tom: good morning, this is "bloomberg daybreak: europe." i am tom mackenzie in london. it treasury yields fall along with the u.s. dollar as fresh did that sustains expectations for the fed to trim rates next week. a former new york fed president calls for a jumbo half-point cut.

christine lagarde says the euro area dow were to growth trajectory is pretty obvious. bloomberg understands governing council members have not rolled out another rate cut next month. boeing's largest union says no to a deal, setting the room for a strike involving 30,000 workers. we will bring you the latest on that developing story. tom: happy friday, yields are lower come at the dollar is softer. other currencies getting a lift on the back of the dead, and the market is set for a positive end to the week as things stand. european futures pointing to ginza .4 of 1%. the focus on jobless claims softer than expected. consumer prices were mixed but

did not close the door on a 25 basis point cut, and bill dudley suggesting a jumbo cut is something he would favor in this environment. ftse 100 futures flat. s&p futures flat as well. nasdaq futures holding of that flat line right now. let's flip the board and look cross asset, because the moves are more pronounced in the bond markets and fx space. euro-dollar in focus. the inflation target of the ecb will get the 2% next year and core inflation will move lower as wage prices ease. euro-dollar 1.10. bonds are lower down five basis points. 3.58 on the two year. all wall street journal report pointing to the discussion at the heart of the fomc.

it gold at record levels up .4 of 1%. brent crude, 72.43. the big industrial story of the moment is what is unfolding with boeing. in the last hour the largest union voting to go on strike after rejecting a labor deal, setting the stage for a walk out in evolving 3000 workers. the decision comes as the plane maker struggles to recover from a series of manufacturing missteps. let's bring in our bloomberg aviation reporter for the latest. what do we know? >> we are less than two hours away from a strike. we got the results from the union vote. 95% of workers rejected the deal negotiated by is boeing union leadership. clearly a comprehensive sound

that union workers are happy and they want a better deal based on higher pay. 24% over four years is not good enough, so going back to the negotiating table will be critical, and how much of that will cause going on how quickly they can resolve this to stop production costing them billions down the line. tom: talk to us about what history tells us around how long did strike it a go one for and what is the ability for boeing to up this offer, and what does it mean in terms of production of some of these key planes? >> the last strike basically lasted over 50 days, and that cost billions to boeing, but in this recent context the fact that there is so much changing or needing to get planes out of the door. boeing needs the money, so the imperative is to get this deal done quickly. we have to hear from boeing what

there was saying about this result and how quickly boeing and again you will get together to hash out new terms and something that is more palatable to the workers. tom: danny lee on this breaking news story with all the details. we will get an update in the next 30 minutes on the boeing strike story. let's cross over to singapore for a check on the asian markets and the yen in focus. avril: yen in focus climbing for four state -- four straight sessions. it is about where it next week to get the federal reserve in the boj. we are seeing the region stock age managing gains and headed for a climb for the week. the likes of chinese tech names lifting the hang seng, including mental one -- meituan managing

again. despite reports of mortgage rate cuts, and xi jinping telling government officials they will need to work harder, do more to let the economy ridge of the growth target of around 5% for the year. as i say and as you mentioned, it is really about the japanese currency, and given how would strengthened. the nikkei erasing gains of 3% just a day ago. this is the tech and auto making stocks getting hit. the japanese companies have to recalibrate earnings projections if the yen continue strengthening. flip the board against the backdrop of lower u.s. yields and softer dollar, we have also been seeing the chinese currency climbing, but even as you watch out for the pboc signals and how it seems they have been letting it move more flexibly and tolerating the strength, wonder

at the same time how much longer they will tolerate this. they do not want this unfettered strengthening in the renminbi. a lot of the other asian currencies benefiting from the softer dollar, including on the yen, sitting around 141 against the greenback. i also wanted to recap those boj what your expectations come at the results of a bloomberg survey out about 50 plus boj watchers were polled, it we saw the majority of them expecting a rate hike from the central bank by the end of january. more than half someone coming in december, so what gives you a sense of what is expected from the japanese central bank. next week, no changes expected. zero chance of that seen by most. it is too soon especially after the july rate hike as well as the ensuing market ruptures. tom: the fed decision next week,

