Topix slipping. A little bit of a weakness of feeding through. In terms of the dollar comest ready after a twoday decline. Taking a look at the 10 year treasury yields. Treasuries recovering a little after thursdays decline. Yieldrs yield 10 year down one basis point. Global stocks on course for their best week since january after the feds dovish hike and after the results of the dutch elections. Volatility coming down. Moststoxx 50 dropped the in yesterdays session. Nikkei volatility, dropping to the lowest since 2014. As investors turned their attention to the g20 summit, the bloomberg belly index steady today that heading to the biggest weekly loss since early february. The treasury yields bounced back from the initial slide. This spread between the 10 year treasury yields and the bloomberg dollar index at the widest in four months. Is that a sign that the dollars retreat may have gone too far. What else may have gone too far . Has oil followed to far after breaking below 50 for the First Time Since december last week . I have highlighted that. It is heading to its first weekly advance this month after u. S. Crude stockpiles yield from the record and saudi arabia signaled and opec led deal to cut supply has been extended. Anna thank you so much. A new edition of daybreak is now available on bloomberg and your mobile. Let us take a look at some of the stories that has made has made it into this edition. The g20 begins. It looks pretty friendly. Germany treading carefully as it welcomes finance ministers and trent and central bankers. Wolfgang schaeuble cutting back on tough talk. To what extent will the g20 members be able to form a this around rulesbased trading . Around protectionism . Around use of currency to trade advantage. The next or he the ecb. The euro climbed to a fiveweek high. A rate hike may be on the way. Cook momentsjeremy ago and he said that could be possible. We could see a rate hike from an end tofore we see the qa program. And daybreak focuses on oil. Opec may extend supply cuts. The sign is that inventories are still above the average for example. The markets are still not confident in the outlook. We do not see companies or investors feeling good about the health of the global oil industry. We have to signal to them that we want to do what it takes to bring the industry back to a healthy situation. Anna let us head now to the United States. This Budget Proposal cannot pass the senate, that was senator mccains reaction. President is advocating an audacious budget with cuts to almost every domestic budget. Includeny budget does increased spending for transportation, veterans affairs, defense and security. But there is little chance that congress will except the bulk of those recommendations. Here are some of the reactions to the trump budget. This to me is a very shortsighted budget. My friend Mick Mulvaney talked about this this morning saying this was taken from president Trumps Campaign speeches. If that is what he got out of campaign speeches, you should be a translator at the united nations. I dont think anyone to get this out of what he campaigned on. From some move away of the domestic priorities and moved to protecting us. We are ready to look at this. Congress under title i of the constitution that has final say over the pursestrings. We intend to exercise that authority. We are eating our seed corn. That is a fair case to make for expanding defense spending. The way to fund that is not by taking or gutting so many domestic programs. The number of senators, republican and democrats. And they are scratching their heads. They cannot believe the budget. Marking so believe many people at of programs they need. This is not a pro growth budget. But poundnny wise foolish and would lead our country poorer if we follow it. Anna varied reactions to the budget. Let us talk about the u. S. Economy. Jeremy cook is still with us. How do you view the budget and the push back he is getting on capitol hill . Everything with donald trump is about negotiation. It starts out so disparate. This is purely another situation harkening back to what he said about china and currency manipulation and the wall and getting mexico to pay for it. It comes down to something more sensible. The moves and cuts we are seeing that he has put words that he has put towards the foreign focus departments and moving towards something domestic these are huge cuts. Wouldt think anyone actually deal with this. It is about the second step. It is about being magnanimous as the president. Bringing everyone together regarding the budget. It is really an anorexic budget. Does that tell us about the way he will be able to deliver another contentious policy . This does not include some entitlements or what should happen on taxation . There could be fights with his own party. Jeremy on the wednesday with think he would tend to agree with the gop on, Social Security for example, on tax policy. The more moderate members of the republican party. They think this is too much at the moment. It just means it will take more time. , these broadurdles benchmarks of where we think the budget will come, tax policy will come from health care, which should have been close to being done by now. We are still months off. Pitcheds a constant battle of expectations. Is this the big question in terms of u. S. Assets and the dollar to what extent trump is able to follow through and deliver on what he says he wants to do. Jeremy the hike we saw this week was a tacit endorsement of what we have seen from the president in the u. S. Economy we have seen for the last six months. Dot plot goinghe to three. The continuation of that is dependent on the kind of movement we see from pennsylvania avenue. I think we have to look at the budget negotiations, the health care negotiations, what we here at of the g20 this weekend we have forecast august but it may now be november. Anna a collision course. What you have referred to, the expectations for Interest Rate from members of the fmoc. What