credit is already tight, we have seen the ecb rate -- ecb being very vocal.ically the same levels as heading into the great financial crisis in europe but that is quite the statement from the ecb bank lending survey. wherever you look, you are seeing credit deteriorating. it is really simple. take europe, high-yield borrowers in europe used to get funds for five to seven years at around 3% yields. 3% borrowing rates. you go have a look at where these companies have to borrow today, you are looking north of 7%. there is not going to be demand to rollover your debt very aggressively if you half to double up your interest-rate cost. the demand for loans comes down because mortgage rates are too high, corporate borrowing rates are too high. and banks are not very happy to supply with credit, because fundamentals are deteriorating. you are in the midst of the typical late cycle credit deterioration which can easily turn into a credit crunch. the ecb hiking more and the fed keeping rates at 5%, plus the banking turmoil can exacerbate the problem even further. manus

today was the ecb's turn. yesterday, the fed. ecb president christine lagarde signaling the central bank in frankfurt is not done. here's what she had to say earlier. >> the inflation outlook continues to be too high for too long. in light of the ongoing high inflation pressures, the governing council today decided to raise the three key ecb interest rates by 25 basis points. overall, the incoming information broadly supports the assessment of the medium-term inflation outlook that formed at our previous meeting. he will keep reducing the euro systems asset purchase program portfolio at a measured and predictable pace. in line with these principles, the governing council expects to discontinue the reinvestment and the app as of july 2023. guy: the key line that stood out for me -- that was christine lagarde, the ecb president speaking at the press conference centered around what sufficiently restrictive is. we are not sufficiently restrictive. we are going to raise rates until we are. what does that mean? the ecb -- maybe it stil

ecb watchers are looking for three things.: maria tadeo is on the ground giving us context on that and we will be listening into madame lagarde and her guidance as well around that. we also have the earnings extra. francine: volkswagen be after rising deliveries and demand offset a slide in sales in china. the cfo who is also the coo arno antlitz spoke to our reporter. arno: the competition will increase. with the semi conductor supply improving, demand coming down, the q3 and q4 will see more competition and we are preparing for that accordingly. we have a strong substance but we are not naÏve. we had to prepare on the cost side both in terms of activity and fixed cost discipline and we need a program to improve margins. these other things that we have set up right now. >> something that this quarter was also marked by, the launch of the model behind you but also your entire board went to china. what did you leave that visit? arno: you are right. we have been in china and spent three days in china and look at competition. we

guest: we think the ecb goes to 3.75%.hat's a rate that will be sufficiently restrictive than they will stay there through the end of the year. more importantly for the ecb and the u.s. as well, for inflation headline inflation will decline through the rest of the year but the central bank -- as central bank stays on hold, that will increase. the desire to do that will be high. making sure -- the desire to make sure inflation moderates is strong. alix: what's the specific effect on china -- of china on equities? do you have to price in a china downturn in certain arias of the european market? guest: i think the challenge of this story is that our view is a china recovery will eventually strengthen. we've seen week data so far but we think to factors are at work. we haven't seen the full effect of reopening the country has still been dealing with covid waves, reluctance of spending after a long time of lockdown. we think policymakers would ease further if the growth data doesn't recover as we expect the second half of the y

the ecb has its work cut out.x: fair enough, but if we take the german data for a moment, the ideas they are working of backlogs from the pandemic, but there are no new orders to fill the backlog when the backlog is done. won't that feed into the real economy and consumer spending? isn't it just delayed reaction that is that going to be a concern? geoff: absolutely. i do think that with the orders figures from last week, double the clients on the annualized basis, unless we see a strong surge into china's manufacturing demand, the high value-added products, that could pick up a bit. it is going to be challenging. you will see the consumer side converge to the manufacturing side, not the other way around. we will see slowdowns of ahead. the ecb doesn't need to encourage that and accelerate that, just as the consumer has achieved some escape velocity. we are thinking another 25 basis points, probably 50 basis points. leave the consumer alone. if you want to tighten conditions, use the balance sheet. dani: i want to

it is a tricky job on part of the ecb - from the ecb.ecb. it is a tricky job on part of the ecb it isj from the ecb. it is a tricky i job on part of the ecb it is so very the economies that share the euro currency, comparing germany to italy or spain, what their needs are, are very different?— their needs are, are very different? ., , , ., different? completely and i think that _ different? completely and i think that was _ different? completely and i think that was highlighted l different? completely and i | think that was highlighted in the inflation data we saw on tuesday, luxembourg had inflation of 2.7% you have latvia with inflation of 15%, there is a huge difference there, and as you said within there, and as you said within the economy of the eurozone economy you have very service sector focused economies and economies focused on manufacturing, so very big diverse range the ecb has to contain. ~ ., 1, ~ diverse range the ecb has to contain. ~ ., a, ~ ., contain. we have the bank of encland contain. we have the bank of england wer

