guy: the u.k.uropean markets 30 auction process, it will take higher during the settlement process. the ftse 100 finishing at 6943. interesting to see the ftse 100 fishing largely in line. single names having a big effect on what is happening here. all of positive territory. i performance in the luxury -- outperformance and with luxury sector. we will be continuing our coverage on what is happening here in the u.k. you can find the podcast a little later on spotify and itunes. alix: we are going to stay with the u.k. economy, leadership is uncertain as well. this is bloomberg. >> this is bloomberg markets: european close. you're looking at a live shot of the principal room. this is bloomberg. >> keeping you up-to-date with the news all around the world, the u.s. along with u.k. has called for a special united nations security council briefing to talk about evidence that russia's iranian drones for its war on ukraine. the u.s. mission to the um sent in a statement that was actually open violation of

francine: for u.k.ics, it has been a day and evening of turmoil in westminster with liz truss' premiership looking close to imploding. let's bring in the u.k. economist atbs, did the markets change depending on who is you -- u.k. prime minister? dean: i think the market is most focused on fiscal policy. stability in number 10 would be welcome, but the key thing to watch is policy decisions from the treasury. we are waiting for the next fiscal event due for the 31st of october, we will see what happens given the uncertainty. but that will be the key thing for me to watch from here. tom: dean, how are you thinking about inflationary dynamics, cpi coming back to a four decade high yesterday, and the announcement that energy support will be reduced potentially after april. what is that leaves your forecast around u.k. inflation? dean: the near-term is pretty much unchanged, the picture to come within the next month or two, october should be the day but we are seeing other dynamics. there could be some littl

looking at u.k.ssets, even if we get this big u-turn, confidence has been completely shaken, and the u-turn is not add to that. a couple quotes say in terms of confidence, it is the elevator down and that the stairs back out. it takes a wild to build back confident. the pound was sinking before we got the mini-budget, you had yields higher locally, and a structural backdrop in the u.k. is not good. u.k. growth is slowing and we are headed towards recession. and there's not a lot the fiscal authorities can do, and they have done a poor job with what they have done but there is not a lot to stop that growth downgrade and recession. tom: that massive not to confidence and it comes down to credibility. the turnaround we are seeing in gilt markets, the dramatic volatility over this week, but does today .2 a turning point for u.k. gilts? have they managed to cap things or is volatility something to think about in days ahead? kristine: the turnaround is the best case scenario for the market in a lot of ways

taking the u.k. as a case in point, we head for government pressing the accelerator and the bank of england to bring inflation down will have to engineer recession to do that, so they are pressing on the brakes. that is not coordinated policy. as a result of fiscal announcement, we're not expecting higher growth forecasts but we have higher rate hike expectations. when policies are not coordinated and well thought through, it doesn't achieve the desired outcome and that is definitely a lesson for european, parts. tom: and you argue markets have not priced the extent of any recession that would come about as a result of this stronger reaction from central banks, but hasn't priced in is your view? wei: not at this juncture. if you look at earnings expectations, we are still talking about mixed single-digit growth for this year, and high single digits next year which in the context of us entering recession in the u.k. and europe this year, and u.s. next year, there is still a disconnect which is why we'

the u.k.'s liz truss resigning as prime minister on this. we have stability for u.k. markets.gilt yield is down five basis points. there may be a little bit of wild action for given the boe's action and the tax plan. maybe a good thing that 30 year yield down. the pound really strong of a 1%. markets are ok with the transition of power to whoever the p.m. might be. as for tesla and those are deliverers, they do not give in rick perry numbers. they do have something going on that they have not have -- they do have something going on right now. they are sitting as storage lots. maybe transformation issues or maybe a different way of looking at inventories. rounding its alta, although the stock is trading lower, the american airlines beat top and bottom by 14. .5% it looks like there's good demand for travel. costs are rising. some of the competitors are higher, probably on the outlook for robust demand for travel as the year passes on. guy: since monday the stock is up about 3.6%. a little bit of a drop down this morning. on the week, it is elevated and higher. thank you indeed.

for the u.k. banks, i think it is too early to buy, you are seeing a pickup in provisions, that is only going to continue, loan losses, etc. the next six months. valuations are cheap on a headline basis but we are still seeing significant downgrades to earnings. and this is an early cycle, the financial sector, if you are very much late in business cycle, you need to get through the point that the recession is broadly priced, and then you look to the early cycle sectors. banks too early, i am more favorable on energy companies because i think there is a longer-term structural story around the oil price. these businesses have done very good job the last 10 years bringing down the oil price at which they can pay dividends, and there is good shareholder return. francine: grace peters stays with us, and coming up, netflix returns to growth as hollywood breathes a cipher leaf. 0-- sigh of relief. this is bloomberg. ♪ tom: open back to the open. 16 minutes into the european trading day. flat across the

