Of japan and china ahead of this weeks g20. Welcome to bloomberg daybreak europe. I am anna edwards. I am manus cranny. She brought chocolate and tried to bribe us all. Lets get back to markets. Juneing news, the india manufacturing, 50. 9, versus 51. 6. We will wait for the u. S. Manufacturing later. Anna all kinds of pmi today. Euro btv 439, the oil market. Dawn. Butchery at day, ther the eighth longest winning streak since 2013, why . Paused for have the first time in 24 weeks. , the pace ofe shortening in the market, just for the moment has abated. Anna you couldnt believe that small move could be so significant, but apparently so. We will talk about oil in a minute. This is the picture on the msci asiapacific. In china, rebound sparking interest in chinese stocks. Going to russia, germany, the g20 looms large. Meanwhile, the bond connects starting. Tokyolitical story in could be significant for the National Debate in japan, but the yen does not know which way to go. What is abe doing next, turning on the monetary and stimulus to get voters on board . Dollar and crude. We touched on crude. Poin. 8 . Up jp morgan still have a bullish view on the dollar, saying the dollar is cheap. There is the oil market, as you said, up. 3 . Anna keeping a night on treasuries, the u. S. 10 year, 2. 3, so the yield goes higher. At 16 basis point surge, up once again on those yields this morning. Withs Juliette Saly bloomberg first word news. Juliette in the middle, the saudilet block has agreed to a extension made ofthe request of the emir kuwait. The coalition has blockaded over with qatar accusations the country is supporting terrorism. U. S. President has ratcheted up his feud with the media, depicting himself body slamming a person whose head has been digitally replaced by the network logo cnn. Says it is a sad day when the president of the United States encourages violence against reporters. Several call it an assault on press freedom. North Koreas Nuclear ambitions have dominated phone calls between donald trump and japan and china. The separate conversations preceded trumps expected meeting with the leaders of asias two biggest economies at the g20 summit in germany. President s the u. S. Stance renewed tensions. In china come the latest gauge of manufacturing has added evidence economy is maintaining momentum after a strong start. The private survey beat expectations, 50. 4, up from 49. 6 in may. Outputs on orders rose. Theresa mays government has changed its tune on brexit, striking a sober and realistic tone. Chancellor Philip Hammond will use his speech to tell Business Leaders their concerns over the split when not be ignored. Gesture tociliatory an audience that feels it has been overlooked. Angela merkel has urged g20 partners to avoid deeper divisions as they may become irreconcilable. She said this weeks g20 summit offers a Good Platform for states to air their interests and an opportunity to forge common policy that benefits the global economy. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. You can find more stories on the bloomberg at top. To the year. The msci asiapacific rose 14 , outpacing the world index. Today, upside in the nikkei. The hang seng looking more positive. ,ll stray the worst performer even though we have seen a rebound in energy players. Some of thek at stocks in detail. Fairfax one of the worst performers, plunging the most since it listed. This after private equity suitors including tpg capitals failed to submit an order. Macau gaming revenue missed estimate in there was speculation that president xi jinpings visit could have curtailed visitors from hong kong to macau. Tay supplies nike, rising on nike strong Sales Outlook and broker upgrades. Chart, is an interesting an exciting day, the opening of the China Hong KongBond Connect Program, opening up that 9. 4 trillion yuan bond market to Foreign Investors. Nomura estimates the only account for 2 of bondholders in china. This chart shows you the yield on chinas generic tenyear bond outpacing the u. S. , germany, and japan. It is open to Foreign Investors as of today and strong yields to be made. Manus thank you very much. Great roundup. Japanese Prime Minister abe faces one of the biggest tests after the ruling party lost tokyos elections. Seats,he ldp secure 23 the lowest number. The vote could be seen as an indication of outcomes next national elections. Joining us now is isabel reynolds. Ay was this result such disaster for the lbp then . Right, two main reasons. One, the tokyo governor has developed star power in the capital, making great use of social media, a clear agenda of costcutting, including having her own salary, and talking a lot about transparency and bringing the workings of the government in the open. People have liked that agenda. The other thing to note is the ldp has shot itself in the foot and a series of scandals failed to explain this to the public. The voters came out on sunday and try to punish the lbp. Anna what does it mean for abe s policies . Stimulus totowards regain capital with a base in japan, what do you make of that . Mean