Stocks and bonds telling off after u. S. Inflation came up for a third time in a row. Next up, its all about the ecb. Rate cut bets getting paired. Volatility surges in the euro. We are live in frankfurt. Oil back in focus as the United States warns of imminent strikes on israel by iran. Negotiations on a cease fire are ongoing. Quick check on the markets as we digest the geopolitics and Monetary Policy. Futures, a little bit of outperformance in europe. I say this with a wagon of caution here. Youre a stoxx 50 futures unchanged after a major selloff in the state. Europe also outperformed in yesterdays session. How much of that is a reflection of what we may hear at the ecb today . Things seem virtually unchanged. 5208 on those s p contracts. Lets talk about the cross as i picture as well. The bond market is fascinating here. Weve crossed 4. 5 on the 10 year yield. You are seeing a bid into bonds this morning. Again, a move above 4. 5 percent. 20 basis point move in just one session. Treasury auction, fomc minutes. We will dive into the details shortly. The currency readthrough is interesting. 107 on eurodollar. Anticipation of those potential cuts coming from the ecb. Cable seeing weakness. Virtually unchanged this morning. Its a reflection of what you are seeing in the yields picture. Asian markets, the first to digest what happened in the u. S. Session. David and glass joins us from hong kong. This is wild. Walk us through the ripple effects in the aipac region. David we are six hours into the session now. Just for some context. We did open week across the board. Since that point, weve started to reverse some of the earlier weakness. At these levels, we are doing ok which goes to show from an equity market perspective, we might be able to shake off these cobwebs in a couple of hours. Now, i cant say the same thing when you look at your other the bond markets. All you have to do is look at the bond markets. You will feel much better. These yields we are seeing across the asiapacific. We can talk about currencies in a moment. Thats really where you are feeling the pain right now, across the sovereigns. You dont normally see that. Kriti the global bond volatility story having ripple effects around the world. It has ripple effects into the dollar and what it means for the currency story. The 10 year, not the only one thats higher. Talk to us about the yen here. David thats interesting. We woke up in asia with the yen above 153. As you can see, weve glided lower as far as dollaryen is concerned. If you look at the yen against other peers, the yen is stronger against the likes of the euro, the pound for example. In some ways, the threat of intervention is on top of mind of traders. Some language coming through this morning out of the japanese official. Just to recap some of these lines. Recent moves have been rapids. Moves from the start of the year have been significant. The benefits of a weekend have been decreasing. The tone and terms that are coming out of japan are slightly firmer in terms of tone. Weve yet to hear the word bull because that tends to indicate that things have escalated as far as the Warning System is concerned. It has still been diplomatic but traders are paying attention to that. That being said, rate differentials will still push the yen to where it is right now. Hsbc came out early this morning to mention that as well. Theyve revised lower some of their forecasts for asia fx because of the cpi print that came out of the u. S. Kriti its fascinating that we are talking about what those levels to watch our. There was a consensus that it would be around 152. These Technical Levels seem to mean Different Things to different people. That doesnt take into account some of the other cross factors you are seeing from china, korea. Lets zero in on china. What we know there, in the context of inflation . Is china exporting deflation to the rest of the world . David they could. It goes to show, we were having this conversation earlier on within economist. The fact that you are getting ppi came in at 2. 8 . Its the 17th or 18th straight month that weve seen a negative print there. That tells me theres idle capacity in the industrial sector. One way china is able to move the needle in growth is exports and excess capacity. That goes into the deflation conversation. This is interesting because the cpi report came out a few hours ago. Both were on opposite sides of the spectrum but both told the same story. An inflation number thats actually bad for risk assets. 