that is the job of the ecb.uld mean, depending on the timing of what you just said, materializing earlier. guy: jens, great to catch up. jens eisenschmidt, european economist at morgan stanley. we will get plenty more central bank analysis later. rebecca patterson, that conversation, 10:00 new york time. european stocks have settled. a quiet session. we are working our work toward -- we are working our way toward the ecb. kalin anev janse, european stability mechanism chief financial officer, does he agree? that conversation, next. this is bloomberg. ♪ - [mo] if you're thinking about going back to school, this is for you. ♪ - i ended up spending less money my entire time at snhu than i did in just one year at my other university. - [juan] my time at snhu has given me more confidence. now i can go for that promotion. - if you're ready to go back to school... you can do it. southern new hampshire university has changed my life. and it can change yours too. ♪ - [announcer] visit snhu.edu. ♪ (upbeat music) ♪ ( ♪♪ )

today it is ecb. that rate decision comes down to the data, it showed core inflation cooling in the euro area. credit conditions tightened. maria is outside the ecb in frankfurt. the question is not so much the hike, but the scale of the height we get, does the data allow them to do 25 versus 50? >> by now it is pretty clear that the european central bank will hike rates again today. all of this to tame inflation. in the words of the head of the ecb, the fight against inflation is not done. the real question is will it be 25 or 50 basis points? in some ways it depends who you ask. your bank says we see 25 basis points but this is a close call. credit agricole sticks with 50 basis points. this is a minority call. but they suggest this is certain because you can spend the data both ways and find good reasons for both. when you look at the market overall, there isn't a definitive consensus call. but there is one that carries more momentum, that is 25 basis points. the lending survey suggested credit cond

the ecb has some room to go. our own survey at the end of last week showed economists predicted terminal rate of three point 75%. essentially three more moves in the pipeline including the one we will likely see this week. we might not be done until much later this summer. alix: wrapping the bank lending survey we got, how much tighter is the wind up getting? was it because of the pass-through rates question mark is it because of the banking crisis in the u.s.. what do you think? jana: probably a lot of everything. the -- they don't break down individual reasons, but banks did cite the repayment of long-term loans is one reason why standards tightened. clearly financial conditions have worsened since the banking turmoil erupted in the u.s. and came over here and got the better of credit suisse. but also it is a sign that monetary policy tightening is reaching the economy. we are seeing signs and other data as well that banks are getting more careful. the demand for loans is falling. but companies are thinking twi

alix: if the ecb is able to successfully hike on wednesday and signal a pause, is the ecb going to haveunway to hike as much as it needs to to get inflation down? anneka: if you just look at it matter of fact and you look at the deposit rates in europe by the ecb versus the fed, there is further room to run. i think is essentially how far will the ecb go, what is appropriate. it is dependent on what the data is telling us and how the economy is faring and how the banking sector is faring. if those figures end up showing the consistency which we have shown thus far, the consistency in wage price inflation, it would not be unrealistic to expect ecb to consider to do more. we think arise and a pause is a viable outcome. alix: in theory the fed still leads the bus. i appreciate they are in the hiking cycle but they cannot keep hiking 25 or 50 to clamp down on inflation if the u.s. growth really slows in the fed stops hiking. anneka: absolutely. they lead the bus and they might be behind the curve so there is a catch up timeline. the second point is the u.s. economy really starts cracking do

the markets remain divided in terms of june and how far the ecb will go. the market is pricing in about 15 basis coming through from june. repricing a little lower in terms of the right trajectory from the european central bank. here is the divergence. we are going to get inflation out of italy and germany tomorrow. 2.9% is the number in spain, diverging from italy and france. energy certainly a play year on year. that coming off, but also food prices coming in for spain as well. a different picture when you look at inflation dynamics in the u.k. money moving into sovereign debt here in europe. kailey: this is something we have been speaking about on bloomberg television all day today, including to eric nielsen, who was discussing the european economy earlier. >> there is a substantial, a huge monetary tightening. we are just seeing the beginning in the first quarter. it is coming now, big steam. the export side rescued us, as you see with china. hitting us quite hard. i think it is difficult to imagine that we don't kind of skirt below zero. tom: that bri

not so much in the ecb. the croatian central bank governors said inflationary pressures in the tourism sector are quite strong and the season will be really good. is that going to stay? michael o'leary sees pricing power for a few more years. does that mean more structural inflation in europe? guy: we will get pmi data tomorrow which likely continues to show the service sector is strong. michael o'leary talking about airplanes. elsewhere, it is the availability of staff, food, all kinds of factors coming into play. the tourism sector is critical for the european economy. we will talk about two different journeys, the journey the ecb has to go on and the journey the european travel sector is on as well. it brings us back to our question of the day which relates back to alix's trip shortly to europe. i should be saying this with an american accent. this is the way we maybe should be looking at europe. the americans are coming and with them they bring inflation. alix: [laughter] guy: our european economics edit

