tom: asian stocks follow wall street lower as china ramps up support for the yuan. traders now betting the fed won't cut rates before july.

we will get minutes from the central bank later today. samsung gains after a vote of confidence from nvidia's ceo. that's despite a profit mystery jensen huang tells us he is ready to meet u.s. president-elect donald trump. and, trump let's loose on foreign affairs threatening to absorb canada, sees the panama canal and take control of greenland. tom: after the tech-led gains of one day, it was the tech-led losses of yesterday fueled by stronger data into pushback in terms of market expectations as to where the fed lands with its next cut. as we said in the headlines, now not fully priced that next cut until july of this year the second half. european futures pointing lower

0.2%, taking the baton from a miserable session in asia and the weakness in the u.s. with the drop of well over one and a half percent for nasdaq and hundred and was 100 futures are currently flat rate s&p futures looking to gain 0.3%. nasdaq 100 futures looking to add 67 points, up 0.3%. big losses from nvidia in the session yesterday. let's have a lacrosse asset. 4.67 on the benchmark u.s. 10-year. yields rising across the curve yesterday on that stronger data. ism services data and the jolt survey. on the jobs front and the service front pointing higher inflation as well, the prices paid within ism services coming in above expectations so you saw a selloff again in treasuries. right now moderating on that front. euro-dollar up a tent of a percent, but going back below 100000 and brent, up 0.7 percent reports around inventories

drinking in the u.s. let's cross over to asia. >> we are seeing asia stocks on the backfoot. reversing gains from a day ago which were fueled by the chipmakers. today though thanks to the poor wall street handover. those steep declines on nvidia. this is the picture you are seeing but losses were accelerated following a joint briefing from chinese authorities. they unveiled a boost to consumer subsidies but it was not enough in the way of a big bazooka-like stimulus impact. we actually solve the stoxx sink deeper into negative territory. a fair bit of recovery bouncing off session lows now. really interesting to see. the focus today is squarely on the chipmakers. and tsmc is the big drag on the benchmark. trucking nvidia's losses. the gainer, and the big boost to the region's stock benchmark is samsung electronics, despite a profit miss.

things are looking on the upside for men the south korean chipmaker thanks to jensen huang, that vote of confidence as you say, expressing confidence that he samsung company might be able to iron out its technical kinks as far as its high end memory chips are concerned. it has been struggling to get nvidia certification for its most recent products. it has been splashing out a lot of money in research and development just to catch up with its much smaller rivals such as sk hynix and micron. i wanted to put things into further perspective, as far as samsung's stock is concerned because despite the profit miss we are also seeing it narrowing really. some analysts have pointed out an element of how these factors that are driving the stock are already out there. we know how there is weak china demand. there is struggle within its

mobile division. the management reshuffle. it's disagreements with workers in the past year as well. so from here on out, there is that optimism that earnings could recover. take a look at how we are seeing currencies faring today. not just the decline in stocks, as the greenback strength shows no signs of abating against the backdrop of signals from the federal reserve. chinese yuan weakness compounding losses in asia's currencies but this is also after the uncertainties coming from trump's policies.that's also fueling strength in the greenback, the declines in asian currencies today. tom: avril hong in singapore with a market check. talking about the uncertainties coming from the trump policy agenda. we will get more details because donald trump's foreign-policy plans are in the spotlight. this after a freewheeling press conference where the president-elect threatened to use economic force to make

canada a part of the united states. he also said he would rename the gulf of mexico as the gulf of america. and declined to rule out using force to seize the panama canal and greenland. >> can you assure the world that as you try to get control of these areas, you are not going to use military or economic coercion? >> i can't assure you. you are talking about panama and greenland. i can't assure you on either of those two but i can say this. we need them for economic security. tom: panama has already vowed to not give up the shipping canal while denmark says that while it welcomes u.s. investment in greenland, the world's largest island is not for sale. that's bring in opening trade anchor kriti gupta on what we have been hearing from incoming president-elect donald trump. kriti: he also in addition to