when you compare the u.k. in some ways to the global economy, the u.k.s singled out, isn't it, for poor performance? afzal: i think this is it. we heard from alex trying to push this whole global situation. it has hit us because of government policies. this happened when mortgage rates went up. if you look at what has happened to families, millions of families are struggling. inflation has gone to 10.1%. you have the energy crisis, the food crisis. and 12 years of stagnation. that is causing the difficulties . host: let's give alex a chance. alex: this conversation is getting strained. they are right the many budgets announced by the last chancellor -- inflation is running higher and every major european economy. it is peculiar for anyone to suggest the u.k. is doing worse. you cherry pick a single quarter from two years ago to try to demonstrate it. of course it is difficult for us as you have been referring to graphs. it is difficult to rebut that. i rather doubt if you are tracking the euro's performance against the dollar you will see a huge differen

the response in the u.k. not the one i would have dissipated when i heard the quasi-content was going to step down. >> when we woke up this morning, you would have expected that markets in the u.k. were in a best case scenario in a lot of ways. the bank of england governor andrew bailey saying the temperature -- temporary measure has -- is going to end on friday. all the uncertainty that has befallen all of us over the last couple of hours here is not doing well for market sentiment. we started the day in a best case scenario for u.k. markets. we are ending the day for a worst-case scenario. a lot about what the new chancellor is going to be doing and on monday, we are starting without the income england temporary measures to support the bond market. >> do we know what we need to see in gilt market for the year beat change their mind on monday? >> a lot of participants are looking at the 5% level. it's a line in the sand in terms of whether it will push the boe to step in and essentially extend the support th

tom: u.k.hancellor jeremy hunt on reversing most of prime minister's trust'-- liz truss's budget. manus: we still got a lot to deal with jumping the program. this ft line has shifted the risk narrative. let's take that ft line to our guest. the pound was lit up on the dumping of truss-onomics, huge reversals, then you have the qt story, that the bank of england may delay qt because of stress in the gilt market. these temporary valleys of the pound and in gilt, are you wary of the rallies? >> i think we are seeing a massive mess in u.k. policy letter of two on a terry policy versus fiscal policy. what you are seeing right now in the pound specifically is a reallocation back into the pound after previously when the first announcement of the budget came out. you saw a dumping of sterling. we are seeing rebalancing back into the pound, looking for recovery, as opposed to parity end sub parity, your sing a reallocation and covering shorts. i think it will be short-lived and we could see a balance ba

and the u.k.you look at the united states, if you have a central bank, you're not facing a difficult choice because on the planet levels are still great. the economy is still very strong. you note your tightening will flow through and you know it will slow the economy and you're not feeling the pain and pressure of which do i do? inflation is telling you now is the time to get this under control and you will wait and see how much the economy will slow. the u.k. is in a different circumstance where they are already in stagflation. the economy is flowing because they don't have enough to power the economy. a lot of the repricing is not happening in central banks but because of fiscal authorities. the government is facing a tough set of circumstances of stagflation. they want to take it on the desk taken off their balance sheets. that's been tried before and it's dangerous. that's what the u.k. is running into. it's not bank of england being too aggressive type of problem. alix: last time we were tal

u.k. chancellor says the bank having led would be responsible for any market volatility after its bond buying ends tomorrow. the institute for fiscal studies said the government needs to find 60 billion pounds to shore up confidence. economists have given their take on what is happening within the boe and what is next for the u.k.'s economy. >> you've got three days left now. you've got to get this done. >> the bank of england can talk tough but fundamentally they have to extend this. >> they are trying to extend this the best they can. >> the confusion is the financial side of the monetary side of the bank of england trying to do two different things. >> monetary policy being at cross purposes with each other is a dangerous cocktail for markets. >> is trying to maintain price stability and at the same time address financial stability with this other instrument. >> this is not looking like a steep and deep recession. >> i worry this is not enough and they will have to come up with their ve

u.k. time. end 23 basis points lower, the 30-year which was leading close to 5% last week currently at 4.5 on view 30-year, lower 27 basis points. the pound also up, and futures in the u.s. pointing to gains. let's get the first word news now. alice: in the u.k., the pound is gaining on expectations there may be further u-turns over the government's unfunded tax cuts. the new chancellor told the bbc nothing is off the table. >> i'm not taking anything off the table. i want to keep as many tax cuts as i possibly can because our long-term health depends on being a low tax economy, and i very strongly believe that. alice: goldman sachs is downgrading its outlook for growth in the u.k. after prime minister liz truss replaced her chancellor and rolled back canceling corporation tax. the bank now expects significant recession. chinese president xi jinping says china is staying the course as it faces what he calls dangerous storms and growing challenges from the u.s. in a two hours speech he said china

