Bloomberg Daybreak: Europe 03/18/2024

Summary

This Bloomberg Daybreak video covers a range of topics, highlighting central bank decisions, market reactions, and geopolitical events. Key points include the anticipation of the Bank of Japan potentially ending its negative interest rate policy, positive signs from China's economic data, and tensions between the US and Israel. Markets in Asia, Europe, and the US are examined, with specific attention to futures, the Japanese yen, and commodity prices. The video also discusses expectations for central banks, including the Fed and BOJ, with insights into rate decisions and their impact on global economies. Additionally, it touches on Putin's victory in a controlled election, EU's aid to Egypt, and Apple's potential AI partnership with Google's Gemini.

Takeaways

• 😀 The Bank of Japan (BOJ) is anticipated to end its negative interest rate policy, marking the first rate hike since 2007.
• 🌏 Asian stock markets, especially in Japan, showed positive performance, with expectations that the yen won't strengthen significantly even if the BOJ raises rates.
• 📈 China's factory output and investment growth exceeded expectations, indicating that stimulus measures are impacting positively, though consumer caution remains.
• 🚫 Vladimir Putin remains defiant, warning that Russia will continue pursuing its goals following a tightly controlled presidential election victory.
• 💹 European and US futures indicate slight gains, with a focus on upcoming central bank decisions.
• 🤖 Apple and Google are reportedly discussing a partnership on AI technology, potentially integrating Google's Gemini AI into Apple devices.
• 🌍 Central banks globally are setting policies that could influence nearly half the global population, with a particular focus on the Fed, BOJ, and Bank of England.
• 🔍 Markets are adjusting to expectations around the Federal Reserve's future rate cuts, with a shift from anticipating nearly three cuts to fewer.
• 🇷🇺 Vladimir Putin secures another term as Russia's president in an election with no real competition, emphasizing a strong grip on power.
• 📊 The script covers detailed market reactions, central bank policies, geopolitical tensions, and notable corporate partnerships in the technology sector.

Q & A

What is the significance of the Bank of Japan's potential move to end its negative interest rate policy?

Ending the negative interest rate policy signifies a shift in the Bank of Japan's monetary stance, moving away from an extremely accommodative policy aimed at stimulating the economy. It reflects an assessment that the economy may be strong enough to handle higher interest rates, potentially curbing inflation.

How did China's factory output and investment growth impact global markets?

China's higher-than-expected factory output and investment growth indicated that stimulus measures were effective, boosting investor confidence in global markets. However, persistent consumer caution tempered optimism, suggesting a balanced approach to economic recovery.

What was the market reaction to the potential partnership between Apple and Gemini from Google on the AI front?

The potential partnership between Apple and Google's Gemini on AI was seen positively by markets, as it could be consequential for Apple and the broader tech space, possibly driving innovation and offering competitive advantages in the rapidly evolving AI sector.

Why is Vladimir Putin's victory in the presidential election significant?

Vladimir Putin's victory in a tightly controlled presidential election underscores his continued dominance in Russian politics, signaling an extension of his policies both domestically and internationally. It also indicates Russia's stance on pursuing its goals despite international pressures.

What does the expectation of the Bank of Japan's rate hike signify for the yen and Japanese stocks?

The expectation of a rate hike from the Bank of Japan suggests anticipation that the yen won't strengthen significantly, which in turn has rallied Japanese stocks. Investors seem to believe that even with a rate hike, the BOJ's approach will be cautious enough not to disrupt market stability.

How does the BOJ's potential policy change relate to global central bank decisions?

The BOJ's potential policy change is part of a broader narrative where central banks globally are adjusting policies in response to shifting economic conditions. Decisions by major central banks like the BOJ, Fed, and others are closely watched as indicators of global economic trends and policy directions.

What impact does the Chinese economy's performance have on global oil prices?

Stronger-than-expected data from China can bolster oil prices by indicating robust economic activity, which typically drives higher energy demand. Conversely, signs of weakness or consumer caution in China might temper oil price gains due to concerns over reduced demand.

What are the implications of the Fed's expected stance on interest rate cuts for the market?

The market's expectations of fewer Fed interest rate cuts suggest anticipation of a more cautious approach to monetary easing, potentially impacting investor sentiment, bond yields, and the broader financial markets by signaling confidence in the economic recovery's durability.

How does the youth unemployment figure in China relate to the overall health of its economy?

The youth unemployment figure is a critical indicator of the health of China's economy, reflecting job market conditions for younger workers. High youth unemployment can signal broader economic challenges, such as insufficient job creation or mismatches between skills and job opportunities.

Why is the geopolitical tension between the US and Israel significant?

Geopolitical tension between the US and Israel is significant because it can impact diplomatic relations, security cooperation, and the broader Middle East's stability. Disagreements over policies or actions can strain traditionally strong ties, affecting regional and global political dynamics.

Outlines

00:00

🌏 Global Market Overview

Tom Mackenzie of Bloomberg Daybreak introduces a week filled with pivotal central bank decisions, highlighting the Bank of Japan's anticipated shift from its negative interest rate policy. The narrative includes a glimpse into Asian markets' positive response, particularly Japan's Nikkei index, in anticipation of policy changes. Additionally, it delves into China's economic indicators, which suggest a modest recovery driven by factory output and investment, albeit with consumer spending remaining tepid. The report touches on a potential partnership between Apple and Google in AI technology, hinting at significant implications for the tech industry.

05:05

📈 China's Economic Resilience

The focus shifts to China's economic performance, where recent data surpasses expectations, hinting at the effectiveness of stimulus measures. Despite these positive signs, the discussion acknowledges the challenges of sustaining growth without relying on heavy investments and addressing consumer demand. Additionally, it touches on the missing youth unemployment data, a critical metric for understanding the labor market's health.

10:08

🔍 A Deep Dive into Asian Markets

This section provides an analysis of the Asian markets, emphasizing China's mixed economic signals. Despite some positive trends in industrial production and investment, concerns linger over retail sales and the property sector. The narrative also covers the anticipation surrounding the Bank of Japan's policy decision and its potential effects on the markets, highlighting the nuanced interactions between central bank policies, market expectations, and economic indicators.

15:11

🌐 Geopolitical Tensions and Economic Policies

The narrative explores geopolitical tensions, focusing on Israel's military actions in Gaza and the strained US-Israel relations. It further discusses the European Union's financial aid to Egypt and the implications for regional stability. The segment concludes with an analysis of the UK's economic conditions, juxtaposing current challenges with historical perspectives and shedding light on the housing market's recovery.

