alix: in the tpi readout it said it could by private-sector securities. it could consider. is that a good idea or bad idea? peter: i don't know. i would have generalized. central banks, the u.s. central banks intervened in the bond market. the government bond markets in europe. in private bond markets as well. i think central banks are used sometimes, under exceptional circumstances, to intervene. this really should be exceptional. here we talk about problems in certain jurisdictions, in certain countries. that makes it difficult, and there are a number of criteria. i think the ecb is going to come with a general signal that they could also intervene in private on markets, but i don't think that is useful. it does not hurt much, but it is not necessary. alix: it is like a huge net, there are still a lot of holes. peter, thank you very much. always appreciate your commentary. peter praet, thank you very much. mario draghi's government is over. dealing with banks during the italian debt crisis. marina broglie will be joining us next. this is bloomberg. ♪ alix: mario draghi off

alix: so it raises the question for me what's changed and i wonder, may be the tpi tool that the ecbas is better than thought. they can handle the spread widening. maybe they can handle the energy crisis in the winter. is there anything to that in terms of why they went so hawkish today. >> i think it's not very complicated. i think inflation fears are not good. the economy has been more resilient on this with some market analysts were thinking, myself also, the unemployment rate is quite low there some wage pressure. i think we should look at the simple analysis that inflation is too strong for the ecb to act. my concern is that the guidance on rate as been quite strong. and the intention you see it's not the intention to further dampen demand in a situation with the project with already to negative figures. this i think is a bridge too far. guy: peter, have inflation expectations and the euro zone become -- now. >> i think they are quite well behaved. and surprisingly given the inflation shock that we had so they are on the upside for us and the ecb basically wants to give a strong

anna: on what did you make of the tpi tools, the transmission protection? have seen it described as containing a lot of constructive ambiguity, and how much latitude there was in christine lagarde's own description. i'm sure it makes sense more to others than it does to me, but is it going to be enough, that tool? ella: we are on the people of the 10th anniversary of draghi announcing whatever it takes, july of 2012. this is probably as far away as possible, and i think it was designed to be ambiguous because the council is not keen on having to trigger that. they are being political at this juncture, because if you are trying to fight spreads widening in spain, france, and italy, how do you justify what part of it is political in nature? having said all of that, faced with a lot of pressure, we believe probably the ecb will choose to protect italy. at this juncture, we need to get ahead of the election, which means they are probably vulnerable here. alix: this is interesting he. the absolute level of yields are lower, at length 3:31 for italy, and german 1

maybe we can get through it therefore they can raise rates now and the instruments they have like the tpi to deal with fragmentation, they have more faith and it now than a few months ago so they can be this hawkish. guy: one was saying the ecb to go deep into restrictive territory if needed. but is a really big shift in the narrative and in terms of the language. the market got its arms around that story yesterday. the question of the day, how bad does it get? let's kick it around. we're hearing from ecb speakers today and they are really reinforcing the message we got from christine lagarde yesterday. the market coming into yesterday was nowhere near that kind of language. how bad could it get for european assets? >> if you look at the italian premium gauges the gauges how much risk we are saying in italy for example, the market is trying to respond perhaps aggressively to be message and they're finally listening to policy members who are saying we are not stepping down, inflation is the biggest goal even if session comes ahead. i don't think we will have to worry as much about session

then, to make sure to ensure periphery doesn't turn into something of a mini crisis, to ensure the tpiactivated and is credible going forward. that is quite a lot of movement from the ecb. anna: can i pivot to the u.k.? we have seen actual real yield today, and eye-catching forecast from goldman sachs that inflation could get to 22% in the u.k. where do you think inflation gets, how high do rates have to go, how quickly in the u.k.? peter: my models would point to similar numbers from city and goldman. i would ask, last week, there were assumptions going into the estimates. those banks are providing, that city was providing. it was based on estimates, accurate estimates. bearing in mind, it is likely to be extending the cap from 3d and a half thousand pounds above -- three and a half thousand pounds above 7000 pounds in or around march of next year. that leads through into all aspects of the u.k. economy. the thing that worries me the most about the u.k. economy's ability to turn into an inflation spiral is the have such a dramatic trade apposite and negative current account allen's. i

we've yet to test the effectiveness of the tpi. as they do more hikes and get more widening. turally you would expect bonds are rising and we are seeing a strong reaction from the two-year bond. guy: what is the euro doing in this scenario? we have a trait shock at the moment for the energy is priced in dollars. it is germane when we think about the inflation risk and growth risk will be this year. what do you think it will look like? skylar: so a really big portion of what happened to the euro is what happens to the dollar. so put simply the u.s. has had two major growth advantages this year. limited exposure to russia ukraine and elevated energy prices being limited exposure as well. one or both of those affect every other developed market. notably for europe it's russia ukraine. i think going forward for a dollar downside you not only need a slow tightening but an impetus elsewhere. you've got to the middle of that dollar somehow through china and we are definitely seeing more positive signs in terms of getting more positive on covid, on property, we are getting negative su