we will talk about the u.k. looking at the bloomberg commodity index, as you start to see that brisk rally, it is showing up in the commodity space, too, perhaps not as large is the stock market but still up .6%. we are now at a 1.12. that rishi rally and a boost into the dollar. the incoming prime minister is where we want to go. he is facing fermentable headwinds with rising inflation, surging interest rate and addressing recent political instability. here is what he had to say. pm sunak: there is no doubt we face a profound economic challenge. we need stability and unity. white pledge that i will serve you with integrity and humility and i will work day in and out to deliver for the jewish people. -- british people. kriti: let us had lived to downing street. give us the latest. >> you heard from rishi sunak saying the u.k. faces profound economic challenge. this was the first time he was speaking in public since the september leadership contest that he lost. he resisted the urge to tell us he was right all al

in the u.k.arin: the elected assembly which runs northern ireland is hours away from collapsing over post exit trade rangements. politicians have until one minute past midnight u.k. time, around four hours from now, to restore power-sharing agreement before a new election is called. political parties met ili ener ita new executive, nearly six months after they were elected. procedures though are being blocked by the democratic unionist party, the dup which objects to the door -- northern ireland protocol. the debate went on for hours in the assembly. this is how it ended. >> the motion has failed. the assembl has today been unable to elect a speaker, and unable to conduct its first item of business. therefore, we can proceed no further. any further sitting of the assembly can only be held to elect a speaker and deputy speakers. under section 39.2, the current speaker remains until the successor is elected. karin: politicians failed to elect a speaker or the deputy first ministers who r the northe

this is that the u.k. has a large current account deficit in a world of rising rates and that means unless yields go higher and offer a more attractive rate for foreign investors, the currency will have to we can further. let's dive in. this is where real yields are when you take the policy rate minus headline inflation. it is a little selective. it is at -8.2%. going back the last 30 years, that is bizarre. over the last 30 years, the average is about 1% positive. the previous era was normally 3% positive. we want to get back to 3% real yields from -8% -- this will happen with inflation coming down or with rates going higher or a combination. we need to look forward. the second chart is looking at one way to do this in a forward-looking way. this chart is to your yields minus -- two your yields minus the 2023 forecast. that does not look as bad if we think it has to get to 1% at least. it is probably suggesting that we have to do another 350 basis points higher in rates. this adjusts more austerity. that

u.k. time. meantime, let's look at the futures markets. u.k. futures moving lower, not as much as the rest of europe but they did underperform significantly yesterday. some writing that hiking taxes are a big deal for equity investors. it does mean that capex and hiring will be deferred. s&p 500 futures up half a percent. oldman with a note that -- goldman with a note that the entirety of the u.s. stock market is expensive but there are some deals and individual names that have sold off. asian equities moving well, down more than 1%. manus: $15 trillion has been wiped off the global equity value and wealth destruction is brutal. you have the oil market rallying a little bit, up three quarters of 1% despite xi not moving on zero covid into the war of words between the white house and the house assad moving higher in terms of coercion, accusations from the white house toward other opec nations. dollar-yen, sniffing 150 seems to be the consensus before that is the line in the sand for the bank of japan. michigan inflation expectations break 5%. i

u.k.or the conservative party is selecting its next prime minister. we have been here before. we have in here before what we thought a former pf could be the next pm as well. >> we have sunak, who will be the next prime minister. this is the third in three weeks. this is extreme clinical volatility that we know has led to volatility in the u.k. markets. it is a blueprint or a threat for the u.s., which is heading into the midterms potentially for china, which is having political upheaval. for now, it is leading us into the question of the day. are you a short form -- short-term bolt? can you go in and buy right now? scarlet: it is a great question. we are looking at markets that show people are interested in picking up risk. dani: let's stick with the u.k. story. it is all anyone is talking about in this country with rishi sunak set to be the next prime minister after his last remaining rival pulled out of the race. let's get more with lizzy burden who joins us outside of 10 downing street

the u.k.anks, less than 24 hours until the central bank and support. he stands against the budget and says he's not going anywhere. and core u.s. inflation hitting a 40 year high, u.s. stocks stumble and yields jump. big fish, big money. volatility, equity, recession. we will talk to the ceo of frankel and templeton and p jim -- pgim. guy johnson, and looks like we had not priced out the inflation data. guy: the pivot seems further away. my head is spinning. talking of pivoting. you got the u.s. story on one hand which is forcing yields lower, and the cpi report forcing yields higher. the nominal is the u.k. 30 year which we will hold for a moment. the bond market has gotten with flash -- whiplash today. it is volatility. we don't have a handle on inflation yet and as a result of which, pivot feels like a long way away at this point. was that a 100 basis point number? that is a question we need to kick around. john was talking to brian deese a moment ago. he is the white house director of the