20:12

📊 Anticipating Central Bank Decisions

As central banks around the world, including the Federal Reserve and the Bank of Japan, prepare to make crucial rate decisions, this segment examines the potential impacts on global markets. It delves into expectations for policy changes, their implications for currencies, and the broader economic outlook. The narrative underscores the significance of these decisions for investors and economies alike.

25:14

🌍 European Futures and Market Movements

This section analyzes the European futures market and anticipates movements based on central bank actions and economic indicators. It examines the potential for interest rate changes by the Fed and its effects on market dynamics, including currency valuations and equity markets. The discussion provides insights into the interconnectedness of global financial systems and the pivotal role of central bank policies.

30:16

🔎 Analysis of Russia's Political Landscape

An in-depth look at Russia's political environment post-election, highlighting Vladimir Putin's victory and its implications. The discussion touches on the lack of genuine electoral competition, the managed nature of Putin's triumph, and the broader context of Russia's political direction. It also considers the impact of these developments on Russia's domestic policy and international stance.

35:18

🌟 Central Bank Decisions and Economic Strategies

A forward-looking analysis of upcoming central bank decisions, emphasizing the importance of the Federal Reserve and Bank of Japan's policy announcements. The narrative explores the potential ramifications for the global economy, including interest rate paths, inflationary pressures, and the balance between economic growth and stability. The discussion is framed within the context of a highly anticipated week for financial markets worldwide.

40:19

📈 Anticipating Market Reactions to Central Bank Moves

This section discusses market participants' expectations and strategies in anticipation of central bank decisions. It provides a snapshot of market sentiment, trading positions, and the strategic considerations driving investor behavior. The focus is on the interplay between policy announcements, market reactions, and the broader economic implications of central bank actions.

45:20

🔍 Global Economic Outlook and Market Trends

A comprehensive overview of the global economic landscape, with a focus on key trends, policy developments, and market dynamics. The narrative synthesizes information on central bank decisions, geopolitical developments, and economic indicators to provide a nuanced understanding of the current state and future prospects of the global economy. It reflects on the interconnectedness of markets and the critical role of policy decisions in shaping economic outcomes.

Keywords

💡Central Bank Decisions

Central bank decisions are pivotal actions taken by a country's central bank to manage monetary policy, including adjusting interest rates and implementing measures to control inflation and stimulate economic growth. In the script, decisions from the Bank of Japan (BOJ), the Federal Reserve (Fed), and others are highlighted as key events impacting global financial markets. The expectation of changes in the BOJ's negative interest rate policy and the Fed's interest rate cuts are specifically mentioned, illustrating their significance in setting the economic agenda and influencing stock and bond markets.

💡Negative Interest Rate Policy

A negative interest rate policy (NIRP) is an unconventional monetary policy tool where central banks set nominal target interest rates below zero. This is intended to encourage borrowing and spending by penalizing banks for holding excess reserves. The script references speculation about the BOJ likely ending its NIRP, demonstrating the policy's importance in global finance and its impact on currency and stock market expectations.

💡Stimulus Measures

Stimulus measures refer to government policies aimed at encouraging economic growth, often through increased public spending, tax cuts, or lowering interest rates. The script mentions China's stimulus measures as helping factory output and investment grow more than expected, indicating the role such measures play in supporting economic recovery, albeit with cautious consumer behavior still prevailing.

💡Consumer Caution

Consumer caution denotes a situation where consumers are hesitant to spend money due to economic uncertainty or personal financial concerns. The script notes that despite positive signs from stimulus measures, consumers remain cautious, highlighting the delicate balance policymakers must maintain between stimulating economic growth and ensuring consumer confidence.

💡Yield Curve Control

Yield curve control is a monetary policy strategy used by central banks to target interest rates on government bonds of specific maturities. This involves buying or selling government bonds to keep the interest rates at a desired target level. The script discusses the BOJ potentially scrapping yield curve control, signifying a significant shift in its monetary policy approach and its implications for financial markets.

💡Rate Hike

A rate hike refers to an increase in the central bank's key interest rate, which is used to curb inflation and stabilize the currency. The script speculates on the BOJ's first rate hike since 2007, emphasizing the impact of such decisions on the economic outlook, currency valuation, and investment strategies.

💡Dot Plots

Dot plots are graphical representations used by the Federal Reserve to convey its officials' projections for the path of interest rates in the future. The script mentions market reactions to potential adjustments in the Fed's dot plots, highlighting how these projections guide investors' expectations regarding monetary policy and market trends.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power. The script touches on central banks adjusting their policies in response to 'stickier inflation', indicating the ongoing challenge of balancing economic growth with inflation control.

💡Treasury Yields

Treasury yields refer to the returns investors can expect when they buy government bonds. Movements in these yields are closely watched as indicators of investor sentiment and expectations about inflation and interest rates. The script notes a sell-off in US Treasuries, reflecting changes in market expectations based on central bank decisions and economic data.

💡Economic Stimulus

Economic stimulus encompasses actions by governments or central banks to jumpstart economic growth during downturns. This can include policies like reducing interest rates, quantitative easing, or fiscal spending. In the script, China's economic stimulus is credited with boosting factory output and investment, underscoring the role of stimulus in driving economic recovery.

Highlights

Japan leads stocks higher in Asia as the Bank of Japan headlines a big week of central bank decisions, likely ending its negative interest rate policy.

China's factory output and investment grow more than expected, indicating stimulus measures are effective, though consumer caution persists.

Vladimir Putin warns Russia will continue pursuing its goals after a dominant presidential election win.

Expectations rise for the Bank of Japan to end its negative interest rate policy, marking the first rate hike since 2007.

European and US futures point to modest gains amid a big week of central bank decisions.

Markets adjust bets on the Federal Reserve's interest rate cuts, with less anticipation for aggressive action.

Bloomberg reports on a potential partnership between Apple and Google's Gemini on AI, potentially impacting the tech space.

The Bank of England and the Federal Reserve are set to make pivotal rate decisions affecting global economic policy.

Chinese economic data shows signs of positive impact from stimulus measures, with factory output jumping significantly.

Asian markets react positively to China's stronger than expected economic data, with a focus on the industrial sector.

Bank of Japan's potential policy shift sparks speculation and anticipation in financial markets.

The Japanese yen's position is closely watched as the Bank of Japan approaches a significant policy decision.

EU pledges a significant aid package for Egypt, highlighting international efforts for regional stability.

Israel's military actions and political tensions with the US are discussed, reflecting on geopolitical dynamics.

Donald Trump proposes aggressive tariffs on Chinese cars made in Mexico, underscoring trade policy stances.

The UK housing market sees price increases, with mortgage rates cooling and buyer activity rising.

Oil prices and commodities react to China's economic data and global market dynamics.

