Good morning, im lizzy burden in london. Strong u. S. Factory data pushes markets to really think cuts. Iran vows a response after a strike at the embassy killed two generals. This over the invasion of raw for rafah. Heightened oil risk and supply. You had time to digest the central bank bonanza. Lots of ecodata amongst fed speak. 19 including fed chair powell. Weve had data reinforcing this narrative that inflation is falling more slowly than expected, hence why the fed will not be in a rash to cut rates. You saw stocks joining a loss continuing later, pointing to a lower opening but in europe tilted to upside. If we flip to crass cross assets he got the twoyear treasury yields, 4. 69 as traders pushback pricing to september. For a moment you solve the august dipping below 50 and all eyes turned toward the jobs report. The dollar is steady, brent trading below 80 a barrel. Tighter supply from mexico and we will dig in later. Gold hovering near record highs and trading at 2000 257 per ounce. Lets get to vonnie quinn with an update on how markets are faring. Vonnie fascinating session with crosscurrents coming together. First reaction to the pce data, hong kong closed yesterday, now reopened. Huge catch up there, but activity around the yen. Mark mobius saying anyone short on the yen, this is a losing battle for authorities. We are at 1 5 the one. 152 is the line in the sand. As Mark Cranfield said, it could be anything and officials have been good about wrong footing traders. They might let the yen weakened before they do anything about it. That is all playing out. It last time we got intervention was 2022. Previously it was 1998. Nikkei has turned positive. Down session yesterday. One narrative was this might be the end of the up cycle and china could be a beneficiary. We will see. Hang seng catching up to and a quarter percent. Shall mean is up 11 and a half percent. They unveiled their first model and orders went gangbusters on par with china. Across asia the index is about 3 10 of 1 . China is hesitating, csi down for tenths of 1 after the pmi data out of china, not just the u. S. Korea is down, stickier inflation as well. Indias them. In the stern to give back money, investors turning back to china. Lizzy a tour of asia, thank you, vonnie. Dollar gain is yen pain, so lets dig into the dater out of the u. S. Strong data prompting traders to price in less policy easing. Markets weighing cautious comments from Jerome Powell. Analysis from jill. Traders cutting rates. How doubtful is a june cut looking . Jill 50 chance of june rate cut. Far cry from months ago when traders expected a rate cut. As you see, economy has been more resilient and being expectations really added even though we had cooling in the core inflation. The picture for the trajectory is was clear. Getting jobs data in the jobs report will give more clarity on one they can start cutting, a murky picture overall. Lizzy 19 feds beaches. Who are you listening to . Interesting to hear on when theyre pricing things in. You have to take the totality of statements. Getting the idea that there expressing patients. Who is keying in on the labor market report, we will see how that develops closer to june because we want to know whether there will be crystallization on a cut by may. Lizzy jill, thank you. I want to get back to the geopolitical story because it is affecting the oil price. The strike in damascus killed several people including military generals. Israel should be held accountable for the repercussions as tensions grow between long time adversaries. Joining us more is patrick in istanbul. Good morning, it is an escalation between these enemies. They are targeting iranians loyal. Much more directly than previous attacks, whether they targeted military personnel or proxies, but not in iranian territory. When building is Still Standing where you can see the government building flattened. The two targets are there has military advisors and hes got a long history in the Expeditionary Force responsible for irans revolutionary ideas. Lizzy you have to wonder if netanyahu is using war take the fight to iran. What has been the response and what are irans options . Patrick it is a tricky balancing act where they will feel the need to respond, but constraint is the prerogative to not invite further response. We have seen that iran going further than previously. You mentioned the Foreign Ministry statement. They summoned the swiss at tasha who represents swiss interests, that is not something you usually see. We found out one hour or so ago that the Security Council met last night and took appropriate decisions without elaborating. They are signaling that this is being taken seriously and telegraphing there will be a response in a more public way and they have in previous attacks. The question is do they do something similar . Try to attack israel on its own territory . That would be a huge escalation. Or do they find an equivalent like this extraterritorial territory like the consulate. A tricky balancing act. Lizzy thank you for the update. They made a video call back on the schedule now in person. Lets get you uptodate with what we have on the docket in terms of ecodata. Set to be a busy one. We get eurozone pci would you might take with a pinch of salt. On thursday as euro area pmi and then friday is the march jobs report, the highlight of the week. You already saw in the Manufacturing Survey the employment side showing declining demand for workers. This will be influential in terms of rate cut thats. News crossing that ubs is going to launch a Share Buyback program of up to 2 million after we saw ubs cutting its bonus pool last year by 14 . I tough yeah for dealmakers. Sergio our body is the best paid european boss in the Buyback Program is in