he willdoes have to turn away from his riskiest policies. He may have to put changing the constitution on the back earner. He came to power promising to improve the japanese economy, so ishas to show publicly he looking to what people want him to do. Wille bright side, koike stay in her current job until 2020, so wont present direct threat to him, but he will see louder voices of criticism from within his own party and will see candidates running against him in next years election for leadership of the o. B. P. Anna thank you very much leadership of the ldp. Anna thank you very much. Good morning, simon. Caught my lines that attention, a fascinating story for japan, but reflects a broader trend, the ruling party lost to an upstart output. Where have we seen that before . This represents a challenge to the japanese to go back focusing on the economy. The challenge lay down doesically means for abe he pull the levers of the last 34 years monetary fiscal stimulus or take the high road, which is international contemporaries have not taken, and use the time to look at structural reform, which it sounds repetitive, but is the real challenge. The monetary stimulus only provides your window within to do it. He faces that choice. If he does not embrace the high road, the political challenges will come thick and fast later in the decade. Anna the whole point of abenomics was taking the higher road, was about structural reform in the economy as well. The other story this morning his there may come pressure on governor kuroda, boj governor, and a former governor saying he is out of ideas, radical thinking, and that was the experiment with the boj. Do you see that is a possibility . To the first point about the high road coming yes, but we keep talking about the monetary and fiscal stimulus and never have got into the third arrow in the quiver, which was the structural Reform Program. Forerms of the future governor kuroda, the biggest challenge he faces is if this bit of a taper tantrum in global bondts and that 10 year target 0 , which looks flaky this morning, heading higher, that may be the bigger challenge to growth in the short run than any challenge from within the movement to take a different path. There is this hawkish tone. Manus the tone has changed. Anna exactly. China and about introduce that theme, chinas new bond length started today with Little Market reaction, the Bond Connect Program with hong kong gets offshore investors are a way to access the mainlands 10 trillion market. It is a one way direction of travel. Anna butcher money in manus a whole other story if you want to take your money out. As was the question with this, this moneyeds because we have a cracking graph that shows the amount of on issuance versus redemption. Corporate in china desperately need external funds because of the deleveraging process. This is the amount of bond issuance is, the real need, financing china inc. It is. They have been unsuccessful previous years finding International Money for a 10 trillion debt market. Less than 5 is held by foreign nationals. ,e have to ask the question why and given 3. 5 , 3. 6 yields on how thatar showed compares favorably with other International Bond markets. A lack ofggest symmetry, money in an money out. The main crumbs around the ok does resentity challenges with the risk premium associated with that return than they are comfortable with. Chinese making great steps to put in place all kinds of infrastructure to open the nation up, increase transparency, access, tying the chinese economy into the global market, at least the infrastructure, book whether hearts and minds are there to allow integration and freedom part of these International Money markets. The problem is each of the steps are not binary. It does not take you from lack of transparency to complete transparency. This is consistent with the chinese way of opening up. It does not want to do this and they specific step. They want to take baby steps. This is another baby steps. See symmetry on capital flows in and out of china, i dont think you will see post so movement of International Capital into their debt markets. Manus baby steps takes you to a whole other level. Simon, you stay with us. Lets get you set up for your highlights for your week ahead. Shes back. International Diplomacy Center sang a lack of diplomacy perhaps on the way the g20 goes. Xi jinping in moscow to meet with vladimir putin. The next day the chinese president holds talks with Angela Merkel ahead of g20 in hamburg. Manus that summit takes place on friday, all building to how will donald trump act and react with his russian counterpart . Set to hold their first facetoface meeting as heads of state. Coming up a milestone agreement, iran plans to sign a formal contract with total and cnpc for the First Investment in iran since sanctions were levied. This is bloomberg. Anna its just gone 1 20 in the afternoon. Juliette saly standing by. The eue alphabet said. Ntitrust fine will cut profit the Company Plans to report the fine in a separate line on its income statement. For pushingenalized its own