving bank of america and in city avenue. there is a bigger debate in peers between then -- them in the fed about projections of

future revenues. we have broken this out on the table to show the differences and it is based on different categories. that includes your pre-provision net revenue, some larger different -- differences in the goodwill impairment and on the net income before taxes as well. the two did not really want to comment beyond that they are having discussions with the fed about some of the items and some of the testing but it of course raises more questions about whether these stress tests are sufficient, whether they should be tougher, some industry groups have been trying to push for a major overhaul. today bank of america has been the focus of course, underperforming at some of the benchmark indexes. let's get you a view on some of the other things that markets are watching out for today. specifically, we've got the first thing that comes to mind is the holiday in the united states. that means that you are looking

at independence day, but lower volumes and lower liquidity with cash markets and u.s. equities in treasuries. they are shot, they resume on wednesday. in london and across europe most markets are going to be open as usual. paris host the euro plays financial forum we have a number of interviews from the event today. that includes a conversation with the bmp chairman happening at 8:40 u.k. time. then at 2 p.m. you've got the british prime minister rishi sunak due to appear before the parliament's liaison committee, he is likely to face questions on tainted water, the cost of living crisis and the war in ukraine. here is what is coming up, esg dilemma. funds that piled into green bonds sold are now trying to figure out a way forward. we will bring you that story next, this is bloomberg. ♪

>> esg funds that piled into green bonds sold by thames water are faced with a dilemma. it comes after a string of environmental social and governance disasters amid u.k.'s biggest water company joining us for now is esg managing editor. tens water has a lot of bond water -- bondholders but this is also about green investors who sought out the company's debt in order to fill up their esg portfolios. what is going on? >> exactly, being able to identify more than 200 esg funds that are specifically sourced out tens water because of its green bond program. it has issued about 2.8 billion euros worth of green bonds since 2022 and that was a time when the news headlines were fairly full of stories about sewage

leaks so it is not as if one was unaware of what was going on at thames water. the issue with green bonds is the proceeds specifically go towards green proceeds so buyers of green bonds have been able to claim they are looking at the specific way the proceeds are being used but there is a growing debate and i think teams water brings it to the four around the question of contaminating the environment. is it legitimate to be buying green bonds from them even if those proceeds are going towards substance of lee green projects. >> what are some of the takeaways for the broader esg debt market here? >> i guess it is precisely that question, the green bond market is by far the biggest esg debt market about 2.7 trillion dollars worth in the market is being in demand, it has been growing this particular esg fund category and article nine, the greenest of the green and there

has been a particular demand for green to bonds to fill those portfolios. but there has been an awareness that those green bonds are being issued by entities that aren't necessarily themselves green in their wider business. their carbon footprint is not necessarily declining and in the case of teams water there is specific ongoing environmental damage and in the case of terms water there is a government issue that one could put their finger at any social issue. u.k. residents are now going to be facing potentially higher water bills in the context and the cost of living crisis. on his gut the full range of esg issues and yet one is an investor who has specifically tried to protect themselves from those issues with these green bonds. >> this has been exceptionally insightful thank you for that, now in more esg news from the atlantic coast to the sun baked

central plains of spain it ramps up over 18 billion euros in green hydrogen investment. it is europe's most ambitious effort yet in an effort to get technologies critical to the world's first climate neutral continent but will there be demand for that? bloomberg's roderigo joining us now for more on this critical question. where and how is this money being spent? >> at this stage most of the investments are going to develop the plans and to get this industry up and running because it is still very much in its first phase so the money is being spent where there are areas of solar production, a key component for green hydrogen. the idea is that this will be able to serve the local market and also be exported to other parts of europe. the money is coming from private companies and critically from eu funds and spanish government funds.

>> straight to the point, that is bloomberg's expert on the subject, we still have much more to come, this is bloomberg. ♪

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>> joining me now is bloomberg's tom mackenzie with a look at what is coming up on markets today. >> we have some really great guests, when you come to think about the bond markets and specifically the gilt markets here in the u.k., there are few people who really move the needle more in terms of the attention, particularly on the bloomberg terminal. doubting of rbc asset management, he has a call that these markets are pricing into many hikes in the u.k.. from the boe, we are going to get his views on why he thinks

that's going to unfold and why he is taking the position in short dated gilts. the other question we are looking at is the tumult unfolding when it comes to thames water usage. there is political controversy, it is a major utility. the dominant player supplying water to london and of course it faces potential nationalization. we will be speaking to the u.k.'s former business secretary, someone who has very strong opinions on the privatization of some of the uk's utilities, but also the role of private equity as well. >> talk to me about luminaire in france, what are you getting on that front? >> you have this big event unfolding in paris around a lobby group to try to build out the view in the footprint that paris now has as a financial hub. at the same time you can see the pictures on the screen, these protests have rippled across the

country. we are going to speak to the chairman about his views on the economic damage that these protests are having and the potential offset given that paris has done really well in attracting some of the big investment banks to play in that capital. we are going to ask him about what they are going to do with their balance sheet, they are the leading invest -- investment bank in europe right now and have a sizable balance sheet and how he thinks they're going to put that to play. he rarely speaks the chairman of bnp and i think it's going to be a fascinating conversation along many of those themes. >> really looking forward to it thank you for that. bloomberg's tom mackenzie, he is going to cover the markets today program. let's get you a snapshot on where we stand in terms of risk appetite. yes you have u.s. and other equities in focus. on the u.s. side those are

off-line because of the holiday in the united states, this is the s&p 500 over the course of two days. the story to me is in treasuries where we still have a raging debate going on between morgan stanley and bill dudley. is the bond market loss going to get worse or better. related to that on the monetary policy side is australia but then you're up front and center with the ecb remarks. euro-dollar at the market went at you -- 108. tom mackenzie's going to take you through the maze that is the global markets map, much more ahead, this is bloomberg. ♪

>> this is bloomberg markets today i am anna edwards live in london with tom mackenzie. let us take you thro