Good morning. It's finally the seventh of July in London. This is the Bloomberg Daybreak You Up Podcast. I'm Caroline Hepka and.
I'm Stephen Carroll. Coming up today, A job to do. US treasury yields have soared after stronger labor market data push rate bets for the Federal Reserve even higher.
Rallying in Asia. UBS's global wealth chief goes hunting for new assets as the Swiss banking chant looks beyond the credit sweet takeover, plus.
The UK government planning to roll back an EU ban on free investment research for clients. Let's start with a roundup of our top stories. US treasury yields shooting to their highest level in fifteen years after surprisingly strong US jobs data. Markets are now bracing for today's non farm payrolls numbers after ADP data on Thursday show the US companies adding almost half a million jobs last month. That's
the most and over a year. Dallas Federal Reserve President Larrie Logan says more interest rate increases will likely be needed to spur meaning full disinflation.
I remain concerned about whether inflation will return to target in a sustainable and timely way, and I think more restrictive monetary policy will be needed to achieve the fomc's goals of stable prices and maximum employment.
LOSTALLUS FADED President Laur Logan speaking at a Central Bank Research Association forum in New York. Economists surveyed by Bloomberg are expecting today's non farm payrolls to show two hundred and thirty thousand jobs were created last month, which would be a significant slowdown on the May figure.
US Treasury Secretary Janet Yellen is meeting Chinese Premier Lee Kiang today as part of her trip pamed at stabilizing four ties between the world's two largest economies. So far, Yellen has already met Central Bank Governor Yi Gang and former Vice Premier Liu Her. Former US Treasury official and now TCW Group senior analyst, David Lowinger says that this trip is about risk management and avoiding misunderstanding.
The US channel relationship is at its lowest point in over fifty years. There's all kinds of accidents waiting to happen, and communications are vital and e economic officials in the US and China just don't know each other, and you want to set up those lines of communications before the crisis happened.
David Lowing, a former US Treasury senior coordinator for China affairs. He was speaking as Bloomberg has learned that US officials started a fresh round of inspections of new listed Chinese companies. People familiar with the matter saying around a dozen firms audits were being reviewed, including ten Cent and dd.
UBS's global welschief Ikbal Khan is looking to find net new money for the bank in Asia. Bloomberg's Brian Cursis has more from Hong Kong.
Cohn is back in Asia gunning for new assets after the firm's takeover of Credit Suitez. People familiar say CON hosted receptions for hundreds of wealth staff in Hong Kong and Singapore. Sure it was to celebrate the two firms coming together, but the underlying message was clear find net new money. Conn is betting that Asia will generate lucrative fees even as Credit Suisse suffers outflows in other regions.
With the takeover, UBS will have more relationship managers in Asia than its rivals DBS and HSBC combined in on Kong praying credits, Bloomberg debreak Hero the UK.
Is planning to roll back the European Union's mified too ban on free research for clients. Bloomberg understands that Jeremy Hunt will unveil the step on Monday as part of a review of rules. Bloomberg's Tom McKenzie reports it.
Looks like Miffed Too may be scrapped in the UK. The Chancellor is expected to make an announcement in his Mansion House speech on Monday to accept the findings of a lawyer led review. The key piece of EU legislation forced financial firms to separate the cost of investment research from trading expenses, but critics say it resulted in less investment research being made available. Rolling it back may be part of the Chancellor's efforts to boost the attractiveness of
the UK's financial services in London. I'm Tom McKenzie, Bloomberg day Break, Europe.
The leaders of Sweden and Turkey will meet ahead of a NATO summit and Vilnius on Monday. Natosakus General Yain Steltenberg is trying to make progress on Sweden's accession to the Alliance after inconclusive talks yesterday. Speaking to Bloomberg, Sweden's Foreign minister, Tobias Bilstrom said they would like to see a clear response from Turkey.
We have reteriated over and over again. But we live in a world now following russia suggression in Ukraine, but is very unstable and that is shown not at least in the part of the world where we live, namely the northern part of Europe. Sweden joining the NATO is going to bring a lot more security to the table. Sweden not being present in NATO is going to do exactly the opposite.
That was Tobias Beltrum, Sweden's foreign minister, speaking to Bloomberg ahead of the NATO summit in Lithuania on Monday.
