Steps in with unscheduled bond buying for a second time this week. Asian stocks and european futures selloff as hot u. S. Jobs data pressure on the fed inflation fight. The bank of england decides with at least another quarterpoint hike expected today. Speculation rose it could hint at a faster pace of bond sales. Earnings heat up with amazon and apple taking center stage. But first, socgen posts betterthanexpected secondquarter net income, with ing results hitting the tape now. Good morning, welcome to thursday. The misery continues in asia, after a miserable end to the session on wall street. The s p 500, it was its worst day since april. The nasdaq was down over 2 . August is typically the most volatile month. The fear gauge, the vix is at its highest since may. There are jitters about how much the bank of japan will let yields rise under its yield curve control regime. It has made its second intervention in a week. Not to mention tepid earnings from qualcomm. The 10year yield rose to its highest since november, as the u. S. Ramped up debt issuance more than forecast. That was helped by payrolls data underscoring the strength of the labor market. We will break down all those moves for you. But first, lets get over to hong kong with tonya chen for how asian markets are faring. Good morning, lets start with japan. As you were saying, japan entered the market for the second time this week. We saw unscheduled bond buying operations. 10year yields touched 0. 65 , a nineyour high. This is the second time after monday yields touched that 0. 6 percent mark. This intervention is underscoring what is the gray line, and what is the definition around flexibility. Last week, they had indicated to 0. 5 would be a reference point, but not a rigid limit. These interventions, we will have to see. But going forward, the bank of japan may continue to tightly manage the pace at which yields rise. Outside of japan, im looking at china today. We had Caixin Services pmi data that was well above estimates. But that rally in the yuan did not hold, we see it paring gains. The pboc fixed the currency 414 pips stronger, slightly stronger than recent days. An indication that they are flattening the fix around the below the 7. 15 line, maybe they dont want to see the yuan we getting past 7. 3 given that 2 currency band. Lizzy now i want to bring breaking earnings from European Banks. We start with amsterdams ing. It reports Net Interest Income for the Second Quarter of 4. 0 6 billion euros, so missing estimates. Youre also seeing net income coming in for the Second Quarter at 2. 1 6 billion euro sign, beating estimates of 1. 7 2 billion euros. We will bring you an interview with the cfo of ing at 6 20 a. M. London time here on daybreak europe. We will be able to break down those earnings with him. More earnings as well from the last few minutes. This out of paris. We have socgen. It has beaten most estimates as key revenue lines weekend amid a lackluster trading environment. Revenue at the unit fell 30 from a year earlier, roughly in line with the biggest wall street firms. Overall net income of 900 Million Euros beat estimates, though revenue fell short on lower income from french retail banking. Thats earnings for now. We will get you more later. Lets get to our morning roundtable with bloombergs Valerie Tytel. I went to pick up where we left off yesterday. Fitch downgraded u. S. Government credit. It put the spotlight on American Public finances. Esther day the treasury ramped up debt issuance, boosting the quarterly bond sale size for the first time in 2. 5 years, yields hit 2023 highs and it has prompted global yields to search higher and has caused of boj to intervene for a second time since that tweak. The u. S. Labor market is also showing signs of cracks. The latest ecodata from adp showed more Companies Added jobs than expected. And tomorrow we have got nonfarm payrolls data. It seems likely the treasury was testing dealers appetite on the back of the recent downgrade. What was the rationale . Valerie they clearly had to. They had a fiscal deficit, one of the largest we have seen outside of recession. Tax receipts this year were disappointing. Future spending is set to increase. The interest expense of the u. S. Government has nearly of the u. Government has nearly doubled the last two years. Its not like they had a choice, but they are testing the market, as you mentioned at a skittish time. Were seeing all these hot data pushing morning. You look at what the treasury announced yesterday, nearly every coupon bond auction size was increased. We knew this was coming because monday they announced thirdquarter borrowing was to reach 1 trillion, way above the street estimates. Weve still been getting commentary on the fitch downgraded. We got noise from former treasury secretarys overnight. Paulson calling the fiscal trajectory of the u. S. Concerning. We also heard from geithner, really urging politicians to act on the debt sooner rather than later, before its too hard. But its funny, were now thinking about what was the trigger for this fitch downgraded . Perhaps it was just that thirdquarter borrowing estimate from the treasury reaching 1 trillion. Thats clearly what the market has reacted to the last 48 hours. Lizzy you reckon the treasury will dip its toe in the water again . Valerie the boj responded. I thought that was interesting if we look at the breadth of the move since they responded last time. It had a fivebasis point increase in the 10year yield prompting that intervention. If we see options next week maybe not be received by the market as well as we thought, and every time we get one of these big options, we have yields ticking higher and higher. You can see more pressure on the bank of japan. Its not really the reason we thought we would have pressure, we thought it would just be hot u. S. Data, not necessarily this wave of treasury issuance. Funnily enough, treasury yields are continuing to rise this morning. The 10year yield is up another four basis points, after claiming nearly 15 this week already. Lizzy lets take our focus back across the pond. Across the road actually to threadneedle street. Its bank of england day. The bank is expected to hike by a quarterpoint today to 5. 