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Good morning.
I'm Nathan Hager.
And I'm Karen Moscow. Here are the stories we're following today.
Karen, we begin with the latest messaging from the FED. Chairman J Powell signaled that policymakers will wait longer than previously anticipated to cut interest rates following a series of surprisingly high inflation readings.
So we've said at the FMC that we'll need greater confidence that inflation is moving sustainably toward two percent before be appropriate to ease policy. You know, we took that cautious approach and sought that greater confidence so as not to overreact to the string of low inflation readings that we had in the second half of last year.
Now, policymakers narrowly penciled in three interest rate cuts and forecasts published last month, but investors are now betting on just one to two cuts this year. The yield on the two year no briefly crossed five percent yesterday. This morning, it's at four point nine four percent.
Well, Nathan, Some on Wall Street have speculated the Fed could raise rates, but Bloomberg Opinion columnist Muhammadalarian says there are real risks. If the FED boost rates from here.
If inflationing gets much worse, they could hike. But I think if they do hike, we're going to have a regional banking crisis. We're going to have all sorts of damage in the marketplace. And I think that is at the back of the head. So I think the likelihood of them hiking is low. Is it zero? No, they could Bloomberg.
Opinion columnist Mohammedalarian says another rate high could put the Fed on a path to a new tightening cycle and that could derail US growth.
Well, Karen. Inflation and rates are also in focus in Europe. UK inflation slowed less than expected last month. This fuel price is corrept higher. Consumer prices rose three point two percent in March compared with the year earlier. That's down from three point four in While that is the lowest since September twenty twenty one, three point two is above the three point one percent inflation that the Bank of England and private sector economists had expected.
Now, Nathan, we get the latest from the Middle East and Israeli Foreign Minister Israel Counts is meeting with the foreign ministers of the UK and Germany. He says Israel has the right to react to Iran's weekend missile and drone attack, and he's calling for sanctions on Around's missile program. The White House says it's preparing a package targeting around's weapons systems, but Bloomberg's Patrick psychs reports Iran has a track record of dealing with sanctions.
The symbolism is much more important in this case. It's more of a diplomatic signal to israel Is saying, you know, we your allies, We're all here, We're acting immediately in the days after that attack, and therefore perhaps you don't need to go so hard in your planned military response to that attack. You know, take this as the message of support and feel reassured a few security.
Meanwhile, Bloomberg's Patrick seikescherports the leaders of Saudi Arabia and the United Arab Emirates issued a joint statement calling for a maximum of self restraint in the Middle East and warning of the quote dangers of war and its dire consequences.
Now, let's turn to the latest Karen on the criminal case against Donald Trump. It took two days to seat seven jurors, but there is progress in the hush money trial in Manhattan. Let's get the latest now from Bloomberg's June Grosso in New York.
The first seven jurors were sworn in after lawyers grilled them about their social media posts, political views, and personal lives. Sitting on the jury will be an information technology worker, an English teacher and oncology nurse, a sales professional, a software engineer, and two lawyers. Four more jurors must be sworn in and six alternates before opening statements can begin, perhaps as early as next week. June Grosso, Bloomberg Radio, All Right.
June, thank you. In company news, job cuts reportedly on the way at Toshiba, The nie K is reporting the company plans to eliminate five thousand jobs in Japan. That's about a tenth of its domestic headcount. The NIKA says with a cost cutting move, Toshiba is now focusing on its infrastructure and digital technology operations.
Meanwhile, Karen Bloomberg News has learned that Morgan Stanley plans to start cutting about fifty investment banking jobs in the Asia Pacific region this week. At least eighty percent of those reductions will be in Hong Kong and China. The job cuts would be the deepest in years for Morgan Stanley in China.
Well Nathan. Jamie Diamond says artificial intelligence will transform banking, but it will also lead to job losses. The JP Morgan CEO's comments to Bloomberg come after he devoted a chunk of his annual shareholder letter to the importance of artificial intelligence for the Wall Street Giants business. Here's what Diamond told Emily Chang on the latest episode of The Circuit.
It's a living breathing thing. So people want to ask what's going to do. It's a living breathing thing.
It's going to change.
They're gonna be all different types of models and different types of tools and technology. But the way to think about for us is every single process, so errors, trading, hedging, research, every app every database. You're going to be applying AI. So it might be as a copilot, it might be to replace humans. You know, AI is doing all the equity hedging for us. For the most part. It's idea generation as large language models.
And you can watch the full wide ranging interview with Jamie Dimond on the latest episode of the Circuit with Emily Chang tonight at six pm Wall Street Time on Bloomberg Television. You can also get the circuit in podcast Forum on Apples, Spotify, or anywhere else you listen to podcasts.