are your expectations . A dovish hike from the fed. They do not suggest the faster pace of tightening coming. Jeremy the communication policy from the fed has been clear and i do now think that every meeting which has a press conference attached is live. We have to look at june, september, and december. We are thinking we are sticking with our course for two march and september. There is an upside risk. Depending on if the Trump Administration manages to get its act together, we see a continuation in a pickup in wages. Butseptember pollack september, and possibly december as well. Anna dollar weakness because of Donald Trumps inability to get everything through. The Dollar Strength was contingent on the Trump Administration being a lot less chaotic than the campaign was. Anna we will see. Thank you, jeremy. We will talk a little bit more about china. The u. S. Secretary of state visits south korea today. Tomorrow, wrecks tillerson touches down Rex Tillerson touches down in beijing where he is expected to address the threat from north korea and the economic interests. On this relationship. Is that itfor sure could not be more a grace of is that it will be more abrasive. I think the relationship can take a little bit more fractious nests without fractiousness without it snapping. Anna a growth target of around 6. 5 . The chinese president has pledged prudence and neutral Monetary Policy today. Nobel laureate and professor of economics advised the government on policy. He said this about the yuan. I think we will see a continuation of what we have got. The situation stabilized because they clamped down on the capital controls which will give them and ability to engage in what you might call it gradual depreciation of the currency until he gets in a territory that people think is vaguely like the market equilibrium and then i think they will increase the band. Anna jeremy cook is still with us on daybreak euro. To talk about china, it has been a big week for Central Banks around the world. A big move from the fed and the chinese following soon. Not a lock standard move. An interest in the market to push rates higher. They did this in february as well. Is this working . Is it paying dividends . Jeremy it is paying dividends. Minimize theng to amount of withdrawals we are seeing out of the chinese economy. The fed is shadowboxing as much as the Chinese Government is shadowboxing the Trump Administration. They are waiting to see how these chips may fall. Whether he becomes more competitive entree. The chinese are portraying themselves to the wider world as the only superpower that has their head screwed on. Trimare quite happy to around the edges and wait for more impetus to come through. Anna interesting to see the chinese in this role of world champions in cherry in trade. Let us look at some of the dividends that are being paid by some of the controls around the chinese economy at the moment. The chinese are seeing inflows again after imposing capital controls. It seemed around the end of last year as if nervousness around the chinese economy and the slide in the yuan would dominate the conversation but they have not. Jeremy i was in hong kong in november and the conversation was all about the dollar breaking seven by the end of the year and will trump push that. We do think that the conversation will pick up as we move through the summer. The continual guarded the evaluation of the yuan by the pboc will continue, and gradually drift. Could promote people to move money out of the country quickly which the pboc does not want. If we see a pickup in capital flows into china, a pickup of to the pboc a flag that the currency is a little more wellregarded and maybe it can move lower. Anna do we expect the pboc to follow the fed at all stages in the hiking cycle . Can the chinese economy cope with that . We know they want to take some of the bubbles out of the economy. Jeremy they were loosening policy. We think they will portray following the fed as long as the fed does not do four hikes this year for example as portraying a neutral policy. Shadowboxing what is going on with their largest trade partner, the biggest trade relationship in the world. Dollar china is the most important cross we had this year. In the u k, we may be looking at cable and no vartan a. As far as the Global Barometer of economic productivity and growth, you have to look at dollar china. Anna jeremy, thank you so much for your time. Are a bloomberg customer, you can watch the show on a regular tv or you can use the function tv on your terminal. As well as a video stream. You can also follow all of the special features, the charts and the functions that we referred to during the program. You can get to those on the righthand side of your screen. Dreckn also send messages late to the producers of the show using the link at the bottom of that screen. Coming up, as dutch a politicians get started on forming a government, we focus on france and the next test for european populism. Trade moving of the agenda. We will analyze what to affect at the meeting of the g20 finance ministers. Ahead of those talks, we speak. Ive to the commissioner he will be joining bloomberg. Anna welcome back. Bloomberg daybreak euro. 2 49 a. M. In the morning in new york. We are one hour closer to the time across the atlantic. Us get a Bloomberg Business flash. Here is juliette saly. Juliette blackstone says it is shutting its 3 billion. It has been given the option to shift money into other distressed credit false. The decision reflects the desire of the hedge fund to shield themselves from quarterly redemption which can be difficult to bear when investing in volatile markets. Tissue by have gained in tokyo trading. That as its memory chip business is attracting morbid theres including japanese back to equities. Development bank of japan is considering a joint offer with u. S. Financial bidders. Representatives for a toshiba declined to comment. Hsbc chief executive Stuart Gulliver is being investigated by