it's the ecb day on the back of the ecb announcing they will have an emergency meeting.getting -- the spread between italian and german no longer widening. we are expecting the ecb meeting to talk about the market conditions. tom: european central bank's governing council holding back -- holding that emergency meeting later today to discuss those market conditions. he see money flooding back into italian debt, we are joined by maria tadeo. we got this announcement in the sixth hour. maria: what we see is the market reaction, stocks are up and yields her down. the europe jumping higher. this was unannounced, a droplet the bombshell this morning on the market, on the vectors. it is coming on the back of that seed yesterday, when she talked about we have no limit to our anti-fragmentation tools. reality is, for a lot of vectors, that is not good enough. it lacks the detail, there is a lot of focus as to whether this meeting will finally address the moves we have seen in the bond markets, particularly on italian bonds. we started yesterday at 4%. is this about action or verb

for the ecb it is about numbers. the spread between italy and germany last summer was inside 100 basis points. yesterday it threatened to blast through 2.50% and beyond. tom: it is the banking problem as well. very different than in america. i am thunderstruck they are doing this meeting out front of the federal reserve of the united states. jonathan: what are they going to do, wait to see what happens with the federal reserve meeting? they are seeing the outcome front and center. it is the one they are worried about, fragmentation. they know the detail they put out last week to address the potential fragmentation is not enough because this market needs to see a whole lot more. tom: where is lagarde on this? we really have not addressed that this morning. we can make mario draghi call for italy or the bundesbank a step in, but where is christine lagarde, the politician? jonathan: she came out of the very beginning of the pandemic, we are not here to close spreads. apparently we are, even within place in at 8% and eve

the ecb taking the most dovish route when trying to sound hawkish. we will hike in a month and then we will see. we are hearing people look at this message saying it is trying to sound hawkish but has a dovish tilt to it. jonathan: what is the time on that note? lisa: 8:03. jonathan: do you think she read it? i have some doubts about whether people read the full. lisa: he was quoting the full statement. i think he is not wrong, some will agree with that. nick bennenbroek agreed to say the same thing which is why you see a lack of conviction around trading. they are basically trying to appease every constituents, so where is christine lagarde,? jonathan: trying to please everyone, everyone often ends up unhappy. people unhappy when it comes to european central bank policy. i'm with patrick, surprise they open the door to gradual stuff down the line. that is a rate hike cycle, not a wait and see. tom: i will go to what we saw at the fed press conferences. you alluded to this important press conference in 20 minutes. it could surprise. she could cut thi

the ecb is up next.llar positive, .1%. >> keeping you up-to-date with news from around the world. the central bank's program for its first interest rate increase in 11 years. policymakers will announce an end to asset purchases. officials are trying to bring down record inflation while avoiding more damage to an economy hurt by the war in ukraine. president biden called inflation the bane of the u.s.. he said that high fuel and gas prices could be offset by legislation, lori the cost of scripture drugs and childcare. authorities and shanghai are locking down part of the city again. they will conduct mass testing on saturday. more than 2.6 million people would be involved. [indiscernible] the proposal puts the value at $3.6 billion of the business which runs more than 2200 roots drug stores across the u.k. tesla staged a remarkable comeback in terms of production in china. the vehicle maker tripled its output from a despite only recently getting it shanghai factory back up to speed. global news 24 hours a

francine: all of that ecb. tom: ecb and credit suisse.oming up, credit suisse shares drop over the news of a potential steak and a news that there might be a caoex expansion in china. this is bloomberg. ♪ francine: welcome back to the open. 23 minutes into european trading day and you can see stocks down between 0.3 percent and 0.7%. it is the ecb starting the process of reducing the balance sheet and one thing people want to know about is the fragmentation. we get more from the press conference with madame lagarde later. the banking world was taking off after news that state street could take over credit suisse. shares lowered this morning, giving up some intraday gains. for more, we are joined by tom metcalf. i was not expecting the credit suisse profit warning down by 7%, saying that they will need to cut costs and fire people. it is still down by less, and takeover target is 6% higher. it is going on? -- what is going on? tom: we are waiting to see how it moves together. the statement to clarify the position and what came out was intr

the ecb should just stand back. if you go long enough the ecb will react. what we've done over the last probably seven or eight months or so was to have interest rate hedges, but also to move petroleum steadily out of the euro zone into the u.s.. out of europe and no longer being close to the euro markets because what we've seen is the u.s. rate market is now more destabilizing for the time being and we have to go further. we take that volatility away. and also higher up the credit. guy: let's talk about the fragmentation issue. how wide -- how big a problem do think we will have? >> that is sort of the problem in itself, nobody knows where it will go but it is so clear that the market has been waiting for the app meaning clearly the use of volatility and it's now really testing where they have to be and it's been said all along we are well aware the ecb has been thinking about fragmentation early in the year so they clearly are aware of the problem. but what to do about it practically. so i think the problem is they haven't really figured out how to go wit