Transcripts

Good morning. This is Bloomberg Daybreak up on Tom

Mackenzie in London. These are the stories that set your

agenda. Japan leads stocks higher in Asia as the

boj headlines a big week of central bank decisions.

It's negative interest rate policy likely to end tomorrow.

China's factory output and investment grow more than expected, showing

stimulus measures are helping, but consumers remain cautious.

Plus, a defiant Vladimir Putin warns Russia won't be stopped from pursuing

its goals after sweeping to victory in a tightly controlled presidential

election. Let's check in on these markets then.

A solid session over in Asia, as we said, bolstered by the gains that we're

seeing over in Japan, the Nikkei rallying on expectations that the yen

won't strengthen that much, even if a rate hike does come through from the DOJ

tomorrow. Of course, that would be the first time

the move move higher, first hike since 2007, ending, of course, the negative

interest rate policy. It's not guaranteed, but the expectation

from BOJ watchers is it's likely to happen.

On Tuesday, European futures pointed to gains of 2/10 of a percent.

Over in the US, S&P futures looking at 5197, pointing higher by 3/10 of a

percent. By the way, markets failing their bets

on the Fed in terms of the number of cuts from just under three now and in

terms of Nasdaq futures. Carney up 5/10 of a percent were

watching the Apple story on Bloomberg reporting that potentially there is a

partnership in the making between Apple and Gemini of Google on the AI front as

well. So that could be consequential for Apple

in the broader tech space. Footsie one on two futures currently

pointing higher by about a 10th of a percent.

We have, of course, the Bowie reporting and its decision on Thursday.

The Fed, of course, but before that it is the BOJ on Tuesday.

Let's flip the board then look across asset as we think about a week when

central banks will be setting policy for almost half the global population.

We look at the ten year currently for 29, a move of one basis point.

A lot of work done on the front end last week in terms of yields up around 20

basis points again as markets readjusted to stickier inflation and pushed back

and faded their expectations around just how many cuts will be coming through

from the Federal Reserve. The Japanese yen 149 as we look at that

rally in the Nikkei I know has been bumping around in the session.

It crossed below $100 per ton. It's not just back above that 102

linking to the China data, currently up 2.7% on iron ore.

Brent $85 a barrel, up 4/10 of a percent after last week's gains.

The strongest week we've seen for oil in about a month.

Part of that, the geopolitics, the attacks on Russian refineries.

But again, the China data coming a little stronger than many had expected,

and that is bolstering oil once again, $85 a barrel on Brent, let's stay with

that story, get more details on what's been happening, of course, with the

Chinese economy, a positive start to the year that with factory output jumping

more than expected, up 7% over January and February.

Retail sales, meanwhile, were up five and a half percent.

That number roughly in line with the estimates.

Let's bring in blue box. We're packaging Wilkins for the details

on this data. Rebecca, is this a sign then that the

stimulus measures that we've seen, the piecemeal stimulus measures, but

nonetheless, collectively not insignificant, that they are now finally

working? Well, certainly suggests that some of

that supply side stimulus that we've seen so far is allowing for the

stabilization in parts of the Chinese economy, at least those outside of

property, for example. Those industrial figures caught my eye

as it did those sort of fixed asset investment figures.

Both of those came in comfortably above the estimates that we also had

manufacturing investment growth on track for its fastest pace since October 2022.

So a lot of reasons to be positive. But I think the key element here is to

really look at that muted, quite lackluster market reaction when we first

saw that initial sweep of figures coming out.

And I think it is really about this caution that the growth that we're

seeing, the improvement that we're seeing really rely on that old model

that China is trying to move away from, relying more on, for example, trying to

push more money through investment into infrastructure and so on without really

tackling some of those fundamental issues about consumer demand.

And while these retail numbers came in a little bit higher.

There is also this context that perhaps that was really more about the

activities of festivities of Lunar New Year and those holidays and so on that

helped sort of artificially bump up that number.

Okay. So some of those underlying challenges,

of course, remaining as you point to for this Chinese economy.

What do you and the team then looking out for next, Rebecca?

Well, there was one thing that was missing that we were hoping to see

today, and that was the youth unemployment figure.

One of the more controversial pieces of Chinese data that we originally saw

actually removed entirely from the database back last year in the summer,

last year. Back then, there was a record high of

young people, one in five young people struggling to find a job.

Now, those numbers were revised and they came back.

They removed the factoring in of people who are at school and the number came in

around 15%. We were hoping to see that today.

It didn't come through, but authorities have said that they are expecting to

release that in the next couple of days. So we are keeping an eye on that.

And the other element here, I think, and this speaks to this sort of consumer

demand story, is whether or not we get more details about this potential sort

of retail trade in program that was announced by SI and has been reiterated

in various corners of the machinery since then.

Are businesses and retail consumers encouraged to trade in their goods?

And the central government is going to direct some portion of funds towards

that. But we don't yet know how much.

Okay. Bloomberg's Rebecca Wilkins with the

details on the data and what to look out for in terms of the jobless rate and

some of the further detail out of the Beijing apparatus in terms of the policy

supporting some of those consumer sales. Rebecca, thank you very much indeed.

Let's get the market reaction then and see how the Asian markets are faring

this Monday. Let's bring in Aber Hong is standing by

in Singapore. April, what are you looking at?

Yeah, we're looking at a positive reaction in the equity space in China.

To be clear, it was a mixed bag, as Rebecca and you have been discussing.

We saw that pick up for the industrial production print as well as for

investment. And that seems to be what investors are

focusing on in spite of what we saw that slight miss on retail sales, as well as

the big concern from the property side of things.

CSI 300 clocking gains of about 6/10 of a percent.

Hang Seng also in the green. We're seeing offshore yen moving

sideways for much of the session. Let's put the ball because I want to

take you to some of the movers in the markets for Chinese equities today.

We're seeing the Chinese authorities telling us to buy local that's propping

up the semiconductor names. We also saw that earnings beat from

Seattle, the battery giant. So traders are also piling into the

stock. We are keeping a really close watch this

week on some of the companies on the Hang Seng Tech.

We have the army that could unveil its ambitions, but earnings as well from

May, Taiwan, from ten said let's flip the board, because, of course, it is

also about the Bank of Japan and the speculation really, really ramping up.

And it seems like the swaps market is pricing in fully that move from the BOJ

tomorrow. Amid all this, though, we're seeing how

futures as well as the ten years seems to be reversing some of the moves from

last week. Don't forget we had the BOJ today coming

through with a massive liquidity operation via the repos and that seems

to be indicating they don't want to tolerate any big fluctuations in the

bond space. And regardless, it looks like it'll be a

while even if the BOJ moves tomorrow before we see 1%, let alone 2% on the

ten year list of the board, because middle this what we're really minding is

the gap between the US and Japan. And the yen has been hovering still at

that 149 level. We're seeing equities also still

powering through those gains accelerating towards the

close on the Nikkei. And it's really about the fundamentals.