she went on to say that the ecb is not done. the question is, is that were more hyper two more hikes? how far away is sufficiently does -- restrictive and how far away are we on that? the dust is settling and we are digesting what was said. do we have clarity on how much road there is to go for the ecb? >> the short answer is no because she would not put a number on it and to me, what is interesting to see, where you see a policy decision, or you get a downshift to 25 basis points hike and in that press conference she insisted and brings the metaphor, we are on a journey and we are not there yet. we are restrictive but not restrictive enough. she was asked multiple times what does that mean in terms of the sequence and timeline to go forward and she repeated, we will stay focused on the data but she says data dependency does not stay forward and she would not put a number on it. she talked about decisions. that is plural and suggests it could be june and more to come but from now on, it will be difficult to figure out where the

in these the ecb to show that it is going to continue going and some of those calls for the ecb hiking to outlast the fed-based, though signs have fallen off. people are less certain on that. the economy in both sides of the atlantic is mixed in terms of data we are seeing at the moment. there is plenty of reasons to start to lose interest in this or look elsewhere and express it in different ways and look at the yen which could be more interesting for where there might be more momentum at the moment. we seem to be stuck euro-dollar and what we do break out finally, there will be movement one way or another but it is difficult to tell what direction that will be right now. tom: china mainland markets hong kong selling off today as well. is this about export and import data? paul: i don't think it is all about it although that is certainly a matter for concern. the unevenness of the chinese recovery has been the reason that people are hesitant and it is not the kind of recovery that brings the rest of the world along with the and really helps neighboring countries around china. that is

they come down to and exactly when the ecb may have rates of 3.50 or 3.75. by the end of 2024, all of the major central banks will cut rate they will come down to 2.5% in the face of rising unemployment and recession. >> in that context, given it is not just exclusive to ecb but the rate cuts have to happen because of the economy dipping into recession and then where do you put your money >> from the bond perspective, at the moment, if you look at end of 2024, the market is surprising with the fed down to 3 and ecb below 3 and the bank of england come down to 4. i actually think all of them will be about 2.5. it issing iis interesting the uk is the most vulnerable of the economies because it has a short-term mortgage rate structure. the likelihood of recession in the uk is higher this year than anywhere else. the market is pricing rates coming down to 4%. it may p come down to 2.5 >> the outlook for the uk as we got fresh housing prices for the uk i think house prices rose in april after seven months of decline. mortgage rates are stabilizista. what is next

ecb next. 13 minutes after that, press conference with ecb president christine lagarde who will say,is bloomberg. mmmm, your morning coffee hot delicious comforting. but by the third or fourth cup, your stomach might not feel so good. if that sounds like you replace your afternoon cup with 5-hour energy. it's perfect for when you're feeling coffeed-out. coffee in the morning... 5-hour energy after. your stomach will thank you. discover 5-hour energy. ♪♪ >> the stresses in the banking sector are likely still there and still coming and still tightening financial conditions ahead. >> you cannot say it's completely separate from the banking sector. >> the main thing in the june meeting is we cannot rule out further policy rate hikes. >> the goal coming into the meeting was to give themselves the option to pause. >> i think they continue to tighten if the data continues to support that. >> this is bloomberg surveillance. tom: good morning, on radio and television, commercial free in this half-hour with a meeting of the european central bank. we are looking at banking crisis in america, lo

he is going to be - getting a call from the ecb to what is libor_ getting a call from the ecb to whatfrom the ecb to what is libor low as— getting a call from the ecb to what is libor low as well. _ getting a call from the ecb to what is libor low as well. it _ getting a call from the ecb to what is libor low as well. [it is _ is libor low as well. it is astonishing _ is libor low as well. it is astonishing to _ is libor low as well. it is astonishing to hear - is libor low as well. it is astonishing to hear that| is libor low as well. it is - astonishing to hear that call is libor low as well— astonishing to hear that call and it tells you how much was going on at the time and give us a sense of what this new evidence tells us about the high level interest rate. we heard that a high level interest rate in those traders rigging interest rates. . �* , those traders rigging interest rates. . v , those traders rigging interest rates. ., �*, , ., those traders rigging interest rates. , ., , . ., rates. that's 'ust one piece of evidence — rates. that'sjust one piece of evidence which _ rat

