♪ anna: good morning. welcome to "bloomberg markets: european open." i am anna edwards live in london. the markets say the global bond the selloff eases but the stock slump extends. the nasdaq tumbles the most since october yesterday. the cash trade is less than an hour away. u.s. benchmark yields hit 1.6%, wreaking havoc in markets concerned the fed is behind the curve's sparks anxiety for

bonds. global stocks selloff, too. europe looks set to fall deeper in the red. eu leaders debate the merits of vaccine passports. ursula von der leyen says it is important to find a solution or else big tech will. we will get the latest from brussels. good morning to you. just coming up to 7:01. breaking news from iag. we will certainly return to our top story. let's get to iag. the adjusted operating loss, no surprise that we are getting a loss from an operator in the aviation space. full year adjusted operating loss, 4.3 7 billion euros against an estimated loss of 4.43. that's a bit better than expected. it is not providing -- this business is not going to provide

profit guidance for 2021 at this stage. perhaps they just lack of visibility. we know the ongoing conversations about opening up various european economies, which will be so crucial to the iag story. they are giving us revenue numbers as well. passenger capacity plans for the first quarter of 2021 are around 20% of 2019. that gives you a sense of how much smaller this operation is compared to pre-pandemic. that is the corporate story when it comes to iag. we have seen a pickup in bookings, notified by the markets to competitors of iag. we have seen a pickup in bookings for european aviation. let's get to these markets. this is what futures look like right now, down by 1.6% on euro stoxx 50 futures. ftse futures and dax futures also very much under pressure.

bond markets do seem to be trying to stage something of a recovery here. yields coming down. investors are buying the bonds market. they are selling stocks. something that started with a spike up in treasury yields, we are not seeing a spike up in treasury yields today. a week or so ago, 1.47%. we are certainly not at the 1.6% level we saw in yesterday's session. u.s. futures moved to the downside. it has been a tech focus. the nasdaq under pressure, down by more than 3% in just yesterday's session. we will get to that conversation about where this u.s. selloff goes next. in the gmm, we need to show you where we are on the asian story. msci asia-pacific down by more than 3%. a lot of red on that screen. this is interesting. we are selling through the asian session and selling stocks.

we are down by more than 2% on all of the major markets that i can see listed in front of me. that is on the australian market, the kospi, also on the shanghai composite. there is a lot of buying of the dollar going on. the dollar is a little stronger. there is an interesting picture coming through in treasuries -- sorry, in fixed-income. seems the u.s. treasury story is a little bit different to the others. the only thing people seem to be buying is treasuries and the dollar. markets have been digesting the spike in yields and the impact across various asset classes. what do our guests think? >> this is the bond market essentially telling us that a boom is coming in real growth in the country, and we are not priced properly and the rates market. >> rates are relative to the world and we must consider, japan and germany cannot be at zero and the u.s. go to 6%. >> we are selling off because

of optimism for growth. i don't think it is concerned about inflation as much as it is concerned that the fed may not thread this needle. > some of what we are seeing right now is a short-lived play. it will still allow equity markets to trend higher. >> this is volatility amplified a bit by the rito activities. it is just part of the -- retail activities. it is just part of the repricing. >> we are very close to the end of this. i think it suggests a real opportunities and some of the segments of the market that have been hit the hardest over the last week or so. anna: let's get into the markets conversation with ven ram, bloomberg's markets live currency and rates strategist. how do you contextualize? give us the back story around the rise in the treasury yields.

now, the market is losing faith in the fed, does not trust the fed? what is going on? ven: good morning. i think that it is not so much that the markets are losing faith in the fed as they are setting the agenda for the fed. if you dial back to what happened in february last year, the markets rallied big-time. it took an entire month for the fed to come in and act with emergency rate cuts. the boot is a on th -- on the other foot. the market is saying we don't need the rates to be solo for longer given the turnaround in the economy. we do not need rates to be solo. therefore -- so low. they are not going to react for a long while. the markets have taken it on themselves to do the job of the central banks. anna: whenever things move quickly, you always look for who

is going to be hurt. this certainly has been a very pasty move. i have been reading about convexity events, forced sellers and treasury market -- in the treasury market. now having to unwind those. is that a substantial part of the story or is that just a sort of a sideshow? ven: i would say it is somewhere in between. i do think that it is a contributive factor to the selloff. i do not think it is an essential part of the selloff, primarily because convexity, hedging happens when people are hedging to manage the duration. the bulk of the market, a big chunk of the market is owned by the fed and they do not hedge. given that, i think that what is happening is that much of it is duration exposure, not just because nps related duration

changes. anna: we saw some substantial movements in the five-year parts of the curve, which is something many remarked on yesterday. in terms of what makes other assets vulnerable. if we get to 1.75 on treasuries, somebody said 2%, but then went on to say, actually it is the real yields that matter so don't worry about the nominal number. we have seen a pickup in the real yields as well. ven: of course. we have seen the 10 year real yields spike up by like 40 basis points this month. i think even if you look at the nominal yield, i think around current levels, 1.5%, i think that's going to be a drag on stocks. the required rate of return bump

up and the treasury rates spike up like this, and therefore, it will be a drag down on stocks. i have been saying this since september of last year. i am not surprised at all by the selloff. it was something waiting to happen. i do not think we have seen the last of the stocks of. even at current -- stock selloff. even at current levels, nasdaq shares are trading at 70 times and a -- of -- valuations are horrendously high. this movie does not really end well. anna: feel this might be a rerun perhaps. in terms of the question of the day, which index is going to turn bearish first, is going to become a bear market first? we are not all that far from correction territory on the

nasdaq right now qamar week -- right now, are we? ven: definitely not. if we are coming out on the others either the lot down on the u.s. economy -- lockdown and the u.s. economy is projected to grow at almost 5% this year. if you are going to get that kind of growth rate, real rate, and nominal yields will be a lot higher than in the past year, if that's going to happen, that's going to be a drag on stocks. stock valuations look extremely untenable at current levels. in particular, the nasdaq and emerging markets will feel the pinch. anna: thanks very much. thanks for joining us. ven ram, thank you, as always, for your thoughts and have a good weekend. coming up, punted to come before the weekend. we get back to the earnings season. there is a lot of it abound in europe today and we will be speaking to some of the key

executives involved from erste bank, basf. that is next. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