we think the challenges to the u.k. remain significant. if you think about the u.k.conomy before the many budget it was facing -- before the mini budget it was facing higher uncertainty over the long-running impact of brexit, these are major challenges that even without the mini budget remains. that means the risk premium on u.k. assets should be higher. scarlet: the bank has not been as aggressive as the federal reserve to tackle inflation. we have seen how the fed has front loaded its rate hikes. as the bank of england going to be back letting its interest rate increases? andrew: i think that is what is so fascinating about this story. six of the last eight meetings the bank of england has under delivered in terms of rate hikes. the reward for this is the market is now expecting the bank of england will go much further over the next 12 months, will take more than the fed or the ecb or any other major central bank in the world. this is a real challenge for the bank of england because the bank of england still faces a difficult macro backdrop where our economists thi

the u.k. how did the tories pull themselves back from this, because she has this one-year window. it's whether she decides to go or what can graham brady and the backbench 1922 committee do to invoke her departure? >> those conversations are being had because it seems she is doomed. her backbenchers are absolutely livid. frankly her economic strategy has been decimated. she is now surrounded by remainders and enemies in her cabinet. the only connection she has to her base is that she has a hardline brags iter -- brexiter. if you remember when boris johnson wrote his resignation speech because he realized it was the end, many in westminster are wondering when liz truss will have that eureka moment. manus: there you go. it's just quite surreal isn't it about the whole thing. let's see what today brings hour by hour. to the fed. they stuck to the cautious tone in the beige book as it noted the u.s. economy grew modestly, and risk-averse session is rising and outlooks are dimming. the st. louis fe

the u.k. president biden thanks liz truss for her cooperation on the war in ukraine. the bbc uncovers shocking testimony from the ethiopian agent of tigray, as aid agencies warned of a humanitarian catastrophe. and as the communist party congress continues in beijing, parts of the city are in covid lockdown, and the delegates may not even know. ♪ welcome to world news america here on pbs and around the globe . it has been a dramatic day. the prime minister liz truss resigned after only 45 days in office. she goes into the history books as the shortest serving prime minister britton ever had. her support in parliament and the country collapsed after her plan to cut taxes scared the markets. the conservative party which is its next prime minister within eight days, as britain's reputation for political stability has come into question. our correspondent now reports. reporter: lunchtime in downing street, and the lectern is back, six weeks and two days since liz truss stood behind it she became p

coming up, more on the u.k.'s u-turn. the impact the shelved tax cuts will have on u.k. equity names. then patrick spencer joining us next. this is bloomberg. ♪ >> there's a game of chicken right now. >> inflation was supposed to be moderating. >> we are going into extra innings. >> when i look at estimates, they are still too high. >> we need to see some weakness coming through. >> we are not going to have a typical bottom markets have come to expect. >> it is more of a slow car crash. >> if you start thinking about what is going on in the u.s. economy, we are in this vacuum that people don't know what to do with. >> the fed is trying to hike. >> this is presenting a challenge. >> it is more about the fed. >> it is the uncertainty that keeps weighing on investors. >> i think progress is taking longer than we thought. guy: some of our guests weighing in on the uncertainty looming over markets. our question of the day going to the heart of that. what is going to be the next crisis? we seem to have dealt with the u.k.'s but there will be another soon. patrick spencer, vice

we think u.k. is going to be about 1.5 percentage points smaller in 18 months then it would have been based on the forecast of just a few months ago. it is the whole he will have to fill whether that is through tax increases or spending constraints. that is the kind of thing investors will be looking for. francine: we have the start of qt november 1 and november 3 is the bank of england mpc decision. if richie sunak becomes prime minister, will he keep the chancellor to speed thanks up? -- speed things up? stephanie: i think there has been a great desire to see those plans continue and he does have the advantage i think if someone was coming in with little treasury experience or handling the economy like penny mordaunt i think there would be a bigger question as to whether the prime minister could have any ownership over that plan as soon as monday, week from today. i think it is more likely -- we know it is important for the bank of england to see those numbers before the next meeting. that does n

u.k. the language from kwarteng, either amazing naivete or just downright arrogance. the gilt market broke last week. 10 year paper goes down and aussie rates are the tail wagging the global rates dog. all rates are under pressure because of this peak height narrative kicking in. -- hike narrative kicking in. dani: you have got $83 a barrel, that is up, manus. but what has caught our attention today is the rba rate decision. this is the first central-bank decision we've gotten, after the global volatility of last week. is this central banks moving in this direction of preferring stability over the fight against inflation? manus: let's get to everybody around the world. in sydney for more on the rba, and jules will take us through market moves. then we will talk about the fed and u.s. economics. lizzy burden is at the tory party conference in birmingham. dani: australia's dollar tumble as much as 1%, after the rba delivered a smaller than expected 25 basis point rate hike. expectations had