is the eye that the fed cuts rates and the ecb doesn't but the ecb does not continue to raise rates mucheyond the federal reserve so a bit more reinforcement for euro appreciation it makes three edition of may reach a point where reaches policymakers but with -- but a lot depends on what happens with domestic demand and in particular wages. the ecb believes wages are already at service sector inflation are fearful that inflation will become entrenched and are already looking at the accelerating inflation expectations. matt: thank you in great having you here. global chief economist at hsbc. speaking of the lag effective rate increases, at least seven large companies filed for chapter 11 bankruptcy protection in less than 48 hours. it's a breakneck pace of restructuring that include vice media as well as kkr backed envision health care. the first thing to break was regional banks and now we are starting to see a string of bankruptcies. maybe this is central bank policy having an effect. jon: and also, it has to do with a particular industry but when one player has challenges in going thro

regional banks. >>> in europe, we are watching the ecb. it will announce the latest rate decision at 1415 cet with markets split over 25 or a 50 basis point hike interest rate futures are pricing 25 basis points. headline inflation rose to 7% in april despite the hiking rates by half a point at each of the last six meetings. core inflation is 5.6% which is muddying the jooutlook for the block. annette, headline inflation seems to have peaked at this point. >> reporter: that could be one interpretation in the recent drop in core inflation we don't see a huge drop to be fair it is a slight lower reading of core inflation whether this is like peak or not, it is one of the topics i'll discuss now with the head of the europe macro research in frankfurt. thank you for joining us >> good morning. >> we discussed the drop in core inflation can be declared like we have seen peak inflation here and that segment of the inflation rate what do you think? >> i think we have seen peak inflation, but certainly it is too early to declare victory here thing

can the ecb even manage if they want to divert?atjana: the ecb actually has to do that because what we see is that the european economy definitely has different problems from the u.s. it is time now that the ecb is able to decouple from fed policy to solve those problems. from that perspective, it is important that they signal what has been announced yesterday and that they try to get the situation under control. in europe. tom: did the bond markets get this one wrong again? we saw the yields move significantly in german debt. they are moving up today. did they get it wrong initially on the back of the statement yesterday? tatjana: it is difficult at the moment to understand the moves that markets have from one day to the other, because some of them just try to be smarter than what the central banks say, and eventually they have to give up and realized that it does not -- the market, so i would not pay too much attention in market moves from one day to the other. they are much more about sentiment and traders trying to bet on their

dani: just to bring it back to the ecb before we let you go, if the fed is about to pause, is the ecbo have to follow suit? lucia: well, there is certainly -- it is difficult to discuss. the stand of the ecb is clear. it has been in the past and still is. and i think they will keep having a very tight monetary policy for some months. we are talking about monetary policy because we are comparing the past years where we have a bench -- effectively lost that. at this level of interest rates, it seems high because we are comparing it to what we had in the past. we are not in a situation where we said, the office is supertight. dani: really great to have you on today. that is the professor of economic policy at strateji menkul degerler. let's get your bloomberg first word news. biden and mccarthy say they are confident the debt ceiling will pass congress are averting a default. mccarthy calls the deal transformational and he expects republicans to support it. he said he cannot see any sticking points that could derail the file. erdogan -- about a third of the countries lawmakers including

just to— ecb to put the libor lower as well. just to exulain _ ecb to put the libor lower as well.e - ecb to put the libor lower as well. just to explain that of the back- ecb to put the libor lower as well. just to explain that of the back of. just to explain that of the back of that we also heard and heard about an interview that peterjohnson gave to all the regulators and prosecutors where he talked about that conversation and about other evidence including publish data on libor and euribor solutions that the bank of france was ordering for french banks to put it down and interventions by the federal reserve bank of new york but that was never put in a public statements.— put in a public statements. andy, thank ou put in a public statements. andy, thank you so _ put in a public statements. andy, thank you so much _ put in a public statements. andy, thank you so much for— put in a public statements. andy, thank you so much for that. - you are alive with bbc news. 20 children have died in a major school in guyana. it broke outjust before midnight at the school in mahdia — engulfin

the ecb pricing is already there, around 375. think your commentary before said we had essentially seen a decline in long rates, which i would argue is the most important part for house purchases or house purchase decision, as we say. of course, we have to say we're coming out of long periods of low rates which have artificial rates. part of it is actually healthy and i think the policy makers need to be watchful and have an eye on whether there's something that goes beyond that healthy correction again, as the ecb has been stressing, one side of it is control of inflation, and the other thing is financial stability. two different sets or tool kits that will be deployed for each the monitoring, of course, is an important part of it of course, they have to make visible these risks, but i don't think that will change anything in the rate trajectory baz as i said, it's already in the prices anyway. >> jens, can i ask in the second half of the year where the main growth driver is going to come from because we look at the pmi manufact