a preview for the ecb decision. let's have a look at china where shanghai is putting one district back into lockdown to conduct a mass testing drive, that's as the general trend is toward using covid restrictions that helped exports rebound strongly in may. but the outlook for china's exports. let's bring in our chief asia economics correspondent. improvement in may numbers, but clouds on the horizon for china's traders. >> exports up 17%, imports around 4%. total experts are on 308 u.s. dollars, the most since january. like you mentioned the devil is in the details. it reflects the pent-up demand and the reopening of shanghai after brutal two months lockdowns. factories are able to get going again. i key takeaway was there will be probably good numbers in june and july, but it may go south because customers in the west are dealing with high inflation, rising interest and are starting to spend more on services rather than merchandise goods. an important number for china's exports, and suggests a rebound, but questio

waiting for something from the ecb. tom: scheduled the fed meeting, but this ecb meeting right now, can you imagine chairman powell yesterday afternoon lagarde dials and goes we are going to front run you. jonathan: and they have a tough call to make. how do you thread this needle? tom: we will see what we see, but i am sorry, this goes back to john monet. the system did not work then and it does not work now. where is the fiscal policy to be a combined cushion. jonathan: that is a fancy way of saying you are worried about what happens with the italian bond market. lisa: the have to actually borrow money and inevitably it is going to slow because of the tightening you are going to see from the ecb. between a rock and a hard place becomes even more difficult for the ecb and they are dealing with a fed that is calling their hand especially given the euro and the weakening ahead of a more hawkish fed. jonathan: you mentioned ecb getting out in front of the federal reserve. a series of media stories this week teeing up 75 b

jonathan: the contradiction of ecb objectives. kid shoots of socgen -- kit juc kes of socgen put out the message, how do you -- that is the big challenge for this ecb. lisa: how do you have additional bond purchases without pushing down yields, without going in the opposite direction and loosening monetary conditions? they are in a difficult spot. they are trying to normalize the situation that is not normal. jonathan: the italian 10 year just above 50 basis points. tom: italy is the focus but i do not think it is the only focus. italy, since the beginning of the year, the italy 10 year has gone 100 down to 76. go over to hungary, 175 since the beginning of the year. what gets my attention is finland, down 8% from 100 to 92 in 12 days. jonathan: unreal. so much pain in bond and equities. equity futures bouncing back a little bit on the s&p, up .5%. the pain over the previous five days, five days of losses down more than 10% on the s&p 500. into the bond market where it does to a year yield is higher by 70 basis bites. the 10 year

for the ecb conference with tom mackenzie. tom: focus on energy, g-7 leaders exploring a price cap on russian gas as well as oil, crude climes for the third day. strategic outlook. nato is set to label china a systemic challenge instead of anniversary, sources say. the alliance lands a sevenfold increase to better deter -- central bankers converge on the portuguese hillside where they will look to set the tone on tackling inflation. let's check in on the markets. losses of around 16% across the u.s. space. --.6% across the u.s. space, mastec selling the heaviest. the mood has changed in the buildup to the open. gains of .3% on the ftse 100, china suggesting they will ease requirements when it comes to quarantine her inbound travelers from three weeks to 10 days, some optimism china gaining a little over 1% last time i looked. the spanish ibex and the cac carotid -- 40 up by .9%. the debate continues about inflation or recession, and which of those two is most in focus for investors. oil remains in focus as well, given the news

the fed and ecb paying attention to that. let's talk about the ecb side. today, we have seen the italian 10 year up about 4%, the first time that has happened since 2014. and fragmentation risk is stopping to manifest itself. we'll get a speech tomorrow talking about the fragmentation risk. now price action. a senior european rates strategist is joining us now, pooja kumra. nice to see you. pooja: good afternoon. guy: we have the ecb, the bread widening over germany, and -- the spread widening over germany. and this is the story developing in europe. how much further has it got to go? pooja: right now, it is moving definitely. looking back to last week's meeting, the ecb did not provide fragmentation tools. they said they were working on it. that they needed more clarity. unless the markets have clear numbers of much the ecb is buying, they will not buy into that story. with respect to that statement, the ecb said that they would be looking at the calibration of rate hikes at the december meeting. now, how fast the markets are thinking about rate hikes, th

traders not convinced by what the ecb said yesterday. tom: goldman sachs saying the ecb could be looking at 50 basis points in september. madame lagarde leaving the door open for 50 basis in september that was part of the hawkish tilt you are seeing from the governing members of that european central bank. the central -- spanish ibex is lower by .5%, the ftse 100 down 26 points. we have that cpi data later today and it will form a more concrete view on where the fomc goes in its rate path. there is real pain being felt at the petrol pump in the u.s., the cac 40 down by .7%. the german decks as well lower by 86 points. let's see how things are playing out across asset. francine mentioned china, the software inflation giving space for policymakers to step up easing but you have additional lockdowns in shanghai, a reminder of the constraints around covid zero. after a sell of on wall street, futures pointing to gains of around .3%. euro-dollar in focus given the volatility yesterday on the back of that statement, and the press conference fr