mark: it is important when the u.k.s turning into italy or some other emerging-market, beyond politics, it is important for people in the markets to say this wasn't the markets calling for this. the budget created a political crisis, it didn't create the markets. remember, the markets have been bullied by cja traders who had a fabulously -- a fabulous year, these macro hedge funds have been very much in the driving seat, and they went into the end of the month heavily short sterling and heavily short everything against the dollar and heavily short on bull markets. they use this as their get out card. you create mass panic and fear if you can get out on the other side of the trade. and sterling went down for 24 hours. the real issue with the bond market was actually because the bank of england set we are going to 75 and then, they suddenly didn't. bond markets spiked, that unwound a timebomb, this lbi thing. we started with the leverage in the pension fund system within the u.k. and we created this image that the markets

the u.k. politics. we keep talking about the history making moves that we are seeing. a new prime minister and the race for the next premiership. i love that we have sent our resident italian to the houses of parliament to discuss the italian-fication of u.k. politics. francine: there are so many foreigners in london and some of them including me, vote and it is important to look at what happens in the u.k. in the future. three main questions here. is this a new conservative party that is less about ideology but also a lot more about pragmatism? we found out yesterday on how they will vote. it is impossible that more than three mp's are going to go through the round of voting and it is likely we will end up with those from monday. the one question the markets have is do we have that halloween budgets on the 31st of october? the timing of that is extremely important because on the third of november, we have the bank of england decision. it was important for markets to get clarity on when they h

let's talk about the turbulence in the u.k.. it continues at a slightly lower level. the u.k. prime minister liz truss showed up earlier for the first time since the major reversal of the economic program. it was heated in the house today. it was kicked off by the labour party leader as truss battles to save her job. >> two-year energy freeze gone. tax-free shopping gone. economic ability gone. and her supposed best friend, the former chancellor, he is gone, as well. they are all gone! so why is she still here? >> mr. speaker. mr. speaker. i am a fighter, not a quitter. i have acted in the national interest to make sure that we have economic stability. guy: here's tom or, liz truss -- liz truss in the house of commons earlier on. i think i heard that phrase before, peter mendelson. joining us, lizzy burden. one of the things that came out today related to the pension story in the u.k. we have a triple locked pension system indexed to inflation. inflation is rising sharply. the new chancellor would not commit to that triple locked continuing, the prime minister committed to it.

u.k.. the conservative party has dropped out. we will be analyzing what he brings to the job in this all attend and he will become britain's third prime minister and less than two months. as ever, standing by in downing street. the very latest. russia accuses ukraine of developing a so-called dirty bomb or use on its own soil. fake allegations says nato. accusing moscow of inventing this bogus story as an excuse to escalate the war. the chinese communist party congress over and growth figures have been released. 3.9% from the last quarter, further confirming the countries slow down. this analyzed in our business segment. this is live in paris. ♪ marc: thank you very much for being with us. london calling the first ever nonwhite leader of the u.k. and conservative party or any british ruling party. rishi steps forward as the sole candidate to become the conservative leader and u.k. prime minister. will this be the candidate to lead the u.k. out of the crisis? he saw it coming and he critici

let's bring in u.k.'s -- bloomberg's u.k. finance editor tom metcalf, we have had a number of banks reporting earnings, deutsche bank and standard chartered, what stands out? tom: it seems across-the-board pretty positive for earnings so far. but it is the idea that revenue will outpace credit loss costs. it looks like a couple of banks have given positive guidance. the deutsche bank fixed income traders did all right this quarter. anna: it's that trade-off between the benefits of net interest income of higher interest rates, but then as interest rates go higher you get a little worried that maybe people who you borrowed money from might not pay it back. it is the balance between things. tom: i would say the lenders are in a sweet spot where the cost isn't quite yet apparent because consumers haven't been in months and months of distress. anna: do you have to be aware of the politics of the business looking strong at a time when european governments are looking for people to tax? tom: barclays is coming up, and there is chatt

is aligned with u.k. and france in calling the supply of these weapons a violation of the un security council resolution 223. as for the iranians, tehran is denying supplying these drones to russia. >> they are moscow's new trump card on its war on ukraine. iranian drones used to target cities such as kyiv. and can cause devastation where they strike, according to the u.s. iran has delivered 1009 reusable drones to russia since late august. for ukraine's president, it is a sign moscow is despera. >> we must remembethe very fact of russia's appealed to iran for assistance is the kremlin's recognition of its military and political bankruptcy. for decades, they have spent billions of dollars on their military industrial complex. in the end, ved that simple drones and missiles. reporter: russia has been tightlipped on any logistical support from tehran, wle i ran's foreign ministry calls the -- calls them politically motivated and says its stance on ukraine was neutral. >> as it is said, the islamic republic

