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.

-- going from potentially janet yellen all the way to raphael bostic. what that translates to is some pressure. the european open. u.s. futures as well. no green on the screen. it's a worrisome market right now. a lot of people repricing some of the cross asset reaction. we are seeing a lot of moves in the treasury space. the 10r yield higheb three basis points. all a function of what you are seeing further out i te curve. u.s. 30 year yield. almtat that 5% level. we will no doubt abo hat but

that's what you need to know. the lack of plumbinility there seems to be -- i shoud say we see continued strength. now you are seeing a pullback in the mexican peso. you will s to see a lot of the rik ppetite diminishing around the wl. em currencies are the first to get hit, creating aeling -- tailwind for the dollar. the super peso conversation we'vebeen hearing. brent crude, lack of risk appetite right now. brent true trading in line with what you are seeing across the board. that's your cross asset equities picture around the world. let's see how asian markets are faring at the moment. ava hung standing by with that story. walk us through the asian narrative. >> we are seeing how the accelerating selloff in u.s. government bonds is starting to spread havoc across asia's financial markets, among other

things. it's causing the ms eias or pacific -- msci asia pacific head toward correction. losses led by south korea as markets come back online after a long break. cosby down 2%. all sectors underwater. declines led by industrials, consumer discretionary, and the impact on the market is not just in the stock markets. it's based on what we saw on the u.s. jobs opening data. it prompted moves in the japanese currency. let's recap what we saw in the end overnight. it bridge that 150 level against the greenback during trade. very quickly moved back to that 147 level. this prompted speculation that japanese officials had stepped in to prop up the currency. the country's top currency official so far declining to confirm if there was any intervention. worth noting that that move to

bridge 150 was a matter of weakness, which tells us that if there was any intervention, it might have been prompted more by the fact that it reach that psychological level more so than the japanese currency. that has prompted these fx moves across the asia pacific. central bankers have come up with commentary. we are seeing that from south korea and taiwan as well as in other parts of asia. southeast asia, malaysia central bankers coming out with commentary about the fx moves. we are seeing the bank indonesia for once, helping to study the rupiah exchange rate. certainly these moves in the fx space are prompting not just investors but also central bankers to set up and take action. >> a lot of worry in asian markets. that's not helping as it is

compounded by the bond story. time now for our top stories around the world. reporters joining us this morning. valerie ty tell right here in london. let's start with that market story. we just talked about the red on the screen. talk to us about how rough this selloff could get. >> treasuries yesterday got hammered. it was one of the worst sessions for the treasury market this year. i could not take my eye off this bare steepening move. what we are seeing in the long end and it's extending in the asia session overnight which is more surprising and is not coming to an end in those 30 year yields creeping ever closer to 5%. the steepening is absolutely relentless. we are seeing generations around the world in this bond market. a lot of this reaction yesterday was really pushed forward by that hot jolt data which saw the

job openings, a massive beat in those job openings which has driven us to believe that this u.s. economy is still too hot. it's not slowing down. we are seeing 30 year yields search on the back of it. this chart is showing how much momentum the 30 year yield has. it's joining more than a percentage point above its 200 day moving average. if we look at the two 30's curve , ever since the fed meeting, it has deepened over 55 basis points. that meeting was only two weeks ago. >> seeing a 30 year yield at 5% is pretty crazy, i have to say. talk to us about the ripple effect. has that trade blown up? >> we saw wobbles in the credit market yesterday. my eye was on the investment-grade credit. we saw those spreads widen at nearly 50 basis points

yesterday. the average yield on investment-grade credit reach ties that we haven't seen since 2007. we are seeing some wobbles happen within the credit market. that's the one key concern. does this treasury yield search start to bring on a wider credit widening phenomenon? that won't just impact the u.s. but also here in europe. perhaps those italian boomed -- bund spreads as well. financial conditions are tightening. the strengthening of the dollar has seen the bloomberg financial conditions index fallback into tightening territory which has not been since earlier this year. this will be a key thing that i think the fed members are going to have to message, change their messaging sometime soon. will any of these fed members admit that the surgeon treasury yields is doing some of their work for them to tighten financial conditions? maybe they start to be less adamant about that next hike