Let's check some stocks this morning, Karen. We're watching shares of ASML holding. They're down more than four percent. In Amsterdam, Europe's most valuable tech firm posted new orders that fell short of analyst estimate's hurt by a downturn in demand for its most advanced machines from the chip making industry.
And shares of United Airlines flying higher by almost five percent in early trading that carry your forecast better than a expected profit this quarter. That's tempering concerns that Boeing aircraft delays and regulatory pressure will put expansion plans at risk.
Well.
Boeing safety record will be under pressure today on Capitol Hill, Karen, the Senate is holding two separate hearings on a whistleblower's claims of poor assembly processes and shortcomings in the seven eighty seven Dreamliner program. Senators will hear from a Boeing engineer who worked on that plane for years, plus safety experts from NASA and the academic world. Boeing executives will not be there. CEO Dave Calhoun is expected to testify at a later date.
And it's time now for look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's John Tucker, John Good Morning.
Good Morning Karen. President Biden calling for higher tariffs on Chinese steel and aluminum. Bloomberg Steve Ponas says this is part of a series of steps to shore up the American steel sector and win over workers in this year's election.
In a visit to Pittsburgh today, mister Biden will propose new twenty five percent tariffs on certain Chinese steel and aluminum products as part of an ongoing review, while the US also launches a formal probe into China's shipbuilding industry. The steps target a relatively small segment of the US market, with imports of Chinese steel and aluminum totaling roughly one point seven billion dollars in twenty twenty three, but US officials said the announcements were designed to head off an
expected surge and safeguard the US market. The President will also reiterate that United States steel based in Pittsburgh should remain American owned. Steve Potisk Bloomberg Radio.
A newly unsealed court document so US Senator Bob Menendez is prepared to blame his wife at his bribery trial for withholding information from him. Lawyers for the New Jersey Democrat asked the judge to try him separately from his wife, Nadine. They're accused of accepting brimes of cash, gold bars, and a car in the Bronx. Police is searching for four sons books who shot four people on a street corner
Tuesday evening, killing one of them. According to NYPD Chief Benjamin Gurley, the victims were all shot by passengers riding on two scooters with.
Two males on each scooter abreast.
The rear passengers of those scooters pulled off firearms. That's two firearms, and he fired approximately ten rounds.
So far, had no arrests. Former US Senator and two termed Florida Governor Bob Graham, who gained national prominence as Chairman of the Senate Intelligence Committee in the aftermath of the two thousand and one terror attacks and as an early critic of the Iraq war, has died. He was eighty seven years old, Global news twenty four hours a day and whenever you wanted with Bloomberg News. Now, I'm John Tucker and this is Bloomberg Nathan and Karen.
Sorry, John, thank you. It's time now for the Bloombergy Sports Update with John Stashaur.
John, Good morning, Good morning, Carry.
The Yankees had the hot start they off. The Mets had a brutal start to the season five straight home losses. They've turned it around moved over five hundred where a three to one win over the Pirates at Cityfield. Mets scored all three and the seventh, ending their bullpen to four Scorelesshitians gave up just one hit. A night after the Yankees first two game losing straight, the skid reached three in Toronto. Blue Jays led five to one. Yankee
comeback fell short. They lost five to four. Jose Trasvigno drove in three runs, but Anthony Bupe went over four with four strikeouts and Aaron Judge went over four. His average fell to one eighty two. Orioles beat the Twins. They are only a half game behind the Yanks. Red Sox lost to Cleveland. Nationals lost to the Dodgers Hall of Fame manager Whitey Herzog has died at ninety two. Managed the Cardinals throughout the nineteen eighties, won the World
Series in eighty two, and also passed either way. One of the last living Boys of Summer, Carl Erskine was the main stay on the Brooklyn Dodgers pitching staff. He was ninety seven. The NBA play in began in New Orleans. Lakers had a fifteen point lead the Pelicans rallied. Lakers prevailed down the stretch.
Here is Breeves dribbling rights all the way to the middle. T low for three shot it two s three for Russell, put the Lakers up by four with fifty seconds remaining.
In the fort on klac and LA fift three four of the night for D'Angelo Russell and the Lakers won one ten to one oh six, So they'll be the seventh seed in the West. They'll face Denver, who swept the Lakers last year, in the West Finals. New Orleans will now host Sacramento Friday to see who the eighth seed will be. The Kings blue out Golden State one eighteen to ninety four. The Rangers found out their opponent first round of the Stanley Cup playoffs will be the
Washington Capitals Bruins lost Florida one. The Panthers won the Atlantic Division. Josh Dashawe, Bloomberg Sports Camp, Nathan.