So this is what we're seeing as we come down to the BOJ and the Fed.

Okay. Overall, fantastic breakdown of the

Asian markets this Monday, April Hong out of Singapore for us.

Let's stay on the Central bank story then, of course, a major week for

central banks. We have the Fed, the Bank of Japan, of

course, among those set to make rate decisions that will affect half the

world's economy. Economists see Fed officials holding

steady while the BOJ, as we've been discussing, widely, expected to finally

end its negative rate policy tomorrow. Not locked in, of course, but the

expectation from bank watchers is that's where they will go on the back of that

stronger wage data that we got out last week.

Let's bring in Mark council then from Bloomberg.

Same life to set us up on the central banking story, what it means for these

markets. Mark, what does that what does this set

up then for dollar yen? Tell us about the BOJ.

Well, the traders have had lots of time to digest all this information, which as

we now think is going to culminate in a find me a change from the Bank of Japan

for the first time in in 17 years. And if you look at where the rate is,

was just above 149 for dollar yen. It was as though traders really are

taking a very sanguine approach to the whole thing.

They don't really fear that any move from the Bank of Japan is going to be so

strong as to really ignite a fire under the yen.

So it's surprising that we we aren't quite a bit lower in dollar yen.

But probably the the reason for that is that it also is not just about the Bank

of Japan, it's also about the Federal Reserve.

So traders, of course, need to make a view on how does one central bank stand

up against the other. So if you fully priced in a dovish move

from the Bank of Japan, yes, they may go to the zero rates or maybe even a touch

higher, but they're likely to accompany it with a statement which is very dovish

for the future, telling us that interest rates are going to move only very, very

slowly. And then you flip to the other side

where you've got the Federal Reserve coming up this week as well.

And as you were saying earlier, there's a decent chance that they're going to

reduce their outlook on the DOT plots to only two interest rate cuts this year.

That would be seen as a fairly aggressive move.

And obviously that would underpin the US dollar.

So that's where we are. We're standing at about 149, which

suggests traders are more concerned about what they have coming up from the

Federal Reserve than from the Bank of Japan.

That's really interesting. That gives us important context, of

course, around the rally as well with Japanese stocks.

Nikkei current up 2.7%, which which, as you say otherwise would look a little

counterintuitive, but you've given us the context as to why that may be

happening, given expectations around the yen.

Meanwhile, with the Treasury story, Mark, we saw yields up, what, 20 basis

points on the two year. Last week, one of their worst weeks

across US treasuries for quite some time.

What was going on that. Although reality is is finally sinking

in, that the Federal Reserve really is going to take its time.

It's a message that the Fed speakers have been putting forward for several

weeks. Of course not.

Last week they were in a blackout, but prior to that there were several Fed

voices who are very consistently saying there's no rush.

The recent CPI data, the API data last week as well, all coming about forecast.

So we'll giving them plenty more time to go.

We have a Bloomberg Economics report out today which shows that they've digested

all these headlines, 900 headlines which come from federal speakers in recent

recent months. And it points to July being the earliest

time when we could expect a lowering of interest rates in the Federal Reserve.

Well, that's quite different to just at the beginning of the year.

We're expecting even March would be a live situation for the Federal Reserve.

Clearly, that's not the case now. So we've gone from at one point thinking

we might get seven interest rate cuts in the US now.

Maybe we have to adjust to only two interest rate cuts and even that is

becoming a little bit questionable. So obviously the Treasury market is

taking the brunt of that. A pleasant surprise for them this week

would be if the Fed actually maintains three interest rate cuts in its outlook.

But that's looking increasingly unlikely.

We're more the case that they're going to reduce the two.

And even some people think the risk is they'll go to one, but maybe not at this

particular meeting. Possibly from three all the way to one

in terms of the dot plots that Bloomberg analyzed.

Mark Greenfield, with important context for you.

Excellent. Thank you, Mark, for that detail.

So the tech story then on a big day, a big week for Nvidia, once again, of

course, dominating the Max seven story in all things A.I.

And it is annual conference kicking off today.

Expectations very high for news that could boost it and other tech stocks, of

course. Let's bring in Bloomberg's Jane Lanhee

Lee for the details. Jane, what are we expecting to hear from

in video and Jensen Huang? Right.

Well, GTC is the development conference where it unveils its new products and

partnerships, and there's a lot of expectation that it's going to unveil

its next AI chip and platform that would speed up the AI model training.

And so a lot of those specs are going to be analyzed by analysts and and to see,

you know, how big of a jump is this and how expensive could this be and what

kind of change will that bring? And so it'll be it'll be key to watch

these aspects to see how this moves the Nvidia going forward.

Okay. So from a confidence that, frankly, few

people have paid much attention to just a few years ago.

So a conference that's now been nicknamed the Woodstock.

Talk to us about that, about the context of this and the focus and the scrutiny

of this event this week. Exactly.

I mean, I think it's it's fair to even say a lot of people in the US didn't

even know what in video was a few years back.

But with the advent of catchy Beat, where I really has become part of

everyone's world, you know, I have teenagers who came back that day and

said, Mom, there's this new age thing and you know, it can do my homework for

me. And so now AI is part of our lives.

And behind that are these in video chips which have powered the training,

powered the data centers that have trained up and other large language

models. And so that excitement has really pushed

air to the forefront in video. For example, this year already up 80%.

It's a $2.2 trillion market capitalized company.

It's somewhat unthinkable even a few years ago.

And Jensen Huang here, where I am in Taiwan, he's he's a celebrity.

He's got a gaggle of reporters following him everywhere, asking him what kind of

noodles he likes. You know, So this has really changed the

company and changed A.I. chip hardware from something that

everybody ignored to now it's center stage.

Well, the next time we get you on, Jane, we need the answer around.

Around his preferred noodle type. I think that's essential to the Jensen

Huang biography. Jane, thank you very much indeed.

2.2 trillion market cap, as you say, sniffing at the heels of Apple, which is

currently around 2.7 trillion. We'll see if the A.I.

story and the partnership with Gemini, the reported potential partnership with

Gemini between Apple could further propel Apple's market cap rate today.

Watch that story as well. But only that.

Alan Healey on the invidious story What to watch for at that event, which ends

in one of course, given the keynote speech later today.

Here's what else is on the agenda. Of course, major wheat for the central

banks. The BOJ rate decision comes on Tuesday.