the ecb also said today that they wanted all six individuals to go on an educational course and to becket, pakistan successfully defended a 287—run total as they beat new zealand by 26 runs in a one—day international to take an unassailable 3—0 lead in the series. imam—ul—haq and babarazam hit half—centuries as pakistan scored 287/6 in karachi. tom blundell top scored for new zealand with 65 and cole mcconchie was 64 not out but they fell short with two matches still to play in the series. meanwhile, at the ipl, mumbai indians chased down a mammoth 215 to beat the punjab kings. it meant liam livingstone�*s 82 not out including seven fours and four sixes was in vain. i n what seemed like an improbable chase, mumbai were up against it mohali when skipper rohit sharma fell for a duck. but suryakumar yadav and ishan kishan hit fifties before tilak varma and tim david's late runs took mumbai over the finishing line. they won the game by six wickets. and lucknow super giants and chennai super kings were forced to split points as their indian premier league match was called off due to rain.

the ecb is catching up fast. there could be a situation where the difference between ecb and fed rates is 1%. that's attractive to the euro. the euro is around 111 now. we have seen it as high as 160. the euro is not overvalued yet. yvonne: thank you mark and kathleen. a discussion about the fed and the ecb. we have a vonnie quinn in new york. >> ukrainian president solesky is denying that his government used a drone to attack putin's resident in the kremlin. solesky says ukraine only fights in its territory, adding that moscow may be try to distract from its failures. unverified we do from social media says what desk shows what -- moscow says putin is not at the kremlin. pacwest has tumbled in trading after bloomberg reported it is weighing strategic options including a sale. the bank is also being considered's recut. it said last month deposits had stabilized after a rush of withdrawals in march. china has reported a surge in travel and spending over the labor day holiday. the ministry of culture and tourism sa

ed 4:45, the ecb's franz wild gilroy will deliver comments on further hikes from the ecb.ime thomas barkin will speak on monetary policy online. that is u.s. -- as it u.s. futures looked to be higher when trading resumes tuesday. nasdaq futures up by .3 percent on modest optimism that a deal has been reached around this debt ceiling stay with us. this is bloomberg. ♪ i need it cool at night. you trying to ice me out of the bed? baby, only on game nights. you know you are retired right? am i? ya! save 50% on the sleep number limited edition smart bed. plus, special financing and free home delivery when you add any base. only at sleep number. hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's chang

for the ecb this is a challenging line.anufacturing slowing, consumer spending less but services supporting that. going into the winter you have to ask were we complacent in optimism having survived the winter and doing all right on energy while alive the risks have not faded yet? going into the winter, if a consumer has inflation rate hikes fighting, consumer with less money, it does not paint a favorable picture going into the winter of 2023. tom: a falling and contracting economy compared with 7% inflation. arguably is this stagflation that we are looking at in germany right now? oliver crook, thank you for breaking down the data. let's bring back in iain stealey from j.p. morgan asset management. is this stagflation in germany? is a clip the wings of ecb hawks? iain: it causes a problem for them. we need to remember they are different from the fed. ecb has a single mandate which is price stability. we are hovering higher than the ecb would like from an inflation standpoint. if you look at the data, not just the prints t

trepidation ahead of the ecb and federal reserve. the nasdaq, meta came with a thundering bond offering yesterday of $8.5 billion. the earnings apocalypse has not arrived thus far. francis chan joins me from hong kong on hsbc earnings. garfield reynolds will hit us with a surprise rba decision. we will touch on u.s. debt drama with bruce einhorn. to the hsbc numbers, to billion-dollar buyback -- $2 billion buyback. noel quinn praised the banks's role and rescuing the u.k. arm of svb. >> strategically, absolutely in line with everything that we are. in terms of opening up the world of opportunity for businesses, that's what we do. i am pleased with the spv acquisition for what it gives a strategically and it was a wise financial deal. manus: let's bring in francis chan. the svb is idiosyncratic and delivered them an additional $1.5 billion on the top line but this is about setting out defensive play to ping an with the buyback in the divvy. >> obviously, the market will be very happy with the buyback and dividends payout. we are looki

tom: briefly on the ecb, inflation rates are lower compared to the u.k. the ecb are going to go.head with rate hikes, unpack that for us. vivek: there is more of that primacy of the inflation mandate, then there is potentially for the federal reserve. if you think about the balance of what they are trying to do, perhaps that is part of the reason why they have still yet to be done. the dynamic doesn't mean there is no trade-off to be had, but they are veering towards one side of it for the foreseeable future. tom: there has been scrutiny around other cracks. the banking system continues to be a issue. u.s. real estate has come to the fore. you also say there are potential opportunities within the mix. vivek: four a period of time, we have been worried because of the lag effects. and add to that the regional bank fallout, but is not something we saw coming, but that is an example of a crack that could occur. it is always important to go a bit more granular. one of the things we say when we are building portfolios, you can't just think about headline, you need to be one more level