ecb has their first rate hike in decades. euros have tumbled. >> medium-term inflation. >> a tale of two inflations. the man's we can. all eyes turn to the u.s. work cpi is expected to top -- again. congress kicks off. generally six attack on trial. -- the january 6 attack is on trial. market participants, are the scared of the rally? yields across the globe continue to head higher. for friday, we're seeing a little bit of a leap. perhaps not enough to compensate what we have seen so far. we are up a quarter of a percent but we are headed lower on equity. it is really led by european moves yesterday. euro yen, we will get into euro a lot in a moment. we won't tread on that too much. looking at yen, the euro is unable to hold on. concerns about demand are adding to that. china, parts of shanghai undergoing more lockdown. to europe where the bank has brought down the curtain on years of monetary policy. leads to a quarter-point increase in rates next month and singles that -- signals the bigger ones might be up and fall. >> new

the ecb were behind the curve. i think this is telling in the sense that they were expecting spreads were widening. [indiscernible] we get to very worrying levels quickly. i think inflation operably does rank ash inflation probably does rank -- inflation probably does rank higher. [indiscernible] alyx: from what you are saying, they want to widen, they just wanted to be orderly? they want everything be perfect at the end of the day? what role does the credit market play? i know it plays a different role in the u.s. than in europe. is there a tipping point for corporate spreads ecb needs to be sensitive to? antoine: i'm sure there is. the sovereign bond market is different between the u.s. and europe. costs -- diverge between one country and another. yield spreads are wide enough that field if tightening does happen -- [indiscernible] guy: does the ecb have this ready for the next meeting? i imagine it sure is onto use this tool. imagine if the fed goes 100 basis points tonight. you could is the sea -- you could eas

ecb relative to the fed.istian: good morning, you are right. situation in europe is more tricky than in the u.s. mary daly made an important remark, she pointed out the neutral rate needs to be seen in real terms. since we are facing higher inflation in the u.s., the rates would also have to go higher. in that respect, we are on a -- there may be another 75 basis point hike in july. in europe, the situation is more tricky. until late may, both the chief economist of the ecb and the ecb president said they would only hike by 25. then to the surprise of many, following last press conference on the ninth of june, president lagarde pointed out there may be a 50 basis point hike. we are facing a difficult situation with pressure from russia on energy prices. they may well settle for 25 basis points. we are looking for hints from the central bank gathering the first three days of the week. manus: and we are also on the ground there with the g7. we are trying to work out the worst case scenario if russia cuts off th

joining us as the ecb discovers heritage, maria, this is not t heir ecb.s is christine lagarde's ecb. how is it different than early days? >> yeah, you are very right. this feels like the end of an era for the ecb, the end of doing whatever it takes. we are headed into something new. what that looks like is going to be a challenge for christine lagarde. it is clear we are heading into a lift off, july is one category, there will be two things that are very important. she stay on the 20 five basis points narrative there was consensus until a few days ago, or are we going to see a hawkish christine lagarde that potentially opens the door to something like 50 basis points? the other thing, this will be a big test and potentially a big point of departure from the old ecb, and fragmentation around the euro area. the reason we are here in amsterdam is because the euro central bank does not need it like this. once a year they like to showcase the system, 19 economies but will the central bank managed to take rates higher but also taylor policy in a way that it do

will christine lagarde and the ecb broadly be able to keep that?he's been vocal about saying it is not the ecb's job to close those but we are preventing the anti-fragmentation, what tools can they use? we will keep you updated on the entire story, the euro appreciation, the strength against the dollar, we will circle back to that story and brought it out and let's bring in the perfect guests president and founder of macro policy perspective. a fascinating career at the federal reserve as well and broader economics, we thank you for joining us. let's start there in terms of what do you make from the divergence you are seeing on the federal reserve versus the ecb versus boj? how to the global economy is deal with these separations? >> while you have been pointing out in the show that the tensions, we are in an integrated global capital market. if the fed goes a lot faster that will strain and make the jobs of the other central banks harder. i agree with your other guest, it is not a currency war but the divergence that are starting to be material fo

the ecb as you mentioned as having a tough time communicating, as i said a few weeks back, the ecb policyurdly utterly miss calibrated. the ecb deposit rate versus the nominal gdp in europe is currently -14%. three times easier than anytime since the euro has been alive. the latest policy meeting was a total disaster. what the ecb then has to do is start talking about backstop regimes for the southern europeans because they cannot commit to kate proper policy direction -- communicate proper policy direction. a great improvement in southern european balance sheets, but they've been impacted by this lack of communication. i think it is something to watch. i think the euro earea -- area politically is more cohesive than last financial crisis. so i am optimistic the tools are available, the political will is there to ensure the euro can survive and will survive. it is deeply frustrating in essence what we have is earning settlements going up -- coming down sharply come so it is a challenge for these institutions to convey a story that is relatively constructive right now. kriti: barrington, i