the things he mentioned talked about nato defense spending, getting it to 5% of gdp. that is a level even the united states has not hit despite their massive investment in arms. a level they have not been hit since 1980's and reaganomics. that may change under donald trump. it is a big part of the republican agenda. especially this big bid from other european countries to get their data spending up to get to that 5% level. but it hasn't happened. 5% of gdp is asking a lot out of fiscal budget in the u.s. and europe that are already fairly stretched. that was the one that stood out to me but some large claims in terms of what he can do. the gulf of america i thought was interesting given that is a body of water that has a good connection to the mexican border. tom: he has a good branding game. kriti: the panama canal, we love the tariffs and trade story. the military troll bit was

interesting. this is where pushback has come from inside the u.s. political agenda where even though he is very pro-tariffs and is leading the republican party and you do have that red sweep in congress, not everyone within congress supports that approach. military control bit is under the executive wing, you don't need congressional approval, so that is where the viability of some things comes into question. tom: frankly, some of this around canada, panama canal, greenland, arguably maybe to many sitting in canada, some will sound pretty unhinged. how do we sift through what we have been hearing on the foreign policy front from trump? some of these extreme policies he is outlining. and get to a point where we understand what is actionable and what he is serious about. kriti: will start with the canadian perspective given they are dealing with their own shift to the right. not a big enough shift to say we want to be part of the united states.

there is a poll suggesting that most canadians oppose that annexation to no surprise. you have justin trudeau the current prime minister, not for long given he has resigned officially but will be interim until the new leader is elected, has already said there isn't a snowball's chance that will happen where the united states will annex canada. you mentioned greenland, this is something he has talked about before. his son donald trump, jr. is in greenland talking about investments. the prime minister of denmark commented in brussels yesterday saying we hear you, greenland is not for sale, but we welcome any sort of investments. i thought that was interesting given denmark's biggest export to the united states is actually ozempic via novo nordisk. tom: one feels these stories have further to run. kriti gupta with a write-down on what we have been hearing from president trump. u.s. stocks got hammered yesterday, as a selloff in the world's biggest bond market

deepened on speculation the federal reserve will not cut interest rates now until july, amid inflation risks. let's dive deeper with bloomberg valerie tytel. the ism services, the jobs data, walk us through to the market reaction and the pushing back then of that next cut from the fed. >> it was all about this yields rise yesterday. hot economic data that took another like higher. it also has been having a global effect. in london, u.k. gilt market shaken by the treasury market. yes we have that hot economic data. we also have trump commenting that interest rates are too high. a little bit of i guess the fed coming under pressure from trump already, getting hints of that in his press conference yesterday.let's put this yields rise in perspective because we are very much those cycle highs for the treasury yield. both the 10 and 30-year yield are 30 basis points from this cycle highs we saw in late 2023. back to that hot economic data

because there is a hint of inflationary forces in that data released yesterday we had a hot ism services. but the underlying inflationary component, the prices paid, hit a 22-month high. we had strong jolts data ahead of the nonfarm payroll report on friday showing that the u.s. labor market is pulling strong. before we get to friday's nfp, we have the fed minutes tonight. a lot of questions over how close the call was to hold rates -- more to cut rates when it comes to that december decision. we will be parsing those minutes very closely with discussions about cementing this fed on pause for the most part of this year. the market is now pricing the next fed cut not until july. we want to know how much the potential trump policies played into their economic forecasts. we heard from powell himself in

the press conference saying that some members did pencil in some of these economic policies boosting growth. we want to read through the lines on that one. lastly, any reasoning upward for the inflation forecast, they core pce up to 2.5%. what drove that? is that the trump economic policies in the background driving these fed forecasts? we will be very much parsing these when it is out tonight at 7 p.m. tom: excellent set up on those minutes. 7:00 p.m. u.k. time in the fed minutes on that december's decision. 7:00 a.m. before we get to the fed minutes, we will get german factory orders. a gauge in terms of the health of the manufacturing and factory sector of germany, amid the challenges of that economy. at 1:30 p.m. u.k. time, we will get a further detail in terms of the labor market of the u.s. after the jobs openings data came in the highest in six

months. u.s. initial jobless claims out 1:30 p.m. you for time. and as valerie was saying, 7:00 p.m. u.k. time, the fomc minutes. really important given where traders now think the next cut is going to land. the nuance in terms of that december decision and how that feeds expectations going forward this year. you can get around up the stories you need to know in today's edition of daybreak terminal subscribers can go to dayb on the terminal. trump dominating the cover it with those comments about greenland, canada and the panama canal. samsung rises after nvidia founder jensen huang expressed confidence in the korean firm. despite disappointing earnings, as it plays catch up in ai, we bring the latest next. this is bloomberg. ♪