focus given the merger just past the one year anniversary. From ubss statement on uh, uh, they say we intend to commence a Share Repurchase program of up to 2 billion u. S. Dollars as previously communicated. We expect to repurchase up to one billion dollars after completion of the merger between ubs and credit suisse, which is expected to occur after the end of the Second Quarter. Ambition is for repurchases to exceed preacquisition by 2026. Im sure we will bring you more on that throughout the program but you can get a roundup of the stories you need to know to get your day going on the daybreak newsletter. Go on the terminal. Turkeys president suffers defeat in municipal elections. Live to discuss the fallout next. This is bloomberg. Lizzy welcome back to bloomberg. We are going to turkey where the president suffered an unprecedented defeat at the ballot box. The ak party fell behind chp in municipal elections, the first defeat since he swept to power more than two decades ago. More from our turkey government reporter barrel ackman in the turkish capital. Is this a watershed moment . Barrel as you mentioned, it is a defeat. He came to power as Prime Minister about two decades ago and it is a historic moment for the opposition where we have rarely seen strongholds taken from a party in local elections. Five years ago we saw the opposition captured in the commercial have as well as the capital and major cities in the west, but this time it is a landmark victory because theyve taken control of citys that they ruled for decades, even with the predecessors of the party, so it is a show of force against the president and a watershed moment. Lizzy is it a watershed moment for turkish macro policy . We will have to see what happens with economic policy. Weve seen in the past how Election Results in major events impact economic policy. But when the president conceded defeat, he signaled the normalization path weve seen since may to continue saying inflation has fallen down in the Program Continues to include aggressively tight policy and fiscal discipline, which the finance minister has said means more savings after elections. Investors do not see risk to a shift in the policy. Inflation data will show consumer inflation toward 17 and we will see what the economic authorities will do, whether they will tighten policy further. Lizzy thank you for that and we will continue the conversation later with bmps head of credit strategy. Up next, Australias Central Bank will introduce a new system. Exclusive conversation with Christopher Kent. This is bloomberg. Lizzy malcolm back to bloomberg. Australias central bank is switching to a new framework for the implementation of policy. The assistant governor outlined that in speaking to bloomberg. What we have announced is a new system for implementing Monetary Policy in the future. It is more about the plumbing of moving money around, achieving a cash rate close to the target. It is not what the target is. The target is Monetary Policy. This is just how we achieve the target at any time. It is responding to imbalances coming from the last few years . Responding to the running down of reserves, excess reserves, in the system. We and other banks issued unconventional policy that put a a lot of money in the bank accounts. As the tff gets repaid, it is about looking to the future and thinking about what we need to do, what system. On the comes to the balance sheet, a lot will depend on demand, but do you have an idea or of scale . No, that is why weve chosen a full allotment allocation system. Thanks come to us in for a fixedprice can borrow reserves, pledge collateral for 20 days of the moment and take what they want, as long as they have collateral. Supply of reserves will depend on bank demand. Banks have their own estimates, we could come up with some ruffed ones rough ones. We should transition seamlessly and we will know when we are there when banks show up in larger numbers and quantities on a weekly basis. Until we get there, we will not know is a good phrase to describe Monetary Policy. You were asked cheekily to give one word to describe Monetary Policy settings. I will give you a few more words, elaborate . Christopher the starting point is the board thinks the interestrate path that will bring inflation down in a timely manner is uncertain. So they have not wanted to rule anything in or out with regard to Interest Rate changes. We are in a better place and inflation has come down. It looks to be moderating, but the path according to forecasts is gradual from here. Labor market pressures are easing. That is because growth is slowing, so that brings demand into balance. Those things are in place. Central forecast predicated upon further good things including productivity growth. In the key point is those are reasonably balanced as best we can tell and the path is uncertain. The next rate change, we dont know if its higher or lower. When you talk about the inability to rule out shocks, how much risks do you worry about . It might be election driven, policies of other countries. How much is domestic or structural macroeconomic aspects that we have not seen yet. It could be both, we dont know. As a smaller economy we are subject to developments offshore. Weve talked about what is happening in china, a major export market for us and there are concerns about the property sector and the problems they are dealing with, so that can impact demand for commodities and move our economy around. Domestically things can be moved by what people here are doing, households. How are they going to behave in the future . That will be a key point. Lizzy that was rba assistant governor Christopher Kent speaking to bloomberg. Of u. S. Futures are pointing lower today after the s p closed lower 2 10 of 1 . Stocks doing the losses after factory data is strongerthanexpected, reinforcing that the fed is not in a rush. Traders pricing the full first cut in september pushed back from the start of the year. Treasury yield at 4. 