The single currency crosses the key level for the first time in two years. Philip lane says it matters for monetary policy. Andy Swift Financial regulators and the swiss financial of creditart suisse over spying on former employees. Let us get some breaking news for you. Front, u. K. Housing august house prices rising by 3. 7 year on year. This is according to nationwide. 2 on the increase of month. The month on month figure is 2 . The year on year figure is 3. 7 . Very strong numbers follow other measures of stress. We have a right move for july. Know the reason behind all of this. There was pentup demand because of a lockdown. There was a tax incentive put in place. And perhaps a little bit of incentive to move to quiet, rural locations. All of that lifting housing demand. Solid numbers nationwide this morning. Lets get to the broader picture around markets, have a look at futures. For European Equity markets, fairly flat. If you excuse exclude the ftse. The futures picture giving us something more positive. We are around 0. 7 . Futures, we u. S. 0. 4 pside there between and 0. 6 . We continue to grind higher. Having a look at whats going on through the asian session, this gives you a picture of how mixed we are. In terms of the overall move, asian equity markets have a bias to the upside. Australian equities you can see doing very nicely. Real moves in us trillion markets. We have the australian currency on the back foot. 0. 1 , the first recession since 1991 in australia. Something that will be talked about later in the program. Expectations as we grind higher globally in market around stimulus, ongoing support for Central Banks, all of those being still very much to the four along with the fight against coronavirus and the latest on the vaccine. We will get more through the program. Lets get the bloomberg first word news. Protestersfter two were fatally shot in kenosha, wisconsin, President Trump has visited the city. His trip came despite the objections of the city mayor and the state governor. The president did not meet the family of jacob blake, the man shot in the back by police. Pres. Trump you could take the people of kenosha that are not here and that you will not see and that are not protesting, but they want change also. They want law order. They want a great police force. They want people that are going to keep them safe where their houses are not broken into, where they are not raped and murdered. That is what they want. Australias economy contracted the most on record last quarter, confirming the nations first recession in almost 30 years. Gdp plunged 7 . A percentage point more than expected. Ongoing lockdown in melbourne, the nations second largest city. Shinzo abes righthand man is the leading candidate to replace him. It is a sign the nation will stick to his economic strategy. Suga is not ahead in opinion polls, but has support of key factions in the party. Willest will behol be held on september 14. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thanks very much for that. U. S. And european futures are climbing as investors take stock of gains. Global shares with yet another record. The euro is faltering after breaking above the 120 level yesterday. With bring in these themes laura cooper. Im not going to ask you how high numbers are going to go. There is much more nuance. An interesting question about where you find havens these days. The markets live team has been asking this question. Is there a better haven than the nasdaq . Explain to me how the nasdaq has come to be seen as a haven during these times. One of the reasons we have seen the nasdaq taking on this narrative that it is a haven is just because it has outperformed the rest of the market during this period of uncertainty. Are companies that are outperforming, they are turning profits, they are cash rich. They are benefiting from this overall period of Global Health climate. This we canental in attribute to acronyms. Fear of missing out. There is no other alternative. You really have to participate in these secular growers given the backdrop. Some exposure to cyclicals at this stage. Just the fact that when we look at traditional havens like bonds that are negative yielding distorted by central bank intervention, clearly at this stage it is no wonder we are seeing these tech stocks continue to have this relentless rally. If we thought things looked uncertain now, it seems markets are factoring a great deal of uncertainty and volatility towards november. Effective campaigning going on already. When we look at what it is factoring in for september, october, november, that time horizon, we see interesting patterns on the amount of volatility anticipated. Absolutely. Something quite interesting is that we are seeing this water relentless rally in stocks despite looming risks being priced into future volatility. It is interesting that the most expensive event risk on record is feeding into the contract when we look to october. That is quite interesting. We have not really seen this type of event risk command this type of premium before. It is clearly telling us markets expect some degree of fireworks. My colleague wrote on the blog yesterday that if we start to actually see premiums higher, that could be assigned markets are worried about the year 2000style uncertainty. That is when we had the bush gore decision go to the supreme court. The degree of uncertainty about that. Markets are anticipating that going forward. But those risks are not feeding into this broader equity rally at this stage. I suppose there are many lawyers of risk. Layers of risk. Remember 2016 at how the market changed assessment in terms of the what would be positive and what would not. We have seen the euro pushing point2 1. 