And finally, Samsung has reported its worst decline in quarterly revenue since at least two thousand and nine. Shares slid two percent in Seoul, with a vestas uncertain when a year long electronics in memory chip demand slump will actually end. The Korean tech john's twenty two percent decline in sales was larger than expected, though the ninety six percent drop in operating profit was less bad than forecasts. Those are top stories.
Well something to think about on this Friday morning, especially as the weather is heating up again, summer travel everyone's looking forward to there's summer holidays. Not wait, somebody's coming up in the papers in a moment about that. But I do recommend today the piece from Andrea Felstadt, our Bloomberg opinion columnist about the phenomenon of peak holiday travel and that actually twenty twenty through twenty twenty three may
see the peak in that as well. And this is partly linked to what we've heard from airlines, for example, over the past few months about how seats are going to remain more expensive post COVID book of a whole range of reasons. But of course higher interest rates going to feed into people spending. People are still spending on holidays for now, we know that from all of the
reports we've gotten recently out of travel related companies. But the question is when we get to this time next year, will people be that much worse off that they won't be able to afford their summer holidays.
Well, and also there was the you know, the revenge travel theme too, was definitely there after COVID, that people wanted to go to wonderful, far flung places to enjoy themselves, which they'd missed out on. But yes, you're right, interest rates and also the fact that those holidays and the weeks in the sun are much more expensive now than they were previously because of inflation. That actually that may not be sustainable. So the industry, airline industry, hotel industries
done quite well, but maybe that won't continue. Yeah, piece is very good.
Yeah, and she also digs into the idea of how people are also booking later, partly because of those those price challenges as well. So anyway, worth the read if you're thinking about your summer holidays this morning.
Yeah. Now dogged least on US employment, boosted expectations for interest rates and saw treasuries tank. On Thursday, benchmark treasury yields have ropped back through four percent, and those on Bloomberg's index of global government bonds have hit a fifteen year high. Joining US now. Bloomberg's executive editor for Agent Markets Paul Dobson, and you're actually in the radio studio in London, Paul, lovely to have you with US. Markets are now bracing for the non farm pay rolls today.
What should we expect from today's figures because that was the big driver yesterday ADP.
Yeah, absolutely, and so I guess people really don't know what to expect. I mean, the ADP figure was so remarkably strong and such an outlier relative today's expectations, and that's why we saw a rather extreme reaction in the markets. The ADP has not always been the best predictor of
what the non farm payrolls report shows are. The following day that said, I guess we're now all rushed to the other side of the ship and we're all expecting a very big number again today here, and so we'll be keeping an eye not just on the headline figure of course, but on the average hourly wages numbers as well, so tend to tell us more about what the inflationary outlook is.
Yeah, certainly. I mean, looking at the reaction in bond markets, this huge routing trousurries. Now looking at your yield over five percent for trousuries this morning. This is affecting markets all over the.
World, absolutely, and we saw the rises in bond yields, or the sell off in bond prices carry on through to ages today, lifting those interest rates in markets like Australia too. I think it's really interesting that we have that global aggregate index average yields back up to the highest level since two thousand and eight, and returns on government bonds or on global bonds for the year are
now basically back to zero. When you know, at the start of the year, everyone was counting on this as the place to put your money, take that yield and presumably have a little bit of capital gains as well from increases in prices, So that part of the investment outlook has been rather scotched. Now we're starting to see that push over into the equity side as well, So I think that's really interesting that sort of shifting correlation from people seeing the economy and the better economic news
is good for stocks. Last week, now everyone's worried again the interest rate environment is just going to have to become a lot more restrictive.
Yeah, that's the thing. So what is it done to pricing around the Fed's path? Is it shades of twenty twenty two all over again?
Yeah, it definitely. It definitely has that sort of feeling the air, although I mean, you know, for all of that, we're pricing in one more FED rate hike pretty soon and then another one by the end of the year. So it's not extreme. It's not like the market is absolutely terrified now relative to the UK. Of course, where
are these expectations and what's baked in? Or a lot higher again, and we're still looking for a much more aggressive BOE taking interest rates here higher still, so you could argue that their scope for FED pricing to continue
to seep into those erschel and yields in particular. I think the other thing to consider when you're looking across the yield curve is that the past few times when we've got to around four percent on the tenure treasury, that's brought in longer term investors, pension funds, that kind of type of investor looking to lock in those long
term yields. They see that as an attractive play. And so maybe, you know, even if we continue to feel that pressure at the short ends of the yield curve, there might be a little bit more support out there for the back end.