that's reflected in the dot plot by the end of the year. >> a lot to digest. it's interesting that the supply story has come front and center at a time when a lot of people said, maybe the market is able to digest it. everything was in the all there. not so much. the really accelerating bond selloff. energy is exciting for the people who get excited about the bond market. also for those who get excited about the cross asset story. compounded by the threat of a u.s. government shutdown, november 17, here's what doesn't help. the third person in line to the presidency, kevin mccarthy, ousted by the gop in a truly historic moment for u.s. politics. take a listen to what he had to say. >> i believe i can continue to fight, maybe in a different manner. i will not run for speaker again. i will have the conference pick somebody else. >> bloomberg -- a historic

moment in u.s. politics. never anything boring out of d.c.. what are the ripple effects for the economy and budget? >> look, i will tell you, certainly historic but maybe this is something we should've seen when it took 15 votes to get kevin mccarthy to hold that gavel back when he was elected speaker earlier this year in january. at this point, there's a lot to be concerned about here. two key dates. one of them, november 17. that's essentially mccarthys swansong as speaker, getting that extension past to avert a government shutdown. kick the can down the road so that's when we will have to revisit this issue before we ultimately see the government shutdown. the second day is october 11, when we will see some votes start up to decide a new speaker. at this point, congress is

essentially adjourned. they can't do anything until they hold the house speaker votes again. we are at a standstill here. at this point, there will be a lot of pressure on whoever the next house speaker is to get something done. on the republican side, to avoid providing any more funding for ukraine, there's a lot going on here that has yet to be resolved. we will have to see what comes of those potential speaker candidates. it's a wide-open race at this point. whoever ultimately takes the role has this incredibly difficult task of uniting republican hardliners with the rest of the republican-controlled congress and ultimately trying to see whether we can avert a government shutdown as we get closer to that november 17 deadline. >> something that's already worrying global wall street, calls overnight out of goldman sachs. eurasia group and ig saying, the odds of a government shutdown have increased. now those odds of bipartisanship

look even less likely. that crucial update this morning. she joins us back later in the show. we go from the u.s. to the u.k. because politics are centerstage here as well. the prime minister taking the stage at the conservative party contrast in manchester. lizzie burden is on location. she's all over that story. it looks like a really backbreaking moment for the prime minister. what's at stake here? >> you are absolutely right. the pressure is on the prime minister in this speech to unite the party but also inject a bit of inspiration into this conference hall. he's taking the stage at 11:45. we are expecting him to lay out his plan to fundamentally change britain as he will put it. we are expecting that to include an increase in the age for smoking, but also plans to scrap hs to.

after so much provocation throughout this conference, this issue has sucked the oxygen out of the conference hall. every industry -- interview that ministers have done, is the high-speed nailed -- rail network. what you will see -- there's a sense that cramping -- scrapping this long-term conference, long-term decisions for a brighter future. fundamentally, the trouble is the conservatives have been a government for 13 years. to present himself as a long-term change candidate is a tough ask. he really has been struggling to make a serious dent in the pole gap that puts them behind the opposition labor leader and the opposition party. this is the moment for richie sunak to put inspiration and. many delegates have already gotten the last train back to london because there's already a rail strike ongoing.

>> the timing is not on the prime ministers side. we will continue that u.k. conversation throughout the morning with key guests including the u.k. defense secretary joining us on tv at 9:30 a.m. u.k. time. let's get a quick check on the things that are on the docket for the day ahead. poland's rate decision is top of mind. the currency story is really interesting here. to what extent does that create some need for intervention or slow down in the polish central bank? keep an eye out for that. the u.s. data matters as well. we get eyes on services numbers. one more puzzle piece for the federal reserve. that's coming up at 3:00 u.k. time. at the core of the story is inflation. that brings us to the opec conversation. opec meeting kicking off today as well. one of their sessions happening throughout the day.