2. Ne seen as a warning sign i supposed to investors. Is it that that moved the euro . What was your assessment . A combination of both. We did see that leading indicator of new orders reaching the highest since 2004, which is quite exceptional. We also saw this relentless rally in the euro most likely due to the pause. Terday we had the european euro area core inflation print at a record low. That shows how this currency strength is actually feeding into disinflationary pressure. That is clearly on the radar of the ecb. 10 to 20 basis points out that core inflation print. I think that is why we are seeing signs of caution coming from the ecb. It actually acts as a headwind to the recovery. At this stage, the fact Economic Data is beginning to roll over, the fact we are seeing Economic Activity as gauged by a highfrequency indicator begin tailwindsa lot of the that propelled the euro to the 7 rally year to date are starting to fade. We could potentially see this range bound trading before we see a catalyst notably higher. Anna thanks so much. Great to hear from you this morning. 10 minutes past 7 00 in london. Billing, september starts with serious corporate debt issuance in europe. Our next guest says the total is likely to fall short of previous years. We will speak with colin party. This is bloomberg. Mberg. Anna welcome back to the European Market open. 45 minutes or so to go until the start of the European Market equity session. The asian equity session has been moderately positive. European futures point to the upside. Here is laura wright. The switzerland financial regulator has open proceedings against Credit Suisse following the scandal that has damaged the banks reputation and led to the ousting of the former chief executive. Latest news marks the escalation of its involvement in the matter. Tesla is planning a share sale to sell as 5 billion in stock to help solidify its position as the Global Leader in electric cars as the worlds most valuable automaker is seeing surging demand from retail investors. Tesla is expanding new factories in germany and austin texas. Donald trump has again insisted any tiktok deal must pay compensation to the u. S. Federal government. He says the sale must be agreed by september 15 or the service will be shut down. It remains unclear how the u. S. Will collect compensation from any potential deal. That is your Bloomberg Business flash. Anna september has begun, true to its billing, as one of the busiest months of the year in credit markets with a batch of new deals coming forward. By the end of today, issuance will reach 6 billion euros market wide according to data compiled by bloomberg. Amidst the flurry of selling, the yield gap between investor grade and junk rated debt has narrowed to the lowest since early march. Investors are buying riskier assets in the hunt for yields. With the amount of supply you are seeing coming to market. Typically you tell us, other investors tell us september is a strong month. Some investors tactically have to raise money earlier on this year, i suppose. Have we seen the supply you might normally see in september cannibalized during the summer . I think we have. Good morning. Indeed, if you look at the u. S. Highyield market, august traditionally is very quiet. We normally have about 12 billion of u. S. Highyield in the month of august. In the month, we have 52 billion, a record for that month compared to any other year. The secondbiggest supply month we have had in u. S. Highyield after june of this year. We have a lot of supply coming into the market not just with highyield, but investmentgrade as well. A lot of that came through in the earlier parts of the year. Even against the backdrop of volatility, i think certain companies, a lot of companies were encouraged by the debt. They had access to the market. What they really wanted to build was a cash buffer to see to the economic concerns we are seeing now. All of those things came together. Q2had a phenomenal q1 and from a supply perspective. And indeed, august as well. New they hadanies to pile of cash buffers. Investors Screening Companies for the strength of their Balance Sheet and the amount of cash they were holding. Does that mean what is the strategy for this . Is it to go along on credit in general . I assume you have to be more granular even though you have Central Banks stepping in to keep rates low across the spectrum credit. I think that is right. We have an overweight bias to fixed income, primarily expressed through you mentioned the fundamentals. We look at Balance Sheets. We look at cash flow. Is the macro backdrop might be recovered. We dont know the pace of that. We do know it is going to be a fairly weak year overall. Growth will be around 3 for the year. It is not a market where you want to buy debt broadly. You do have areas of value. You have areas, we like investmentgrade, where given the week macro, you want to be up the quality curve. Youve also got direct buying by Central Banks. If there is weakness, that is capped. Even within investmentgrade, there are areas that we think make more sense, looking at more noncyclical names of tech, health care, we like banks as well. We like these names where we think weve got a good degree of visibility on cash flows and earnings. For the same reason, you know, we are still relatively cautious in those most more cyclical areas, retail, lodging, leisure, to give examples. Anna so those are the sector picks. Thinking broadly about how the recovery in the Global Economy fits the credit cycle, normally we have been talking about recovery from perhaps a more sustained downturn. This has been a quick, sharp downturn. We have conversations about recovery. Play into credit markets . We might still have peaks in unemployment ahead or trouble for consumers ahead. Wayare you working your through conflicting macro signals . It is difficult. We feel we have to have visibility before we are willing to take risk