but also the boj at the end of the week on friday. the latest set of u.s. economic data doing little to dissuade investors about the trajectory of anticipated fed cuts. let's bring in mark cranfield. softer dollar, is this a question of the date at the cross yesterday out of the u.s. where arguably there were not any major surprises, or is it what we have been hearing from bill dudley or the reporting out of the wall street journal around this debate at the heart of the fomc? mark: all of the above i should think, but it is feeding into a climate where traders working to look for anything which would suggest that the bond really could continue and the dollar could continue to follow in the near term, because that is where the positioning is, and anything that these that narrative will help. if you look at the data itself, the jobless claims were worth it expected to, and that will be a reminder to people of the big

issue in terms of the fed, and that is the employment situation. they were looking at inflation a lot more. they have swung their emphasis toward employment, so seeing a slightly higher number there feeds into the fact that maybe the fed is already behind the curve. as you mentioned, there are a couple of meeting reports out there as well not telling us anything new as such, i a reminder of the discussion most likely next week has to be about 25 or 50 basis points. in the same weight the central bank in new zealand discussed larger interest rate cut and in the end they went with a smaller one. most of the g10 countries have started lowering interest rates. the ecb did so again yesterday, so the fed may feel they are at the tail end of this i need to do catch up. there could be internal pressure on them.

that may be the reason they get a consensus and go for the larger move. certainly there was a lot of smoke out there, whether there is fire or not, but traders want to believe it. the move in the two year treasury is very unusual to see such a large move in the short end of the treasury curve. sometimes in the 10 year, but rarely in that two year. tom: that focus on the two year, the moves in the asian session. what does it tell us about market pricing? how divided our traders about the question of a potential jumbo cut next week? mark: traders are moving that way if you look at the short-term pricing. they are not fully for 50 basis points, but they have gone beyond 25 basis points, so there was a number that think that. the fact that they are pricing for 100 basis points by the end of the year, that does mean that somewhere there has to be 150

basis point cut, because we only have three meetings. at that math does not add up. traders will continue to push thinking that they will have to do something by the end of the year waiting until the december meeting, but he clearly if you look at the curve pricing for something like 200 basis points worth of interest rate cuts into the middle of next year. that is an ex ordinary situation when you think the federal reserve has not started and given any indication of whether or not the pace is correct or not. they are going to be a new set of said dot plots announced in september. they need to revise their outlook especially for 2025. if they do so anything in line with the market, traders will feel as though the fed is going their way, and they will stick with those large bets for much cheaper interest rate cuts.

it will be an interesting situation, so watch about dot plots next week. tom: i reminder we have the revisions to the fed to forecast as well as the decision of whether they give 25 450. mark cranfield, thank you very much. bloomberg has learned that the ecb governing council members believe they are not yet in a position to rule out a rate that at their next meeting in october as policymakers way any -- weigh any downturn is underlying inflation projections edge higher. >> the risks to economic growth remained tilted to the downside. lower demand for euro area exports or escalation in trade tensions between major economies would weigh on euro area growth. tom: joining me now is lizzy

burden in frankfurt for us covering all of this yesterday as well as the ecb decision. so we had a downgrade to the growth forecast from the ecb, but a slight dodging up in terms of their views on inflation. where does that leave the question of october for the ecb? lizzy: we are still very much in the dark. as you said they have downgraded the growth forecast for this year and years ahead. they have not updated the inflation outlook, and you heard christine lagarde talking about the risk to growth tilting to the downside, but no bias mention when it came to inflation. just had a more ecb speak from the governing council in an interview offering encouraging words and how cc inflation calming down. another saying more cuts need to

weaponize inflation is coming down. christine lagarde had all of the opportunity in the world to signaled that an october cut is coming or rule it out. think of how clearly she telegraph the june rate cut, but yet again she took this data dependent, meeting by meeting approach sitting on the fence, telling us that they are not sticking to a predetermined rate a path, that there is not a particular data point to watch, and by that she means there is not that much data between now and the october meeting. traders do not overreact to the next inflation print if it goes down, because inflation could go up again before the end of the year. where does it leave traders in the october cut? they have pared their bets from 40% to 20%. economists were thinking raines would come down by a