the ecb is behind the fed in that way, and the ecb and christine lagarde made it clear today, our job we are not dependent on what the fed does. we are moving forward. let's listen. madame lagarde: everybody agreed that an increasing rate was necessary. that, second, we are not pausing. that very clear. third, we know that we have more ground to cover on the basis of the baseline that we had, which is still guiding us, until we have our next projection exercise. kathleen: the vote was not unanimous, ms. lagarde said, so obviously, a couple of hawks still wanted if you basis points, and it is perceived that's why they announced they are going to stop the reinvestment in one of their main bonds purchased -- one of their main bond purchase programs. they are making some progress. we do note that the latest quarterly review showed there is some reduction in lending. i think what lagarde is telling us, they got more to do, but certainly the door is open to saying we have reached a peak in rates. similar to the fed, maybe just a different timetable for now. rishaad: all right, kathleen. kat

and for the euro zone, that will impact what the ecb decides.ave a full roundup of earnings, especially banks. this is bloomberg. ♪ >> this is "bloomberg surveillance: early edition" with francine lacqua.

there is a story we broke a little while ago about the ecb councilmembers. they are thinking about rate hikes well into the full. that is something that will be challenging with the fed. we are going to see single stock story that are interesting. investors had a really troubled couple of years. evidence that it is starting to come out, and a surprise profit. are going to see that translate with a long way to go, but we come back to a key question. can you make money or profits from the energy transition? we are going to ask that tomorrow. i think the ceo will join us here on set. >> i find the headline interesting. they can't break above 110. here, definitely losing steam. the s&p is losing's theme. we see a margin and earnings story. first quarter profit beat estimates and strong margins with a good outlook for the rest of the year. the two-year is interesting. that happened once we got the cpi on estimates. two interesting headlines. japanese insurers are actually selling treasuries. the other is a few hours ago, saying they were shorting ux stocks and th

the ecb hikes, today that is good for the market.ltimately it can lead to problems in the european stock market. this is over a six month horizon. i think the euro stocks can be the s&p. alix: are we looking at terminal rates for the boe? is it a five, a four at the ecb? how do you see that coming? bhanu: if you think about these three central banks think the most mispriced is the ecb. we think the risks are this is 4.25. the boe has already gone to 5.4. if i'm thinking with my fixed income had on i think the boe is overpriced relative to ecb. right? that is just in terms of relative value trade. the truth is that the stronger view is ecb is mispriced. guy: we keep underestimating the u.k. though. bhanu: absolutely. he will set in april, folks, we were thinking about a recession. we are not getting a recession. the fact that oil prices are coming off leads to headline inflation being quite low, but actually it extends the cycle. core inflation is higher, which means we might need to hike more. that takes a while to get your head arou

we think the ecb will continue to hike rates and we see at least another three rate hikes but the ecbthat is independent of what the fed is doing. what the deutsche bank analysis does is purely focusing on the fed i think is not enough. you have to keep in mind that we have two players here and the ecb is becoming increasingly independent in setting monetary policy and pursuing price stability. they have a single mandate. they don't have a dual mandate. they will really be focused on inflation control. we've got a lot of members of the governing council from smaller member states of the euro area are facing double-digit inflation in their countries. these people are under tremendous domestic pressure to do something to bring inflation down in your area. we think the ecb is more determined than the fed to continue hiking rates. manus: christian, thank you so much for being with us this morning. hell of a backdrop there. that's all i've got to say. keep punching them out for us in that garden. christian: thank you, manus. manus: dani lives in west london. dani: i need you to come over a

the ecb cannot attack that.n you come to the green energy transition and putting money into it, that is going to make inflation persistent and worse. maria: the ecb is begging for it, the imf is begging for fiscal restraint. i spoke with the head of the euro group who say we need to pay attention to the counter effects of the fiscal policy, may be playing out if we see the worst of the -- say the worst of the energy crisis is over, that has to be reflected in policy. that is a real debate today. the meeting is ongoing. this idea we can counter the actions of the european central bank is doing. we may be in a situation where they continue to tighten rates. it puts stress on credit. it is not reflected in a lot of the real prices. yes, you are right. the message from voices in the euro group is, this is the time to scale back but also taylor a lot of emergency measures. alix: really great conversation, thanks for setting us up. thank you very much. coming up, pawnbrokers for all seasons. that is the role the centr

the ecb has made some progress, i guess, the base rate was in double digits at the end of last year,are now down to 7%. no further progress in april, it seems. looking at the details, there are some positives. food inflation is down, it had been rising and rising. hopefully that is a trend that will continue. also called goods inflation, that is also decreasing for the first time. the bad news is, for the ecb, that services inflation keeps rising and thatis services inflation keeps rising and that is the surprise in this, really. we had expected at slight decline. that is driven by wages. the dilemma for the ecb and all central banks as they are looking at inflation figures that is telling us what has already happened. they have to take a pretty calculator gamble on what will happen in the future. indeed, looking at inflation is like driving forwards by looking in the rear—view mirror. at the same time, we have so little confidence at the moment in our own forecasts of inflation having gotten it wrong, that you just have to look at the current inflation and it has to fall before you