the ecb is raising 25 basis points next month. the central bank cut forecast for the next three years, and predicted inflation will end at 6.8% ecb president said the central bank is focused on bringing inflation down to the 2% target. >> we observed inflation expectations are well anchored we want to indicate to those who form expectations, whether markets or whether they are experts or consumers, that we are determined to delivering on our target of 2% in the medium term therefore, expectations will remain because we will deliver >> she does not expect the prices to decline after the immediate hike >> do we expect july interest rate hikes have an immediate impact on inflation? no first of all, because of the anticipation of our monetary policy and because of the inflation and growth outlook, financing costs have already moderately, but significantly increased whether you look at corporate bonds or sovereign bonds or bank. those financing costs increased. with the signal we're giving here, concerning the short-term rates, this si

central banks are said to hike, this does not include the ecb. let's get to that risk story, looking at china stocks opening higher. they are coming off of a long weekend, they are up one and a half percent lead by industrials and materials. that gets to this idea of travel coming back, the s&p 500 futures are up .5%, euro stoxx futures going higher as well. playing a little bit of catch-up. u.s. stocks did end lower friday after strong payrolls numbers, but a little bit of bounceback this morning. manus: i have it on good authority a lot of cake was eating over the weekend. dani: indeed. manus: we will come to the mliv survey in a moment. it is amazing how our viewers are more concerned over where rates end up than they are over qt. china stepping back from restrictions, the saudis raising the price of oil to asians. citigroup do warned that there is going to be a delay in iranian sanctions releasing barrels to the market, they are going for 113 dollars on brent by the second quarter. bond yields rising ever so slightly, again, hedge funds turne

does the ecb have the tools to tackle this? maria: she repeated that the ecb will want to avoid that. she has said we have done it and will do it in the future. but specific tools, she did not reveal that. it was underwhelming investors wanted to find out the shape and form that this tool would take, also the pain threshold that the ecb would take. the fact that she was asked four times about fragmentation did not go into detail magnified this idea that we ecb does not want to reveal their tool. if they do not talk about because i have one, that is more of a problem. alix: that was the game changing moment for the markets there were also questions on credibility. many quarters led, why should we believe you? did he give a good enough answer to beef up ecb's credibility? maria: he repeated that ecb is committed to bringing inflation to target. he also conceded that it is not at a desirable level, but when it comes to the forecasts, which persistently have been at least mark, gross and gdp -- big revisions happening there and mis

>> they have pushed the ecb in a direction. some have figured that inflation has surged in they still have the key rated negative. that has not gotten to zero yet. they will end bond purchases on july 1. they would do 25 basis points. and what convinced the doves about doing this was not just the head of the dutch central bank and other saying we have to not be so soft, it is also the fact that inflation has surged so much. in the september rate hike, there is a possibility that they would do a 50 basis point rate hike then, but let's remember that it's not like the rushing through these rate hikes. they're just getting started. they are going gradually. they will be more aggressive. that is one thing the bond market does not like. they will have to be more aggressive later. meanwhile, i was listening to what you said about the bond yields, the peripheral bonds, greeks, italians, etc., that may have been part of the deal between the doves on the ecb on the hawks that we know we have to hike rates and get aggressive, but we have

maria tadeo with a recap of the ecb's ad hoc meeting. lizzy burden is just around the corner at the bank of england ahead of today's policy meeting. and julia singapore is in singapore across the market moves there. the hike of 75 basis points from the fed, the biggest since 1994, jay powell reasserting the commitment to rein in prices. >> we are strongly committed to returning inflation to our 2% objective. inflation has again surprised to the upside. some indicators of inflation expectations have risen. in response to these developments, the committee decided a larger increase in the target range was warranted. today 75 basis point increase is unusually large and i do not expect moves of this size to be common. either a 50 basis point or 75 basis point increase seems most likely at our next meeting. tom: enda curran joining us now from hong kong, are you reassured, to the markets appear reassured, have they regain the initiative? enda: 75 was expected. they did not rule out another jumbo size move again in the future. they will go 50 a

francine: but the ecb, is it the one markets are most worried about?ei: at this juncture, given the more dire growth/inflation trade up in the euro area because of the war in ukraine, and hero economies being more impacted, the ecb is in a more tricky position. inflation is getting pushed up more in the euro area compared to the u.s. and growth is being dragged down because of the energy crisis. the ecb growth inflation trade-off is coming to a head, and we believe the pricing is to hawkish. the time to turn more dovish is not down because of the inflation pressure. tom: what is attractive if anything in the fixed income space? wei: over a six to 12 month horizon, we want to go along the short end, and short the long and. -- long end. we are underway government bonds because of elevated inflationary pressure. we recently upgraded credit from underway to neutral. that is off the back of downgrading developed market equities. tom: what a great day to have you on. wei li, global chief investment strategist at blackrock staying with us. let's get the busin

the fed and the ecb yesterday and today. bank of england is set to deliver its fifth consecutive rate hike today. the decision comes against the backdrop of a global --in markets. charlotte ryland with ccla investments is still with us. is there an argument that given the fed response yesterday, and the ecb has given itself some space to go harder on hikes with plans for the anti-fragmentation tool, that the boe has to play catch-up. that they will have to step up rate hikes because of the pressure on the pound? charlotte: they have had a weak print, i imagine it will get worse the second half of the year. the bank of england has talked about 10% inflation coming through, and we have another big gas price in the second half. there is the short-term pain of pushing operates, but if you let inflation get out of control and we get back to the 1970's, that is a much much worse situation. francine: are there parallels with what we live through in 2008, are we going to see a credit crunch, is read -- rev lon a case in point? charl