As we've been discussing, BOJ watchers increasingly think that the Bank of

Japan will make that move. Then with the first hike since 2007,

ending it's negative interest rate policy, given the wage negotiation

detail that we got out last week, that decision comes on Tuesday.

The Bank of Japan is currently meeting Wednesday.

We of course have the Fed decision, Mark Cranfield beating us and detailing for

us the forecasts and the update around the DOT plots, which will be so

important. They could move from 3 to 2 and then on

Thursday we get the b e decision as well.

Market still pricing in the first cut from the b A not until August.

We'll see if that changes on the bank of the decision on Thursday.

Widely, of course, expects it to be held, but any details of the press

conference will be important terms of informing our views as to the Bank of

England coming up. US-Israel relations hit a new low as

Benjamin Netanyahu pushes back against Chuck Schumer's call for new Israeli

elections. We discuss.

That's next. This is believed that.

Welcome back to Bloomberg Daybreak Europe.

Now, the European Union has pledged a €7.4 billion aid package for Egypt.

The mix of grants and loans was announced by the EU Commission President

Ursula von der Leyen during a trip to Cairo with leaders from Italy, Greece

and Cyprus. The deal marks the latest push by the

international community to buoy Egypt, which is seen as vital to regional

stability. Switching focus to Israel and Gaza now,

Israel's military has made its deepest incursion into Gaza City in about two

weeks, targeting al-Shifa hospital, citing Hamas activity.

It comes as Prime Minister Benjamin Netanyahu vowed to continue the war.

He also pushed back against comments by US Senate Majority Leader Chuck Schumer,

who last week called for elections in Israel.

It is totally inappropriate. It's inappropriate for a to go to a

sister democracy and try to replace the elected leadership there.

That's something that Israel, the Israeli public, does on its own.

We're not a banana republic. Okay.

Let's bring in Ethan Bronner, then Bloomberg's Israel bureau chief.

Ethan, I guess the key question is to what extent this division and it seems

like increasing division between the US and Israel could shift or will shift

policy. On one level, it seems like the policy

from Israel has not shifted in light of the pressure from the US.

Is that likely to change or is it changing under the surface?

Well, I don't think Israeli policy is going to change, but I think the bigger

question is whether US policy will change.

Right. Will President Biden, under such

enormous public pressure and electoral pressure as he faces an election in

November, actually start to turn the screws on Netanyahu and and Israel and

its policy in Gaza? I don't I don't think it's clear yet.

And I think it's also about timing. If the if the Israelis can sort of

accomplish something that they consider a victory in Gaza fast enough, probably

not. And of course, there's also negotiations

going on on those negotiations that.

Nathan, do we have any progress? Do we know what the detail is around

those negotiations for the release of the hostages, of course, and the

potential cease fire? Indeed, we do know a little something.

The Israelis have declined to join these negotiations for the last week or two or

or ten days. They are going today.

David Barnea, who's the head of the Mossad, the spy agency, will be going to

Qatar to Doha in order to try to push this thing forward.

So what we what has held things up until now is the Hamas insistence that

whatever deal there is has to be a permanent cease fire and the Israeli

insistence that whatever delivers cannot be a permanent cease fire.

So it appears that they're working about a two or three stage process in the

first stage of which will not require a commitment to a full, full cease fire.

And therefore, there could be an exchange of some 30 or 40 Israeli

hostages held in Gaza for some hundreds of Palestinian prisoners held here in

Israel, as well as a massive increase in humanitarian aid and a cease fire of

some weeks. About six, it looks like.

Okay. Ethan Bronner, Bloomberg's Israel bureau

chief, with an important update, of course, out of the region.

Thank you very much indeed. Coming up, oil pushes higher as China

data beats and Ukraine steps up attacks on Russian refineries.

I'm going to take a closer look at the commodities space.

That is next. This is Bloomberg.

Welcome back to Bloomberg Daybreak Europe.

Now, some of the other stories making news today.

Donald Trump says he will hit Chinese carmakers made in Mexico with a 100%

tariff if re-elected. The figure is double what he previously

promised. The presumptive Republican presidential

candidate addressed Chinese President Xi Jinping directly in a rally speech in

Ohio. Trump has previously proposed tariffs of

as much as 60% on all Chinese goods and 10% on goods made in other countries.

India has announced that general elections will take place over six weeks

from April the 19th. The Election Commission says the seven

phase polls will be completed on June 1st, with vote counting on June 4th.

Prime Minister Narendra modi is bidding for a third term in office, boosted by a

strong economy and a weakened opposition alliance that's been struggling to put

across a cohesive message. Here in the UK, Prime Minister Rishi

Sunak is facing the same levels of economic misery that led to the

Conservative Party's election defeat in 1997.

The misery index, which measures both inflation and unemployment, is at its

worst since John Major's landslide defeat.

But it's likely to improve over the next 12 months as inflation eases, backing up

Sunak's preference for a later general election.

And prices for homes in the UK have risen at the fastest pace in ten months.

The online sales portal Rightmove says the average asking price was up one and

a half percent in March month on month to just over £368,000.

Cooling mortgage rates have seen buyers return to the market, with Rightmove

saying it seems that the bottom of the market has now passed.

Let's check in on the commodities market then.

Of course, a big day in terms of the data that has come out of China.

It's a little mix, but on the factory output gauge and on investment, you've

seen a pretty strong tick up in the first few months out of China on the

data that was came out today. The retail sector remains a little

cautious. Consumers remain cautious.

But of course the read through is there for the commodities space.

Brent is currently up 4/10 of a percent. Part of that is China, tied to the

slightly stronger China data at $85 a barrel after a very strong week, the

best week in a month for oil. Last week, crude WTI at $81 a barrel.

Iron ore broke through 100 per tonne, now 102, up close to 3% so far in the

session. You can see the price there on copper.

There's plenty more coming up. We now unpack the story around Vladimir

Putin. Of course, that election extending his

nearly quarter century rule into a fifth term with a record win in an election

with no real challenger. That conversation is coming up next.

The implications for Russia and the world.

Stay with us. This is Bloomberg.

And.

Good morning. This is Bloomberg Daybreak Europe on Tom

Mackenzie in London. These are the stories that set your

agenda. Japan leads stocks higher in Asia as the

boj headlines a big week of central bank decisions.

It's negative interest rate policy looks likely to end tomorrow.

China's factory output investment grow more than expected, showing stimulus

measures are helping, but consumers remain cautious.

Plus, a defiant Vladimir Putin warns Russia won't be stopped from pursuing

its goals after sweeping to victory in a tightly controlled presidential

election. Let's check in on these markets then.

As we've been discussing, central bank policy being set for almost half the

world's growth in terms of economies. Of course, we have the BOJ decision

tomorrow at the Fed, the BOJ later on in the week.