in the name. That involves the fundamentals of the name. At a very high level, with ,entral banks, the fed, the ecb that does give us some confidence. Is a slightly different picture. You have sensitivity to that. Where should we be taking risk now . Where are we still relatively cautious . We are looking at default increasing. Controlledeen fairly in the retelling energy space, within the highyield space. Pick up to they will an 8 rate. It is important toy into five where you think these risks are. Is trying to overlay the macro picture with the sector and individual fundamentals goingfied which names are to be ok, which names are going to come through this period. Downturn,s a further who has the cash flow strength . Who has the liquidity to see market volatility . Anna we will see if we get some sort of reckoning. Thank you very much. Stay with us. Colin purdie stays with us. Coming up, twin peaks. Bond watchers calling for steeper curves on both sides of the atlantic. Anna welcome back to the European Market open. Futures point modestly to the upside. Bond watchers calling for steeper curves on both sides of the atlantic. Toasury yields have risen levels last seen in early june. In europe, five banks have lined up recommendation for higher long dated rates. Is still with us. Would you go along with this trade . The idea you should position for steepeners, expecting to see a steeper curve, a higher longer dated rate . I would agree with that, exactly what you say in terms of the theoretical aspects. The fed particularly last week mentioned the fact i think the question that has to be answered around this trade is timing. When are we going to see inflation coming through . E saw the recent eurozone what has become fairly apparent is the nearterm impacts of this virus. U. S. , alook at the large point of inflation would be the job market, would be wage growth, seen as widely reported. The job market has come off quite significantly. We get is actually on the inflation side. Where is that going to come through . In the longer term, there is a lot of talk about fiscal programs. The size and scope of any fiscal problems, europe or the u. S. , are yet to be determined. It is more wait and see on that one based on what we have heard from Central Banks and others, that the trade does not make sense. Anna how do you factor in expectations around a vaccine and what that does to yields . There,o see progress comments from Anthony Fauci and others, if we see progress, do we still managed to keep this low Interest Rate environment . For the time being, the answer would be yes. There has been clear damage done to economies. I dont think anyone is going to move and route anytime soon. Central banks have been fairly explicit. The way we think about it is in terms of portfolios. We are fairly comfortable with investmentgrade credit. If you see a vaccine come through you are going to get positive momentum. You are going to get positivity through the market. In that environment, high yield will have a bigger part to play. Portfolios in that point in time. It would be very beneficial to a lot of companies. Thanks very much for joining us. In london. Coming up, trump in kenosha. The latest on the president s visit next. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Anna welcome back to the European Market open. Expect equity markets to be stronger at the start of trading. Lets take a look at the key events to focus on. Will be back facing off against the Opposition Leader keir starmer in parliament for the First Time Since july at 12 00 p. M. U. K. Time. Staying in the u. K. , ad 2 30, bank of england governor sorry, policymakers including the governor will testify before lawmakers. They will discuss monetary tools needed to fight the economic slump. The London Stock Exchange will announce the results of the latest quarterly review. The Media Company plunged this year. More on that story and the stickup of the stoxx 50 shakeup of the stoxx 50. Publish the latest beige book highlighting Economic Conditions in the u. S. Lets get a roundup of the latest news. The u. S. Economy urgently needs new stimulus to rebound from the Coronavirus Crisis according to Steven Mnuchin speaking to a house committee. Sources tell us he started a conversation with nancy pelosi amid stalled negotiations. He stopped short of offering a fresh proposal to break the deadlock. The pentagon is warning of chinas increasing nuclear capabilities. Its rapid nuclear bill that means the country is going to join russia and the u. S. In the ability to Deploy Nuclear weapons. According to an annual defense report, chinas progress upgrading its bombs should achieve this triad of delivery systems. Chinas Charm Offensive in europe may have backfired. The visit of the Chinese Foreign minister culminated in a Tense Exchange in berlin. He was confronted by his germany counterpart for saying the check Senate President would pay a heavy price for moving to taiwan. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thanks so much. Let us talk about what we are seeing in the morning calls from various banks. The euro is faltering after breaking through that 1. 20 to the dollar mark, the highest since 2018. It came after philip lane said the eurodollar rate does matter to the central bank. Some analysts see the single currency breaking lower. Others remain fairly bullish. Lets get into todays morning call with the dani burger. What are we hearing on the euro . We are definitely hearing both sides of the argument, which is maybe why we are seeing so much waffling on the euro itself. In the more bearish camp we have someone like scotia bank and analyst sean osborne point to fills comments and say we are finally getting philip lanes comments saying we are finally getting pushed back saying the euro depreciation matters for policy. Because of t