u.k. government. that's having a big effect on the bond market prayed so much to discuss today. the countdown to the close starts now. >> the countdown is on here. this is bloomberg markets: european close with guy johnson and alix steel. guy: my head has been spinning. it's been chaotic once again. you get the narrative of u-turn out of the u.k.. that smashes the pound higher, ascending gilt yields tumbling particularly on the long end. then you get the cpi number out of the states hotter than anticipated. the tales it looks a bit better but nonetheless that number, what is amazing is stocks are now coming back. this is quite a turnaround we are watching. well up into positive territory. up by 1/10 of 1%. so we are trading 386 right now. what's amazing as well as the dollar against sterling and the euro is now down which i find amazing. easy to understand when it comes to sterling given what's happening politically here in the u.k. but it's fascinating to see what's happening with euro-do

all this with u.k. tensions and margin calls. the u.k.ed differently from that perspective. broadly speaking, the 10 year curve tends to see good demand from pension funds in the u.s. as well as globally. also, it tends to be a safe haven asset. you are going to see a decent amount of demand for the long end as we start seeing perhaps a meaningful showdown in the u.s. as well as global growth. -- slowdown in the u.s. as well as global growth. that is why we see a scenario where global bond yields continue to rise. i think treasuries are going to continue to form relative to bonds. what you are going to see is a narrowing of that spread between the bonds and the treasuries. lisa: i'm curious about the effects of certain events and what that means for investors, and japan for example. in the u.k., places that might sell what they can, not what they want to. what they can sell is treasuries. how much are we going to get the ripple effects of that for a longer period of time, creating disruption in a liquid market? >> that's a good question.

the u.k.ps the move in bond yields along but it is not the driving force, rates are up, everybody is issuing debt at the same time, so it all feeds on itself. part of the issue this week is that yesterday what was happening in the u.k. was magnified by announcements in euro that we will get in one form or another more debt issued but adds to it all. the u.k. is in that sense relatively small the pushing along, i just think it all keep it going. manus: we got just two minutes. yes, the credibility of the u.k., we had bigger move than expected yesterday them the var shock two weeks ago, so will there be reasserting of pressure on sterling, when do we break parity? kit: i'd be surprised if we break parity in this move because you do need another stock to confidence. the market is short sterling, a lot of people have used it as a way to go along of the dollar. i don't think we will break parity unless we are driving the euro down with us, but i definitely think the dollar is going up against both

it's all happening in gilts and sterling, u.k. gilts falling.oments ago confirming they will still end bond buying on friday. it has reiterated plans to actually finish friday despite a conflicting reports it could be extended. joining us is our gilt guru, from our markets mliv team, we talk about a huge mistake in central-bank history from the bank of england. is this because they want to end bond purchasing friday? or could it be they think the market can handle this with three days ago? >> i think it is the latter. i don't think they are reading the market right because yields have surged the past week alone. the 30 year, the key metric to be watching, it is not too far away from the peak we saw before the boe unveiled their action. if the 30-year trends back about these levels and the boe ends purchases friday, and we have two more weeks before the meeting. it is setting the market up for yet more volatility, which is not something the central bank would wish to have. tom: visit your analysis they can hold the line and really pull back on fr

u.k. made its biggest u-turn yet on unfunded tax cuts. the japanese currency hovers below the key level of 152 the dollar. insights on global markets as the best chairman -- vice chairman of blackrock philip hildebrand joins us. rishaad: a rising feeling as opposed to the sinking one we are use to. the s&p 500 hit that key technical which really saw a big bounce. u.k. assets, nobody seems to want them. junk bonds reaching the lowest level they have ever reached. of course we have the data delay as well. you can see equity markets. you can see it is a main. bonds getting hit with yields in japan on the way up as they are in singapore and new zealand. a little bit of pressure to the downside on yields. at least the up arrow for the australian bond picture, the 10 year at least. what have we got here? that s&p move certainly. support coming through, it is that data delay. yvonne: the data delay in china was interesting maybe we shouldn't read too much into that given the party congress is goi

in the u.k. can i say something like the boe did announce it will actually work but is it more complicated? jordan: i do not think it is complicated. the bank of england was not there to calm down yields and help people who own gilts make my. it was how fast yields went up to make it difficult for pension funds to meet the margin calls. it was a two week stopgap which allow themselves to get themselves in a better position cash wise. and for some security when the bank of england announced an intense repo line. this makes the functioning of the market better than what it was. i do not think the bank of england once yields large. alix: -- tom: does that put your parity call at risk? jordan: it makes it more likely. growth is everything. when you are hiking into a recession the more you hike the bigger the recession will be. it makes sterling more attractive. why would you buy gilts when you have this uncertainty for your economy? whatever happens, i think the bank of england will probably disappoi