Of course, the Fed comes three Wednesday, the BOJ on Thursday.

Currently you're looking at European futures up 2/10 of a percent.

Footsie 100 futures pointing to gains of 2/10 as well, 7773.

S&P futures back below 5200, but still pointing to gains of around 3/10 of a

percent. After three straight sessions of losses

across US stocks. We look as well for in video and that

event later today with Jensen Huang making a keynote speech talking of tech.

The Nasdaq currently pointing to gains. The Nasdaq 100 of around 5/10 of a

percent on the central bank front when it comes to the Fed, markets now

expecting fewer than three rate cuts coming through from that central bank.

The details around the dot plots, of course, will be essential for these

markets on Wednesday. Let's go across an set then have a quick

look on how treasuries are shaping up with an eye, of course, on the Japanese

yen as well. The ten year currency at 428, a move

there a little at or close to two basis points.

You saw a 20 basis point jump in years, a little over 20 basis points on the two

year last week. So a significant sell off, particularly

the frontend. And we'll see how that story evolves

this week. The Japanese yen 149 expectations that

the Japanese yen won't strengthen too much.

And even if you do get the first time since 2007 tomorrow and that view around

a potentially softer yen is bolstering Japanese stocks today on one hour to a

gain of 2.6%. A little bit of strength coming through

from iron ore after a very challenging week last week on suggestions that maybe

the data is starting to prove, at least around the edges, a bit of improvement

out of China and Brent, $85 a barrel after its best week in a month last

week, up 5/10 of a percent. Let's get to the geopolitics then and

the story around Vladimir Putin and the election.

Not a huge surprise, but nonetheless, of course, consequential.

Significant indeed. Vladimir Putin warning that Russia won't

be stopped from pursuing its goals. His defiant words coming after securing

another six years, another six years as president with a record victory in a

tightly controlled election where he faced no serious competition.

Let's bring in Bloomberg's Russia economy and government team leader Tony

Halpin for the context on this. There was very little doubt that this

would be the result. How is the Kremlin then adjusting to

this results? What is the messaging that's coming

through? What does it tell us about Putin's aims

and goals going forward then, Tony? Yes.

Good morning. Well, I mean, it certainly far exceeds

anything we've seen in Russia's post-Soviet history.

And it puts Putin really in the company of certain Central Asian autocrats in

terms of the supposed devotion of his electorate.

If you want to put it in context, it's ten percentage points greater than his

last resort in 2018, which itself was a record.

And the turnout was put at something not seen since 1991 when Boris Yeltsin won

election after the Soviet Union's collapse.

So it's a completely different league and it's intended to convey a message

that Putin has a united country behind him.

But clearly, there are a great deal of doubt.

There are there is a great deal of doubt about some of the results that have been

seen in the country. Well, Tony, just expand on that a

little. You're giving us the context in terms of

just how significant or at least to the size of this apparent support in that

historical context going all the way back to 1991.

To your point, are there any real sense is there any real sense that there's

oppositional pushback? What do we glean from what's transpired

over the last few days? Yeah.

I mean, I think in many regions what's called administrative resources were

deployed to ensure that, for instance, state workers turned up and voted the

right way. And places like Moscow and St

Petersburg, which historically have been hotbeds of opposition to Putin, they

were extremely high votes and turn out in his favor.

All of that said, there's very little actual opposition on the ground since

the death of Alexei Navalny in prison, though there were protests at some

polling stations yesterday. They were really quite marginal.

And opposition to Putin has been effectively suppressed by the Kremlin,

which has been cracking down on dissent pretty much throughout the whole war

period. Okay.

Tony Halpin, thank you very much indeed on that important story, of course, out

of Russia with the Russian president saying he is committed to pursuing his

goals, of course, on the back of that election victory.

But of course, with all the context, it was highly, highly controlled and

essentially not in doubt. Tony, thank you very much, indeed.

Now, EU foreign ministers are meeting in Brussels today to discuss Ukraine and

the situation in the Middle East. And of course, we can't forget Ukraine

without thinking about Russia. The meeting comes after Germany and

France called for the European Investment Bank, the EIB, to step up

defence spending. Let's bring in Bloomberg's Oliver Crook

in Brussels with the details. Ollie, talk us through this EIB

proposal. How serious is it?

Where are we in seeing that come to fruition?

What could it mean on the ground in Ukraine?

Yes. So the European Investment Bank is

obviously the lending arm of the EU and it's really sort of there to deploy

capital to get through to Europe's policy aims.

Right. And one of those big policy aims

recently has been defence spending and getting that back to sort of where it

needs to be. So they launched part of this EIB, which

is on defence spending called the Strategic European Security Initiative

back in 2022. There's about €8 billion in that part of

the fund. However, there is a policy that is

guiding this, that is basically that this these investments cannot go to

anything that is not dual use, i.e. both civilian and military, and to quote

them from their page of what that precisely means.

The projects we support require that the majority of the promoters expected

future revenue will come from civilian application.

So when you're talking about artillery shells, bullets, guns, fighter jets,

that does not have a non-military application.

And so as a consequence, that sort of part of the defence realm is being

neglected. And that is really where a lot of the

money needs to go. So what they want is there are 14

countries that are signed to this is led by Germany and France and they really

want reform to this. So you can have really pure defence

spending going forward from the EIB. Would it make if that reform came

through, then only as the French and Germans clearly want it to, would it

would it make a significant difference in terms of the support that Europe is

able to give Ukraine? So it looks like you have to look at it

through a different a couple of different perspectives.

So there's this the money side of it, right?

So you think about in terms of the volume of money that would actually go

towards defense. When you look at the EIB spending last

year where it deployed capital, it deployed €75 billion worth of it, only

750 million of that was towards defence, right?

So that was less than 1%. And then you also end in 8 billion in

terms of that spending is not a huge sum of money.

What it does do, however, it does help with the European Strategic Fund, which

they put out this industrial strategy of wanting a more centralized view of where

Europe and how Europe spends money on defence, how it does procurement and to

have it all centralised and a sort of capital arm behind that would be

extremely helpful. And then there's also two signals.

One of the signals we heard from the sub CEO when we interviewed him last week

that if the EIB is putting money into this, it signals to big funds that they

should be and can be making money and spending more in defence.

But then there's also this question of the moral signal time.

We've spent a lot of time for many years talking about ESG, where does defence,

military guns and that sort of thing fit into sort of positive social impact?

That was a very sort of dubious thing for a long time.

But since the invasion of Ukraine, four perspectives have shifted on that and a

lot more sort of ESG facing funds are now investing in aerospace and defense

companies. Okay.