>> i think having someone who is very close to the u.s. industry and to the ev world. i think it should be positive for the industry. tom: hyundai motors' new ceo, the first foreign leader to head

up the south korean automaker, speaking to us exclusively. sticking to korean companies, samsung shares surging after nvidia ceo jensen huang expressed confidence in the firm, despite disappointing earnings. let's bring in bloomberg asia technology correspondent annabelle droulers. jensen huang is developing central banker style power over markets. [laughter] he comments on one company and the stock moves. i can't think of another ceo that has quite the same effect. what do jensen huang have to say when it comes to samsung? >> he certainly knows how to move the markets. importantly, he gave some hope. and samsung really needs that especially when you think about the more than 20-30% slide in their market share last year alone. the hope was really around its hbm product. we have spoken about this but it is higher bandwidth memory. it is an essential part of ai infrastructure. samsung has not been able to get

its product certified by nvidia to date. this is something they said they would achieve by 2024. clearly that hasn't happened. but jensen huang speaking at ces said he is optimistic they will do it and they are working fast. this showed up on and the results from samsung because we saw a lot more money going into r&d expenses and capacity expansion. that again speaks to that hbm story and how much they need to get that across the line because we to see that slide in the share price. versus sk hynix it's smaller up your in south korea that has been supplying higher end chips into nvidia. because of the ai theme, it is not going away anytime soon. this week alone we have seen microsoft saying it will spend $80 billion building out data centers just in 2025. that sparked the rally in sk

hynix and ai beneficiaries but samsung has not been able to play a part in this. and that is what they need to do this coming year. tom: they did not get the certification from nvidia by the end of last year, maybe they get it in the first quarter, we will watch that as a potential pivotal moment. when it comes to the quarterly numbers, what else stood out in terms of what we learned about this chip maker? >> these were the preliminary figures. we get the full group reading later in the month. they were largely disappointing. investors already had negative perceptions, or expectations, for these figures but still they manage to under shoot those. we saw operating profit at 6.5 trillion won. that was short of the average analyst projection for nearly 9 trillion won. quite a big mess and revenue came to 75 trillion won, that was also shy of estimates. we actually saw a drop in

samsung's share price at the open that later reversed. going back to jensen huang's ability to move the markets but it is important to note given the share price the last 12 months a lot of the bad news is possibly baked into the share price. still the company is facing a significant number of headwinds. not just in terms of its abilities around ai and hbm, but there is other factors that are important to note. firstly, the other sectors, you've got things like smartphones, tv's, other appliances. they are continuing to face growing competition. there is their legacy chips. these are supplying consumer electronics like pcs and smartphones. they also are seeing declining figures. sk hynix for instance has already started to reduce its production of these types of chips. it is what some analysts are saying is one of the toughest

moments in the company's history. the next thing that will be watched closely is samsung unveiling its latest galaxy smartphone lineup. that's happening in san jose on january 22. they are saying they will make better use of ai and that is a key theme for this year the greater use of agentic ai that will be built into smartphones but headwinds is the key takeaway. tom: liberate asia to correspondent annabelle droulers on the numbers from samsung and the lift that company has had today from the comments from jensen huang. sticking with the nvidia story, shares in that company slumping after a wide-ranging product presentation by the ceo failed to win over investors in the ai chipmaker. haung also spoke to uber technology about plans under incoming president donald trump as well as the impact of ai on the gaming industry. >> ai is going to reinvigorate

the videogame industry. on the one hand, for developers, it is going to reduce the cost of creating content. on the other hand, all the characters in the games will be smart characters in the future. every time you interact with them, they will be interacting in a much more intelligent way. so the games will be more interesting. the characters will be more interesting. the content development cost is going to decline. and that will be great for that industry. i think the future is really bright for videogames and these virtual worlds and artificial intelligence will reinvigorate it. >> project digits. may i pick it up? >> yeah, yeah. >> three thousand dollars. a supercomputer sitting on your desk. >> can you imagine sitting there just like that working on your pc -- >> why would i need one of these? probably not me, but how big is the addressable market for this?