we will track oil prices for you. brent treading shy of $91 per barrel. a full round up of the stories that you need to know to get your days going. she i y b is all you need to type into the daybreak inal. you will be able to get some o your top stories and really crucial analysis. more of that on the show as well i'm a coming up. oil studies ahead of an opec plus review of global crude markets. we discuss what to expect. the interview with the indian energy minister, crucial for your trading docket. stick with us. this is bloomberg. ♪

kriti: welcome back to daybreak

europe. india's oil minister has said crude prices need to fall to around $80 a barrel to be good for consumers. we heard from the sidelines of the summit in abu dhabi. >> there are parts of the world where the rising oil price is going to create organized chaos. i would say devastation. in the last 18 months, increasing prices have put 109 people into abject poverty. there are parts of the world that is in recession but flirting with recession also. the up and another quarter slightly down. it is an interest of all countries including producing countries and consuming countries to have a healthy discussion on what constitutes a reasonable price cap. >> i want you to speak to

diversifying sources of your imports. you have made it clear you're going to go out there and find the cheapest barrel for indian citizens. where is that today? >> we have said all along that our companies in the private and public sector will buy wherever they get the cheapest barrel. they have done really well at that. there was a time that the 5 million barrels we consumed every day and there are five or six countries which were each selling us 800,000 barrels a day. the restriction came and some went up and some down. yousef: last month to make clear there was potential that some of the imports from russia could be lowered substantially. >> all yes. the data we have been looking at says it was a seven month low in shipments according to the data that they have been monitoring of the cargoes. is that the case? >> you and i and the data you

are citing all agrees on one thing. it depends on the discount. it is entirely possible that the country would treat but nothing will suddenly be our supplier which is the case with russia. kriti: let's get more on oil ahead of the opec+ review of the global crude market. we are joined by yousef gamal el-din. walk us through the debate happening in the opec space right now. yousef: it was a rite of passage getting from the oil conference back to dubai. it finished very late and because it was so busy it felt like a pilgrimage making the right home. going into the joint ministerial monetary committee meeting, this is going to be about what is holding up. it has always been the concern of opec+ that demand is fragile and the recent move lower and brent and wti speaks to the narrative. we had a raise up to $100 almost

and we have given back a lot of that. we are barely holding above $90 a barrel at the moment. the other wildcard as a sit down in the coming hours, even though no change is expected and russia and saudi arabia will lead with unilateral cuts until the end of the year, the real question is going to be how much more additional barrels are coming from countries like iran, and nigeria. i caught up with the energy minister of nigeria at the sidelines and here's what he had to say. >> right now, without additional investments, nigeria can produce up to 2 million barrels. i will give you an example. in 2020 during covid without doing anything, nigeria increase production to over 2 million barrels. why? because there was no market for expired yousef: you got a straight shot from nigerians

potentially to 2 million barrels a day and beyond that, they are looking at investing in because -- expanding capacity. in the new year they will try to figure out the quotas which the united arab emirates is also doing and many other opec countries probably looking at similar strategies. the other thing to look out for today going into tomorrow will be the data from the eia in the united states and inventory scared how much resilience will be see or is there an inventory buildup that is beginning to emerge? that is something that is likely to happen. they are looking at $450,000 build in the last week that will be the biggest move in about seven weeks and will give us another angle to better understand the health of the consumer side of this equation which is something the indian energy minister felt so strongly about. kriti: the idea that inventory is perhaps coming back online at a time and spare capacity has been a major issue in terms of meeting quotas is crucial.

yousef gamal el-din with that crucial update. let's get to other stories we are following from around the world starting in kenya. the central bank has kept its benchmark interest rate change for second meeting in a row as a forecast for the monetary policy. the committee expects inflation to remain within the 2.5-7 .5% target range in the near-term, all helped by lower food prices. it has depreciated 70% against the dollar on track for the steepest decline since 2008. the reserve bank of new zealand has cap the official cash rate unchanged at 5.5% as economists predicted. rates may need to remain restrictive or longer to return inflation to targets. adding to uncertainties, new zealand holds a general election in 10 days could see a change of government. the blockbuster trial of sam bankman-freid is underway almost one year after the collapse of the ftx crypto exchange that he

cofounded. that story next. this is bloomberg. ♪

kriti: the blockbuster trial of the u.s. versus sam bankman-freid is officially underway almost one year after the collapse of ftx crypto exchange he cofounded. bloomberg's kailey leinz has more from new york. >> sam bankman-freid trial began in manhattan on tuesday where he is facing seven charges related to fraud and money laundering. the tribe began -- the trial began with jurors who were evaluated for bias so they can decide his fate. sam bankman-freid was present in the courtroom on tuesday and had a shorter haircut. his signature mop of curly hair