Bloomberg's Oliver Crook then on the course, were from around AIB and the

consequences of that potential signalling around the investment flows

into defense. Excellent.

Thank you very much indeed. Now to a Bloomberg scoop and Apple is in

talks to build Google's Gemini, a AI engine artificial engine into the iPhone

in a deal that could shake up the AI industry.

Then Bloomberg's Kristie Gupta has the details.

Kristie, what do we know? Well, we know very little, but we are

assuming a lot. Let me walk you through some of this.

This is, of course, the Has to Gemini, the A.I.

kind of product that Alphabet's Google had offered back in March of 2023.

So it is still a fairly new product, only doubt for what's called a year

here. And yet in that year, they've managed to

do quite a lot. For example, in January, Samsung had

just rolled out their kind of offering with Gemini II involved in it.

Now Apple is trying to do the same. There are two ways to interpret it as.

And first, we should mention that these discussions are not official.

They haven't been talked about this all off the record.

And according to our reporting from Mark Gurman out of L.A., San Francisco,

California, is what we'll call it. But what's important to keep in mind,

that there are two things here. One is that this could be a sign that

Apple hasn't actually been able to develop their AI product that well.

So there is that piece of it. The other sign is simply there is a

working partnership between Apple and Alphabet, and there has been for a

while. Remember, Alphabet has been paying

billions of year, billions of dollars annually to get be kind of the go to

search platform. When you look at Apple's safari, when

you look at iPhones, iPads, even your MacBook, you are the first thing you

pull up is that Google search engine that costs money.

So this is kind of this working partnership that's been in the works for

a while. But in addition to the fact that perhaps

Apple doesn't have the edge, there is a sign here that for Gemini, for Google,

this gives access to 2 billion users worldwide.

That is a massive number when it comes to kind of getting the reach that Gemini

has an arguably on top of Samsung, which as we know, Samsung and Apple in terms

of the actual smartphone market are very big competitors.

Samsung has the edge, a lot of emerging market economies, even periphery here in

Europe, Spain, Italy, China, India. Samsung is the go to.

So that's going to be a lot to keep an eye on.

We look at that working partnership and whether or not Apple can actually edge

out or at least have some of that A.I. offering in some way, because take a

look at the stock, Tom. They haven't been in on the rally

because they haven't had an A.I. product.

This might actually change that. The one hurdle here is antitrust

scrutiny from both sides. The company We know the Alphabet's

already focusing on lawsuits with the DOJ, Apple dealing with plenty right

here in Europe. Yeah, you can imagine those EU

commissioners are waking up this morning to these headlines and taking a big look

at this potential story, Kristie. Got to put the details on that Bloomberg

scoop around the potential partnership between Apple and Google's Gemini and

how that could reshape the landscape Kristie.

Thank you very much indeed. Coming up, I'm joined by Aron, captain,

the chief economist and head of economics and strategy at UBS Investment

Bank. We're going to get his views on, of

course, those key central bank decisions this week.

That interview is next. This is Bloomberg.

Welcome back to Bloomberg Daybreak Europe.

Happy Monday. Now, it is, of course, a major week for

those central banks for the Fed, the Bank of Japan, of course.

Among those set to make rate calls that will affect half the world's economy.

Who better then to speak to than Aron? Captain, chief economist, chief

economist at UBS Investment Bank. And Aaron, I said to you in the break,

I'm going to start with the Fed, but that was making an assumption and I

don't wanna make that assumption. So I ask you the question as to which

central bank decision is most important for you this week.

That Well, it is the Fed. Okay.

Yes. So not that they're going to do

anything, but I think what they say matters.

The market is really swung to pricing a lot to pricing very little.

And I think whatever where the Fed goes, everyone else sort of goes, right.

There's their safety in the herd. Now, our assumption is they stay with

three cuts for this year, mainly because we don't think the forecasts are going

to really revise maybe a 10th or so. And usually with the top five goes where

the forecast goes. Right.

So if nothing changes there, then nothing changes in there in their rate

guidance. But I think at this stage the data is so

all over the map for the US that it's unclear what the staff is briefing them.

Is. Is it a bullish story that everything is

fine or there's lots of employment growth and we're going have there's no

landing or soft landing, or is it a bearish story where, you know, you now

have the same rule triggering in 42 states and you have, you know, the

leading employment categories are starting to roll over again in the

latest release. So I think it's unclear where I think

the mindset is at the center of the committee right now in the data story.

This is this a new normal for us post-pandemic that the data is this

muddier and less clear? Yeah.

Is there is there a period in time when we get back to the to the pre-pandemic

relative relative clarity around the data or is this the new normal for.

Yeah, it's a bit like the Lehman echo we had.

So for a couple of years, I think the seasonal factors just shifted, distorted

everything. You know, for three years running.

I think we all got our forecasts wrong post GFC and then eventually the

seasonal factors catch up. I think that's starting to happen,

right? You can you can see it in the claims

data. For instance, last week they revised the

seasonals are now much closer to pre-pandemic seasonals so we're getting

there but I think there's still a lot of distortion and is not unique to the US

right it's also in the UK. How vulnerable is the market do you

think, to to a revision from 3 to 2 on the dot plot.

So do you think that's priced in at this point?

Not Yeah, I don't think it's that vulnerable to that.

I mean that's that's sort of neither here nor there.

I think next year's guidance will be important, right?

So they still had one next year. So if you take one out this year, what

do you do next year? I think the main risk, I mean, if they

don't change the unemployment forecast, I think you can hang on to most of the

market pricing. The risk in their models is that

unemployment starts to go lower because payrolls are running too fast.

Right. That is the risk to the market, because

then the models will start to say abort bought the cutting cycle.

Right. And that's not happening.

So I think unemployment's sort of drifting up nicely to their forecast.

So they can probably retain most of what they have.

What do you make from the rent? It seems like there's a disconnect, but

what we heard from Jay Powell in testimony saying we're not far not far

from the position where we can cut from having that confidence versus the stick.

Your inflation disconnect. It seems like the rhetoric from the

chairman and the data, what do you make of that?

So not far for us means that they're going to go in June, right?

I mean, they have ample opportunity to to change that.

And he didn't. I think also the other Fed speakers

going into the quiet period didn't really say anything that suggested the

big shift in there. That's the sticky inflation.

I think there was from our perspective, there was good news in the inflation

print last week, even though it was quite hot, right.

So the nervousness would have been, oh, so everything that happened in the prior

prints in January was not supposed to happen, Right?

So a residual seasonality optically was there, but it was in all the wrong

components. And so I think there was a lot of

nervousness on the part of the Fed staff as to whether something was happening

that would carry over into the forecast. I think the February prints confirms

that's not the case. Right?

So most of the things that were anomalies sort of disappeared.