♪ anna: welcome back to "bloomberg markets: european open." european equity markets expected to open to the downside. losses a more than 1.5% on major european equity markets. losses in the asian session of more than 3%. we will get to the market story in more detail. let's pause and think about what's going on in earnings and talk to a business that will be very interested in what's going on in the markets. erste group reported net income for the fourth quarter that beat analyst estimates. it sees loan growth and the low to mid single digit range. we are joined by the ceo of

erste group, stefan doerfler. you said your goal for 2021 is to increase net profit. tell me how you plan to do that. stefan: thanks for having me. 2020 obviously has been a very special year with the pandemic around, followed by very, very aggressively lower interest rate environment. going into 2021, we expect on the back of lower risk costs to deliver better net income. that's what we are expecting. however, the environment still remains challenging, that's for sure. anna: the environment remains challenging. i wonder how you respond to what we are seeing in financial markets at the moment. on the one side, something good for banks, steeper yield curves in the u.s. and to some extent parts of your. how much -- parts of europe. how much does that give you optimism? these moves are happening so quickly, some of the markets being caught off guard. stefan: that's absolutely right.

the volatility of the last two weeks has come to a bit of a surprise after yields going lower and lower and lower for such a long time. however, it remains to be seen whether this is a real turnaround or it is just a short-lived correction. we do not expect anything, any change on core yields on the short end for sure. ecb will hold at very low levels. we do not expect a substantially changed environment. we are very closely watching what is going on on the long end of yield curve. our exposure in currencies is substantial. over the medium term, this could be very positive for us. anna: do your forecasts, your assumptions for the year ahead, do they include a steepening of the curve for the price of your business? stefan: i would say a slight steepening, yes. in particular in czech republic.

we could even imagine if the recovery in the economy takes place as we hope in second and third and fourth quarter, we could even see rates go higher, and the key rate to be raised later on this year. again, i want to repeat, it remains to be seen whether the selloff in the bond markets really is sustainable. we have seen it several times in the last few years and they have been very quickly but off again. anna: that's interesting. in terms of the way this year will pan out. we are looking with interest at the growth stories that my result from the recovery -- might result from the recovery. i wonder when you expect the coronavirus bad debt to really materialize and how much? stefan: as you have seen, in 2020, we took a significant risk on our books in order to be prepared for certain risks to materialize really and default -- in default. we do not expect npl

rates to be higher than 3%, 4% in our books. we are pleased that the asset quality in our sheet has been holding up well in this difficult environment. let's see how long the pandemic will be a burden on the growth in our region. in general, we definitely expect the region to outperform european union average by far. anna: you do not have a presence in all of the central and eastern european countries. there is some missing from that list, poland one of those areas. i wonder what m&a plans you might see as durable, which assets -- doable, which assets are attractive to you at the moment? stefan: we are clearly interested to strengthen our footprint in the region where we operate. poland is kind of the one market

we have not been entering into. if there is an interesting opportunity, we will certainly consider. apart from that, we are very much looking forward to take opportunity of domestic consolidation in those countries where we are already. that's the clear statement we always make. anna: thank you very much. stefan doerfler, cfo of erste group, talking about earnings and what we are seeing in these markets and in the markets futures for stocks in europe. we are selling stocks on a day where treasuries looked to be gaining a little bit of ground. certainly, the tenur -- 10 year end of thanks. the asian equity session is very weak. ftse futures, cac, dax futures point to the downside. basf hedges its bets with a wide outlook for 2021 on the possibly

supply chain disruptions. we speak to the ceo of the world's largest chemicals company. when you switch to xfinity mobile, you're choosing to get connected to the most reliable network nationwide, now with 5g included. discover how to save up to $300 a year with shared data starting at $15 a month, or get the lowest price for one line of unlimited. come into your local xfinity store to make the most of your mobile experience. you can shop the latest phones, bring your own device, or trade in for extra savings. stop in or book an appointment to shop safely with peace of mind at your local xfinity store.

♪ anna: welcome back to "bloomberg markets: european open." we are 40 minutes away from what looks to be a very negative session for european equity markets. we look to catch up with the u.s. a little bit. european futures on the back for. basf his hedging its bets with a broad outlook for 2021 amid possible supply chain disruptions. the world's largest chemical company posted better than expected results in the fourth quarter. it signals the industry is emerging from the covid-19 pandemic in relatively good shape compared with key end markets, such as aerospace. we are joined now by the ceo of basf, martin brudermueller. you've set this very wide outlook for 2021.

you are concerned about supply chain disruptions. can you be more specific on the regions or sectors you expect to be disrupted? martin: optimistic about 2021 and we have started strongly in february on a very high level. i think we have all experienced over the last month how much uncertainty is connected with tandem -- with the pandemic. i think we have the mutations that clearly show that there is additional uncertainty. the vaccination campaign in europe started rather slow. we simply have the risk that we might have a ways to come. we are optimistic. we really think we can be at the upper range of our value we have given on the earnings aside, if there are not unpredicted lockdowns anymore. i think overall, we are in a

very positive mode and we started very strong. anna: which of your customer industries do you think is vulnerable? is it all about others -- auto? stefan: auto -- martin: autos had -16% in production volume last year. there is now a bit of a hiccup with the availability of semi conductors. we expect for this year a very strong recovery on automotive. might be in the second have a little bit higher than in the first half because of that supply chain disruption. it is the leading industry for basf, about 20% of our sales and it came back stronger. anna: clearly, you have got a big investment program underway, notably in china. what is the next milestone on this $10 billion project for you? stefan: -- martin: well, this is the most important investment project we

have, this site in china. it is a huge opportunity. you saw over the last months how well the chinese market recovered, how fast it recovered. it runs very strong. we experienced several months of double-digit volume growth over there. they focus more on domestic demand. that is why i think this project is just right for basf to expand in asia-pacific, particularly in china. the next -- also going into the detailed engineering. we have already started with the so-called first initial phase, we have two plans already under construction. it will go step-by-step over the next years into then finishing this project, the first phase in 2025. anna: we have seen a huge wave of m&a in the chemical space. basf not at the forefront of that. are you happy to stay on the

sidelines? do other assets look not worth the money, too expensive? martin: this is part of our new corporate strategy, that we focus much more on the organic growth, which is always a very healthy option for the chemical industry. if you have your own strong technology, you invest in the right places in the world. we have now the focus much less on acquisitions but on organic growth projects. on one hand, the china project. the other part is the very dynamically growing battery materials market for the electron mobility -- electro- mobility. you have seen m&a in the past at too high prices. anna: investors seem increasingly focused on esg matters and green meadows. i spoke to covestro earlier this week and they talked to me about the circular economy.