the ecb emergency meeting short on action. the bank now says it will accelerate against fragmentation. in the fed race, market and economy think recently expecting 35 basis point hikes to retain credibility. and bitcoin teeters on the edge, the price bounces off of the 20,000 mark as crypto investors struggle to stay afloat. we are going to hear from grayscale investment's cio. from new york, on alix steel. welcome to bloomberg markets. whatever you think the ecb should have done, they did move bond yields significantly to the downside over in europe and now i feel like we have to wait and see if they can sustain that when we get the fed announcement. >> in some ways we anticipate, out of the ecb didn't get it but they say the market reaction has priced in something and we certainly seen the fed compressing move to ecb. i think we probably now move onto the main event, which is the federal reserve a little bit later on. 75 basis points, what does that say about the story going forward? that is going to be absolutely fascinatin

>> the ecb is hedging his bets. one thing i believe points to a really pretty rate -- raising rates. in contrast to the reserve bank of australia and the federal reserve and the u.s., of the ecb is very scared to use quantitative tightening. which the other central banks are using quantitative tightening to try and flank the interest rate calls. the ecb is rightly very concerned about inflation, it isn't going to do that. interest rates are going to take more. alix: here in the u.s. the narrative is evolving were more worried about a recession versus inflation. from what you're talking about it feels like in europe the risk is still inflation, and recession yet. >> i disagree on the recession risk frankly. i think that there's a lot of sources of resilience. first faults the starting point. we have fantastically tight labor market. pre-much everyone of the exception of china. that's good to make them very reluctant to fire people. we've got these enormous household savings which are deployed very grad -- two very gr

if it takes them balance from -- it takes balance from the ecb. tom: the better index, broader index, one point four standard deviations -- 1.4 standard deviations off the trading partner, what does this inflation report mean today for the broader emerging markets? jane: for the broader emerging markets, they are sensitive to what the fed could or could not do in terms of interest rates. more interest rates five's, the more aggressive pace, bad for emerging markets. i think this is what the cpi index will help us know. how do we reach this peak inflation -- have we reached this peak inflation scenario or not? some of the factors you were just talking about, how hard is inflation affecting consumer confidence? is it meeting people are spending less at this point? tom: thank you so much. this goes with what you and ms. foley were talking about, not just the 8:30 report, the ann arbor and university of michigan report. i am looking at the one data point. five years out, five years out from that, the inflation guesstimate. lisa: how sticky is it? how

mazen: yeah, the ecb meeting for the upcoming ecb meeting has been fairly well telegraphed.e know that they are going to essentially announce that they are going to end adp by july and they are going to begin normalization by the july meeting. i think what is really going to be important from this is whether or not lagarde comes out in favor of doing more aggressive policy tightening, as some of the more hawkish members of the council. so far, that is a minority. the way as an institution the ecb has worked is generally more dovish. and i am hard-pressed to find -- or find it hard to believe that lagarde is going to come out and support of doing a series of 50's. there is a case for that down the line, later this year, but given some of the risks they are facing from the macro funds, particularly emanating from ukraine, it may not be something that i think lagarde is willing to sort of traverse at the moment. yvonne: what would be your positive than that could come out of the ecb today? mazen: well, i mean, i think lagarde would basically need to effectively say that they wi

anna: you said ecb policy is inappropriate. we started showing market is pricing in a half-point ecb break -- rate hike hike in september following rate hikes in september. with that sound like where we need to get to? or do we need to new more? barrington: i think forward rates are telling you the ecb needs to become far more aggressive in the rate hiking regime. just to put it into perspective, the posit rate versus nominal gdp, in the euro area today, stans -14%. in other words, monetary policy is absurdly, and if you compare the -14% to the history of the euro area, it has never been beyond negative five since the euro was invented. so we are dramatically easy today. we believe not only is inflation here, inflation pleasures -- inflation pressures are here, but also beginning to see pressures on the service sector. we would expect that pressure on the ecb will remain. anna: so 14% versus nominal gdp, -14% for the positive right. we know about inflation pressures and there are more next-door door. does that make you think th

we will watch that ecb press conference tomorrow.oris johnson says absolute nothing will top -- stop his agenda. he says he will not be blown off courts -- off course. this after 40% of his party said they have no confidence in his leadership. this is bloomberg. ♪ >> in a long political career so far and of course has barely begun, of course i picked up opponents all over. francine: he is back. that was boris johnson speaking to mps in the house of commons earlier today. he plans to press ahead giving him power to override parts of the brexit deal. lizzie, we -- you had batches. you worked for toy five hours because that votive confidence. he's back, it feels like he's one and he wants to get brexit done in any way possible. >> classic boris johnson. there are some doubts if they get this bill over the line tomorrow because first of all we are hearing they may not have their ducks in a row in terms of legal advice, they might not want to overshadow the bill coming and they want to look bad before the elections on june the 23rd. but -