was gone. he was wearing a suit that was too big for him. he may have lost weight while in detention at the metropolitan detention center. this case centers around the implosion of ftx and alameda research and the crypto exchange and separate hedge fund both of which he founded. prosecutor said he orchestrated one the biggest financial frauds and u.s. history and misused customer funds for risky investments, real estate and political donations. prosecutors will be aided by three key witnesses which were his closest associates at the time this went down. the cofounder of ftx and the head of engineering and his ex-girlfriend and former ceo of alameda research. all of them have pleaded guilty to charges and are cooperating with prosecutors. the defense will likely argue that sam bankman-freid did not intentionally commit fraud. this is something he has said repeatedly in the lead up to this trial. he has pleaded not guilty to all

charges. the trial is going to take some time to play out and could last up to six weeks. if he is convicted of these seven charges, some of them carry large maximum sentences of 20 years for five of the counts. it is possible if he is found guilty that sam bankman-freid could spend the rest of his life in prison or be sentenced to it at least. kailey leinz at the federal courthouse in manhattan for bloomberg news. kriti: sticking with trials, coming up, kevin mccarthy is ousted as u.s. house speaker in a historic vote in u.s. politics. more on that story next. this is bloomberg. ♪ nice footwork. man, you're lucky, watching live sports never used to be this easy. now you can stream all your games like it's nothing. yes! [ cheers ] yeah! woho!

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>> good morning and welcome back to "bloomberg daybreak: europe." i am kriti gupta in london. stocks in slump. stocks around the world dropping in reaction to that continued pressure on the long end of the treasuries market. 30 year yields surging. testing 150. the yen spikes but japanese officials refused to say whether or not they intervened to bring stability into the fx market. fresh turmoil in washington as kevin mccarthy becomes the first ever house speaker to be removed from his post, increasing the odds of a u.s. government shutdown. a lot of crosscurrents. that doom and gloom showing up in futures trading. you see right on the screen. the selloff slightly worsening in the u.s., where you see a bit of a selloff easing in european futures. when we started the show, it was down about 0.3%.

the worsening selloff is showing up in nasdaq 100 futures in light of kevin mccarthy and the turmoil in washington. the u.s. may feel even more pressure. let's go cross asset. the bond market top of mind. yields continuing to sky market already higher by 4 basis points in the european session. again, that in version is getting steeper and steeper. the u.s. dollar is a really interesting dynamic. as you see yields strengthen, the dollar strengthens as well. the exception is dollar mex right now. the mexican peso takes a breather, except for right now, where you see the 18 handle. it's your biggest contributor to the action in the bloomberg dollar index. brent crude just shy of $91 a barrel. that's your cross asset picture. let's check in on asia. avril hong standing by in singapore. >> we are seeing how that

acceleration of the selloff of u.s. government bonds is really causing and starting to spread the pink across asia's financial markets. there is havoc, recalibration. the msci asia pacific is headed for technical correction today. the losses being led by south korea's kospi. as markets come back online. the sectors are all in negative territory, led by the consumer discretionary sector. it's not just pain in the stock market we are seeing. the jolt also being seen in the japanese currency overnight in new york trade, where we saw the yen spiking past the 1.50 level against her greenback.

that weakness brought it above the 1.50 level, which suggests if there was indeed intervention, as some traders have been speculating, despite with the top currency official has said, that might have been more a key catalyst than breaching of the 1.50 level. we are not just watching the japanese officials commentary, we also got commentary from central bankers in south korea and taiwan saying that they will step in to stabilize things in the fx markets, if needed. closer to home in southeast asia, we got comments from the central bankers in thailand, malaysia, indonesia. bank indonesia saying it is buying bonds to steady their currency. you can see how the recalibration in financial markets and the big moves in fx actually prompting central bankers to sit up, take action, pay attention. kriti: a really kind of