u. K. Tax officials over his residency status. He lost a bid to end an inquiry that started in 2015 centering on where he was living in the previous tax year. The ruling says the government is not making any allegations as to the impropriety. He has spent a significant amount of time living in asia. French authorities have joined the u. K. In a corruption probe of airbus. The investigation is focused on allegations of fraudulent practices. Including arranging aircraft financing. The probe follows steps by the u. K. Office in august. Airbus, which is cooperating fully, has said it dropped the questionable middleman. Former barclays ceo diamond is said to be poised to return to londons Financial Center with a takeover of gordon. According to people of knowledge with knowledge of the plan, he left Merchant Capital in preparing to announce an agreement with the stockbroker private. It is already the main shareholder which has a market value of about 9. 2 million pounds. That is your Bloomberg Business flash. Anna thank you. Dutch political leaders took the first steps towards forming a new Multiparty Coalition government under the Prime Minister as the Prime Minister beat wilders. Focus now turns on the next political event in europe, the french election. Spoke in berlin after meeting with angela merkel. He was asked about the dutch election and was cautious about making comparisons with france. I am extremely careful about that because i think there is no comparison. Thattheless, i do believe it highlighted the fact that speech, deliver free when you explain what you do, what your constraints are in your country, you can defeat extremism. Discussining us here to this and other geopolitical moments geopolitical issues at the moment is charles lichfield. Great to have you on the program. We have had the dutch elections. Let us focus on where that takes us next. Macron did not want to make a link to the french vote. They doubted whether the french voters really cared how dutch voters voted. What is the read across from the netherlands to france . Right not to assume that this will be easier for him but i do think there are parallels. Wilders did quite well. Debtor than the last time. But there has been a reaction from the dutch electorate, knowing that there is a threat and turning out to vote for parties opposing him with a clear line. And the new party, the green, the left green has done very well. Offering a polar opposite to the pvv. That is what we are seeing in french politics. The person doing the best at the polls is offering the most polar opposite to marine le pen. Anna you reference to the high turnout. And whether that becomes a characteristic of european elections. Pulling up the latest polling. Various trending charts. One is round the french election. Marine le pen is still at the top but macron is not far behind. You fear they are underplaying the risk. What will do what will happen in the second round and those that do not want marine le pen. That you run system is a problem for marine le pen. And those that voted for her in the first round will not vote for her in the second. Our question is whether it will be macron or fillon in the second round. Vulnerabilities in their own campaigns. Marine le pen will be able to turn the second round into a referendum on the status quo. To theresents no immigrants and globalization. We think therefore there is a chance she wins especially if abstention is higher. Anna that is another possibility. We are watching what is happening at the g20. Verys delegations from the u. S. Coming over and many in europe trying to read the coffee grounds and the tea leaves around what the u. S. Administration intends towards euro. Comforting words regarding nato from previous visitors. Steven mnuchin and sounding dramatic and not wanting a trade war. Maybe it just means lower taxes in america and it is less of a threat to european nations. Charles the Trump Administration has tried to reassure partners to an extent but it comes with several conditions. Europeans have to pay more for nato. And i think our outlook for u. S. European relations is not that good. Donald trump has calmed the onations the comments nato. All of this was done privately. I think disagreements on taxation, on the department of justices habits of looking into the habits of European Companies and whether they have arrived any officials, all of these were problematic for an under donald trump could become explosive. Anna we will see if they can get on the same page around protectionism and rulesbased trade. Charles, thank you. After meeting with germanys finance minister, Steve Mnuchin heads to the meeting in badenbaden. We are live with the events. This is bloomberg. Anna kneeling in diplomacy. Steve mnuchin strikes a softer tone on trade in his global debut. We are in badenbaden, germany. Recent may prepares to pledge a closer union with scotland after a bid for an in the independence vote for brexit. Comes trumps proposal under fire in congress. Warm welcome to bloomberg daybreak. Im anna edwards. Program. R 7 00 here in london. Lets look at where the futures open up on this european equities session. Fed move seems to be running out of steam. Flat to negative in the Asian Session by the end. Here in europe, euro stoxx seem down a 10 1 10 of a percent. Asia pretty flat, but some emerging markets doing better. Japan the weaker link there. Volatility still retreating. Quotes around it being scarily slow. Checking in on currencies. A lot of movement in key currencies this week. 123. 65, Kristin Forbes is leaving soon but raised questions about how far behind the rest might be. How scotland could abandon its Current Union with the u. K. On currency. Euro, 107. 79. The talking about a rate increase maybe on the ray on the way. Way seems to be coming to her from the ecb. We put nymex on there for you. From words coming through gordon, something being watched by investors. They are recommending a purchase valueswhere, the deal issued Share Ca