quarter-point orderly meetings to 2.5% this time last year. at this point we will have to wait for christmas to deliver another rate cut from frankfurt. tom: thank you very much and how we think about the next steps were this ecb. it later in the show we will dive deeper on the ecb and its potential paths ahead with the ecb former chief economist. 6:30 a.m. yucatan -- u.k. time. donald trump and kamala harris are back on the campaign trail trading barbs over the debate. the latest in terms of the race for the white house. that is next. this is bloomberg. ♪

tom: welcome back to "bloomberg daybreak: europe." kamala harris and donald trump traded jabs over their debate in their return to the campaign trail with candidates visiting two crucial swing states. vice president harris kicked off her blitz with a rally in north carolina, while former president donald trump pledged no taxes on overtime at an event in arizona. mr. trump: i am announcing we will end all taxes on overtime. do you know what that means? v.p. harris: my plan is to give a $50,000 tax deduction to start up small businesses. because you know not everybody started out with $400 million on

a silver platter and filed for bankruptcy six times. tom: for more let's bring in bill farris. we heard from both candidates on tax. donald trump seeking to regain the initiative for his footing after a debate that was widely seen as a win for harris. as he succeeded? talk about whether that will inject new momentum into his campaign. >> that is the latest economic proposal from donald trump. we have seen him make several in the last few weeks on the economy, which is of course were both candidates the top issue to address and show that they are on top of what voters' concerns are. donald trump's proposals before this latest move on overtime were calculated to cause $10.5 trillion over 10 years, which is

more than all of the federal agency budgets combined. that would add to that. it is not clear how much we get through congress, but he is trying to target those working-class voters it will be critical to this election for either candidate in all of the swing states, so he is out west and talking to voters in places like arizona, nevada. these are places with a lot of hourly wage workers who would benefit from this proposal. there are a lot of workers who fit that bill in pennsylvania too, so all of the critical states that will decide this election in november. tom: we will watch to see if that moves the needle on the balding. in terms of this potential debate, it has been back and forth whether they will debate again. is the door closed on that question? >> donald trump was out earlier

saying there will be no third debate. of course the first debate was one against biden that prompted the president to eventually pull out of the race. he is widely seen as having not had the strongest performance in his latest debate against kamala harris. the harris campaign is been pushing ever since that last debate and do have another debate at some point in october. the president ruling that out. he is trying to spin it as saying he has already won two debates and does not need a third one. he says that harris campaign must feel like they are on the back would come up most people that weston felt like the vice president came out slightly stronger in that one. i do not rule out former president trump changing his mind on this. for now he is willing that there debate out. tom: bill faries with the latest

as we continue to monitor how that story evolves. coming up, data center challenge. we will look at how booming demand is affecting power markets and the green transition. we will break that story down for you. stay with us. this is bloomberg. ♪

tom: welcome back to "bloomberg daybreak: europe." globally data centers already use more electricity than most countries with events set to grow as the ai boom continues. already a hub for data centers, texas could offer a window into the future for other power markets tearing down this monumental challenge. here to tell us more is an

associate in the u.s. power team at bloomberg nef. how much of an impact our data centers having on texas? >> texas has emerged as the bitcoin capital of the u.s. in the last few years. the wave of bitcoin mining facilities have been built across the state. the size and energy intensity means electric demand of these facilities are growing faster than other demand sources we have seen such as population growth. in 2023 these facilities composed of average texas demand. in 2040 the growth is forecast to be 60%, which is on par with oil and gas production. even been more data centers come online our case as they said 24% of demand in 2030.