terrifying space in the em world as the risk appetite around the world kind of abates. you see central bankers spring to action. avril hong with that crucial market update. i want to stick with the asian story, bring you some of the stories we are watching. softbank's billionaire founder has urged japanese leaders to embrace artificial intelligence to avoid being left behind. he said not using ai is like saying don't drive a car or don't use electricity. in his first public appearance in several months, he's also discussed regulation of the technology. of course, that follows the recent arm ipo that softbank really benefited from. sticking with perhaps some of the china stories, perhaps some of the asian story, we will have it all relate to the u.s. the u.s. taking aim at chinese and canadian entities allegedly involved in the large-scale manufacture and distribution of fentanyl. the treasury department sanctions freeze the assets held by 28 designated people and groups and prohibits americans

from transacting with them. sticking with the united states, kevin mccarthy has been toppled as the u.s. house speaker by dissidents within his own party, ending his to motionless nine months into the job and sending a fractured congress into further disarray. >> i don't regret standing up for choosing governance over grievance. it is my responsibility, it is my job. i do not regret negotiating. our government is designed to find compromises. i don't regret my efforts to build coalitions and find solutions. i was raised to solve problems, not create them. kriti: joe d6 joins us now for more. talk to us more -- jill d6 joins us now for more. talk to us more about the stakes when it's unclear who the future house speaker is going to be? >> that's right. i think at this point, we are expecting a vote for the next

speaker october 11 when congress reconvenes. that's going to be a really difficult job for whoever steps into it. remember that we have just averted a government shutdown really mccarthy's swansong here, reaching a deal with democrats to push off the deadline until november 17. there is still a lot that's at stake if they want to create anything that's more than just a stopgap measure. i think at this point, there is really two things that come to mind when i think about what ultimately has to be resolved. there is a lot of debate about funding for ukraine, obviously, a big push on joe biden's part along with the democrat's continued push for funding for ukraine. republicans want to take a lot of that away. there is a lot of debate over what's happening along the border involving immigration, concerns about asylum, that kind of stuff. these are all issues that whoever the next house speaker

is is going to have to preside over. i think when you've got republican hardliners ousting mccarthy, it's difficult to see who is going to step into this role. it's a very wide-open race at this point. i think whoever is stepping into that has ultimately got a month perhaps to resolve some of these issues before something happens. you've got goldman sachs talking about how difficult this is going to be, how whoever that next house speaker is going to face increasing pressures. we had moody's talking last month, the only credit agency retaining the u.s.'s top credit rating, saying they've got concerns about governance. this is a perfect example of where those concerns really come into play. >> i mean it is a fascinating story for sure. in terms of the government shutdown, it feels like the odds you have seen coming out of goldman sachs, eurasia, etc. have increased about the likelihood of that. what gets hit first in the u.s. government? jill: look, at think at this

point, it's really about how long the government shutdown lasts. if there were to be one once we reach past that november 17 deadline. there's a lot of key federal services that are ultimately shut down. we've talked a lot in the past about the fact that if it is a short-term shutdown, ultimately, that does not have any sort of long-term implications for the economy. the government can ultimately continue. you are missing a lot of key public services if you get to the point where funding ultimately runs out. i think that at this point for the u.s. economy, it is a much bigger concern if you are giving with a shutdown that goes on and on or if there is no end in sight for trying to come to some sort of resolution. i think that's what we have to keep in mind as we go forward. what i am looking at is ultimately who takes that speakership role, how likely are they to be able to work across the aisle? we know how difficult it is an

environment to get a bipartisan relationship. i think any kind of implication that we could see something more long-lasting is going to have those ripple effects that start to weigh on the u.s. economy in a morning for way. k >> surely something will keep a close eye on. thank you for joining the program. i want to stick what's going on in u.s. politics. and the ramp up to the presidential election, we are watching the legal matters a president donald trump. the judge in the former civil fraud trial against him has issued a gag order after trump made social media posts using the judge's principal law clerk of palling around with democrats. trump's former accountant said key information was missing from financial statements over the years. the former president those charges. in the u.k., rishi sunak is taking center stage at the conservative party conference today for what is shaping up to be the biggest speech of his

political career. joining us now, lizzy burden all over that story, on location in manchester. let's start with what politicians and business leaders are saying about hs2. lizzy: hs2 is this high-speed rail network that would connect manchester faster but the government's -- over whether it's going to go ahead the northern leg has dominated the conference. it has sucked the oxygen out of this. it's been the subject of pre-much every interview with ministers. i asked the chancellor for some clarity. take a listen to what he said. chancellor: we have not made a formal decision. and at the appropriate time, on announcement will be made. what i will say is that we would always want to invest in our economic infrastructure, but you would expect any chancellor to want to understand why it is that it costs 10 times more to build high-speed rail in this country than it does in france.