Obviously, things are still running a bit too hot, but you can be quite

confident that in March things really stepped down because we know we get a

very benign OCR print based on how they sample that.

Okay, so that was the good news within the otherwise headline stickier

inflation print. And you still see June for the Fed, they

cut in June. Let's switch focus then to the DOJ.

They make that decision tomorrow. Is it locked in at this point?

And how do you see the sequencing for the DOJ going from here?

So it looks locked in. If you if you look at the local press

and of we were talking about sort of this this the full page sort of Nikkei

newspaper in Japan saying, you know, first the first hike in 17 years, it

looks locked in. Now, we had thought April we last night

published a note saying, well, clearly it looks like it's going to happen now.

Right. It wasn't just the the shoot out wage

round. It was Kishida in Parliament basically

saying, look, you know, DOJ can go ahead.

They don't need to wait for us to change the statement.

So it looks like it's happening. The key uncertainty is not whether to go

from, you know, minus ten bips that to zero.

I think it's the job guidance. Right.

So if they abandon, which is see but also eliminate the reference rates,

which wasn't that clear until a few days ago, then the question is, well, what's

your intervention policy right now? So they're going to have to guide us as

to to what extent we want to stabilize the job market.

Okay. So it's the and the expectation around

the yield curve control is that they dropped that as they as they raise rates

as well as that we think we think they abandoned it now.

So a couple of months ago we thought they might phase it so they would.

First and nerve. So sorry negative interest rate policy

and then sort of hang on to the reference rate, then sort of abandon

yield curve control. We think it all happens now.

Right. But the question then is, well, what is

your intervention policy on the ETF purchases?

I think they just sit on the portfolio, do nothing.

Right. So I think are going to have to send a

clear signal that t is nowhere on the horizon is basically managing the

portfolio and that's it. So it's a it's a dovish hike in the

budget, we think. So, yeah.

When it comes to the Bank of England Thursday, it's the decision markets did

expect in the first cut not to come through until until until August.

Bank of England if the body waits that long, do you think they have the ability

to wait that long to wait until August? And if so, do they have to do more if

they're starting later? So we have August as well.

So it's I mean, I think they have to wait until August just because the

inflation and wage data has not gone far enough in their favour.

They're sort of going through the same inflation dynamics as the eurozone and

the US, except to start it later. So they just haven't accumulated the

sequence of improvement that I think you want to have in order to start start

cutting. Can they afford to wait?

I mean, the economy's not going nowhere fast.

So it's so it's not it's not that asymmetric, right?

It's it's sort of symmetric in the sense if you wait, you are doing more and more

damage. I think for households who have

mortgages resetting and growth is really sort of stagnant.

But I think you just really cannot justify going that much earlier.

Are you seeing green shoots in the European economy

who have to look really hard? I mean, a few things.

So you're so the backlog actually, I think it's

very unclear. So the February data have reversed.

I think a lot of improvement we are seeing in some of the survey data

there is globally, including in the eurozone, I think a bounce in the data

bucket that is loosely related to consumption.

Everything else still looks pretty bad. And if you think about things like the

auto sector, then the backlogs are now completely worked off and production

should start to fall. Right?

So I think it's a mixed bag of, you know, consumer getting better, trade

still very weak, not really getting any positive spillover from the tech story

in Asia. It's difficult to be very optimistic

about where we're going. Okay.

Right. Thank you very much indeed.

Smart analysis, of course, on a major week for the central banks and sent the

chief economist at UBS Investment Bank. There's plenty more coming up.

Stay with us. This is Bloomberg.

We've been saying that the Bank of Japan is very likely to be tightening

policies. My view is that it will be a very dovish

exit. Market split between a march and April

exit from negative rates. Japan raises interest rate.

The US goes slowly. The yen strengthens a little bit.

I don't think that they want to risk any financial instability.

The stock market has performed very well on the week again, come on this trip.

That could take a bit of the zest out of that.

Yes, there will be hiccups and it seems that these couple of months would be a

little bit rough for Japanese equities. But at the same time, they can give you

opportunities. The money is then leaves Japan.

Where does it go? That's an interesting one there that

could bring us back maybe maybe to China.

Welcome back. So Bloomberg TV, guess that discussing

the DOJ, the Bank of Japan in our latest live Pulse survey, let's reflect on

what's happening around the positioning in the yen then, because on some levels

it seems counterintuitive that you're actually seeing the yen softening and

the bets coming through from the likes of the leverage funds and asset managers

is that there's going to be further weakness for the yen, further weakness,

even as we expect a Bank of Japan to raise interest rates, if not tomorrow,

then in the coming month or so. Of course, Bank of Japan watchers think

it will happen tomorrow. We just speaking to UBS is Aron kept

saying he thinks they will raise interest rates.

The Bank of Japan for the first time since 2007.

He was pointing to the front page of the Nikkei over the weekend.

He also thinks that they can scrap yield curve control.

These are the short positions and building into the yen despite the

expectations that you'll get that rates increase.

And the Fed, of course is a big factor in that particularly if they revise the

forecasts in terms of the dot plots from 3 to 2 fewer cuts coming through from

the Fed, a higher rate for longer from the Federal Reserve, strengthen the US

dollar pressure on the anyone as the Bank of Japan looks to raise interest

rates. Here's the expectation then around the

Fed Reserve, you've pegged you've gone from almost seven at the start of this

year expectations. You might get seven interest rate cuts

from the Federal Reserve that has been paired by these markets to expectations.

You're going to get fewer than three. Again, it's the revisions around the

forecast on Wednesday for the Fed that are going to be so consequential.

And of course, the Fed story ties to the Bank of Japan as we were speaking about

earlier. Let's flip the board and have a quick

look on the ten year because the Treasury markets were reacting then to

these expectations, the stickier inflation data out of the US and the

commentary from Fed officials and markets and the Treasuries reacting to

that with a sell off last week, particularly on the twos and the tens.

And you saw an almost 20 basis, a little more than 20 basis point move by the

full week. In terms of the ten year yields up.

It's money moving out of US treasuries on expectations that you going to get

fewer cuts this year. So that's the context you see towards

the end of this chart, there is the sell off in the US ten year.

We'll see that story and how that story evolves.

Of course, when we get the detail on Wednesday, expect to stand pat.

But again, it's the revisions around the forecasts.

So they're going to be so consequential coming up later.

Barclays chief executive C. S Ben cuts aggression and is going to be

joining the surveillance team to discuss that UK lender's outlook and strategy

plan. That's an exclusive conversation.

11:15 a.m. UK time next hour markets today we'll be

breaking down all the central bank action and setting you up for the week.

Stay with us. This is Bloomberg.