>> you should look at the eurozone, which is supervised by the ecb. they have all of these metrics and supervision that basically if you look at in the euro zone, there was no idiosyncratic risk. there was definitely not a systemic risk as we have seen in some other areas, like the u.s. and in switzerland. so that is what we see. we see that environment being solid. we do not see that systemic risk, so that is why we see business for europe. anna: a solid environment in europe unlike elsewhere, but did you benefit? some banks have said they benefited from what was happening at credit suisse. >> i am not saying credit suisse, but given the uncertainty, what you saw in the last eight months is a flight to quality. so we saw a bigger number of deposits that came into bnp paribas and that is what we observed. anna: in terms of m&a, i wanted to ask whether you are interested in participating in what could be a wave of m&a. fairly credit suisse and ubs, but also deutsche bank consolidating smaller businesses around europe. do you have your eyes on any parti

we are still waiting on the boe and ecb this week.these are the stocks we will be watching when trade opens in korea shortly. chips and focus. the u.s. has given samsung and and sk hynix a one-way -- when your waiver from export controls. kakao consolidated missing estimates. fortescue looking to buy copper and lithium lines in south america as part of its transition efforts. national australia bank profit fell short of analysts estimates. haidi: yeah, despite the first have been your record, right? we will look at the nuances when it comes to those numbers. we will ask ross mcewen about the results in the outlook, coming up. also, we will be speaking with shane elliott the ceo of anz. ♪ emerson automation software helps breakthrough medicines get to market at warp speed. go human go. go boldly. emerson. shery: this is "bloomberg daybreak: asia." we are continuing to market opens in australia and korea. for the day, we had another small rate hike basis points and potential pause signals but not necessarily signals for a pivot coming a

the data is supported ecb doves who say interest rate increases concern end.or more, let's go to maria tadeo. good morning, what is the cpi print actually tell us? maria: what it shows and i would agree this is more relevant for the ecb and that decision in two weeks that it would be for the spanish government at this point. that inflation is significantly cooling. both on the headline number but also the core. there is caveats that go into the way spain particularly measures core inflation, but it shows that both are cooling down in may. you could argue a lot of the monetary policy perhaps feeding into some of this. we should point to downwards pressure coming once again from energy, but also food prices which had been an issue. this is relevant for the ecb, the spanish government now in the midst of an election campaign. normally this would be good news, the problem the government is facing is this is a political election that has been called for july 23. i'm not sure how much good numbers will shake this election. normally it is about the economy but this f

reporter: let us also look a little bit at the current consideration and the biggest challenges the ecbs fighting now. you're referring to the existential threats during the debt crisis were not like the existential threats territory right now, but still there are loads of challenges. which are the biggest in your opinion? >> well, it's still, of course, to tame inflation, which is ongoing, i think and in terms of monetary policy, everyone is expecting a further hike in the next meeting but i wouldn't share the view you merged in your program that (# is a very important contribution to the defense against climate change but not so much in monetary policy itself the possible greening of the portfolio that the changes with security that ecb did, in the end, there will be a shrinking on testify balance sheet, and the meaningfulness of that will not in quantitative terms be very significant of course, in quantitative terms, it's a symbol of the concerns that humanity must have with the issue of climate change, but it will not amount to meaningful effects on the problem. the problem must be

we are awaiting decisions from the ecb. still a long way to go. let's start with the ecb.abelle: a lot of focus on the inflation numbers that came out earlier. a lot of economists focus on the core inflation reading. it is the line in blue. it is difficult to make out. a drop down very narrowly in ease for the first time in 10 months. some economists say it makes the case for the ecb to slow its case even though the headline rate -- it is difficult to make out -- but it ticked up a little bit to 7%. bank of america, they said this is not enough to change the calculus for policymakers at the ecb. yes, we saw the drop in core inflation but it is close to the record high back in march. on top of that, flows have not deteriorated significantly beyond what could have expected with the backdrop. bank of america is sticking with their call. this is a low conviction one. the ecb will deliver a 50 basis point hike. they said that will come with an emphasis on data dependence and an indication there is still ground to cover and there needs to be a clear signal coming through that co