25 , as well as its latest forecast for the u. K. Economy. Silvana has been replaced. You have hot wage growth. The headline inflation number is almost four times the bank of englands target. 50 basis still very much on the table. Valerie Market Pricing is in the middle, 35 basis points for today. That was price for the previous meeting when they surprised with 50. Its funny, we look at e. M. Economies who have maybe not been punished for definition is lately. Dovishness lately, but developed market economies like japan have been punished for dovishness. The risk is if they dont hike by 50, the currency weakens. Maybe they hike by 25, but then signal an increase in the pace of qt. Lizzy lots of speculation about that. The lacquered in the central bank conga line has become the leader. It forecast a similar move at its next meeting. Did the real have thats like you were warning about yesterday . Valerie it hasnt yet. The thing about brazils decision yesterday. Not only did they cut more than expected, but they signal they would go for a 50 basis point cut at the next meeting. Quite a dovish pivot from the central bank of brazil. We have seen other emerging market economies sound more dovish recently and their currencies have held up okay. Perhaps it is just fell up to markets that are trying to sound less hawkish when their currency gets punished. Lizzy let me lay out some key events today. We have been discussing, at 12 00 p. M. The latest bank of england decision. 30 minute later, a press conference from governor bailey and his officials. At 1 30 p. M. London time the latest weekly u. S. Jobs claims numbers. The consensus is a marginal increase at the end of july. Finally, at 3 00 p. M. Factory orders and ism Services Numbers which are expected to soften after junes gangbusters print. These are a prelude to the nonfarm payrolls out tomorrow. Are you convinced the u. S. Can avoid recession . Valerie there has been so much positivity recently about u. S. Growth. Maybe the equity market weakness the last two days is hinting that weve seen a peak in optimism. And were due for soft economic data. But the market has been thinking that for months, and we have not gotten it yet. The ism Services Today is a big print ahead of tomorrows nfp. Lizzy Valerie Tytel for our morning roundtable. Get a roundup of the stories you need on todays edition of daybreak. Today, they lead on the bank of england decision, and the Pershing Square management founder saying 30year treasuries as supply ramps up. Finally, they have comments from former frederick treasury secretarys urging washington to address the u. S. s longterm fiscal issues before its too late. All that and more on todays edition of the newsletter, which terminal subscribers can find by going to dayb. Back to earnings now. More from ab inbev, the belgian brewer, best known as the maker of budweiser. Youre seeing for the Second Quarter, organic adjusted ebita profit up 5 , double estimates. Then we have revenue for the Second Quarter. Thats only slightly beaten estimates at 7. 2 . The story here is ab inbev has been stunned by the backlash over its collaboration with a trans influencer over its bud light brand. Bloomberg intelligence estimates market share in the fallout. Heineken lower Profit Guidance earlier this week because of waning consumption, and higher inflation has meant people are drinking less beer. Those results we have from ab inbev. A sale expects full year revenue to grow ahead of ebita. We keep an eye on those results from ab inbev. We also have results from lufthansa, the german airline. It says it sees full year profit above 2. 6 billion euros on a strong outlet for the second half. It sees thirdquarter adjusted ebit exceeding the precrisis level. And report secondquarter revenue of 9. 3 9 billion euros, only beating estimates by a whisker. It is battling the likes of ryanair and wizz air for passengers in the costofliving crisis. Shares up 13 today. More earnings throughout the program. Coming up, the bank of japan steps in with unscheduled the bond buying for a second time this week. And coming up, after that Net Interest Income miss from ing, ill be speaking to the cfo tanate phutrakul. Stay with us. This is bloomberg. Lizzy the move by fitch to downgrade u. S. Government credit has put renewed focus on the nations debt trajectory. Mliv strategist Mark Cranfield joins me for more. How far will treasury yields rise . What does it mean across assets . Mark if we believe bill ackman, who valerie was talking about earlier, there is a long way to go on the upside. Hes looking for Something Like 5. 5 on the 30year treasury, way above where we are now. That might be extreme, and he is positioned accordingly. But what the Fitch Ratings analysis did, if nothing else, it brought investors back to look at debt ratios in the United States. Our u. S. Economist suggests if the u. S. Dont do anything about it, their debt to gdp ratio could rise to 130 in the next 10 years. When they were downgrading from aaa the first time 12 years ago, the ratio was only 60 so it is already deteriorating. And it is likely to get a lot worse. In the shortterm, the metrics for the u. S. Fiscal situation are far worse than when s p downgraded aaa status several years ago. On a casebycase basis, the situation in many ways is a little bit getting out of control for the United States. Until investors get a signal that the u. S. Government will actually do something to slow down this widening of the fiscal deficit. They will not be confident this is the right time to buy treasuries. If they buy them, they want more compensation. They want to see yields much higher. When the treasury announced they will be selling even more debt in the Third Quarter than expected, of course, people want to push yields higher. The options next week could be tough if the prices dont get to a decent enough level. Investors may say, we dont want to touch these bonds until we have fully discounted the bad news which we can see coming down the line. Lizzy briefly, we have had the bank of japan intervening a second time this week. What sparked this . Marco thats just a smoothing operation. They went up to 0. 