tom: texas infrastructure and power grids we know are vulnerable, so how effective has this been, texas and providing the energy needed for these data centers? >> is not an easy task. texas is also a clean power leader. it has one of the largest wind fleets. they expect so capacity to triple in the next decade. we do see renewables not keep up with the rate of demand growth, so through 2030 our forecast shows even more gas and coal has to be burned. tom: it is a mix of energy sources coming through. what does it mean for power prices then? >> overall of the power prices declined as demand outstrips supply reaching $80 per megawatt hour, which is double prices

seen the last year. on top of average power prices, changing demand and supply mix will introduce more hourly price volatility, so all of that solar will come online and depress midday power prices, and these data centers and oil and gas facilities are running around the clock, so evening and nighttime power prices will likely be higher. tom: what about capacity? are there incentives economically to build a capacity to support this demand? >> the texas legislature has passed a lot of different laws to introduce reliability. one of them is the texas energy fund, which is to build about 10 gigabytes of new natural gas plants through this decade to help with reliability as well as demand sources. tom: fascinating stuff, the case study texas provides in terms of fact to support these growing demands around data centers.

natalie, an associate at the u.s. power team. if you would like to hear more from the analysts, download the switched on podcast. get more detail on the bloomberg terminal. we will be discussing the ecb's latest rate decision with the former ecb chief economist, someone with deep insights. stay with us for that conversation. this is bloomberg. ♪

♪ tom: good morning, i'm tom and these are the stories that set

your agenda. fresh data sustains expectation. william dudley calls for a half-point cut and christine the guard says the euro area trajectory is obvious. council have not ruled out another rate cut next month and boeing says no, setting the stage for a strike, the latest on the story. risk on equity, ending the week positive but the biggest moves in the treasury markets and european futures with gains of 5/10 coming through, we look

ahead to next week. ftse pointing modestly higher and most components are higher. s&p is up, futures are higher. flip the board because moves have been pronounced. two-year at 358. debate continues as to whether the fed goes 25 or indeed 50 indeed. gold at record levels indeed. 5/10 of 1% and brent is higher, $72 per barrel. clues on when the ecb will cut where in short supply as

policymakers await more dater. >> future i am tempted to quote spanish. we have said and we repeat again we shall be data dependent, justified in the uncertainty. tom: used to be joined by chief economist peter. what do you come away with? do you have clarity? are the markets right? >> was a very careful press

conference, core inflation has been revised and still the price pressures remain high so what we've seen is a careful reduction of restrictions so the council is cautious. tom: you are hoping for a change in communication with an emphasis on the labor market. why would that be important? >> that was the only surprise. risk to growth compared to inflation.

so they -- they -- they assessed and did not talk about it. more confident on inflation so they talk about risk, i thought communication would be more realistic because domestic demand week which was not in the previous projections still confident but that is not what we are seeing in the third quarter so my surprise was it was hawkish communication,

basically the best scenario has not changed. tom: that's -- that's -- that's -- that's interesting. do you think it was a misstep? slowing more than the forecast and then expectations, does this look stagflation area? >> i would talk about pressures but not exaggerate. the main disappointment is private demand not catching up so growth was revised downward supported by external environment of euro area, so the council's could have stressed more the issue of private demand

and when we look at inflation figures it is clear price pressures are high so i understand why they remain cautious in the rate cut but i thought they would communicate more. tom: debate continues as to whether the reserve goes 25 or 50. should they go with a jumbo cut? to what extent would that play into thinking? should the fed go 50? >> it could. if there is a big cut it shows

the fed sees the growth environment and in china so that would impact markets and currency. bigger cut would have impact on october meeting. there are not many big decisions when meetings are not in frankfurt. the probability of a cut in october would be higher but base scenario is december so ecb is cautious, we will see what happens with the currency.

tom: ok, so data dependent. what should be scrutinized? >> many expect nothing will happen in october about what is important, situation of wages, wages have a big impact, we know this is the biggest issue. we see the october meeting will be key alongside the decision in the u.s.. basically two factors and a third factor not discussed is

energy market. ecb revised core inflation up and headline was not changed because of slow energy prices. we may see more positive news contributing to the easy monetary policy, but no change. tom: as we look at germany or auto sector, political uncertainty is it right to characterize germany at this point? >> any factoring sector not

doing well in germany has a manufacturing sector depending on classical automobile production but if you look at france situation is not easy, we know and one concern is fiscal policy. budget constraints are high as we've seen, huge spending, research and development etc.'s concern is real can be on the hawkish side.