All Right, John, thank you. SMP futures up a quarter percent, or fourteen points down, futures up a third of upper cent or one hundred and twenty eight points, Nasdaq futures up a tenth of upper cent or twenty four points, and the ten year Treasury yield at four point sixty three percent.
Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg dot Com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning.
I'm Nathan Hager. Higher for longer. That has been the message for quite some time from Fed Chairman Jerome Powell when it comes to interest rates. But after the latest hot inflation data that has started this year, Powell really seems to be trying to send that message home to markets in an even bigger way. And for more. We are joined by Bloomberg's Kritty Gupta. Critty good morning. Sounds like the new message from chairman Powell is higher for even longer.
It is, and it's kind of this almost admitting that there is I mean, he said this right, that there's still more work to do. The last mile is always going to be the hardest. His wording seems to have pushed those market expectations of a cut potentially to into next year, moving it out of twenty twenty four altogether. So it's more a question of not only higher for longer, but there's also a question of credibility here that is
this the tool that can actually tack on inflation? And Nathan, you know, well early on when we had inflation takeups back in twenty twenty one, the verbiage that Jay Powell and some of his critics even us is we don't want a vulgar repeat, We don't want that reacceleration of inflation. This is kind of his worst nightmare, that's almost coming to fruition.
Yeah, he seems to be sort of hoping that this isn't the reacceleration. But it's raising the question when it comes to FED credibility about whether that last mile should be maybe a little bit less than a mile. There's a growing debate in this market about whether the two percent inflation targets still makes sense.
There is a growing debate, and it's one that's kind of going global as well, because right here in the UK as well, we are having the exact same debate. Of course, setting the precedent by the Federal Reserve. But look, that's a much longer process that isn't going to be adjusted anytime soon. It requires even congressional approval to adjust that target. It Something you are, however, seeing, is what
the inputs into this inflationary process is. So when we're talking about what's actually driving this inflation uptick, you're starting to see some of the commodity prices actually take higher. So oil prices, for example, was one gas prices that we watch, especially ahead of the election in the States. Another piece that's especially relevant for the global audience is simply this idea that you were starting to yield much
much higher. A lot of the work, a lot of that kind of easing of the Federal Reserve was kind of pushing off in terms of rate cuts. A lot of that has actually been done by the markets in a good chunk a way. When you look at financial conditions, take a look at the stock market rally, take a
look at the dollar rally, credit spreads have tightened. Those are all ways to kind of through the markets without that FED intervention tighten or extracy ease some of the conditions that allow for things like financing, for example, in the broader market. So that's going to be one thing to watch. The bond market is another story here, where you start to see so many people piled on to the front end of the curve that their market is
almost partially in control of where rates go. Some would argue at an even faster pace than where the FED is expecting. They're higher for longer as well. So you're seeing yields tick up higher. That makes the FED its job even more difficult when it comes to working in the opposite direction.
So does this.
Raise the idea once again that we could see no interest rate cuts this year? Perhaps as a base case? I mean, does Torsten Slock of Apollo Management sound like a profit at this point?
It could be, and then look, it wouldn't be the first time that he's claimed that profit status, and very easily could be. He also mentioned that some of these financial conditions are incentivizing capital markets activity, IPO deals, et cetera. And he's been right about that, and he's really shown that kind of pickup as well. I'll answer your question in terms of market pricing here, because the market's always right,
isn't it, Nathan. And when you look at the market pricing you can find on the Bloomberg terminal, it basically is it has pushed out cuts all the way into twenty twenty five. The most kind of the biggest percentage you is about a forty seven percent odds of a cut in September, though the next one coming out forty eight percent in December. Remember're also dealing with the election story. How close to the election does the Fed have room
to cut? And how many data points in between do you get suggesting that inflation is either upticked further, that there is a reacceleration, or gone in the opposite direction that we can claim that transitory status. And right now you've had three hot prints across CPI, PPI, PCE. At the moment, three data points is starting to feel like a trend.
Only about thirty seconds left here, Kritie. But we're in this situation where inflation is easing just a bit overseas. Now we got the lower than well, the lower inflation print out of the UK not lower than expected. But this idea as well, that the ECB could be cutting in June. I mean, what about the divergence here?
Well, the divergence is one of concern, and it's one that actually kind of makes the trade a little bit easier when it comes to the bond market and even the FX market. You're already seeing cracks of that where the strong dollar story is actually weighing on the year and the pound because the market is expecting that divergence to manifest as soon as the summer. Is this an issue not really seems to be the consensus at the moment because it'll only last for a couple of months
at most. Does that narrative change Absolutely? But right now you're one hundred percent right. The ECB is looking like it's going to be the first to cut rates.
This is Bloomberg day Break Today, your morning brief on the stories making news from Wall Street to Washington and beyond.
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And I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak