Policy that worked to a goldilocks economy. Nothing has pushed me away from that. They cultivate mining, you are welcome its daybreak morning daybreak europe. I got the last the as flight back from the anna with my bags. Politics is at the top of our agenda, look at the dollar rand. Rand accelerated, rallied by 1. 7 , it gave most of that back. It give a void. We saw the highest level on dollar rand since april 12. The volatility is fairly muted every this is the chart you want to keep an eye on. Why is it so muted . ,hat rally should continue emerging market currency. The carry trade will prevail. The fact that summa has avoided you are stillve, going to see a return to form. Thats what the track later on. Lowness as usual for the and higher Interest Rate environment would drive speculators that to this currency, that to dollar rand. Thats from one or two of the analysts weve spoken to in asia. Lets talk about the risks in the market. Syncretic,s a very corporate story. Of what is going on . We have a lot of markets. The cost is just coming back from a new record high. Lower, 30, 40 lower. 31 lower. The south korean won come very muted reaction as north korea launches a another missile. Chiefe a comment from the cabinet secretary in japan that says we need to apply pressure to north korea. It will not come from the chinese, will that come from a concerted intervention . 100 three months ago, adding, thats toast. This is a september future as 62 quinn do, contract is the one you want to focus on because thats act the 50 range. China is taking the inventory in the port, alltime high. Oil is still at disappointment pervasive across the oil market. We are back to low 50 a barrel. Data, deputy i rose by the most this year. Those are the state of play for your markets, lets get cap for first word news with juliet. Good morning. North korea has conducted another missile test following condemnation from south korea and japan. The missile, which appears to be a scud variant, flute 400 kilometers toward japans exclusive economic zone. It comes days after the World Leaders vowed to take tougher measures against kim jonguns weapons development. Trump lastent donald out at what he called the Fake News Media in a series of twitter messages yesterday. The comments came after his trip to saudi arabia in which he didnt hold any news conferences. In one of the tweets, he said, its my opinion that many of the leaks are fabricated lies made up by the aspect Fake News Media. The u. S. Homeland security has said he might ban Laptop Computers in the cabins of all International Flights into and out of the country. His comments come amid continuing terrorist threats to bring down airplanes. Banned 10 has already middle east countries from carrying on the plane. South african president jacob zuma or has survived a trip decided not to vote on a noconfidence motion. Pressure has built on zuma to quit following his decision to fire his finance minister, a move that sparked public test. Protest. Amber rudd has said there are potentially more suspects at large in the investigation into the terrorist attack in manchester. Speaking to bbc, he said until the operation is complete, we cant be entirely sure its close. The suicide bomber killed 22 people at a concert in britains worst terrorist attack in more than a decade. Federal reserve banker of San Francisco, John Williams has said trade Interest Rates increasing this year makes sense. Thats as the central bank makes gradual progress to prevent the economy from overheating. When you are knocking the boat, you dont run in as fast as you can toward surer and hope you can reverse engineer. It can run afoul. Isntle of talking about never approach a dock faster than you are willing to hit it. Similarly, in achieving sustainable growth, the best rule is to close in on the target carefully and avoid substantially overshooting. Be talking exclusively to John Williams at 7 40 a. M. U. K. Time. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Its been a muted session in the asia session. The u. K. Will be closed along with the u. S. You have seen the u. K. Rise from around the 10th of 1 , hong kong stock look ok. Its pretty flat at the moment after hitting a fresh record high for a seventh consecutive session earlier in the day despite but we saw in the north over the weekend. A lot of the commoditybased markets under pressure. S p eight 600 is down. Korean defense stocks have been in play after the north five, the tech is up by on the 2 . Mighturces are saying it up its stake in video, but note confirmation from softbank. Check out ever grant. No real news, but we are seeing Hong Kong Developers gain significantly. This stock has doubled since early may and it means its founder has seen its fortune go up by 10 billion. Lets have a look at some of the Hong Kong Developers when you chart their moves. China ever grant has been the 31 sinceer for about we saw its moves around march 31. A lot of analysts say its not sustainable because we know there is a digital bubbles in the hong kong property market. Jpmorgan says in a note on friday that ever grant business is not sustainable. Manus thank you. Merkel gave up her strongest indication yet that europe and the United States are jerking apart. Speaking at a Campaign Rally in munich, after the g7 summit merkel suggests that reliable relations forged since the end of world war ii are coming to an end. The time in which we can fully account on others is almost over as we have experienced in the past few days. Thats why i can only say we europeans must rely to take our destiny into our own hands. In french it with the United States. In friendship with great britain. Also with russia and other countries. Our very own matt miller joins us from berlin. Well done, great reporting. Some pretty strong words from chancellor Angela Merkel after what some would say is a challenging g7. It must have been some very vexed and anxious moments behind closed doors. I think the animosity started even before the g7 leaders rather in sicily. Angela merkel met up with president obama on the day before he was to meet donald trump on his first foreign visit. President obama had some harsh words for the trump policy. Also on the day before the g7, donald trump said, in a closed meeting, that germany has been very bad on exports and complained the german auto imports to the u. S. That was picked up by spiegel, which was picked up by every paper in germany and really aggressively. The meeting got off to a rough start to begin with and then adding to that the disagreement, strong disagreement on climate change, between donald trump, the u. S. , and not only germany, but all six other g7 members as merkel put it, seven if you include the eu because the eu has representation there as well. It really made things, in her words, intense. It certainly did make it intense. Very aggressive form of electioneering by merkel . Not to be seen as a laptop in any way to the u. S. Administration. Painting europeans destiny into its own hands, what might that look like . Is that a form of news pundit isolation . Trump has got his own version of isolation. Is this merkels . I think you are spot on in pointing out that we are in an election season right now. You can see Angela Merkel here are right inhe front of the csu with the logo. Its the same on other german papers. With theting there leader of the csu and the beer is there. Really being aggressive, taking an aggressive act toward the u. S. And the u. K. Because she said we will work with the u. S. Didnt u. K. In friendship. Deepen ties too europe and her push to be elected to her fourth term as chancellor. She wants to make it 16 years. Lets see what the election polls deliver. Met joins us met joins us from berlin. Great to see you, and you. Ive just got back from the middle east as he arrived in israel. I am not quite sure. How would you sum up his g7 and counter . Pushing montenegrin outoftheway, rocking on climate change, give me your assessment. I think we are seeing a man that is new to the world stage and not quite sure which way he is really supposed to be going. He certainly doesnt seem to be having that leadership with the u. S. In mind that more his own personal agenda. Thats something american politics is going to have to come to terms with. The one thing that strikes me most importantly is that before trump, before cameron disappeared come before brexit was in our midst, the words renegotiation of global trade wasnt set to be between the u. S. , canada, japan, these trade deals were set to add half 1 trillion to Global Economic growth. To happent not going in the size and scale we anticipated. Are you worried . More worriedam about the slowdown in china during china. Its not going to be a hard oneing, but it does add more concern to the global market. Youve got the breakdown from trump following his own agenda, from wanting to fulfill his election promises of the bringing jobs back to the u. S. But the reality of economics is that a lot of those jobs are not viable in the u. S. Thats going to come home to roost. At the same time, we have maybe europe doing better come but still not going strong. At the same time, the backdrop against this is come you got all the stock market trading at their highs. Investors are fully invested or wanting to be invested, that also have one eye on the exit door. Big bluestays with the chips where there is liquidity. The small companies, small smes that produced the jobs, really art hitting the support they need. Are not getting the support they need. Macron erupts, onto the world stage. The bromance between macron and trudeau. I think its rather inspiring to see two young, smart, whatever their politics, they are young and smart and switched on with the next generation. In terms of the perspective for the world. I think thats very true. I hope france gets behind macron and allows him to deliver on the promises hes made. Hopefully he doesnt get marred down by the existing party line and means he has to compromise on those election promises. It would even refreshing to see change coming through. Andrew sullivan, National Stage with the daybreak show. Some highlights for your daybreak ahead. Weve got markets closed today in the u. S. , u. K. , and china. We have a race decision in preserve in brazil. We write off the week with the u. K. Theresa may and germany corbyn facing audience questions on bbc television. We as close as we have ever been. Thats what John Williams said, nearing our goals. We will bring you the details. This is bloomberg. Its 1 19 in the afternoon in hong kong. His 6 19 here. Hanging onto a little piece of green. It is ever a very own juliette saly. Juliette, how are you doing . British airways said many of its Computer Systems are running again. They recovered from a Massive Technology failure that disrupted hundreds of flights and stranded hundreds of thousands of passengers worldwide. It will run a full schedule today. Its a proportion of short whole programs. Unionse called by granted 200 flights yesterday. Unions called the lockout to urge the government to nationalize the airlines, which was put into administration after years of losses. The government rolled out the option and is looking for a buyer. Last six months. Saudi arabia it could attract tens of billions of dollars in Foreign Investments in the arab worlds stock market as it added to the emerging markets index. He said the Bank Research is up to 35 billion in inflows, the comments come as the Worlds Largest oil exporter pushes to diversify economy away from hostile field. That is your Bloomberg Business manner. Bank ofederal reserve San Francisco, president John Williams says three hikes this year makes