taylor: that was ecb president christine lagarde speaking earlier.be signaling a better hike -- a bigger hike could be possible as soon as the fall. joining us is joe davis, vanguard chief economist. is this to be still a little bit behind the curve? joe: thanks for having me. yes, and i think many central banks were behind the curve last year. it was a central thesis to our outlook. we are clearly continuing to see a fixation on getting price pressures hopefully contained. i thought was interesting from the ecb if they start talking about medium run inflation outlooks knowledge and the fact that we will not see material improvement in the near-term. jon: to build on not come from your vantage point, mohamed el-erian saying today is just too early, at least in the u.s. much to suggest we have reached a peak in inflation. what is your view? joe: i think it will be tough to tell. we are in a precarious situation. even if we had evidence it is peaking, it is still going to be high from any consumer's perspective. food and energy combined are a pretty po

haidi: christine lagarde speaking after the ecb decision.n is warning that inflation is yet to peak as a driver's including the high energy prices persist. it bloomberg opinion contributor told us that the cpi out on thursday could top 8.5%. mohammed: i have no reason to have a different forecast from the consensus of .5% or .7% month-to-month, but what worries me, and you will not like this, june month-on-month print will be worse than the may month-on-month print. those who boldly said inflation has leaked and it is coming down me afte -- may have to change their minds. i would not be surprised if we see a headline print that is much higher than 8.5%. >> next month? why? mohammed: because the drivers ultimately should our bargaining and that is due to affect a policy mistake. secondly, at the headline level, energy prices are going up month-on-month quite dramatically. thirdly, p.r.c. pressure on shelter and food. if you look at all the components, it is way too early unfortunately to say that inflation has peaked. i hope it has, but it wo

exactly what the ecb has said.deed the county of yorkshire itself with effectively bringing the game into disrepute. but i think you got a sense, in the statements you have been detailing ofjust how long still this may take. the hearings will not be taking place until the autumn of this year, this has been a long—running saga, some years now since whistle—blower azeem rafiq, a former player at yorkshire, first made allegations, and still some way to go, because these cases are going back a long way in time, as yorkshire have stayed in a statement, and it could well be there are appeals to come. it will be interesting to say, if some of these charges result in guilty verdicts, and important to stress that no one has been identified among those individuals, interesting to see what punishments may be applied, a fine, and ban, but we understand that not all may be involved in the game and an active way, so that remains to be seen. for yorkshire, interesting timing, because behind me they are preparing for the third and

the rbi has hiked by 50 basis points as we look ahead to the ecb.with us, this is bloomberg. ♪ tom: welcome back to the open. we are almost 40 minutes into the european trading day. losses of around .2% across the benchmark. the banking sector one of the sectors in the red, down .8%. we want to focus on that sector and the challenges in the months ahead. let's talk about specifically europe, it has not been easy for lenders with war in ukraine and skyhigh inflation, about 8% in the euro zone. joining us from rome, from the goldman sachs financial conference is jose manuel campa, european banking authority chairman, with experience previously secretary of the economy in spain. thank you for joining us this morning. as we look at a higher rates environment, the rbi with 50 basis points earlier today, and the ecb tomorrow and expectations that asset purchases will end and maybe you get a hike in july. do you expect higher interest rates are going to be net positive for europe's banks? jose: good morning, thank you for inviting me. it should be a good o

the ecb is now playing catch up. they have laid out this game plan, asset purchases finish this month, and they have signaled quite precisely a 25 -basis-point rate hike , a 25-basis-point rate hike. they are coming from behind, but definitely playing catch up. haidi:. haidi: given they are coming from behind, does it surprise you that they don't go 51st? andrew: -- does it surprise you that they don't go with a 50 basis point hike first question mark andrew: 25 is the new 50. we have seen that from the rba and the rbnz. they are signaling a steady start and then they will dial up the pace. they are mindful not to rock the markets. we have seen this pattern -- the fed started in 25 and went to 50. the bank of england started with 15 and then went to 25. haidi: where bond yields go from here? we are seeing hints about recovery and that it is just taken away because the sentiment seems so fragile. there doesn't seem to be a lot of conviction in the moment. andrew: i always think that the u.s. 10-year bond yield is the

shery: you mentioned the ecb.e are setting up for the central bank to wind down trillions of asset purchases, setting the ground for the first rate hike. how do you position in european assets? massimiliano: in european assets, definitely fixed income is not the time. talking about dollar-denominated. here the interest rate move has not happened yet. of course longer-term rates have moved higher but there is more to run. in europe we are still in negative rates. there is still quite a lot of room to go. we are likely to go to zero, mainly slightly positive for the end of the year. definitely what you see in the u.s. in terms of asset impact because of central-bank changes in their policy you're likely to see you are maybe at a slightly lower magnitude but it will likely be repeated before stay away from long-term fixed income which are euro denominated. maybe take a little off of financial exposures in the equity space and expect pressure to come on the back of the euro stocks once its stance has changed. shery: o