the same thing for the ecb looking at the lending service and saying if credit is suddenly not flowing and there's a big credit crunch, then they need to cut rates to counterimpact that. >> you're certainly beginning to see a tightening of credit sta standards, but not to the extend it would cut rates that dramatically. >>> stick around with us we're going to talk about what's happening in europe and the bank of england is happening tomorrow we'll talk about that in the next block. >>> u.s. president joe biden and republican house speaker kevin mccarthy failed to reach any consensus on the debt ceiling. they met to discuss increasing the borrowing limit, which the republicans say they won't approve without spending cuts. the u.s. risks defaulting on june 1st without any break through. talks continue daily >> reporter: a high-stakes high-risk showdown today at the white house as political heavyweights square off over the debt ceiling. >> i didn't see any new movement. >> reporter: the top four congressional leaders emerging from an hour-long meeting with president biden, failing to brea

how far will the ecb have to go?ow many more hikes and what would that do to the euro zone economy? jari: they slow down to 25 basis points as was expected and basically said there is more ground to cover because inflation is still too high. there are still underlying pressures in the labor market that are building and growth is more resilient than we thought. to us, it means that there are two more rate hikes coming. we have another 25 in june and another 25 in july 2 3.75%. then we will think they will sit there for a while, actually for quite a while until the end of 2024 because we think the underlying pressures are still to elevated for them to turn around very quickly and cut to. tom: you think they settle at 3.75 until the end of 2024? jari: that is the base case because we still have a tight labor market, wage growth sell rating, and i think what is interesting in the euro area is institutional wage setting set up essentially means that the wage pressures tend to be more persistent than in the u.s. where wage

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christine lagarde said the ecb is not going to pause.e data we have seen today will be able to pause? marilyn: i think the data today basically presents the range of possibilities. it makes them more difficult to go solo. we think it's likely that they will still pause. they have made it clear that there are a lot of locks coming through in terms of the impact of the rate hikes. we have seen some of the consequences of that. i think it's important next week to watch the cpi inflation and we will get another reading before the next fed meeting. i think that today's data is presenting more of a mixed picture for the economy. we are starting to see a slowdown in the economy overall. we are seeing issues in the cyclical sectors of the market and so while the services sector remain strong and we are seeing stock growth -- we see economic data start to weaken a little bit. alix: if it's able to pause, how can the boe and ecb still hike? marilyn: when we had the ecb yesterday, the market was pricing in it could be 25, 50, they opted for 25. the

as ecb officials have said tightening may need to continue past july.will speak with the chairman and ceo of jpmorgan chase at the bank's annual global markets conference in paris. a conversation you don't want to miss. we are waiting on some bayer earnings this morning. i'm trying to see if we got anything on that. manus: you just caught me short. it doesn't happen often. i know you are excited, but i didn't have it in front of me. let's do a cross-market check. look at bayer, and tell me the average price of the chemical components. there you go, short end of the curve dropped like a stone yesterday. a pavlovian response to the inflation rating. the bond market at the short end compressed, yields dropped. cable is the best-performing currency in the g10. we expect another 25 basis points, but what caveat will bailey give us that could suggest that the bank of england might go into pause mode? unlikely, some would say. oil is eking out a bounce back. the chinese energy market is rebounding strongly. jet fuel demand is especially strong. it is an accept

that is the signal and we are expecting from the ecb.aslinda: let's get to daniel murray from efg private bank. lots all central-bank decisions this week. the fed, kathleen says probably one and done. but also the messaging is what people are looking after. >> i think the fed has an incentive to talk a little bit tougher to undo some of the tightening they have already influence. haslinda: so much uncertainty. if you take a look at the data so far, the inflation for manufacturing rose unexpectedly. how do you seek shelter? >> it is always tough in these environments transitioning from one stage of the economy to the next. you get confusing signals. it makes sense to have a good diversified book. i think the world of hedge funds is looking more interesting at the moment spirit for many years, they were constrained by the lack of opportunity. yields were very low and it was tough to make money. but i think opportunities are looking more interesting at the moment. rishaad: how are you looking at the moment? we had a guest on who said there

it is a different story and the ecb will scratch their heads it is different in manufacturing.ompanies are struggling to service demand there is no surplus supply they don't have enough workers they have to pay more for people to work for them it is not as high as last area's peak for cost flinflation, but is way higher prior to the survey very steep in services which is passed on in the form of higher selling prices for services. the ecb has to be thinking we have a lot of commodity price kmir pressure coming down that will feed into the services sector how long will this persist if this is a lot of pent-up money for households to sustained through the end of the year, it will ratchet through the sector and managing cpi will be sticky. is this a boon we got post-pandemic spending and it will fade away and the cost of living crisis. this is what we don't know yet that is what ecb is going to be front and mind about >> chris, good morning we will keep looking at the data lot as it continues to flush out exactly where or what the state of the economy currently looks like supply c