are you as well-placed as others in your sector to benefit from that kind of new development? martin: look, sustainability is in the heart of basf's strategy for a long time. in tools, we have been the first one in 2008 already showing a carbon co2 footprint. we have prepared ourselves a lot for the future, with the grain dealer and other regions that's -- with the green deal, and other regions. we are dedicated to becoming circular, low co2. basf is in a leading role to benefit from that. integrated production come along value chains, which you also -- integrated production, long value chains which you connect with each other is ideal. anna: thank you so much for your

time. thanks for talking to us. martin brudermueller, the ceo of basf. we stick with the earnings story. we speak to the ceo of the world's largest cement maker. that conversation next. this is bloomberg. ♪

♪ anna: welcome back to "bloomberg markets: european open." let's have a quick look at the markets where you. you can see that we are expecting to see some substantial losses, more than 1% down on european futures are not. let's show you u.s. futures. we added to the russell 2000, which, as my colleague dani burger was saying, is of interest. the selling has been largely limited to the nasdaq, tech stocks. that's been the epicenter of in the united states. it's interesting to see the russell being called down.

we do seem to be selling a lot of things today. gold moving to the downside. interesting that bonds markets, treasury markets specifically, are trying to find firmer footing. we are at 1.48. still the main theme around higher yields are meant. let's get a bloomberg business flash. >> airbnb's quarterly revenue is blitzing expectations as the firm benefits from travelers choosing vacation rentals rather than hotels. the company is not giving a financial forecast and is cautious about 2021. it's stock is over -- is up over 160% since its blockbuster ipo late last year, giving it a valuation of more than $100 million. tiktok's agreed to pay $92 million to settle privacy laws that claim the app illegally recorded facial scans of users and share private data with third parties. in addition, the deal requires tiktok to initiate a new privacy compliance trend program.

the agreements to has to be approved by a chicago judge. twitter is unveiling the first details of its subscription model. it will let users charge for access to exclusive content to allow high-profile users to make money on the social network. these so-called super follows will likely come out sometime this year and is part of twitter's efforts to open up new sources of revenue. that is your bloomberg business flash. anna: back to the earnings story. lafargeholcim's sales beat estimates in the fourth quarter. it comes as the company turns the page on years of restructuring following its creation via a merger and 20 15. the ceo, jan jenisch, has cut costs and sold assets. you have spoken quite positively about 2021. you say recurring ebit will be

at least plus 7%. is this all about fiscal stimulus? jan: yes, good morning. no, it's about generally good market trends we are seeing. we are seeing expected growth. that gives us great confidence. it's going to be a very solid year for the demand for our product. second half of the year, we believe that the stimulus programs which have been announced by many governments will hit our order books. anna: you are pushing into the roofing business in the u.s., a business that you know very well. i wonder what expectations you have for that business. there is a lot of concern more broadly and markets about whether the u.s. economy will overheat this year or next. what expectations do you have for this new path of your business? jan: great. i think the acquisition of firestone is a new chapter for us.

we are very proud to have it. and the outlook for the business is excellent. we closed here the numbers higher than expected. for this year, you see great impact from biting's bit -- biden's build a better plan. he has announced several -- build back better plan. he has announced several things to make housing more sustainable. anna: we have seen cement demand rebounding to some extent. do we take another step up in the year ahead? what kind of visibility do you have in that business? jan: we are quite confident. we don't want to make too many promises beginning of the year. we are still in the band deming -- pandemic so we are still cautious for the other. building in a general is the megatrend which will support us for many years. anna: you have talked about some

of the m&a that you have already done. would you do a deal the size of firestone again? or have you done enough dealmaking for not? jan: first of all, we are really happy to have that opportunity to have this iconic company with us. when you look at our balance sheet, i think we are ready to do whatever it takes to make this company a great green company, and ready for the future. anna: does whatever it takes include being interested in basf construction chemicals business? you have shown some interest in that. are you still interested in that or businesses of that type? jan: we looked at it at that time. we are financially very disciplined so we are not doing any deals which do not generate value for our shareholders. in general, we are very open. we want to develop the company into a segment of solutions and products. we just announced a new executive committee member to have that business globally.

anna: we talked in the introduction about some of the divestments you have made in asia. are you planning other divestments? the south african business, for example, what our plans th -- what are the plans there? jan: we sold three markets in south asia. we look at our portfolio ongoing, we might shave it a bit but that's not there for the company. i think we have the right -- anna: thank you. thank you very much. sorry to interrupt. jan jenisch, the ceo of lafargeholcim. coming up, we need to touch base with european politics. european union leaders edge towards establishing bloc-wide vaccine certificates but it is not all smooth sailing. we have the details next, who was four, who is against, what

the future holds for this particular initiative. this is bloomberg. ♪

♪ anna: welcome back to "bloomberg markets: european open." we are 22 minutes away from the start of the european equity trading session. we have quite a few earnings stories to price in. it might struggle to cut their when you look at what the futures look like right now. futures look decidedly in red territory. let's roll onto u.s. futures. we saw heavy selling in the u.s. yesterday. the nasdaq down by more than 3%. it does not look as if we draw a line there, but the selling does not look as scary as it perhaps materialized to be. futures this time yesterday looked very similar. we have got the russell there as well. let's get into the markets story in more detail.

the global bond market selloff may be easing but other highflying, risky assets are still under pressure. we might see some buying a bond markets today but we are certainly seeing selling of stocks, everybody from u.s. futures to bitcoin and copper is moving deeper into the red. joining us now to discuss is dani burger. it all started with higher treasury yields. today, we do not see higher treasury yields but the rest of the market is off and running. what sort of ripple effects are leasing across markets? dani: to say that the past 12 hours has been chaotic is probably an understatement. it was so shocking to see that seven year treasury auction bid have the worst bid to cover ratio in history. that's what set off this many flash crash -- mini flash crash. when you look at the ripple effects, this is going to be one of the key thresholds that is having an effect on equity markets. when you look at the 10 year

yield in the yellow crossing the dividend yield of the s&p 500, it shows you that perhaps some of these valuations does not hold up. you do not need to go searching in equities for value. that's why we see the tech sector really under pressure. the cost of capital is also higher as well with this idea that no one is stepping in to save the bond space, at least yet. we could see higher interest rates. of this has started to culminate in a selloff that is wider than just that concern about frothy valuations. look at what russell 2000 futures are doing, look at what the dax are doing. if the economy is doing better and that is the reason that all stocks are selling off, because we are going to get more inflation, it is odd that we are seeing the more cyclical sectors in indexes selloff. it seems to suggest that people are using this opportunity to sell at some of the highs. anna: seems to be persistent