the ecb, they react to the emergency.d be great if they put something in place before but that is very difficult. tom: we turn the focus to credit, which you recently upgraded. is that something you stand by? >> we looked at investment rate credit in the u.s. and when the index breached 4.25%, and the mix was interesting, yield and spread is what gave you that. that is a pretty attractive kerry instrument so that is why we had been underweight to neutral. we were reflecting on the spread going forward. we would be more likely to upgrade it to downgrade it. dani: i want to get your take on real yields. what does it mean for your risk asset outlook? >> what has happened is breakevens actually have readily stable. in the context of the world we are in. they have been stable which is interesting. nominal yields have pushed higher, real yields have pushed higher, and that is a big shift. we are back to average real yields over decades. we are not too far from the average 10 year real yields. what that is telling us as we have

command doj, a -- ecb command doj and fed.g the charge. ? the fed has been the driving force in the last years. guy: all of that is coming up. this is bloomberg. ♪ psst. girl. you can do better. ok. wow. i'm right here. and you can do better, too. at least with your big name wireless carrier. with xfinity mobile, you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill, over t-mobile, at&t and verizon. wow. i can do better. yes, you can. i can do better, too. break free from the big three and switch to xfinity mobile. - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get

those naughty swaps traders getting ahead of the curve and ecb. gold defies me, three weeks of gains and then it turns into the red. these markets will not behave themselves when i to this report. john has the latest on the jobs data, and here in the middle east, our energy reporter to talk oil. manus: we also have our senior editor for asia finance on the losses that tiger global, and juliette saly has more on speculation about further bank tightening in asia. it is jobs day in the u.s., data for the month of may will show the smallest gain in employment since 2021, after yesterday's miserable edp figures. lael brainard says 50 basis points for next month are reasonable. how did those comments a this current conversation around that policy? >> happy jobs day to both of you. this seems to be coming almost daily now. it seems like just yesterday we were talking about bullard's 75 basis point height rumor, and the thought that that may be on the table for the summer months. we are now cementing a realistic expectation of those 50 basis point hikes t

market requires the ecb to deal with it.ry: we are looking at a fifth consecutive hike in as many meetings. how much more will they have to do given we are talking about uncommon moves from central banks? the labor market is pretty hot as well. do they have room? john: i don't think so. the bank of england is in a difficult position where we do have a worse inflation problem than some other countries. we also have, thanks in part to brexit, which bet not have been the greatest of ideas, there's a shortage of labor which means there is more pressure on wages as well. the expectation which i imagine is going to be fulfilled because they don't want to cause too much excitement is we are going to get a 25 basis point hike on them tomorrow but i find it hard to believe they are not going to continue beyond that. the other point they have to contend with, they have managed to get down to $1.20. when you have a weak economy, you will find a pathway to inflation. shery: john authers here with the latest. let's go back to essman argu

ecb deals with a fallout from the azema rafik racism scandal.orformer no room for former captain steph horton. and back together at brookline, the rebels return after last week's event that fractured the world of golf. hello and welcome to sportsday. let's start with the news... let's start with that news from the world of cricket today, that the england and wales cricket board have charged a number of individuals with bringing the game into dispute. it follows the allegations of racism made by azeem rafiq while a player at yorkshire. the accused, who have not been named, could be banned orfined by the ecb and yorkshire itself has also been charged with breaching the anti—racism rules. let's cross live to headingley, where we can speak to the bbc sports editor dan roan, whojoins us now. dan, can you give us a little more on the developments today? hi, sarah. this is a significant development in what has been a long—running saga. this has cast a shadow over the whole of english cricket for well over a year. the ecb have conducted a complex invest

inflation print and a big ecb decision.hat conversation is up next. ♪ jonathan: live from new york city, this is bloomberg "real yield." it is time now for the final spread. coming up, china pmi over the weekend. next week a whole host of central bank decisions, including a big one from the ecb on thursday. posing out the week with a big cpi print friday. bob, briefly, the ecb next week, are they going to be teaching us up for a rate hike? -- teeing us up for a weight -- rate hike? bob: do they do 50 or 25 out of the gate? i think because it is the ecb, they're going to do 25. jonathan: can the ecb get rates back to zero before year end? this was controversial maybe six months ago. i think this is pretty easy for you guys now. yes or no, can the ecb get rates back to zero before year end? gargi: yes. jonathan: bob? bob: yes. jonathan: jim? jim: easily. jonathan: things have changed a lot. on inflation, i'm looking at the estimates. the median still has an eight handle. if you had to get out to december, year end, where you

the ecb, wrapping up its annual retreat in portugal. president christine lagarde is about to give her closing news conference. that is going to happen any moment now. earlier on she said that she sees -- that is hard to say -- a new environment for monetary policy. pres. lagarde: i don't think we are going to go back to that environment of low inflation. there are forces that have been unleashed we are facing now that are going to change the picture in which we operate. guy: lagarde thinks we are not going back to that low-rate environment, that this inflationary environment we lived with for basically 10 years. do you agree with that? >> i agree with that partially. i would say it needs to bring down inflation we see right now. you never know when they will stop, so probably we will see also in the shorter-term horizon over the next year or so inflation to be really below central-bank targets. on the longer-term outlook, yes they are under inflationary pressures, and also we think they will remain. however, you have a different shape b