What does all of this mean in terms of what the Federal Reserve does next.
Well, we heard from some of the fair policies makers this week talking about the need for more hikes. We saw in the minutes there was certainly a feeling among a good number of the officials that further hikes and needed. I think the FED has been pretty explicit in the need to get inflation under control and the willingness to slow growth or ever and trigger you know, some sort of a recession if that's what's needed in order to win this battle, because it's so worried that those inflation
expectations become unanchored. So I don't think that they will be worried about what the market is doing. So much is worried about what inflation is doing and still paying attention to try to get that under control.
Yeah, Paul, I think it's a bit of a crucial moment, isn't it in markets today. We've thought we might be sitting the start of summer, but.
Maybe that's Yeah, this is my this is my summer holiday, Caroline. Good welcome and cold weather and.
And big moves in bond markets. Well, thank you so much for popping into the studio. Lovely to see you actually in person, say Paul Dobson, Bloomberg's executive editor for Asia. Markets.
Up next, more bad news on HS two casts and London air pollution warning. Now the paper review on Bluebird Daybreak Europe.
The news you need to know from today's papers.
Blue again and joins us this morning for more. The Financial Times has the headline decision to delay HS two's London terminus will cost at least two hundred million pounds. The whole not far from where I live in Houston, is going to remain then the construction.
Oh Caroline, Yes, by the looks of it for now, but who knows what the future has to hold. But the additional two hundred million pound figure has actually been revealed in a report from a cross party group of MPs that will be published today, and I must say something,
it's pretty scathing. They're warning the government's decision to delay constructing HS two will cost this huge sum of money, and they actually argue that from the very very beginning the budget was completely unrealistic and one of the biggest headaches has been the tunnel close to Caroline has been the rebuilding of Houston Station actually to accommodate huge high speed trains are going to be coming in and out. The project was designed to carry passengers from London to
Birmingham and the North of England. It suffered these bad delays, large costs, overturns, and this particular you know, design projects in the station close to your house could exceed seventy billion pounds. That's up from thirty seven billion in twenty thirteen. And earlier this year the government did announce plans to halt work on Euston Station and the final streatch of the track to control these ballooning costs which include that tunnel.
And the report from the House of Commons Public Accounts Committee out today, as I said, very critical of the government. But Caroline and Stephen, this was a huge plan to link London to northern England. Great in the concept of things, but has been more difficult to achieve than first thought.
Yeah, certainly, and that bill going even higher it seems for the project as well. Lee, And let's go to the Times next headline. There thousands of European flights maybe delayed or canceled as air traffic controller threatened strikes.
I feel so bad reporting this because we've all been so excited for our summer holidays. I must say I was delayed on my summer holiday, but I got over it and got there in the end. But many more people could be so. Up to a third of all European flights are now at risk of being delayed or canceled this summer after air traffic controllers said they would strike.
Now this is according to The Times newspaper. Controllers at euro Control that's a European air traffic management body, have said they would walk out over the peak of summer after talksovers staffing, rosters and pay has just broken down. So British holidays now face holiday makers now face this agonizing weight because we're going to find out in the next couple of days when the walkouts will be. So it's pretty you know, touching times if you've booked a flight.
Also here in London are mt Union. They've announced more strikes on the London underground for July the twenty third to twenty eighth than Caroline. If you're a mother and you have children or a father parents, know that some teachers are going on strike in England today too. So lot's happening.
Yeah, absolutely, two days of stri co action in the UK in terms of schools this week alone. The Guardian air pollution could kill London as a sporting capital. Sebastian co Worn's subco big voice in terms of world athletics and sports in general.
Yeah, huge voice.
Remember He was very, very instrumental in the Olympics that we held here in London in twenty twelve. But now the World Athletics president is warning that the climate crisis and poor air quality may just cause havoc to the sporting calendar. Yesterday he was speaking to Gary Lineker in a panel at Wimbledon, and he basically says that even London could be a very difficult place to hold these sporting events because of air pollution and the effect that that could have on athletes in the future.
This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond.
Look for us on your podcast feed every morning, on Apple, Spotify, and anywhere else you get your podcasts.
You can also listen live each morning on London Dab Radio, the Bloomberg Business app, and Bloomberg dot Com.
Our flagship New York station, is also available on your Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hepka and.
I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg day Break.
Europe,