worry around risk assets. 1.48% is not 1.6. the route comes at a time when retail investor participation is pretty high. what are the consequences of these two trends converging? dani: you think retail investors would be holding the bag. look at gamestop yesterday, up more than 18%. it really shows you that there are still investors out there willing to go in and buy risky assets. i would quote jeffrey haley, who says dumb money is still buying. when you look at the other retail favorites, amc, the ark etf, tesla, all of them deeply in the red yesterday, selling of more than 8% in many cases. a lot of the retail favorites got crushed yesterday despite the fact that gamestop did better. institutional investors are looking at higher yields,

finding an opportunity perhaps to sell equity markets. who is left holding the bag? it could be this new breed of return investor. anna: dani burger with the latest on these markets. now, let's turn to the politics and the recovery from the pandemic and the latest on the vaccines. eu leaders are inching towards establishing bloc-wide vaccine certificates. angela merkel said in the future , it will certainly be good to have such a certificate, but that will not mean that only those who have such a passport will be able to travel. about that, no political decisions have been made yet. interesting to think about her view, how this is going to be used, which kinds of businesses are going to use it. joining us now is maria tadeo. how much consensus is there around this passport? it does seem from being a very fragmented north-south conversation, there does to be

more support from bigger countries in europe around this idea now. maria: yes. look, there is more consensus than frankly we were expecting going into the summit. there was a big difference of opinion between countries like germany and france, who did not look at the certificate as a priority. greece and spain clearly depend on the summer season and tourism saying that they do look at it as a priority. there is in fact more consensus than we were expecting. angela merkel is warming up to the idea that to some extent, good weather is around the corner, people are going to want to go on holiday. if you continue these restrictions and do not get people a break, that could also be a political problem. they argued that if the eu does not agree at an eu 27 level, there is going to be many different directions, bilateral deals. on that point, i spoke to the chief economic advisor to the greek prime minister, and he

told me that's the best way to do it to avoid confusion and chaos. >> we are also working at the moment on bilateral deals. we have an agreement in principle between greece and israel. we are also working on deals with the united kingdom. we do want to welcome u.k. taurus in the summer. we are working on bilateral deals with countries. it would be even better if this were coordinated at the european union level and we do not end up with a patchwork of solutions like we did last year. >> that was the economic advisor to the greek government that is pushing very hard for this. he said last summer did not work because there was too many different regulations, rules. what i would note is that there is still not a political conclusion on this, there is technical working done. emmanuel macron continues to say that he still worries about

this, that there is still concerns about mutations. he also worries about discrimination to those that do not get the vaccine. the french rollout has not been good. that may be also an issue for him as the only people in europe who cannot travel are the french. anna: really interesting to think about the way that these passports will be used. international travel is one thing. going to the local shops is another. to the extent to which there will be controls around that. interesting that it seems the european conversation has almost been kicked into gear by the assumption that may be tech companies will do this anyway. will travel in europe be possible the summer, given the infection rate? maria: yes, anna. it's a good point that you make. this was also a point of conversation yesterday. the head of the european commission pointed to, if we don't come up with our own certificate, you best believe

big tech will come and do this for us. the europeans are very particular in anything that has to do with privacy and personal data. the other issue, as a note of caution, european officials do still say that if you book a holiday now, that is still a big risk because we still do not know what is going to happen with the mutations. do not assume that this will be a normal summer because we are still operating in very exceptional circumstances. anna: a lot of people booking on hope with fingers crossed. maria tadeo in brussels, thank you very much for joining us. let's take a quick look at markets. european equity markets expected to open significantly in the red. this as the bond rout continues. that led to heavy selling in u.s. stocks. we can roll over and show you where u.s. futures are right now. asian equity markets have been under pressure because of that selloff in the u.s. yesterday.

looks as if the selloff will continue, even though we see a bit of civility returning to treasury markets. the dollar is very well bid. we see money coming out of the euro and going into the perceived safe haven of the doubt. we will bring you are stocks to watch, including iag, as the british airways parent company posts and 9 billion-dollar loss. no doubt they also have their fingers crossed for the summer. more on that ne. this is bloomberg. ♪

♪ anna: welcome back to "bloomberg markets: european open." european equity markets under considerable pressure. that is the expectation.

futures down by as much as 1.4% on the euro stoxx 50 futures. let's show u.s. expectations because it is some selling that became exaggerated in yesterday's session in the u.s. nasdaq down by more than 3%. all of the major equity markets over in the asian session down by more than 2%. interesting to take dani's point on board about what we are seeing in the russell and if we are starting to see smaclical s. the bond markets, treasury markets at least, trying to draw a line in the sand. we see some buying of treasuries, the dollar, the bund as well in germany. seems that those old poster children for safe haven trades are doing ok this morning. that is having a negative impact. still, the risk assets are

licking their wounds and dealing with yesterday. let's get into your individual stocks to watch then with dani burger. the sectors and the regions we need to be watching out for as we get into this session today. dani: it does seem that it is a more cyclical things that will be affected. dax, even ftse 100 seem to be the ones that will be falling the most, at least at the open. part of that is because in this kind of territory where things are starting to sell, people are reevaluating the buy everything rally from the past few months. that means a lot of a commodities are falling today. the miners might take a hit, the oil majors might take a hit. those cyclical names, if they are going to be reacting to the real assets, are likely to be under pressure in terms of today's open. anna: interesting to see what

kind of response we are getting from central banks. fill a plane at the ecb saying to a newspaper in -- philip lane at the ecb saying to a newspaper that the ecb has more ammo. the rba stepping in with an unscheduled operator to buy 3 billion australian dollars in defense. that had a lot of people asking questions about whether other central banks are going to have to step in. it could be difficult for some of these individual earnings stories to cut through. dani: wouldn't it be a weird concept that the fed may need to raise rates to save the stock market? probably not what's going to happen but you never know. when it comes to the individual stock stories today, it's going to be a very weird market. usually when we have these big macro moves, it means that correlation among stocks tends to be higher, dispersion is lower. there are individual stores. one of them being iag, out with

earnings today and really getting a picture of just how difficult 2020 was for them -- , booking a big loss. they are not giving us any guidance for profits in 2021. also saying that they do not need more liquidity, that they expect a good summer this year. their capacity for the first quarter of 2021 they expect to be about 20% of 2019. anna: what about the french utilities space? dani: the battle continues. trying hard to avoid a takeover by the company. basically arguing, we are fine as a separate entity. we can fend off this takeover, we don't need to be absorbed into veolia. today is going to be very, very messy and markets. it needs to be a really strong individual story for these stocks to shine and move

differently than the overall markets. anna: dani burger there with thoughts on the market overall and indeed what we expect to see from individual stock names. as we both have been saying, difficult for those individual stores to cut through on a day when futures look as gloomy as they do. we are expecting to see some fairly heavy selling. selling in asia has been really extensive. all of the major markets down by more than 2%. kospi, shanghai composite down by more than 2%, some down more than 3%. for the msci asia pacific to be down more than 3% is fairly drastic step. we will see what the u.s. session brings later. nasdaq futures paring earlier losses. we will keep that in mind as we work our way to the start of the european equity trading session. this is bloomberg. ♪

anna: welcome back to the european market open. a minute to go until the start of cash equity trading. here are your headlines. u.s. benchmark deals hit 1.6%, wreaking havoc 10 markets. -- havoc in markets. europe looks set to fall deeper into the red after a day of heavy losses on wall street. and eu leaders debate the merits of vaccine passports. one person says it's important to find a solution, otherwise big tech will. good morning.