still ahead, with the u.k.ew leadership still in doubt, what does it mean for the market in the panama will find out what like stones john great thanks. that conversation next, this is bloomberg. ♪ kriti: this is bloomberg markets. it is an historic moment, getting another british prime minister. right after liz truss resigned, we had many conversations. i want to show you this chart, the history of liz truss after her fiscal plan was announced. it's showing this trickle-down economics and the bank of england pushing down the bond market are you see the 30 year yield come back down. there are questions of how long the boe can stand to do that. you see the pullback right up here until the reports come around that her time in office is coming to an end soon and that's where you see the turnaround. with a new prime minister, how long will that last and do you continue to have the friction between the boe and the fiscal government? we have some important conversations about this and we spoke with blackstone preside

the u.k. has been plunged into fresh political crisis following the resignation of the shortest serving prime minister. her 44-day 10 year saw her announce a massive package of tax cuts before facing a massive market route. >> i recognize though given the situation, i cannot deliver the mandate on which i was elected by the conservative party. i have therefore spoken to his majesty the king to notify him that i am resigning as leader of the conservative party. dani: let's go to anna edwards, who is life in westminster. as we watch social media celebrating that head of lettuce that lasted longer than liz truss, what happens now? anna: light relief from social media i suppose. good morning from westminster. the conservative party are trying to find their third leader this year, from johnson to truss to let's wait and see. the 1922 committee and those who run the party have been putting the focus on it being quick. this is the key parts of it. here is the chair of the 1922 committee that represen

i'm keeping an eye on the u.k. today we have seen the u.k. mortgages down .6%. is still a shortage of supply. it is going to be interesting on how those come together. then we jump right to the main event to single stocks today. it is shell appeared a little surprised. i would point out though, this talk is of 45% of its lows earlier this year. that ever-expanding rate. i think it is interesting the stock is only down 2.4%. alix: let's get into that. senior executive energy and commodity. there are a couple of questions to come back to this. supply or demand issue? >> i think a demand issue. it may be a sign that europe and are is weakening fast. energy is bearing down on europe's industrial sector. guy: what is going on there, refining markets? will: there are still not bad. they're always good to come up a little bit. we saw the refining markets. i think should bear in mind they are still very good. alix: first shell, they can take a hit like this. -- for shell, they can take a hit like this. are there smaller companies who are going to feel the pain? how are

what u.k.n is that the old system of stimulating your way out of any kind of recession or financial market pain is not being allowed . inflation is holding you at bay. you are in this scenario where you will have pressure and credit cracks in the federal government. central banks cannot come to the rescue as easily had -- as they have historically. there is a multi-quarter downturn, not something that will reverse quickly. lisa: i pictured a mattress stuffed full with dollar bills. is that what you are doing, or is there a more nuanced approach? >> it is more nuanced. you do not want to put your cash under the mattress. prime money market strategies, you can go a little further on the curve. you want to have the quiddity in your cash portfolio. you want to take that money and move it when the time comes. we think that the time is approaching, but you can get pretty yields as you go into cash strategies and go a little further out on the curve. i think you will be over four within two weeks. tha

the u.k.aying the same thing. we also saw the u.s. stock selloff as well. we are seeing weakness continuing in the u.k. and european stocks as they play catch up with the u.s.. we are on a high from the futures after that report from andrew bailey potentially backtracking on the bond buying program. even so, we are on the log and that got smoked yesterday. hong kong tech is a separate story here. it is the intel at bloomberg saying they are cutting staff. i want to dig deeper into the story. we have bank of england governor andrew bailey morning yesterday that they cannot maintain market support. >> we think a rebalancing must be done. we believe it is clearly temporary. dani: they did not just rattle sterling, they rattled broad markets. then, the bombshell this morning, they reported that it was probably told to bankers that they might hold bond purchases. let's bring in endocrine. enda: on the one hand, they are telling them to clean up your conditions. market participants are responding by

cole: let's use the u.k. context.as in london last week with investors talking over the weekend i think what really is keenly and acutely hurt u.k. investors is quality growth managers and equity stories dying. the idea that you can way overpay for blue-chip companies, anything from microsoft out to colgate-palmolive or coca-cola. these are great businesses, the question is what price should you have paid for those businesses? those of the kind of things the s&p 500 is loaded to the gills on in terms of its composition. in comparison, there is a great bull market going on in energy stocks and nobody owns those peer therefore, they cannot make up for the folly in the index or investor portfolios right now. manus: are you prepared to buy anything in the u.k. right now given the crucifixion of the currency, just quickly before bring in kit. are you actively considering stepping into the u.k. market? cole: we own stocks there and we have been buying there recently. i wg, which is a diversified revenue business around the