tom: valuable insights. thinking about fiscal stimulus in the eurozone and the ppi or pmi data and consequences for the ecb. whether that will open a door remains a question. indeed. u.k. prime minister arriving in washington to meet president biden. the countries are allowing ukraine to conduct strikes using western missiles. vladimir putin said strikes would mean nato countries would be at war with moscow. bloomberg learned several nations will challenge the imf's plan to engage with russia for

the first time since the invasion of ukraine, restarting reviews of russia's economy calling in a mutual obligation. 33,000 workers at boeing, the latest on their troubles, this is bloomberg. ♪

tom: boeing workers poised to walk off the job crippling manufacturing after members voted to strike as the company works to recover from manufacturing missteps. julie johnson is on the ground

monitoring this story. what led to the decision. >> you have to wonder if any deal would have passed with this labor force. union leaders announced workers resoundingly defeated the contract proposal and 96% voted to strike. we can get into the payback but it is something else. tom: how do you think management will respond?

>> no choice but to come back with a better deal so before we get into that the union did something's none of us expected and filed unfair labor practices act meaningless will go into mediation. i'm not an expert but what i do know is it will not be resolved in a day or two so this is the beginning of a long process toward a final deal and that will be interesting. in terms of the factory floor air 25% pay increase was not the ballpark.

these are people you've got to feel sympathy for, clipped by inflation, locked into a long-term deal below the costs of living so folks have been thinking about this and they -- they -- they paid a price. and now they want payback. tom: ok. it could cost between three and 3.5 billion. given the challenges what does it for production given -- given the timeframe? julie: everything will slow down

or shut down. workers have strike signs and are screaming all over so it will not be good for boeing and this is a reason why boeing has incentive to up the ante and get a deal done. something else, this is 20% of their workforce but from a dollar and cents perspective this is less then 5% of the cost structure so there has got to be some give given the importance of the group for getting a

better deal. we will see how it plays out. tom: indeed, indeed. julie on the ground indeed covering the twists and turns and decision by members of the union to go for a strike and some breaking news headlines. the danish logistics business signed a deal. that is the line that we have, undertakings with german employees, it says they will be discussed, entering undertakings with employees in germany buying a company. more details and a stop to watch at the open.

openai is releasing a new model capable of performing human tasks. known as strawberry it can handle problems. let's bring in annabelle jewelers. what does this tell us about competition? annabelle: this will give it an edge but stiff competition, anthropic, google saying advance models have some reasoning capability but this is the next level so it is known as strawberry or bow one. it can perform reasoning tasks. it's humanlike intelligence,

considering different inputs, using reasoning so how that will function, be prepared to take a beat. it might take longer to respond because it has background processes, a step forward for the company because we know they've been trying to carry out multi step actions and it's not rolled out to all users. just some of them. the company using experiences to advance the tool. tom: annabelle jewelers in hong kong on openai. we will see how well received that is. lenny moore coming up, insights driving gold to record levels, this is bloomberg. ♪

>> welcome back, happy friday. let's reflect on the prices that came through. cpi crossing in the u.s., jobless claims picked up but topline is benign, mixed picture. in terms of the components in pce those were benign. airfares dropped. month on month producer prices went up, year on year in line with the surveys and if you strip out the opponents it's looking benign. bottom line is it doesn't really

change the equation. maybe the jobless claims are more important in what we are hearing is more important. university of michigan survey, labor market, switching focus. expected to soften. michigan university survey later . let's flip the board, record levels are down, lower rate environment, softer dollar but also central banks are buying,

retail investors also and some bearish positions, those have been unwound so gold is at record highs. richard hughes will discuss the countries fiscal outlook, an interesting conversation in the opening trade is next. this is bloomberg. ♪ t so is yo sound engineer. you need to hire. i need indeed. indeed you do. our advanced matching helps find talented candidates, so you can connect with them fast. visit indeed.com/hire ♪♪ ♪♪

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anna: good morning from london. here's what you need to know. fed president bill dudley makes the case for a half-point cut