6, they have come in again today. Roughly every five basis points they will do something. But the market has just shrugged. Jgb futures are still trading after the bank of japan came in. They ticked up slightly been made new lows for the day. Thats a strong signal that japanese Bond Investors are not impressed by yields at this level, and they wont get serious about buying japanese bonds until they see the 1 level in the 10year, which is the top end of the threshold they indicated last week. Jgb yields are likely to follow global yields, if they continue to go higher. Lizzy thanks to mliv strategist Mark Cranfield. We will speak to the ing cfo tanate phutrakul. We will discuss secondquarter earnings, and the outlook for the biggest bank in the netherlands. This is bloomberg. Lizzy ing has reported Net Interest Income for the Second Quarter that missed the average analyst estimate. While net income for the period beat estimates, 83 year on year up. Joining us to discuss is tanate phutrakul, cfo of ing. Great to have you with me this morning. Lets talk through these earnings. Tanate thank you. Were very pleased with how the result has evolved this quarter. Revenues are up 23 year on year. We have seen good, strong operating expense management with our costs flat despite high wage inflation. Were pleased with seeing our credit book remain resilient with limited risk cost. We have seen inflows of retail deposits quite strong, almost 18 billion euros. Strong set of results culminating in strong profit generation this quarter. Very pleased with how things have evolved. Lizzy talk me through whats happening to cost inflation in your major markets . Tanate cost inflation has been rising through much of q3 and q4 , but its starting to slow the pace of inflation. Combined with our efficiency program, digitizing of our core processes has meant some of that inflation has been negated. Lizzy you launched a Share Buyback of 1. 5 billion euros in may, due to be finished by october, but only 15 was completed as of last month. Are we to expect another buyback and has your thirdquarter results . Tanate capital veneration during the first half of the year is strong. Despite the Share Buyback, our capital is strengthening over the current three months. We are in the middle of a 1. 5 billion dollars Share Buyback that runs through the middle of october. We indicated that in our thirdquarter results, we will give more information about further Capital Management action we may take at that time. But capital is extremely strong generation. Lizzy we missed Net Interest Income missed analysts estimates but it continues to get a boost from ecb rate hike. Fee growth is subdued. What is your outlook as the fight against inflation by Central Banks continues . Tanate you look at the forward curve. The pace of rate hikes is coming to an end. We have seen this rapidly improving liability income for ing. The way we manage Interest Rates means we have a Strong Foundation for sustained Net Interest Income going forward. The pace is likely to slow, but the sustainability is strong. With respect to income, we continue to broaden the product, the geography in which we make fees. Were pleased this quarter to make strong improvement in the income compared to last quarter. But the market remains subdued in terms of loan origination and fees related to origination and mortgage broking, for example. Those are things we need to manage within the context of rising Interest Rates. Lizzy did you have a for the reduction in your exposure to russia . Tanate yes we have. Since the beginning of the war, our russian exposure is down 70 . We continue to derisk from russia. We continue to have another Strong Quarter of reduction in terms of our russian exposure. Thats partly why our risk weighted assets has performed well, because derisking exposure from russia is significantly smaller than it was at the time of the war. Lizzy earlier this week, i interviewed the chairman of the European Bank authority. The results of its stress test showed most banks came out stronger than two years ago. But yours fared worse. Given we have already seen the collapse of credit suisse, and the crisis in u. S. Regional banking this year, what are you doing to protect against uncertainty . Tanate were happy with the process and the results of the stress test that show the resilience of the whole European Banking system. We have observed this particular hypothetical around stress tests. We use it, among other stress tests we do internally. Based on our internal stress test, taking into account what we see from the other tests, we confirm our capital target of 12. 5 . We dont see reason to change our guidance. Lizzy just briefly, you have been one of the banks leading the way in artificial intelligence. You are using it to screen for potential defaulters. How will it change your offerings, who you hire . Tanate we are one of the most digital banks in europe. Were focused on enhancing our capability, including the areas of ai and we watch that space very caref