1 on cpi missed every single forecast with the exception of one. Virtually no inflation, consumer inflation in china. The pboc had to come out because of the Dollar Strength with record support as far as the daily midpoint is concerned. All that being said, you look at the economics, what the traders are doing, i will end with this. Its actually getting cheaper and cheaper to short the chinese currency. The incentives are there. Some state banks sold dollars in large amounts thursday morning at the 72350 level to alleviate some of the pressure coming through in the chinese currency. Back to you. Kriti certainly a lot to digest there. Thank you so much for walking us through those ripple effects we are keeping a close eye on. Lets zero in to the root cause. Its about the cpi report. Now the third one in a row. We will break it all down with jail. Hot report once, shame on me. Hot report twice, shame on you. What does the third time mean . How is the fed interpreting this . Is it still a soft landing story . Jill look, this one is really concerning. Look, we could pretty much discount january and february as saying, there is seasonal factors that are playing into this harder than expected print. People were expecting things to cool down by march. Thats really not the picture that you are seeing. You saw arises in rent and transportation in particular that really point to this issue. Its been hard to stick to a disinflationary trend and we are not seeing things come down in the way you would want to to keep the fed on track for its 2 annual targets. At this point, weve had some analysts saying you have to prepare for a world in which 3 is where we are trending toward instead. Looking at some of those core figures in particular, 0. 4 gain , that number for march matching what we saw at a time where you wanted to see it stick to a deflationary trend. Thats not a fantastic picture for the fed to be looking at right now. It drives home the message that we have to be more patient than we thought we were going to be even just a few months ago. Its interesting that we are talking about that as well. If you look at the data set, theres been a lot of questions. We are just waiting for the labor to market labor market is often up. This is a housing story at the core of it. How quickly does housing get fixed . Jill exactly. Thats the problem here. When you are looking at these rent costs, this is what weve been talking about in terms of keeping a look at those rent costs. When you arent seeing any of that tapered on it all, thats where you want to see that disinflationary trend pull through to pull you to that annual target. If you are not getting there, its going to take a lot longer for inflation to come down. It seems like theres not a whole lot of triggers that are really pulling down on those figures either. Combine that with the other strong data that weve seen out of the u. S. Economy recently. Nonfarm payrolls last week. Other wage data that shows a lot of that resilience in the labor market get this combines for a totality that tells us the u. S. Economy is incredibly resilient and its really changing the picture on when the fed could actually start cutting rates. Kriti the fed has to be an expert in the American Consumer psyche. What does the wealth effect mean for things like housing . Its not just about wages anymore. Thank you so much for walking us through that crucial story. Having ripple effects around the world. Lets talk about the european cycle, the other major mover thats coming up in the next 24 hours, the ecb. We are live on the scene from frankfurt. Lizzy burden joining us from there. Is this the moment that the ecb front runs the fed . Lizzie only one of our 62 economists surveyed reckons that today is the day the ecb is going to fire the starting got on cuts. You are right. The u. S. Cpi report has rocked even ecb bets for a june cut. That was fully priced this time last week and now its only an 80 chance in the eyes of markets. What difference does a month or to make, you might ask . If they go too soon, before the fed, it risks eurodollar parity. So that could feedback into eurozone inflation. On the other hand, the risk of going too late this is a different picture in the euro area than the u. S. It could tip it into recession. Even the most hawkish member of the governing council has warned of the dangers of holding rates too high for too long. Because indeed, here you havent seen any growth for about a year and a half compared to the u. S. Where youve seen that 3 growth last year. Thats a start contrast. Today, the expectation is that Christine Lagarde will telegraph a june cut. The focus in the press conference very much on the path beyond that and the divergence between the ecb and the fed. Think about it. If you get trump in the white house, that could stoke u. S. Inflation and leave the euro area in a tight spot. Kriti all right, lizzy burden in frankfurt. Thank you for bringing us that crucial context. She will be live for the ecb policy decision at 1 15 p. M. U. K. Time, followed by what Christine Lagarde has to say in that News Conference just a halfhour later. We will be speaking to Evelyn Herrmann later in the show. That conversation coming up in just about 15 minutes time. A lot to digest there, not in terms of european policy but what the ripple effects are further currency as well. We are keeping an eye on the treasury yield and what that means for the fx story but also brent crude, 90 per barrel off of some of the job little tensions. We go there next. Stick with us. This is bloomberg. Kriti the u. S. Believes major strikes by iran could happen within just days. Iran has threatened retaliation for its attack on a diplomatic compound in damascus. Roslyn matheson joins me on set. Lets talk about the threat to begin with. How significant