let's look at the picture. it's been in negative territory, losses of more than 1% on equity markets. the links in treasury markets is where it started. with or have the selling of cyclical assets. when it comes to commodities, it's cyclical as well. the ftse 100 opening down, the ibex down, and this continuation of what we saw in wall street last night, a continuation of what's going on through the asian session, as well, higher treasury yields leading to what that does to the relative merits to assets like stocks, so we see a stocks selloff. that's where the conversation is this morning even though we see stability in treasury markets.

just a quick word on the global macro picture, the ftse economy expanding in the fourth quarter, a redhead line across the bloomberg. that is better than an estimate 0%. bradley, thinking -- broadly thinking about the european story, we saw it graded from previous estimates. in terms of baseline for q4, where we're coming from, perhaps they've been improving behind the scenes a little bit. european equity markets, putting that aside, opening to the downside is global bonds attempt to recover from an aggressive selloff driven steep losses in treasuries and u.s. stocks. joining us now is in steely, international cio for fixed income, the perfect person to speak to today because of the links between fixed income and the open of the markets and the selling of risk assets we've been seeing. underlying this run-up in yields we've seen in recent sessions,

is there a "we don't believe the fed" thought process running through this? the market is processing rate hikes before the fed suggested they would come. how do you explain that disconnect? ian: it's an interesting moment because historically, over the last few years, it's been the case of the fed outrunning the market when it comes to hiking the fed. what the market is focusing on is the fact we've got a lot of good news at the moment, as we've been mentioning the last couple of weeks or so. the pandemic looks to hold off. the vaccine rollout looks to be a success at the moment. then we've got what will be a significant fiscal package. there's a concern about u.s. overheating. if that's the case, does 1.5% on the 10-year look sensible? that's what's being challenged

at the moment. anna: we are seeing interest rates hiking, early 2023, so just in a couple of years. if growth is as strong, do you still expect the fed will hold off from tightening policy? iain: so, another good question. the data will be dependent on that. but what we've heard from the federal reserve over the last few weeks or so, they are very much focusing on the dual mandate, now maximum employment, as we listen to jerome powell the last week or so, and inflation. and although we do know inflation is going to pick up in the short-term, we're expecting to see 2.5-3 percent on the headline numbers in the second quarter. there are structural downward shifts with inflation, and those that they really want to see pick up and be convinced inflation is going to be above

2% over the longer term before they move. we'll have to wait and see. with the market is saying is the risk that does happen, given the good news, given the stimulus package, and the risk is we get hikes from the federal reserve sooner than what they would like to do. that's the risk rather than waiting out longer at the moment. anna: it is this a test of the fed's symmetrical target? is this happening because we don't understand enough, or is it still untested, this symmetrical target, the fact that they will allow the economy to run a bit hot? but we just don't know how hot and for how long. iain: yes, it is, but what was happening is probably what the fed liked. we heard from a couple fed members. they were looking at the rise in lung and yields, saying this is stating our policies -- long and yields -- long end yields,

saying this is hitting our policies. much more focused on the policy component. you've got the market asking that question. are the fed going to really allow inflation to run hot for a considerable periods of time? or will they effectively do a double take and start to hike rates when we get there? that's what's the challenge. we go through previous hiking cycles, where we started in december of 2015, we were making our way towards to percent. we wouldn't have had a hike under this new framework until march of 2018. so, the market is sort of debating with the fed as to what flexible average inflation targeting actually means. anna: we're looking at the markets opening up, five minutes into the trading session, european markets under pressure,

the stoxx 600 down 1.7%. this is the sector breakdown we have. interesting to see, no sectors are in positive territory for european equities. but the ones that are least hit today are the more defensive ones. the ones that have been sold of the most, technology, energy, basic resources, and travel and leisure. some of the cyclical plays that have been doing well are also under pressure today. you wonder what that tells us about growth expectation. where does this go from here? i spoke to a bank ceo, who is giving a corporate perspective, saying he's not convinced yet the rally in yields is going to continue. the selloff on bonds is going to continue for much longer. what is your expectation? iain: i think there's three things we're looking at at what could be the circuit breaker. the first, to the reflation

themes go away? that seems unlikely given what's happening around the vaccine and the cases. second would be, to central bankers put their foot down? we saw big buying in australia, out of sync with the normal program. we haven't had the pushback yet from the federal reserve. a lot of that's around the third thing that could disrupt this, which is do we see a sustained selloff in risk assets and tightening of financial conditions? financial conditions in the u.s. are easy at the moment. i know stocks have come up a bit, but still positive territory, having had a very good year last year. i think one central bankers look at this, they will still see what's happening at the moment isn't disrupting that dual mandate. if we see risk fall from here, that will be a big question.

i think for now, the path for least resistance for yields to move a little bit higher. anna: for yields to move higher, and it comes down from the 1.6% yesterday. what about the steepness of the curve? the seven-year auction got a lot of mention yesterday. i'm looking at a chart, wondering what that's telling me. what is the steepness of that curve and the movement yesterday? what is that telling us? iain: start with the seven-year, it is interesting. to be honest, that's going to raise warning signs for fed members and janet yellen over at the treasury. they don't want to see those sorts of misses, so that will be a concern. when it comes to the curve, a steepening has been in line with what they were hoping for, highlighting inflation expectations. growth expectations were picking up. what happened yesterday is the markets pushed back and

actually, it's all well and good. but you're going to have to normalize policy sooner. and that's something the fed will keep an eye on because they don't want the front end of the curve to move away. anna: thank you very much. stay with us. we will get more of a european angle on that conversation. we've heard from the ecb. we'll talk about what they' sayingre -- they're saying. we'll also talk about the vaccine rollout. coming up, the astrazeneca ceo defended his company's delay as your russia's two falter its vaccine drive. we've got the latest next. this is bloomberg. ♪