what is the addressable market? >> there are 30 million software developers. there are probably something along the lines of 10 million designers around the world. probably another 20 million creative artists. hard to say exactly how many students. i'm going to guess probably a couple hundred million students around the world. everybody is going to have to -- well, they can afford computers, and so, if they can afford computers and they would like to have a companion that helps them do ai, this is the way to do it. >> can i clarify something on it? i think you said on-stage mac os, linux and windows, but the invitation said just linux. >> no, no whatever computer you use, you are literally enjoying however it is going to be used. it sits right there and is connected wirelessly like your personal cloud. >> i promised the audience i would clarify that because they were excited. we are running short on time, president-elect trump has been speaking during the course of

the conversation. how imperative is it that you go to mar-a-lago and meet with him if nvidia is america's leading ai company? and will you? jensen: i'd be delighted to go see him. >> have you been invited? >> not yet but i'd be delighted. and congratulate him and do everything we can to help this administration succeed. >> a lot of what you outlined on stage last night in the realm of physical ai. i saw xpeng for example in the autonomous driving context. that is happening in china. they are doing a lot on robotics. i'm going to ask about tariffs. it's likely this incoming administration will be as restrictive on technology exports. and tariffs will be a function. how have you prepared for that? >> whatever the administration ultimately decides, we will give them as much insight as we can from our perspective. and i'm sure the administration will make the right moves. that's in the best interest of our country.

tom: nvidia ceo jensen huang speaking with "bloomberg technology" coanchor ed ludlow. later, the u.s. president says nato nations should hike defense spending to 5% of gdp. but just how are leaders in europe actually preparing? we will hear exclusively from the eu's industry chief. that's at 6:30 a.m. u.k. time. stay with us. this is bloomberg. ♪

tom: donald trump's incoming special envoy to the middle east says negotiators are on the board of a deal to secure the hostages taken by hamas in the war against israel. a press conference at his

mar-a-lago resort he completed a threat that if the hostages were not released before his inauguration, hamas would pay a price. fast-moving wildfire has a ripped through an affluent area of los angeles, destroying homes and forcing thousands of people to evacuate. about 30,000 people were ordered to leave their homes after brush fire erupted in the pacific palisades community, causing panic in traffic. the blaze was almost 3000 acres and remains uncontained. coming up, we hear exclusively from the eu's industry chief. stay with us for that interview. this is bloomberg. ♪

tom: good morning, this is bloomberg daybreak: europe. i'm tom mackenzie in london, these are the stories at set your agenda. asian stocks follow a china wraps up support by iran. they are betting the fed will not cut rates before the second half of this year. we get minutes from the central bank later today. samsung gaining after nvidia's ceo expresses confidence that the company can resolve its tech problems despite a profit minutes. and president elect donald trump lets loose on foreign affairs threatening to absorb canada, sees the panama canal, and take control of green liquid. let's check in on the markets. the nasdaq 100 fell around 1.8 percent. the s&p fell around one point 1%. the future suggest there could be relieved coming through for u.s. stocks today after the selloff of yesterday. it's falling by .3%. ftse 100 is currently stable and

unchanged. s&p futures pointing higher up .2% after yesterday selling similar picture for the nasdaq 100. this was down to stronger jobs data. a drop of a little over 6% for nvidia. so, big drop in terms of nvidia after it reached a fresh record high the previous days. pressure comes with nvidia, that weighed on the nasdaq 100 and the stock market. it was the jobs data, that number came in, the highest number of jobs earnings we have heard for six months. the prices paid with ism services data. they suggested there is possibly a tick up and inflation coming through. a bold look across assets. it was a result of the data, that selloff has eased in today's session. the 10 years for 67. euro-dollar out 103. bitcoin below 100,000 at 96,000. down in the session. brent, that 7747 up .6% in the

session. donald trump says nato nations should spend the equivalent of 5% of gdp on defense. more than double the current target. no nato member, including the u.s., currently spends close to that level. u.s. president-elect's comments come after bloomberg spoke exclusively to the eu commission's executive vice president about how the blocked plans to respond to the new u.s. administration. >> europe will remain an open market. it will not become a closed one. there is no gain in a trade war. however, europe cannot be the only continent open to global overcapacity. across the globe, markets are increasingly protective with state aid marking our industries on competitive. this must be addressed. we have both offensive and defensive trade instruments that