if we suddenly see a shock and increase in volatility, because the issue i have is, i'm not sure the tpiill be a very effective tool. if it is actually put to use than i think it could be very problematic. yes, if you are going north of 5% that will create some attention, but i think probably the biggest sure btp story will be the story for 2023, actually in the short-term term and a lot of people are very narration italy, a lot of people are short. if the political news is better you could see italy may be trading a little bit better in the next couple of months. sonali: is the risk of a gas shut down -- a russian gas shut down -- priced into the markets here? much risks does that pose over a multitude of assets for italy? mark: we already know this, no more russian gas, right? nord stream is gone and europe is not getting any more russian gas. thankfully, reserves are largely full. i think speaking to the guys at the commission in terms of the energy agency, i think the main theory is if we have a really cold winter, a statistically-cold winter, we will see further curbs, more blackout

the company. many may not recognize what tpi cap is, but it has quite a history. some characters behind it. to 2016, you had rivals in london. one headed by michael spencer, who wanted to sell the voice part of that to its rival, which made the company tpi cap. next group was what was left. you will remove read the beginning of the year, cme in chicago announced that they would be purchasing that company. so important company for the financial sector. mark: joe, thank you. vonnie: we want to get to capitol hill, where kevin cirilli is with senator johnson of south dakota. is brett kavanaugh going to be able to get confirmed? >> i think you will, but we have a process to go through and we want to make sure we do that in a deliberate way said that he gets a chance to make his case, have his record examined, to meet with senators and ultimately have a hearing where he will answer the hard questions, a debate on the floor and also a vote. my guess is, based on what i know, that he will get confirmed. kevin: what you want to ask him? >> with every nominee, i am interested in their judicial philos

perspective of the likely way they would be looking at this is their ability to intervene in the bond market through their tpi, those measures already in place. that is the most effective way for them to target. we look at energy shock. there are capacities to cartel that inflation is limited. we are seeing the stagflation inflation starting to emerge. alix: is the first bank of payment going to have to be the ecb because of the specific energy crisis? is the ecb going to pivot first? does that make the european market more attractive? laura: we have to take a step back and look at the big three. that is most likely to be the case that the european central bank will pivot first. we are starting to see the data deteriorate. eventually, we do think the ecb will focus on those growth concerns. as we look toward the fed, we do think at this point we are not yet seeing meaningful sign of the duration on the economic front. the bank of england has acknowledged that they do in fact -- in the u.k. it is not a catalyst at this point to enter as a european asset. i do not think that is going to be a 2022 story. i have

core cpi, we exclude the price of brent, 1.6%. headlines tpi over 1%. k underneath the surface, we are looking at more and more signs that inflation pressures are starting to build. you will what's that report this thursday to see if it gets so high the fed might have to act. you can check the chart at the terminal. betty: possibly heading to that 2% overall. ok, mark. mark: can i say that is the most lying joe has ever done. he has never done four lines. lines joe the most has ever done. two months ago today, the world stockmarket hit a bit of a boat. -- bump. as you know, we have seen a rebound since then. i love my anniversaries so i don't let us check out to see who is the best-performing equity assets since from 11, 2016. is uphe all country world by 11.8, the best-performin stock and evolve and 94 we track is the rts index in russia. it is up by 34%, rising with the price of oil. russia relies on energy sales for about half of its budget. the best-performing stock in europe is actually euro banking. i thought this was a bank that has basically lost

the market when it comes to debt sustainability concerns. they have flexible reimbursements of their pandemic program. they have to standby facility, relatively new tpich was created when the ecb started and just raising interest rates last year. they're still the omt which was created during the debt crisis in 2012. between all of those different layers and safety nets, the ecb is very confident that a debt crisis can be kept in check. alix: thank you so much both of you. wonderful set up to what is going to look very difficult. thank you so very much. coming up, more on the market impact of the ecb's decisions. this is bloomberg. ♪ tom: let's continue our conversation on central banks. in our question on the day, to what extent these terminal ranks that we are getting closer to, it seems and how that will feed through to these asset markets. joining us now is steen jakobsen . they see 5% terminal rate being held for about six months. what is the terminal rate you are starting to price for and what would a six-month hold at the kind of level due to these equity markets? >> i like the whole concept that the premise is that we are at terminal rate whi