so those are the discussions we are having. lizzy: no clarity from the chancellor but we may get some in rishi sunak's speech today. hs2 was a key part of leveling up this promise in boris johnson's manifesto. hs2 has been backed by rishi sunak's five predecessors. we are here in manchester in a former railway station. in terms of the business reaction and the politicians, other than the government, we heard from the mayor of the west midlands. he says if this project is scrapped, it could damage the british international reputation among foreign investors permanently because of the going back on a promise. that's a view that has been supported by the -- ceo. he said it will cost thousands of new jobs but also new homes. it was echoed by the director

general of the cbi, the business lobby group. she said she wants certainty from the government. that's what business wants to see. there are lots of other options in terms of what you could provide in terms of transport, infrastructure, better connecting east-west, offering more buses. we spoke to the mayor of greater manchester. he says, why does the north have to make a choice when the south, london in particular, seems to get it all? >> really something we are watching. lizzy burden joining us live from the conservative party conference in manchester. thank you so much for that update. we will continue the conversation throughout the morning. key guests, including grant shapps, the u.s. defense secretary -- u.k. defense secretary, joining us. it's an interview you don't want to miss. let's take a look at what we are looking at today. at about 11:30 a.m., that prime minister speech from rishi sunak is due coming about the conservative party conference between 1:00 and 2:00 p.m., we

also get the polish rate decis the national bank of poland could resist c it reference rate in october after delivering a 75 basis point cut in september. it's all about the currency story, not necessarily th itself. . at 3:00 p.m., the u.s. ism services dis released, one more puzzle piece for the fed. the crude inventory report co out. later in the afternoon opec+ ministers meet to review the state the global market. coming up on the program, black and blue. we discussed the drivers behind the bruising week for treasuries and global bonds, next. stick with us. this is bloomberg. ♪

♪ kriti: welcome back to "bloomberg daybreak: europe." i am kriti gupta in ldon. a lot of the market pressure you

see he stock and bond market is coming from a question of market plumbing from liquidity. there is one person who'sbeen all over the story, who saw it from miles away months ahead of time, i have to say, and that is are very on valerie tytel. we said here, come on set, do it with us together. let's talk about the oz of the curve are inverting today. we are still about -31 basis points away from that inversion version on the two stents. is that likely? valerie: if we look at the two 's, 30's curve, it's definitely in the range to invert today. that curve really steepening, it is catching many people's eye, on this bear steepening. a lot of eyebrows being raised as to what is causing it and what could possibly cause it to end. that two's, 30's curve, i think there is potential to syrian version of that in today's session. if you look at how treasuries are trading in the asian session, we see the bear

steepening continue. that 30 yield coming within a whisker 5% overnight. kriti: when the fed first started their rate hiking cycle, they used the term asset price inflation over and over again. it feels like this yield steepening is doing the fed's job for them. where do they stand on this yield move? valerie: we have not seen any change in language from the fed, they are still threatening the possibility of an additional hike if the u.s. economy stay strong. it has now flipped into tightening territory for the first time since may. that's reflecting the fact that credit spreads are begin to widen, this treasury yield surge is happening, and that dollar strength, alongside the equity market falling. that is tightening financial conditions, possibly could do some of the work for the fed to slow the u.s. economy. we have not necessarily had any change in language from the fed just yet. i know that's what we will be watching for as we have more fed

speakers on the line later this week. if anyone sounded dovish about this, it was janet yellen yesterday. she made a comment that higher for longer rates are by no means a given. i think that's probably the most dovish thing we have heard from unofficial since the selloff began. kriti: it's fascinating to talk about. even janet yellen, who was initially on the same page as jay powell, said maybe giving a little bit of a dovish town. there are shocks you have to take into account. how worried should the banks to about that? valerie: this could be something that could really come out of north. it's hard to -- out of nowhere. it's hard to pinpoint who could be rattled by this move the most in the long end. we could look at the gilt market last year, the insurers, the pension funds were really hit by the volatility in the long end. possibly there is some weakness in the same areas as the u.s. market but there is a lot of structural differences between