we must activate as part of a comprehensive economic strategy. this marks the end of european complacency or express -- or excessive openness. we need to protect our industries when they are not operating on a level playing field. >> one of the great risks of the european economy and european industry will be tariffs, what has been promised by donald, something that you are paying close attention to. i want to askedif there's no det european industries if that comes to pass? works regarding steel, there is no automobile industry without steel. so if you want to be able to build automobiles, wind turbines in europe for carbon neutrality, we need a european steel industry. we will have a plan to protect the steel sector from global overcapacity while ensuring competitiveness. i'm prepared to explore both

defensive and offensive actions with my colleagues at the commission. this is a dialogue that we will have at the commission. i still hope to convince the next u.s. administration that we have everything to lose from the collective trade war. europe is an economic power with 450 million consumers that must be viewed as such. our goal, our responsibility is to be united as 27 nations to be able to negotiate. tom: the eu commission's executive vice president speaking there to bloomberg's oliver crook, who joins be now from brussels. listening to that, it's pretty convincing from him that he understands the issues that europe faces, that europe is girding for the pressures that could come from this trump administration. but what do we know about a concrete plan to support european industry, that he acknowledged is under threat? all of listen, i think everyone

is agreeing on a lot of the problems that europe faces. i think the difficulty comes in trying to solve those problems from the methods and the ways that you approach it, and if there is the political unity to do it. this is a new job that has been formed that he is embodying, the executive vice president for industrial strategy. for shorthand we can call it the competitiveness commissioner. what i got from the impression of talking to him, i will say that it -- there is not a huge amount of concrete detail in terms of where they will go, but we got a good insight to how they are thinking about the problem. what they are looking at for the europeans is bridging this issue for the un-competitiveness of past industries, i.e., in dusters -- industry, steel, aluminum, the heavy stuff. chemicals. but also the automobile industry and bridging it into the future. embracing the old industries in europe so they don't die out and also trying to promote

industries of the future that would be more in terms of clean technology, energy, medical and those sorts of things, of course technology, which is something we did not talk that much about, which is a big mission. that will be one of europe's great strengths. a very educated labor force that has a lot of expertise bringing that into the productivity discussion of technology. one of the main questions is, how are they going to pay for all of this. how was he going to be done? are there going to be more funds set up for the europeans to distribute among member states. his whole point is he will implement the draghi agenda, basically all the way through. one of the things that they call for in his competitiveness agenda is the spending of almost one trillion euros every year. 800 billion euros almost every single year. i asked how they are going to do that, can they do that without joint debt. have a listen. >> yes, it is realistic because first of all, if we add the competitiveness policies of each

member state, plus the european budget, you are not very far from the investments that need to be made. i will push to implement the whole draghi report and nothing but the draghi report of the components, including the investment assets. oliver: for the moment, since it's such a sticky issue, the question of joint debt rising to that. i know he is trying to unlock additional funds that already exist within europe. there could be potentially new funds established in terms of how to disburse the money. we get the industrial clean deal. that is a new deal that the eu puts out in the month of february. we get more detail on precisely what are the actual instruments and policy tools that will be used to boost competitiveness here in europe. tom: you're talking about funding potentially being a roadblock to this project for the eu, to these ambitions. what are the other potential headwinds to getting this competitiveness agenda underway in a comprehensive way in across

the line, ultimately? oliver: i think some of them are priced into the nature of the eu. this is a very slow-moving organism that requires a lot of consensus. i thing at a time when industrial strategy is so critical and you see the trump administration moving pretty fast, it hasn't started on a lot of policy initiatives. europe slowness will be one of the big issues. another issue that you also had is the question of consensus right now. we are talking about the political threads throughout europe. he is talking about one of the most important things that you require right now is european unity. you do not have european unity. not just among the 27 member states, but at the national level. you look at what's going on in france, germany, i think we can't overstate the importance of what's happening in austria. it's the rise of the far right in the head of the member states sitting at the table in the eu 27 and the leader of the freedom

party, who is very euro skeptic. he is since with viktor orban in the former id group within the european parliament. this could cause problems to getting these joint initiatives moving forward. this is something that will be a major concern to say nothing of the fact that even those who are a little bit more pro-europe say olaf scholz, for example, they are not willing to allow things that are the things that mario draghi is recommending, getting rid of national champions in favor of european champions. this is a question i put to him, how do you get the rest of europe on board in order to get these companies that are not just big on a german or french level but on a european level. have a listen. >> we obviously need companies, this is true in the telecom sector, which today is 27 markets. we need to work on building a telecoms market at the european level. this applies to banks, banking union is a real challenge for europeans and the banks.