maybe the ecb. changing like this at the last minute in guiding the markets would have with the markets in a panic. the other idea is we don't know what we are dealing with in september and november as we could have a gas embargo from russia. things could get tricky. the fact it is smaller, he put your foot in a dark room and see what happens, and then you can calibrate. i think the market's interpretation that she was on the dovish side because it would have been a great opportunity to say otherwise, is the correct one. alix: we are looking at a chart that says the dread of the spread. that is the other arm of this. that reinvestment piece that is going to deal with fragmentation. if they can tighten financial conditions while keeping a lid on certain bond yields, at the same time hiking rates, can they do all those things? francine: they're trying to commence the market they can, but of course christine lagarde did address fragmentation. she addressed fragmentation by saying, we will not tolerate

the ecb's financing governments out right.hat is interesting to see what those detailed conditions are. at the bottom of the story, for market participants is an important line. flexibility may also involve frontloading reinvestments, meaning the ecb could buy new bonds before older securities mature. the master part of this mechanism, the effort, that is getting people to pay attention to the bond market. italian yields role higher, 395 on the italian 10 year. tom: the oddest fixed income story i have ever seen. he read the first paragraph of this story, -- you read the first paragraph of this story, it -- i am going to invent the phrase, bond sterilization. that is how contrived this is. not silly. this is an exceptionally odd story of this desperation to come up with a new mechanism. jonathan: i remember the security markets program in the euros on debt crisis, that was sterilized to begin with. i remember going all the way back then. what is interesting, they are trying to tighten financial conditions and contain what happ

the focus is on earnings going forward to ecb. we had big goldman sachs note expecting a soft landing for the u.s. i am mention a lot of the conversation this week will give impetus to a lot of these sectors, whether we can avoid recession out of the u.s., and whether the u.s. consumer keeps on being strong. francine: tom: mercedes gaining more than 1%, despite a report of a recall of a million vehicles on concerns of faulty brakes. hermes, just pulled out one of these luxury players for you, gaining .5%. the maker of things like niea moisture. around 300,000 jobs added on friday in the u.s., they hired at a robust clip in may while wage gains held firm. as the fed raises rates at a steep pace to tame inflation. btv weighed in on the latest data and its implications for fed policy. >> these are still very strong numbers. >> the fed is going to be aggressively raising rates by 50 basis points a meeting for the next few meetings. >> there is nothing that is going to stop them from continuing this march of 50 basis point increases. >

but the ecb does need to get back to positive because of the inflationary backdrop. at that point, we expect them to keep the growth focus back in the radar and we are likely going to see a dovish pivot from them. in terms of investor positioning, we shifted our mutual positioning towards european government bonds given the backup in yields and aggressive pricing from the ecb. tom: yields are looking attractive at this point to you. laura: it really depends again, on that regional story. for example, in the u.s. we trimmed our underweight on u.s. treasuries, but we still hold that underweight position. i think that's largely the case, the focus in terms of market narratives has been on inflation at what the fed will do, less so on the growth front. we are not yet seeing signs of u.s. recession. yes, growth is going to materially slow from here, and at that point you would expect investors to position further up the curve. francine: some of those high-tech valuations that no longer makes sense. laura: we do see some value in terms of having tech in your portfolio as a

but ecb front and center. what is interesting, after a job stay, the monday after a sort of clunky -- the headline today's the jump condition in copper, optimism of china reopening. jonathan: we push onto cpi friday. -- the summer of volker, no fun until the fed is done. tom: it will be data-dependent. with an 8.3% statistic, what if we overshoot that, come in underneath? research shows us it is an ambivalence. it is like we just have to wait. you think -- jonathan: we start to see price targets come in. we will check in with lori calvasina in a couple minutes. lisa: pretty much across the board, perhaps we have come across people pessimism. the idea of my ozone of morgan stanley saying we will probably start to see company start to remove some of the fuzzy forecast and downgrade even further what their profits are likely to be, and that will lead to the next leg lower, but this is not a a wholesale freak out we saw a couple weeks ago. jonathan: do you want good news? quiet period for the fed started. lisa: do

the third week of july, that is when the ecb meets.w it is that the ecb plans to go about supporting this bond. at the moment, indications are they will be inviting btp's, biting spain, portugal, all of these indebted nations, and to counteract that affect, they will be selling bunds and other higher-rated debt securities. the impact of how that will actually work out is something to be seen. definitely, we have parliamentary elections coming up in italy soon, as well. so there is not only the credit risk that investors will be considering but also the political risk that investors will be weighing up in the coming months. tom: political risk and once again for the eurozone. the political risk is very different in japan, you have been writing about this, bank of japan holding to its ultra dovish policy stance. i was speaking to an economist who said, you understand the politics in japan is very different. there is not the pressure on the boj to change policy. they are not concerned about where inflation is heading. do you buy into that