sense. To 20s. Economy is close goals and the central bank need to aim for growth that is, quote, not too hot, not too cold. Attainment of our goal is close at hand. Its important to work toward this goldilocks economy. Not too hot, not too cold. We want the porridge to be just right. So goldilocks isnt knocking on the front door of the u. S. Economy and sullivan is the manager. They are going to come out. Absolutely walltowall trying absolutely believe june is a lock in. They need to do this in terms of frederick. Its important. I think is important. There is still data dependent and we have the jobs number at the end of this week, but the reality is the u. S. Economy is doing well. We are seeing the markets making new highs. The whole reason Interest Rates are down at these levels is because they were worried about these companies failing. Thats obviously not the case. They got to look at how do prevent from overshooting in the other direction . The way to do that will be cautious moves with regular moves. , but regular. They also want to get the new rates. Some would say its 2 above. Im going to show our viewers the cpi and pce, personal consumption expenditure, of which are rolling over to a certain extent. The pce will be the data of choice for the federal reserve. That comes on tuesday. In terms of data sweeps, its a big week. Is this phil or kill in terms of the reflation story on the pce for you . Data, ink all of this dont think any data is fill or kill these days. I think they look at the Broad Spectrum of things they can. Economists in general do that nowadays. We get much more data points, we look at the data as well, that the reality is the u. S. Economy does seem to be recovering well. We are seeing people more confident and that is going to turn itself into the inflation as we get that shortage of jobs coming through. I think a lot of people need to be watching the average wage and how that is rising and whether thats continuing to rise because we still have the feeling that there are people at the edge of the workforce that havent come back get that could come back thats going to remain a concern for the fed, as well. That comes tech to the discussion of does the full employment number, where is the everchanging number . One thing that struck me was the lower volatility. The takee bond market, of America Merrill lynch index, at a three year low. A political race which could drive you up 2 , versus inflation which could take you to 3 . When you look at this repressed volatility and the bond market, where d think we break to in the first instance . Three or 1. 75 . I think the temptation is that we break lower. But the trouble is these days emma and it comes back to Interest Rates, when money is mispriced, then every other asset class really doesnt ring true to the longterm averages, is whats making it difficult for investors and institutions these days. Aboutterms of debate where the terminal rate is, where do you see that . What infected think that will have on markets . We look at longterm rates, which is where we should definitely be looking, its going to take us a very long time to get anywhere close to those. Markets are going to remain very buoyant in the shortterm because money is still very cheap. If we are getting people back in employment and they have money to spend, thats going to help the companies grow. Once we start seeing that being spent, and we are seeing that in japan, which is encouragement they believe its real demand, all the economy is going to be on the best footing. Thats when the fed and Central Banks can really start reading Interest Rates back into the longterm in line with the longterm averages. Thats what people want to see. Thank you very much for joining us on daybreak. Managing director for sales at high flung it international security. We are going to have a conversation with John Williams, he joins the team at 7 40 a. M. We will have that conversation with mr. Williams. Now up next, the data this week may show the strongest euro economic confident in a decade. Prices are still struggling. Welcome back. A glorious day. Lostorth koreans have another Missile Launch and the here inhave gone right the city of london on this bank holiday. Now, good morning. Todayare being kept busy and, if you look across the asian equity space, you see some pretty flat gains. He did get this nudged and there is a total of 23 late rate hikes goalhis is as close to the says they have ever been. Back a come back come sterling am looking at greenback against the and we are seeing it with a poll thisu. K. Conservatives and is why we are seeing a bit of a the poll showed the was theowing and it worst week and i want to show we are slightly flatter. What is the longest lived short . Smallestoking at the they have beend betting against the euro and cut possession. There is a new addition of lets take a look at the top surrounding stories and the leaders agreed to keep trade fair and fight protectionism. They say the statement was less than one third and reflected the and hehed Common Ground said he would decide on the continuation of the paris accord. There is a changing world order after the meetings with trump. They believe that the relationships are over and that europeans must take the destiny into their hands. Maria says it will be a big day this will likely be his final appearance before the policy decision. To lowraghi will point inflation as he makes the case for keeping policy on hold. This is our swiss guest and it is great to see you this morning. So, how dovish will he be today . Expectationthis that the time for the unorthodox end ands coming to an we are not talking about the and weof asset purchases are talking about being less isish and what were seeing in the European Court and we will have pressure to change the policy. I know one of those rather bizarre positions and thi