in politics, when you discuss these subjects with member states, they often agree. when you go into detail, it is often more complicated, so now it is a question of political will. oliver: so of course the other question, before everybody here, is the influence of donald trump. obviously tariffs and economic policy against europe could be massively damaging to the economy and also massively damaging to this idea of european competitiveness. the question is, does trump harm or help europe? that's an interesting question to get into. tom: on that point, he has been taking aim in his press conference at everyone from candidates of the panama canal, to greenland and denmark. not even rolling out military force, ultimately. we don't know how much of that is hyperbole and how much of that is real intent for in incoming president, but we can assume it's not going to be long

before incoming president trump turns his target, his ire on europe. we know europe has been a bugbear for him, for rational regions and irrational ball ones. is he a unifier for europe or will he accelerate divisions that you outlined for us? oliver: i think that's an interesting question and how this plays out will be fundamental to the future, not just as europe as an economy but the european project. i remember when i sat down with the danish prime minister in september, even before the election in the united states and i asked her, i just want to confirm with you, is green and still not for sale, tongue-in-cheek, but she took it pretty badly saying that are less said about this the better because we have already answered this question. this question is not answered in the mind of donald trump. the interesting question is, does this drive the europeans further together, do they come to this realization that they have more sway, more power, more might in order to negotiate with donald trump, or does it so the

seeds of division, and this brings us to elon musk and what we see in terms of politics in europe. basically advocating, certainly in germany with the afd, a party that now has more than a fifth of the vote in germany that wants to leave the euro zone. if you get into a position with bilateral discussions with tsay, hungary between the united states, the trump administration and viktor orban, could it drive wedges, could you begin a situation where they topic -- talk about trade deals unilaterally. i think this is stuff that the europeans need to start thinking about and started to think about in a unified approach. particularly the question of nato. this is something that could bring europe together or is it something that will bring even more stress on the cracks that are clearly appearing at the national level but the european level on the continent? tom: we will see if the questions will be answered in the weeks, months and years ahead. poland steps up its defense spending close to that 5% level but still a ways from that.

thank you very much with the details from brussels. fascinating conversation with the executive there leading the competitiveness charge for the euro zone. other stories making the news this wednesday, the sister of sam altman has accused the openai chief executive of sexually abusing her for almost a decade. in a lawsuit filed in federal court, and altman alleges her brother abused and manipulated her while they were growing up in missouri in the late 1990's and early 2000's. in this statement on behalf of himself, his mother, and brothers, sam altman called the claims utterly untrue. a british politician has criticized a shein representative about the firm's practices. the business committee chair william burns said he has almost zero confidence in the fast

fashion company supply chain after the representative declined to comment on whether it's products contain for the region. shein is targeting a potential ipo in london later this year. openai arrival is set to be in advanced talks to raise $2 billion in a funding round that is $60 billion valuation. lightspeed venture partners is leading the round. it's one of many start ups raising billions amid the hype over generative ai. amazon said in november it was interesting and additional $4 billion to boost its stake. jp morgan is said to be planning its hybrid work option for employees requiring everyone to return to the office five days a week. sources say the bank could announce the change in the coming weeks, replacing an existing three-day mandate from any of its workers. jp morgan employs more than 300,000 people globally.

coming up, new year, new you. the globals -- global credit markets he strong demand as they settle for low risk premiums. we get the details next. this is bloomberg. ♪ ♪ three little birds ♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪

tom: welcome back to bloomberg daybreak: europe. happy wednesday. borrowers are flooding global debt markets at an unprecedented pace as they take advantage of demand from credit hungry managers. flush with cash. let's bring in bloomberg's valerie tytel, is this a seasonal story, what's driving this corporate debt issuance? valerie: it's not a surprise that we get a flurry of corporate debt issuance to start the year. january is normally a busy month for those putting the bond issuance is together as