>> if the recovery in the economy takes place, as we hope, in the second and third quarter, we can hope to see rates to go higher and the key to be raised later this year. however, it remains to be see whether it is sustainable. we have seen it several times and it was very quickly being bought up again. anna: that was the oeste group ceo speaking to me about the bond selloff as the treasury

selloff seems to report for just this morning in european time. that said, we are of earlier lows when it comes to the stock selloff so some taking the opportunity to buy. the ftse outperforming just a touch, down .9%. let's look at u.s. futures. nasdaq futures have been coming off earlier lows and they continue to do so, now down .2%. let's look at the latest on vaccines in europe, astrazeneca ceo has defended a shortfall in deliveries. he said employees are working around-the-clock to increase production. europe is lagging behind in the vaccine raise as the u.k., israel, and the u.s. are ahead. let's get thoughts on what that does to the baron outlook across the outlook. iain is still with us.

interesting trying to draw the dots between what i said about the vaccine rollout and what we are seeing and what we are seeing in markets right now. i was reading some people linking these phenomenon by saying if the u.s. is allowed to grow so much more than europe, that's part of the instability we're seeing and markets at this point. do you attribute some of this to a stronger growth picture in the u.s. and a lagging picture in europe? iain: that's a good question. i think the treasury market is fixated on the good u.s. growth rates. i think bunds and the european bond market have taken -- been taken along for the ride. when you look at the movement in german government bonds, it's been fairly dramatic in the sense of where they've been and the volatility we've seen. but it's not been anywhere near as high as other markets. the reason is, when you do look at the growth outlook in europe

and the inflation outlook, it doesn't look as strong as other markets around the world. you've got consistent projections of low inflation, well below ecb's target. the vaccine rollout isn't going particularly well at the moment and that's questioning the growth prospects over the second half of this year. when you look at growth forecasts, they are down slightly in contrast with the u.s., where they are going up. the argument would be that is why, of all the central bankers around the world in the last week or so, you've seen more pushback from the ecb members, whether it be lagarde or for the plane yesterday, pushing back saying they are keeping a close eye on yields and they have the ability to do more, if necessary. anna: absolutely. because u.s. growth may be a gift to the world

with it. but europe doesn't want to pay a cost of money that is higher than its underlying economy was justifying. we heard from christine lagarde, the ecb's philip lane saying without a doubt, the ecb has more, if there is another shock. what are they thinking, the ecb, do you think? iain: they have got some more, but the top is fairly empty -- talk is fairly empty. the more, would be that they can use the pet program and they can adjust it, if necessary, and focus on certain markets or certain parts of the curve if required. so, it will be interesting over the next couple of weeks, whether they have been doing any additional buying. the market would indicate that at the moment, just given the movement we've seen in yields. and i think is trying to do verbal intervention, or stop the rot, in a sense, from ecb

members. it would probably hope that they wouldn't have to go to actually intervening in the markets. and bond yields can be contained at these levels. anna: just a read headline across the bloomberg, we've got a red headline from israel saying it is giving have of its population at least one vaccine dose. i know on our vaccine tracker, israel performing very well. with these varied paces of vaccine rollout, where are you looking at the best investment opportunities at this point in the recovery? iain: so, it is a challenging one at the moment because the movement we're seeing in treasury yields is underpinning everything. with the exception of the high-yield space, double digits,

a couple percent negative returns a lot of markets. that is creating some opportunities. we do believe a global reflation and a pickup in growth should be beneficiary to the markets. we've seen weakness in currencies the last couple days. i think it's this beat of the movement. if we can get stability, i do think there's opportunities. emerging markets still look cheap. the one asset club that didn't perform last year. for a lot of other markets within fixed income, it is more of a carry game relative to spread. things like the high-yield spread, you're not going to get a huge amount of capital appreciation. if you can get yields to 4-5%, i think most would take the at the moment. anna: thanks very much. iain, thanks very much. iain will be continuing his

conversation with us on bloomberg radio. that :00 a.m. u.k. time. -- that's 9:00 a.m. u.k. time. coming up, iag posted a nine -- $9 billion loss. that is next. this is bloomberg.

anna: welcome back to the european market open.

21 minutes into the trading session, recovering off earlier lows, but still negative. catching up with the u.s. of yesterday, with the u.s. today look different? perhaps it might. it does to be turning itself around. futures now in positive territory, nasdaq futures in positive territory, as well. will we see cyclical selling off in the way cyclicals have been selling off in europe? iag posts a $9 billion loss for 2020. the airline group says it can't provide an outlook as the coronavirus pandemic continues to batter air travel. joining us now is sit are philip. -- siddarth philip sid, thank you for joining us. sid: at the moment, it's hard for aig. unlike other discount carriers,

iag has a large chunk of its money from lung holds line, especially the more -- lung holds line -- long holds line, especially the more lucrative ones. they can't carry an outlook over how it will fare over the next year as there's still questions remain about one travel will be ready to return. anna: that must be great to be an executive in an airline -- relatively great -- none of it is great -- but from an airline that has a domestic market. what are other airlines doing? where are they different iag? sid: sure, so like i said, iag depends on transatlantic business, especially on business travel, whereas short like easyjet and ryanair counting on a quicker one with the vaccination campaign.

so, iag has been obviously hard at it. although the airline does say someone might be promising, especially with the vaccination -- rate of vaccinations, and they vest f -- they've asked for a commitment to open travel and remove travel restrictions. anna: it's almost possible to imagine. at least the sun is shining. if you're in london, the sun is shining this morning. siddarth philip, thank you for that. the selloff easing, but that has been putting pressure on highflying risky assets, everything from u.s. futures to bitcoin and copper has been moving into the red this morning. but things are starting to turn around once again, getting better for risk assets. what are the ripples you are looking at? dani: part of this has to do with digesting the bond selloff, may be people buying and saying ok, let's turn to the fed, the

ecb, and see if the invisible hand to support the bond market is coming back in. we've heard that from some degree from philip lane, saying there's plenty more, west of the ecb to support a shock. this picture helping. but there still are pockets of stress. we look at the stoxx 600 down nearly 1%. this is a small cap, at one point, down almost 1%. that too has eased off .5%, still more than we've seen for the s&p 500 futures, so it really is a day were some of the momentum trades are coming off a bit. part of the reason is the higher yields. yes, it is easing. but when you get this violent move up road -- upward, you start to reevaluate your position. or if you were looking for a market to sell into, this gives

you a good opportunity. so, i think it is taking money off the table at a time where you have a shocking bond move. anna: when things move quickly, who is going to get hurt? we see participation from retail investors lightly. dani: we have. bitcoin, highflying tech, those are the kind of things retail really likes. but they did like gamestop yesterday. anna: dani burger with the latest. on the markets coming up, the world is slowly and surely shifting to a greener future. we'll speak to a utility company, edp, promising to increase investments in green energy. through the pandemic, we haven't seen a step back from the green agenda. if anything, companies have been taking the green agenda increasingly seriously. we've seen that from china. we'll continue that conversation next. this is bloomberg. ♪

anna: welcome back to the european market open. for a friday morning, it's a busy one. we are already off loads of the session, open down on the equity markets. we have pulled back a bit since then, now down around 175% on the stoxx 600 -- .75% on the stock 600. nasdaq futures actually leaping to the upside, up .3%. are we drawing a line in the sand? we've seen more stability in the bond markets, treasury markets trying to stabilize a bit.