the u.k. and u.s. i was quite surprised to see this widening in credit spreads yesterday. we had u.s. investment grade issuance, that average yield on eiji, hit a new -- ig, hit a new high we have not seen since 2007. we had some issuers pull their bond yields yesterday amidst this volatility in the treasury market. it's beginning to rattle some parts of the u.s. i, for one, am surprised there has not been a broader issue yet. this kind of steepening has been phenomenal. kriti: a lot of this is coinciding with the government shutdown, with the politics. how much does this actually have to do with d.c.? valerie: a lot of it. if we think about this steepening being driven by the supply-side narrative of treasuries, we only have to look so far to see what goldman sachs said on the u.s. debt cost yesterday. they wrote a new piece saying interest expense is on track to hit a new high by 2025, and they

expect these debt servicing costs to reach 4% of gdp by 2030. yellen did comment on this yesterday. she sees that interest-rate expenses are at a normal level. kriti: it is janet yellen's job to say everything is fine, everything is ok. is it though? valerie tytel all over that story. we thank you for that, i've got to say, calling it, and your enthusiasm this morning. we are going to continue that conversation with the charts that you need to kno ahead of the european open. stick with us. this is bloomberg. ♪

kriti: all right, there is red across this ring. we are seeing it in the stock market, you are singing in the bond market, even the commodity market. risk sentiment souring across the world and it all comes back to one thing, bond yields, especially on the long end. the 10 year treasury, 30 year treasury yield you're starting to see cycle highs. look at just how high it is, going all the way back to last time we saw these levels, 2007. you will remember what happened in 2007, a big worry about the housing crisis followed by the global financial crisis. are we there yet? not quite. the ripple effects are interesting because borrowing rates, especially for even the most profitable countries and companies around the world have just gotten much, much higher using that treasury baseline as their rate in a way that even the fed, even the banks are not quite ready for. . this is the most concerning

chart for any market trader this morning. just how high does this go? especially when you see the steepness pickup more momentum. you saw a lot of that in the overnight session as well. that's just one thing to worry about. it comes in the currency market, japan top of mind as well. remember when we thought the japanese, the jgb story would break the entire market? looks like treasuries beat them to the punch. that possible policy tweak with the boj has now created its biggest volatility for dollar-yen going back all the way to the end of july. the first time you started to see hints of perhaps that yield curve control changes. what's important to keep in mind is that this is compounding with some of the data we got overnight as well. u.s. jobs data is actively affecting dollar-yen, and that is scary at a time when we are monitoring every single thing the boj is doing. how much wider do those bands have to get? another chart for you to keep your eye on.

i will throw you a third chart. in the u.k., perhaps some good news. remember yesterday we got that data that food prices are actually coming down a little bit? it has been a very long streak, two years of really high food prices, only for a finally, a tiny drop. that is a positive sign that perhaps those rate hikes are indeed filtering throughout the economy. we are going to get another read on that. tesco reports earnings in about five minutes about whether those price cuts are actually going to worry their long-term profit outlook. every single story in the commodities side has a read through into the corporate world, especially when you're talking about a consumer in the u.k., the united states, and truly around the world that is only able to afford fewer and fewer items thanks to inflation. even in the u.k., where food prices are actually much, much lower than its counterparts around the world, affordability is a key issue, especially outside of london, where perhaps

salaries are not as strong. that's the problem at the boe. how do you tackle it with a unified approach when you see the pressures completely vary? we will keep you monitored throughout the morning in terms of what you need to know for the markets. in addition to some of the politics and the amazing guest lineup we have threat today. we are going to continue the conversation with certain guests, including grant shapps, the u.k. defense secretary. he joins us at about 9:30 a.m. u.k. time. up next, markets today, anna edwards, mark cudmore, and tom mackenzie are going to take you through the european market stick with us. this is bloomberg. ♪

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♪ anna: this is "bloomberg markets today."