>> u.k. equities are quite separate from what is happening on the fiscal side of the gilts market when you look at the largest equities and the ftse 100. these are company s that aextremely attractive in terms of evaluation and exposed to a -- revenues. we have been liking u.k. equities also, the largest companies within the index also during the period of volatility. i would say the more difficult is going to be the companies that are more exposed to the u.k. economy and the u.k. economy will be difficult for sometime. francine: are there any bargains that you can pick up now for companies on the ftse 250 that are under extreme pressure? >> there are very few. you need to be selective and possibly as we are going to hear more from the fiscal policy decisions. there will be better at any times to buy. francine: where do you see the pivot ending? the market believes there is always a fed pivot. going from 2% to 3%. there is going to be a lot more hikes ahead. is the market too optimistic? >> t

and there appeared liz truss a few you -- u.k. truss a few weeks ago called for a wider europe, including for countries outside the eu apart from russia and belarus. i think the sticking point is going to be over the northern island protocol -- northern ireland protocol. a deal with the eu about the trading relationship between the republic o ireland and northern ireland on the island of ireland. that is going to be a very tricky problem to resolve as far as europe is concerned, and the free market which they want to have with the republic of ireland, and how you prevent those goods going across the border with the north. there's a lot for rishi sunak to do. he will try to reset the mood around the relationship with europe, but there's still of seemingly intractable problems. laura: thank you. as we've been saying, rishi sunak is a practicing hindu of indian descent. his grandparents are from british india and migrated to east africa in the 1960's. our correspondent has been speaking to british asians about what this moment means

u.k. gilt market is a mass. that's an understatement and it looks like it's going to continue to be a mess for the next few days. we are still up by around 30 basis points. you've got collateral calls coming up. regularly with the swaps being taken out, the pension markets, how would get fixed will remain to be seen. the pound at 11069. -- 1.1069. we are up by a percent. and we are trading, i think those two things need to be sort of sat back and digested. european stocks are lower. earnings season really gets into gear. i think we will wait and see what happens. taking a look at phillips today, stock down massively. and that i look at lvmh, buying everything. i think the stories fit together. having a really big impact on the sector. if you're in exporter you are still facing problems with staff in resolving those problems. and that is not going away anytime soon. you should come shopping here. europe is on sale. alix: i can't walk into a store. talking about earnings, the numbers are rea

the u.k. seems to be at the epicenter of all of this.ichael mckee joins us to discuss, as does our u.s. rates strategist ira jersey. don't be concerned about this question, but is there rates market a significant source of instability right now? we are all over the place here in the u.k. and to a certain extent in the treasury market. we are repressing the fed, qt, how unstable is this market and do we need to worry? ira: i think we have to worry a little bit because liquidity is significant numerous that it has been in the recent past. in large part that is because of the uncertainty that you note. there is also the inability for a lot of market makers and other potential intermediaries to take risk. we have a market that is significantly larger than it was a decade, even 15 years ago. the purchase agreement market, the other markets, the plumbing for the treasury markets, have not grown nearly as much. if you look at the funding markets as a share of the treasury market, they are the lowest they have ever been since the 1970's. i think

rishi sunak formerly taking over as u.k. prime minister today. one of his first moves, reappointing jeremy hunt as the chancellor. sunak speaking outside 10 downing street earlier. >> i will place economic stability and confidence at the heart of this government's agenda. this will mean occult decisions to come. guy: bloomberg's lizzy burden joins us from downing street. have just learned that jeremy hunt will remain in number 11 as chancellor, but 10 other cabinet members have gone. when do we expect to hear about the new cabinet? lizzy: they have been coming in and out of that front door. when jeremy hunt came at -- came out he only gave us a nod of the head. we have also seen dominic wrong, who was boris's deputy prime minister. he be going back into that role? we have seen the foreign secretary, james cleverly. will he be replaced with penny mourdant as a consolation prize? have offer seen the former culture secretary. he is tipped for education secretary and is a wily political operator. rishi sunak could do with people like that in his cabi

reporting excess profitability, look at the u.k.e has been a windfall tax, can you frontload charges? that is very interesting. clearly, the cushion being provided by revenue because rates have risen so quickly. look at the shares, the market is still seeing bad debt. the answer lies somewhere in between. francine: thank you so much. coming up, plenty more on the u.k.'s new prime minister. this is bloomberg. ♪ francine: welcome back to the open, 53 minutes into the european trading day. european stocks gaining 0.3%. the ftse still under pressure, 0.3% lower. stocks in europe are gaining on the back of futures in the u.s. pretty much steady. we had mostly positive earnings, that is helping sentiment. treasury yields dropping for a second day. adidas plans to end its partnership with kanye west following offensive behavior from the rapper. joining us is joe easton, who looks at the main stocks to watch. adidas has been under fire for its silence over these anti-semitic comments. why has it waited so long? joe: purely because how much