corporate try to raise cash for their needs for the year. what is surprising is that the corporate bond spreads are at historic tights. there's not a lot the investor gets from buying corporate bonds but they still have appetites. was driving that is the fact that the risk of defaults has dropped recently. if you think about where we were last year, we were talking about the u.s. having an economic slowdown, perhaps at becoming a global problem and you see global defaults rising. we are not worried about these defaults. even though the yield pickup versus government debt to buy corporate debt is at historic tights, investors are still seeing some sort of return or juice and that for them. tom: what about those sovereign debt market with a flurry of governments issuing debt in the u.k., 30 are gilts being issued, how has that been absorbed by

the market? valerie: it's a different picture with the debt to lose we are due to see from governments globally, the u.k. being one of them trying to issue the most debt that they have ever outside of the pandemic, the situation is very much the same in the u.s. and if you look at france as well, this growing, swelling deficit, the need to fund it. it's a very different story when we talk about governments because, especially here in the u.k. if we focus in on governments, who have economies that aren't growing, it is a problem because you start to question this fiscal discipline. at how much room do these governments have to borrow when there economies aren't growing and they are facing funding themselves at 5%. tom: you are talking about the u.k. what are the options for rachel reeves? valerie: it will be an

interesting one. we have until the spring for them to make a big announcement. we have the spring budget on march 26 but the market is really tempting them to do something further, and that could be another round of tax hikes in order to raise cash, to help her meet her fiscal rules. the problem with that is we have a very huge debt burden already here in the u.k. and we could get to a situation where a tax hikes are going to further hamper economic growth, which is already back to back at 0%. you have an economy not growing, you have the interest rate, this debt cost nearing 5%. you start to wonder whether the u.k. government can fund itself in a long-term basis. we focus more on the interest paid just to pay the coupons on debt, it is a big percent of gdp. if you don't have gdp growing, you're debt stock continues to pile up. so it would be a very

interesting situation across europe, especially in the u.k. to see how the governments manage this debt pile. tom: with businesses contending with the higher tax increase as a result. contributions on employees and the payments. that has not gone down well with the business community and the u.k.. bloomberg's valerie tytel, thank you for walking us through what's happening in the credit and sovereign markets with the challenge here for the u.k.. plenty more coming up. stay with us. this is bloomberg. ♪

>> markets have very much focused on the fact that you probably will see more inflation . they have taken that is quite

hawkish, but it's double-sided, you have it on the one side, you have inflationary impact on the other hand, there is some risk to markets if we were to see a more aggressive tear of posture, which of course is a risk. tom: goldman sachs chief economist speaking to bloomberg there. let's focus in on the data that came through yesterday that provided that jolt to the treasury market. strong data out of the u.s.. ism services gauge firmly in expansionary territory. the number coming in at the white line you see on the screen , 54 .1. services in expansionary territory. here's what stood out. it was the price is paid, 64 is the highest level, the biggest print in terms of that number since march. you have to go back to march of 2023 is the price is increasing that much within the gauge of the ism services. bloomberg economic said this is partly due to activity picking up and being pulled forward in

anticipation of trump tariffs. bloomberg economic says that will be the key driver of services going forward. it was this data point that led to expectations from markets that maybe the fed will have to push back its next cut into the second half of next year. let's look the board and have a look because today we get the minutes of the december meeting of the fed's 7:00 p.m. u.k. time. hopefully more details in terms of thinking. fed officials increasing the last few days coming around to the idea that they could be cautious and take their time in terms of thinking about the next cut. markets now not pricing the full next cut, 25 basis points until july of this year. using the split between the hawks on the dev and you see how that changes of the doves. corporate story linking again to nvidia is samsung. because they don't move just on one, from that -- jensen wong who takes on star power over these markets. he made a comment about them

working fast in terms of developing high-bandwidth memory that can be certified by nvidia and he saw the stock jump on the back of that. in terms of the earnings it was a big miss for samsung in terms of how they are to the legacy inside of this business in terms of smart phones, chips for dvds, the fact there's competition coming through from china and that underscores the need for them to get the high-bandwidth memory certified so they can really play a role in the ai revolution that they have so far missed out on. today at 5:00 p.m. u.k. time we speak exclusively with gary as he prepares to leave his post, contentious as it was as chair of the u.s. securities and exchange commission. the opening trade is up next. this is bloomberg. ♪

kriti: we are an hour away from the opening trade, here's what you need to know. may cap tap lab by driving the s&p 500 lowee