is it . Is this really that unexpected to begin with . Roselyn they said they had to retaliate on this attack. If youd the attack as an assault on its own soil. Because of the nature of it. It has been saying its going to do something. Now it has to do something. The question is what. We know now that the u. S. Intelligence assessment of the u. S. And its allies is that the retaliation could take a range of forms. It could be as unusual and strong as a direct missile strike by iran on israeli soil. That would be the big option. It could also take the form of going through his proxies in the region, has blood or some such. It is significant enough that the u. S. Is willing to share it and publicize it which shows the level of concern that iran is going to do something. Weve been expecting it for days. The question is what. Its very interesting to see the intelligence showing that a missile strike from iran on israel is possibly on the table. Kriti its interesting that we are talking about this from a Financial Network perspective. This is exactly what the oil markets are worried about, what the ripple effects are. What does this mean for a rainy an output on oil for the rest of the market . Its an inflationary story at the core of it. We have to talk about the negotiations with hamas on the hostages. Theres calls for ceasefires from the likes of President Biden and other leaders around the world. Where are we on those negotiations . Roslyn its interesting. With oil, the war in gaza has been going on for six months. The disruptions to red sea shipping has been going on. Oil hasnt reacted to that. After the strike on the uranian compound, oil did react because now people are saying, this conflict could spread. This could become much more widespread in the region. It could pull in iran, the u. S. The new got disruptions to supply, a big effect on the global economy. People are worried about the knock on effect. They are still worried about the conflict inside gaza. We still dont have a cease fire. Israel has pulled some of its troops back to prepare for an assault on rafah. A lot of that depends on whether they can get talks to get a cease fire. That depends on the state of the hostages. What we can see from the reporting in the New York Times is that hamas is saying that they dont know where the hostages are or the state of many of them and they cant guarantee that. Thats a precondition that israel has said it wants met in order to agree to a ceasefire. Kriti as the pressure around israels actions is ramping up, the spanish Prime Minister not mincing words when it comes to how he feels about the situation. Thank you so much for walking us through the crucial story in the middle east. I want to stick with the geopolitics. The u. S. And japan have unveiled plans to deepen their security ties, coming as joe biden hosted japanese Prime Minister for an official visit aimed at countering china. I want to bring in John Herskovitz this morning. Pleasure to have you on the program. Talk to us about this agreement. Talk to us about the significance of it. This is historic in a lot of ways but why . John this really resets the u. S. And Japan Security Alliance which states back decades. It changes the way the two militaries can operate jointly in japan. Its called Operational Command. It is Something Like in south korea where the u. S. And south Korean Forces can work as one unit under a joint command. At present, u. S. Forces in japan have a command structure that is set up with indo Pacific Command in hawaii. What this too would integrate the u. S. Command into japanese command and have the two militaries be able to Work Together to counter any threat and bring the two forces into much greater alignment. So thats the big picture. Theres also a lot of other parts of that which include information sharing, training exercises. But the basic alliance between the u. S. And japan will undergo this Operational Command structure change. Kriti all right, John Herskovitz there talking to us about the significance of this military alliance at a time when the philippines and china have been ramping up tensions there. How much of this has her broader broader regional effect. Coming up, we go to south africa. The rand tumbles as support for new poll sows shows support for north africa plunging. We hear from the leader of the opposition yet five party. More for marks elusive interview next. This is bloomberg. Kriti welcome back to bloomberg daybreak europe. Breaking headlines in the baking space. Socgen selling their Equipment Finance arm to group bpce for 1. 