69 . Coming up, oil years a five month high. 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Golo is real, our customers are real, and our Success Stories are real. Why not give it a try . Good morning, this is bloomberg daybreak europe. Im lizzy burden in london and these other stories that set your agenda. Strong u. S. Factory data pushes markets to rethink the number of fed cuts this year with the june cut dipping below 50 . I ran vows a decisive response afterwards as an israeli strike on its mbs embassy killed two people. This agrees to in person talks with the u. S. Over invasion of rough. Oil nears a fivemonth high on that heightened risk in the middle east as well as titers supply. We will dig into all of those stories. Lots of geopolitics to get our teeth into. It is a busy week ahead for economic data. We have already had a little bit from the u. S. Factory data. As ive said, it has pushback rep fed rate cut thats. There was a moment you saw the june cuts dipping below 50 . You can see on the picture that the impacts in terms of stocks. Stocks join the losses in bonds. S p closing down 2 10 of a percent. Wall street set to open lower today. In europe, more optimism, flat to the upside when it comes to euro stoxx 50 futures. If you flip over to the cross asset picture and you look at treasuries, there is not a lot of movement. The twoyear treasury yield at 4. 69 . We have seen traders pushing back their pricing for the first full fed cut to september. All eyes turn to that u. S. Jobs report for march on friday. The dollar, pretty steady at the moment. Higher six basis points. Oil just below 88 a barrel. This is on all of the geopolitical risk in the middle east. Also, the supply tighter from mexico. You have gold hovering near record highs, currently trading at 2254 an ounce. Meanwhile, the yen is weakening toward 152 per dollar. This is a key level that traders see elevating the chances that japanese officials will bring us that yentervntion. Lets get to mark cudmore. Spring is here, is it time for the yen to blossom . Mark good morning. It is not time for the yen to blossom. There arent any Cherry Blossoms for this currency. Whether there is intervention, it will only lead to shortterm gains. The fundamental reasons for yen weakness are structurally still there and will not change in intervention and have not changed based on recent doj action. The fact is, japan has deeply negative real yields in their more negative than the rest of the world. Even though it has negative real yields, its not like its economy is booming. They are still fighting a deflationary mindset. I know theyve had positive inflation prints the last couple of years, but its not runaway inflation. In one of the gets global inflation threats weve had in 40 years. I think the structural reason for yen week this remains the same. It could continue to weaken even after intervention. It might be strong for a couple of days, but quickly traders will sell into that. Lizzy thats the internal story in japan. But how much of the resilience of the u. S. Economy is feeding into it . Where are you on the 50 versus 75 basis point rate cut on this debate as we have all of the ecodata coming in . Mark i dont see how the fed can cut even 50. I would be shocked if we get more than 25 basis points this year. He have a strong labor market, we have a consumer that continues to spend. We have Manufacturing Sector come out of contraction territory. It is a good lead indicator because it matters for hiring, etc. All parts of the economy are still strong. The fed december meeting, they said a very dovish message. It reignited an economy that mightve started to slow. There is no landing. I know the fed has expressed desperation to cut. They will try to get away with 25 basis points. Im not sure they get away with that. I dont see them doing more than 25 basis points, and less there is a crisis. Some regional banks will go because of commercial real estate, but its not systemic. Private markets have stretch valuations, but its not systemic. There is nothing on the horizon that looks likely to derail the economy. Therefore, it will be hard for the fed to sell cuts, no matter how hard they try. I dont think we get 50 basis points. I think its more likely we get 150 basis points than 50 basis points. That may sound strange. The only justification for the fed to doing more than one token gesture cut would be because the u. S. Economy does go into crisis. The fed will need to cut more aggressively. Yields need to go higher from here still. Lizzy not even core pce. The feds preferred inflation gauge coming in line with expectations could knock your confidence. Mark cudmore, we thank you. Bloombergs mark cudmore. Lets go to oil. Its holding near a fivemonth high with heightened geopolitical risks and supply constraints boosting prices. We have bloomberg Senior Editor reporter in singapore, stephen, thank you for joining us. What more can you tell us about this rally in oil prices . Stephen oil is up over 10 so far this year. There are a number of reasons, as you mention, theres the geopolitical risk with iran and the tension there with israel and whats going to happen to the region. That has been the story for the last six months. What is really driving the oil market now is playing fundamentals. You look at what opecplus is doing, they have cut back in cap their production cuts in place going to the Second Quarter now. The market, a lot of the supply and the froth is being sucked out of the market. On top of that, there are p