yields came down from the more extreme levels yesterday down to 1.48%. with that, you may have that we've seen more of the tension come out of the stock selling story. that didn't happen through the asian session, but it seems to happen as we look at u.s. futures. let's look at the sector picture and show you a breakdown. here in europe, most sectors it negative territory. there are a couple to the upside, both of them bond proxies, sectors that you might consider safe havens. we are seeing selling still of the more cyclical names, basic resources and energy adding to the earlier selling we'd already seen in earlier sessions. let's move onto the green agenda. green energy is a hot topic, governments and business leaders committing to a cleaner future. edp, which operates in 20 countries, says it plans to

invest billions of euros in the next four years, with about 80% going to renewables. i'm pleased to say we're joined by miguel. good to have you on the program with me this morning. let me ask what is going to set you apart in the race towards renewables. in the energy transition, many are turning to renewable energy. what will set you apart from the others? miguel: good morning. the first thing is we have a strong track record in the renewable space. we've been doing this for 15 years. we have 20 billion euros invested in the euro space -- the renewable space. we have the track record. we have the team. we have the global footprint. and we have the process in place to continue to invest in all the different geographies. anna: in terms of the types of renewable energy, wind energy has been central to your

strategy. now, so there seems to be taking the spotlight, as well. what happened to solar to solar to push it up your agenda? miguel: one of the global trends we've seen, really becoming very competitive against the more competitive technology, the fact that renewables, wind and solar, are the most competitive in the market. so there is obviously taking more of a marketshare. we see more of the potential growth for solar the next couple years. in the mix of our assessment, we see it pretty evenly split between went on shore, and solar -- wind, ensure -- wind on shore, and solar. places like france, italy, poland, u.k., we're investing in all these different countries.

anna: are you interested in acquisitions in the solar space? miguel: we've done most of it organically. we have a strong track record. we know how to do the development on the ground. we're seeing a lot more projects we're able to develop into different geographies. solar is becoming very competitive. we been doing that with our teams building up the pipeline, more than 40 gigawatts of pipeline we develop over the years. we're beginning to bring those online. we have seven gigawatts secured for the next couple years. and what we're projecting is 20 gigawatts over this period, five-year period, to 2025. it's a fair the aggressive program. as i say, this is a multi-decades trend, multi-decades macro trend we're seeing. we certainly expect to ramp up. to give you an idea, we're

basically doubling the pace of growth the previous years. we can go even higher than that. this is clearly, if you want, our stepping up to the challenge of climate change. it is a major macro trend and we're seeing that across all geographies. anna: i just want to jump into the conversation and bring comments from an ecb executive board member, speaking at a virtual event, red headline across the bloomberg, saying the ecb may need to add support if yields hurt growth. that's interesting in the context for viewers who have been with us a while, the context we were having with iain earlier, about how europe is worried about the push up in yields at this point. that brings me back to you. are you concerned about a rising bond yield environment, either because of your own funding costs or because of what it does

to the relative attractiveness of european assets at this point? miguel: first, we significantly reduced our leverage. most of the assets we invest in our inflation are linked, so they're able to withstand less than the impact, heather. in terms of interest rates -- have there. in terms of interest rates, as long as it's reasonable, that's perfectly acceptable and perfectly doable. i think with all the growth, people will adapt. they will adjust the returns accordingly going forward, obviously assuming that is within modest rates. so, i'm not overly concerned about it. anna: in terms of the structure of your business, edp are is your focus, the renewable energy unit. when do you think you might have a decision on that unit? haslinda: -- miguel: edpr is

renewable energy. at the appropriate time, we could issue around 1.5 billion euros of equity to finance this plan. it's 24 billion euros of investments we're doing, around 20 billion euros to be in renewables. so, fantastic performance last couple of years. it has a great track record in terms of capacity. so, we think bringing fresh equity and allowing us to fund this plan going forward would be a great way of doing it. we haven't specifically given a timeframe for it. it would be an appropriate time for institutional investors. anna: thank. thanks for joining us -- thank you very much. thanks for joining us.

isabel schnabel from the ecb saying there may be a need to add support for growth, going on to say the ecb has some room to cut interest rates. we're watching this live feed right now of what she is saying from the ecb. she's also saying the benefits and costs of deeper rate cuts must be weighed. the ecb still has room to cut interest rates, as we have seen some of the european bond markets swept downwards in terms of price, and upwards in terms of yields following what we've seen in treasury markets, but without the growth story to go along with the underlying u.s. growth story, no doubt worrying some at the ecb. let's get a bloomberg first word news update now with laura wright. laura: president biden takes its first known military action. the defense department says multiple facilities were destroyed. this comes after a series of rockets attacked on u.s. forces in iraq.

next month is the 10th anniversary of the syrian civil war. the u.s. intelligence report is expected to say saudi arabia approved the killing of washington post killing of jamal khashoggi. a source says it may be declassified as soon as today. he says he expects symbolic responsibility as the de facto ruler. mitch mcconnell said he would support donald trump again if he is the republican party's nominee for president in 2024. his remarks or an about-face from his comments less than two weeks ago. he gave a speech in the senate, saying trump was practically and morally responsible for the attack on the capital january 6. global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. anna? anna: thank you very much, laura wright in london.