1 billion euros. This is important because bpce was at one point the fourth largest bank in france. Socgen seeing a positive of 25 basis points impact on theres their ratio from the deal. It is meant to occur in the First Quarter of 2025. In terms of the Equipment Finance center, this group will take over. This looks ultimately like a cash story. Does the additional cast cash affect the ratio and help the stock price at the open . We will keep an eye on that in 90 minutes. Onto one of our top stories coming out of africa. The rand fell after an opinion poll showed plunging support for the Ruling African National congress party. It suggests that the amc, which has governed south africa for 30 years, may garner 37 in the election at the end of may. Jennifer zabasajja joins us from johannesburg. Walk us through this currency reaction. What are they seeing . Jennifer this is significant. The rand was at its best levels since 2024. The drop that we saw on wednesday had halted a threeday rally for the rand. As you mentioned, this is really coming after this opinion poll that is showing that the amc is not going to get this 50 majority that weve been talking about for the past few weeks but is actually going to drop below 50 . For many investors, this continues to spell more uncertainty. What does that actually look like . That would mean potentially we are gearing up for a coalition government. It really depends on which parties that you are talking about, what that could mean for investors. So we are seeing the rand right now. Pulling back just a bit slightly. But it just spells even more uncertainty. We got a little bit of that even when we spoke with the eff party leader. Its one of the biggest parties in south africa. It is led by julius milana. A very bombastic, charismatic person but he was even saying his expectation and his polls are showing that the amc will likely not get 40 . Written really, investors are playing paying close attention to what this means for the election. Kriti you spoke with the leader of the eff party yesterday. Talk to us about his view about his chances in the election. Jennifer its important to put into context to he has. He used to work as the anc youth leader. He works closely with the former president and has gained more and more popularity over the last few years. As i mentioned, its one of the main parties that is contesting in this election. Listen to what he told us about his former boss who is now able to run in the election. Take a listen. Quacks are base has never been based on the basis of the lapse of supporting jacob. It was not based on this support being threatened by him. Weve had success in harnessing all provinces and we are the only organization after the anc that has membership and presence in almost all municipalities in south africa and existing in every corner of south africa. We welcome the president. Let him come. He knows himself by now. Its not easy to form a political party. Jennifer yeah. So that was just part of what he was telling us. Its important to note, for investors, weve done a few polls internally and shown that investors are very wary about a potential eff anc coalition. Eff has been for land expropriation without competition. They want to nationalize the minds. Also the reserve bank. This is a party that has really gained a lot of popularity in the country. The question is, what does it look like Going Forward . What does a potential Coalition Look Like with some of these parties . Kriti thank you so much for bringing the story to us. She will be entering the south african Election Special edition month. You can catch that on may 3. Coming up, we speak to evelyn hermon. Its all about the ecb. That conversation coming up shortly. Stick with us. This is bloomberg. Kriti good morning. Welcome to daybreak era. Lets get to the top stories that set your agenda. U. S. Inflation came in hot for the third time in a row. Traders testing key levels from a 10 year treasury yield all the weight of the japanese yen. We dive into the market reaction. Next up, its all about the ecb. The overnight volatility surging in the euro. We are live in frankfurt on decision day. Oil back in focus after the u. S. Warns of imminent strikes on israel by iran or its proxies. Negotiations on the ceasefire and the potential prisoner swap are ongoing. A quick check on the markets as we digest the headlines. When you look at the stock market, a 1 selloff in u. S. Equities not having much of a readthrough when you look at whats going on in the european session. Youre a stoxx 50 futures virtually unchanged. They were the outperformer globally in the last one he for hours. Ftse 100 is the real story. We will dive into what that actually looks like in just 90 minutes. S p futures unchanged. You are not saying a major bid despite the selloff yesterday. For me, is the cross asset story. Thats where all the action is, especially when it comes to the bond market. Just at the beginning of the year, more of the strategists, investors that we spoke to expected 3. 5 on the 10 year before we got a 4. 5. The fact that weve gone to 4. 5 before 3. 