as well passed a major threshold with half of its population receiving at least one covid vaccine dose. the country's health minister spoke to bloomberg yesterday about milestone. >> i'm really proud to say that, as we speak, we are crossing the line of 50% of the general it's really possible -- is really population. -- israeli population. understanding we are a very small market, the moment companies will have seen, they will look in her direction. we started early. the prime minister was actively involved in crucial stasis -- stages and trying to negotiate the best age possible. and our medical teams came into action in an incredible way. the results are, in the two

months we've reached 2% of the general population, and right now we don't have permission from pfizer to vaccinate kids under the age of 16. so, i think it is a very impressive result. >> have you had any surprises up until this point? >> well, first of all, there's the psychological aspect we just started talking about. definitely, there's a sigh of relief that comes a little bit prematurely. people don't understand why, if they've already been vaccinated, they still have to wear mask baseds, still have to masks, still --, masks, still have to social distancing. the psychological aspect is not easy. but there is also, i think, in terms of surprise of effects,

there is something we have to keep in mind. the vaccine is very effective. we have the research that shows the effectiveness. if we are talking about 100 people, all of them vaccinated in a certain event, five or six are surely not reacting to the vaccine. so, the danger is always there and that's what we're trying to explain to people. anna: really interesting there, the thoughts on the forefront of the vaccine rollout. coming up on the program, we are 42 minutes into the trading session. we'll look at some of the biggest movers, some of the overall themes dominating the markets, perhaps overwriting the earnings story. we're paring back some of the losses as u.s. futures turn increasingly positive. this is bloomberg. ♪

anna: welcome back to the european market open. decreasingly negative as european futures turn more positive. with the a breaking headline. this relates -- we've got a breaking headline. this relates to a vehicle in lmh, emerging high-growth enterprises. the focus of the news today is el capitan has acquired a majority of birkenstocks,

according to the handle splat over in germany. we're flashing across the bloomberg, a comfortable footwear is perhaps all the rage during a pandemic. what's going on with the markets, joining us is bloomberg's dani burger. dani: deals wait for no selloffs. star at off on a positive note, part of the reason we're able to see markets turn around, is because broadcast are being bid up. utilities one of the few sectors to be in the green today, along with health care. they are more safety plays, but when you think about a bond proxy, you think of something and although rate environment, getting support from ecb members, saying there's more, left, that they need -- more ammo left, that they need to step in. one of the ones falling, anything tied to some of the resources. miners falling, oil and gas,

copper, basic resources company down nearly 2%. we're looking at some of the super cycle commodity trades coming off higher yields, giving investors an opportunity to rethink the past few months of that buy everything rally. one sector that's turned around, but still in the red is tech. if you want to dive into the factors that are moving momentum, the worst-performing factor in the european session. that's why we see tech to poorly. it is the reversal of that buy everything. i want to get a quick look on the macro picture. one of the important parts of the story is the fact that in -- that 10 year yields in europe

are starting to sell off. some of the basic resource companies are taking a hit. copper has been on fire. 2% decline doesn't do that much to dent the rally it's been on. we look at the pound. the dollar is very strong. that's the one thing able to get a bid in the bloodbath of trading. we're looking at the risky currencies and commodity currencies trading weaker and today's session -- in today's session. anna: thank you, dani burger. she mentioned the trading of markets. there have been dominance. we see bunds moving with treasuries. is that because of the worries from the ecb and the expression of "we can do more to limit the gains in yields," or is it the treasury move?

let's get a bloomberg business flash. here's laura wright. laura: thanks, anna. airbnb's quarterly revenue is blitzing expectations as the firm benefits from travelers choosing vacation rentals rather than hotels. the company isn't giving a financial forecast and is cautious about 2021. its stock is up over 160% since its blockbuster ipo late last year, giving it a valuation of more than $100 billion. following on from that technology company, tiktok is agreeing to pay $92 million to settle privacy lawsuits that claim the app illegally recorded facial scans of users and shared private data with third parties. in addition, the deal requires tiktok to initiate a new privacy compliance training program. the agreement still has to be approved by a chicago judge. twitter is unveiling the first details of its subscription model. it will let users charge for access to exclusive content to allow high-profile users to make money on the social network. these so-called super follows

will likely come out sometime this year. it's part of twitter's efforts to open up new sources of revenue. that your bloomberg. anna: coming up, 50 minutes into the trading day, we look at the big moves in the market. it's been an exhausting market, off the session lows, paring back earlier losses, stoxx 600 now down by just .5% after down for more than 1%. u.s. futures now point higher. this is bloomberg. ♪

anna: welcome back to the european market open. 53 minutes into the trading session, stocks are negative, but not as negative as they were. so, the global stocks selloff is easing, that after the global bond selloff eased. markets have been digesting the spy in yields and the impact across asset classes. here's what we heard from some of our guests. >> this is the bond market essentially telling us that a boom is coming in real growth in the country, and we're not priced properly. >> rates are relative to the world and we

must consider japan and germany cannot be at zero in the u.s. go to 6%. >> we're selling off because of optimism for growth. i don't think it's concern of inflation as much as the fed may not thread this needle. >> some of what we're seeing right now is a short list play, and longer-term lives on sentiment. it's underlying markets and will allow markets to trend higher. >> this is volatility, amplified by retail volatilities, but part of the repricing in this type of market cycle. we think it should be patiently look through this. >> we are very close to the end of this and it suggests real opportunity in some of the segments of the market that have been hit hardest the last week or so. anna: some of the voices we've been hearing on this subject. joining us now is our markets live editor. it stood out to me the

soundbites that we put together, coming before we saw stability in bond markets this morning, most people sounding the alarm, but many sounding quite relaxed about what we were seeing, thinking it would be temporary. is it over, i suppose, is my question? >> yeah, look, i think you were exactly right earlier in saying the bond market that was the first to ease this morning, bunds were the first to catch a little bit of a bid early on in this session. it is friday and i think nobody wants to put on a big position before the weekend, and make big allocations before the weekend. the saying this is all over is too soon. traders have been conditioned to buy the dip, but this feels a little scary. we'll see. for now, things have calmed down. anna: take a breather for this

stage of your friday. what does this mean for your? we were talking to iain earlier in the program, and he says perhaps this is more alarming for europe. we've seen philip lane pushing back pushing back -- as about schnabel pushing back. and we have seen movement in the bund yields, as you suggest. eddie: yeah, there's a great quote from a clinton advisor from a few years back, who says if he comes back from the dead, if he was to be reincarnated, he wants to be reincarnated by the bond market because the bond market scares everybody. we've seen that here and it's doubly true for europe. europe is still struggling with poor vaccinations, low vaccination rates compared compared to other places. and it doesn't have the growth story. if we see that spike in yields, i think europe will be the

epicenter of the selloff. anna: we're all a little bit scared by the bond markets. eddie, even if it's not scary as it is this morning as the last couple days. that is it for a busy european market open. surveillance: early edition is up next. ♪

>> looking at bonds right now, that asset class has done its thing. what is next? >> manufacturing in the eu is actually going to eu supplies. >> the agreement that we have with china is the agreement that we have, and there are promises that china may that china needs to deliver on. >> this is "bloomberg surveillance: early edition," with francine lacqua. francine: good morning, everyone, and welcome to