5 is the contrarian view. Do we had 5 before seeing that cut actually take place . That puts the focus on the ecb. Perhaps i thats why you are seeing weakness in the euro. Partially offsetting that cpi action as well. Continuing weakness in cable as well. Brent crude not doing a lot. 90 per barrel. Geopolitical tensions, how inflationary are they . We will digest that throughout the show. It comes back to the cpi story. You would think it is commodity driven. Plot twist. None of the above. Its housing driven, airlines driven. Mark cranford is all over the story. Pleasure to have you on the program. This is a concern in terms of being data dependent. In terms of transitory inflation. Too hot Inflation Reports could be counted off as a oneoff. Can a third hot Inflation Report be thrown to the side by the markets . Mark no. Its not just a problem for the u. S. Its a problem globally. You can see the read across. Theres a bit of a limited read across in some assets. If you look across global bond markets including asia today, the reaction is very strong. Theres a backup and yields everywhere. Australia, japan, across the rest of the asian region. You will see more as the European Markets begin their day shortly. You can see that it means that Central Banks everywhere are probably now having to reassess what they are going to do with their own right decisions in relation to the fact that the fed probably has to go slower than the dot suggests. In japan, we are seeing the tenure japanese bonds having their worst day so far this year. Theres no sign yet that the bank of japan is coming into defend the market which is an unusual thing. They are saying to themselves, we dont know where the peak in treasury yields is going to be so theres no point in us wasting our bullets just yet in stopping the japanese market as there could be more rate hikes to come. You can see the read across is pretty strong in bond markets. Fx markets have been more strategy steady as well. Chinese currency is getting close to the top of the trading band. Dollaryen is not as high as it was yesterday but is not far away. We havent yet seen any actual intervention. Plenty of verbal intervention today. Japanese authorities are confirmed concerned about yen weakness. Ripple effects are still going through. Obviously there will be more to come today because you have the European Central bank coming up. Theyve got major decisions in terms of how far they are going to be affected by what they are seeing in the cpi report as well. Kriti mark ran walking us through that readthrough. Thank you so much for talking us through the ripple effects. He was there talking about dollaryen. We are keeping a close eye on eurodollar as well. How much of that is a cpi story as opposed to caution ahead of the ecb . We are live in frankfurt. Lizzie borden joins us. Talk to us about some of the risks that come with front running the federal reserve. Lizzy well, if the ecb goes before the fed, and it could, it reminds us that it has its own mind. Finland saying that the ecb is not the First Federal reserve district. Then theres the risk of eurodollar parity. And then the risk that that feeds back into euro area inflation. Economists say, this is only ever going to be a temporary divergence. It isnt something that the ecb is talking about at the moment. Their worries about Exchange Rate volatility this will be a focus when we listen to Christine Lagarde at the press conference after the decision. You need to listen out for clues as to the path beyond june. The expectation is very much that the cuts are not going to start today. June is the date that they will begin. Kriti so what are they watching . When we talk about these labor market concerns around the world , the ecb has a different mandate than a lot of these other Central Banks. What is the inflation canary in the coal mine when it comes to this region . Lizzy you are bang on to talk about jobs and wage growth. Inflation as a whole has been retreating towards the 2 target. It looks like to some policymakers it could be below the 2 target by the summer. If you break that down, Services Inflation has been persistent. Its been around the 4 mark since november. Within that, wage growth is the concern. Christine lagarde herself has flagged it and shes pointed to the june data as being really crucial and may be a reason to wait until june. Service is the thorn on the side. You had weak growth. This is the difference between euro area picture and the u. S. Picture. In the euro area, the economy has barely grown for the past 18 months. Whereas the u. S. Has grown 3 last year. So its a stark contrast. Even the most hawkish member of the governing council has talked about the perils of waiting too long. Of france has talked about the need for an insurance policy against the wrister growth. Risk to growth. This is why its a twosided risk. Kriti lizzy burden in frankfurt, thank you for previewing that decision. As we say, we are watching the currency picture very closely. I want to get more analysis and bring in a true expert, evelyn hermon from bank of america global research. A pleasure to have you on the program. Thank you for waking up early for us. Talk to us about this readthrough. Lizzie was talking about the risks of the ecb frontloading the federal reserve. Today may be the day for a cut. If not today, when . Mark evelyn they did flagged very clearly that they want to see the wage data over the coming weeks and months. They want to see inflation move lower to target. They seem to have zoomed in on june. June is the moment for the ecb to start the cutting cycle. Theyve had a shallow cutting cycle in mind then. April is too early. June will be the moment when they will move. Calendarwise, that would be before the fed anyway. One thing we will find out is that the ecb is facing a very different economy. We have a lot more disinflation in the euro area. We have a weaker economy. The labor market is not as tight as the on implement rate suggests. All that matters for the central bank. That in mind, the ecb will not have much of a choice to engage into a cutting cycle even if the fed were to delay their cutting cycle. Weve seen divergence in the past. If you think back to 2015, the fed started hikes. The ecb actually cut again and then launched a qe program. We did have cycles where the two Central Banks have diverged meaningfully. Kriti we are talking about that divergence story and how you factor it into the markets, price it into the markets even. If you do see the front running of the ecb ahead of the federal reserve, you start to see real weakness in eurodollar. The case for parity is based on this cut story in its entirety. Is the ecb paying attention to what the euro is doing . Evelyn its part of it. The Exchange Rate does enter the inflation profile. From that perspective, i wont say that it doesnt matter at all. It cant be their primary concern. We are facing an economy, from a domestic perspective, that cannot deliver 2 inflation. We are heading towards and undershooting 2025. The extremes rate will be secondorder. From that perspective, the ecb needs to look at the domestic economy to do whats right here and the Exchange Rate will be a factor to that one. Some of the hawks, if we were to see substantial euro weakness, was starting to talk about the Exchange Rate again. From a Monetary Policy perspective, you need to look at your domestic economy. That one is sufficiently weaken the euro area to require these rate cuts. Kriti in terms of what they are factoring in, how much does Monetary Policy even matter when you have this fiscal impulse yvonne impulse . Does monetary matter when so much of the fiscal is propping up some of these economies that are most at risk . Evelyn Monetary Policy does matter. We did see it. Inflation is coming down. Weve seen Monetary Policy very fast actually in terms of lending rates to the economy. In terms of fiscal policy, you have support from programs like ngu but you dont get more support from a year on year comparison. That hasnt prevented the euro area from having we growth. So Monetary Policy does matter. It does matter for funding costs. Weve seen credit impulse. A change in new lending to the economy has basically hit zero. In the bank lending survey, weve seen that the appetite affirms of ferns has reduced even further on the back of higher founding costs. All of that matters for capex and the economy. Monetary policy still matters. Fiscal policy has relatively been supportive in the past. Will let matter Going Forward . We can open the entire debate around fiscal rules. If we are heading into the trajectory in which public finances in the euro area will be going on an adjustment path, even if its relatively shallow. We will get less support from fiscal policy, small corrections. What happens if we have to face the next crisis and Monetary Policy would be in the focus again . We have evidence Monetary Policy is working. The policy mix has been supportive in the euro area until the hiking cycle started to kick in. We would argue at the moment that we are in a very restrictive environment from a policy mix perspective. Kriti one of the criticisms of the ecb at the moment, for the folks who are saying a cut is in for the ecb, is that they are catering more to the German Economy than to perhaps the periphery. Spain, italy, greece. Thats actually outperforming at the moment. What do you say to that . That the ecb is catering to the sick man of europe. Evelyn i would question that a little bit because weve seen disinflation broadbased in the euro area. You can have strong growth. You can have decent growth rates. Yet you can have inflation dynamics that are insufficient. That is something we have in common across the euro area. Weve seen wage growth coming lower. In very many economies. Germany is standing out. From that perspective, i would not argue the ecb is catering to the German Economy. If anything, weve had substantial economic weakness in the german it economy. Its one where the National Central bank has been pushing back against rate cuts for a very long time. That criticism at this stage would be overdone. Is the ecb waiting too long for rate cuts . We do see inflation coming lower. We see inflation coming lower everywhere. Thats the part the ecb needs to react to because we are currently on a trajectory whereby and undershooting in 2025 for us is the most likely outcome. Kriti we have to leave it there. I could talk to you for hours. I think you so much for making the time this morning. Reminder that we will bring you live coverage of the ecb policy decision at 1 15 p. M. U. K. Time, followed by Christine Lagardes News Conference just a halfhour later. 107 on eurodollar as we approach that decision. The swiss government unveils sweeping measures to reform Bank Oversight and takes aim at ubs chief 60 million salary. That story next. This is bloomberg. Kriti welcome back to bloomberg daybreak europe. We go to the Swiss Banking sector yes. Ubs faces an increase in regulatory Capital Requirements as the swiss government unveils sweeping reforms for the vanke Banking Sector following the collapse of Credit Suisse. Listen to what the finance minister had to say. The highest goal of the federal council is to protect the taxpayers and the economy. What happened with Credit Suisse but must not prevented so repeat itself. It becomes a threat to the swiss economy. Regarding bonuses and management, those responsible must be held accountable. That means it must be possible to cancel bonuses. It must be possible to recall them retroactively. This is not about punishment but prevention. Kriti pleasure to have you on the program. Talk to us about the Swiss Banking reform. Whats in it . The swiss government started to look at it very specifically which came up during the Credit Suisse demise. Which is the capital backing of foreign subsidiaries. You have banks like ubs or Credit Suisse at the time who have a Large International president s, have subsidiaries in the u. S. And u. K. Under the current rules, ubs only has to back them with 60 of their capital. This was government said very specifically that they want to increase this. The problem i Credit Suisse was that during the crisis, the sale of these foreign units which would have helped the Parent Company was essentially out of the question because that would have essentially lowered their capital ratio. This is what they want to look at. They said that they are aiming for a substantial increase of Capital Requirements also on the group level for ubs. Kriti the reform also has a lot to say about what it can and cant do with the former ceo on a couple of weeks ago around what the regulation authorities should be able to do. Talk to us about to what extent his hands are tied or not. Yes. They are looking at holding road managers accountable. What theyve said, what the management has said is, we talked to them for more than a year and they just wouldnt listen to a spear get they just tried to delay the process. Credit suisse executives told them, they need to make changes but they didnt listen to us. What they are going for is a socalled senior manager review. This is something which is in place in other jurisdictions, in the u. K. Or hong kong. It essentially says that in advance, it needs to be laid down what manager is responsible for what. So if there is road behavior or a failure in a certain unit, then we know this manager is the accountable one that needs to be punished, held accountable, whatever that might be. However, they are not looking at penalties. They are not going to slap fines on individual managers. This is the point, also not on banks. The possibility to fine banks is more or less standard. But the swiss financial regulator will also in the future not get this power. The finance minister has said that they are still looking at it. It is something which could come in the future. Its not totally off the table. For now, they are saying if you slap fines on lenders, thats not going to help. The bank is going to pay the fine but its not going to change their behavior. They are really looking at holding managers accountable with the senior manager regime. They have some weapons against them, short of fines. For example, they could ban them from their jobs. Like, you cant working the work in the Banking Industry anymore. This is what they are looking at. They especially want to be able to establish a clear line of accountability. Thats at the core of the new powers for the financial regulators. Kriti we will see how far they get especially when it comes to targeting salaries and penalties as well. We have to leave it there. Thank you so much for that crucial context around the Swiss Banking center. Plenty more ahead. This is bloomberg. You have to take seriously the possibility that the next great move will be upwards rather than downwards. And anything could happen. Markets could crash. Indicators could turn down. But on current facts, a rate cut in june seems to me would be a dangerous and egregious error. Kriti a dangerous and egregious error. Some big words coming out of Larry Summers who says, there may still be a case for a rate hike on the table. Not just pausing or pushing cuts out but a rate hike altogether. Heres what the markets are doing. They are taking the comments in stride. This is just for june. Remember the start of the year, we were expect and seven rate cuts. Those odds have diminished more and more. That doesnt just speak to the hike story. What does the ecb do today . Is it more of a reaction in the cpi numbers . Volatility is crucial when we talk about it being at its highest back to march of 2023. Those all in focus as we get closer to the ecb decision. We also have a supreme amount of great guests as well. The Telecom Italia ceo will join us in the 9 00 hour. Plenty to digest. Markets today is up next. We break down the market stories of the day. We will get your day going and prepare you for the European Market open. Stick with us. This is bloomberg. Good morning from london. Asian stocks and bonds are high after u. S. Invasion. The end studies. The