Shopping Services ahead of rivals. Toshiba said it is considering listing its energy unit in switzerland. Timeframe by the end of september. The company says it continues to consider other options, including selling the business. That is your Bloomberg Business flash. Manus thank you very much. To sign a plies t contract with total and cnpc to develop its largest gas field. Manus it is the first Foreign Investment in iran in energy since sanctions were lifted. What is the significance of this . Put this into context for us . It is a big corporate name. That is entirely accurate. We have been waiting for a wave of potential deals since sanctions were eased. Out this announcement from total and cnpc that they have signed this deal. The rationale makes sense. China has been snapping up Energy Assets around the world. Some of the majors have been chipping their toe in the dealmaking space. The timing, the iran announcement is expected to come on the day that was going to be the deadline for qatar to respond to those 13 demands from the saudiled gcc alliance, and it involves an oil field that iran shares with qatar. There is this interesting geopolitical angle. One source here on the ground thought that the decision to restart production in the northfield asked field earlier cause of the the diplomatic spat with saudi arabia and other gcc member since it heaped pressure on other opec countries, so some fascinating dynamics on the ground. Manus what is the latest on the qatar situation . The kuwait these are playing a crucial role here as mediators. Exactly. As i alluded to in that previous answer, we have had supposedly an extension of the deadline. Saudi arabia according to local media saying it has agreed to this extension in response to a request by kuwait, acting as mediator in the dispute. Hasont know whether qatar agreed to the extension and whether or not this makes any difference to the disagreement. We saw strong words out of the Foreign Ministry yesterday saying they would not concede to anything that violates national sovereignty. Meanwhile, saudi arabia said there is no room for it remainss, so unclear whether an additional two days will be enough to result this dispute. Manus thank you very much. U. S. Turn our attention to crude extending its longest run of gains this year as drilling in america slows, futures climbing in new york, more than 8 in the past seven sessions. Simon is with us. Manus yes he is. Which of the stories in oil you believe . The big selloff or the bounce of the last eight days . Big selloff. The Baker Hughes Rig count is providing early week in visio some, but i am not buying it myself. I think that was the least effective Production Cut from opec, and six dollars a barrel lower. Is whole of the marketplace looking at the sensitivity of the u. S. Shale market to lower prices. There ishink largescale capacity coming off at the 45 to 50 range. You would probably have to see sub 40. Are they prepared to take that shortterm pain . I dont believe they are. Manus the saudis dont seem to be in the mood for that. One of our top stories, opec , the total estimated production of opec. Ae is now producing more than million are also day. By the time opec in november, there will be screams unless something dramatic happens, if the market continues in this bandwidth, you will hear clamor for them to do more, but is there an appetite . There is little appetite with stretched finances and a lot of opec countries. Also through nigeria in their. A number of countries exempt from the production cap who for geopolitical reasons were given leeway. Will pressure come on them to participate . That is a plausible scenario, but goes to show something i have been talking about for six months, the geopolitical stability of the opec group means, which is fundamentally more unstable since the arab spring, makes comparisons with 1998, which a lot of professional analysts are drawing, very inappropriate in this cycle. There just simply is not the desire to impose shortterm pain on the population. Effectively public works programs will continue at lossmaking to represent a geopolitical stabilization program. As well and the gas story. Thank you very much. You stay with us here on daybreak. Anna barclays is in the dark. Four executives in the bank itself face fraud charges over Capital Raising could we bring you the details of what is to come. This is bloomberg. Manus welcome back. The dollar against the yen, 112. 5. Lets check in on the markets. A muted session across asian equity markets, trading volumes light. Nikkei and hang seng volatility rose the most in a month on friday. That coming down quite a bit in todays session. Fromility might be awaking a coma, but still pretty groggy. Are, adding towe a 16 basis point surge last week, the most since march, but the 10 year yield is just 1 above the record low set a year ago this week and this shows that the verge an convergence. Diversiongence. The worst start to the year for the greenback, finishing the longest such stretch since 2011, wiping out postelection gains. If history is any guide, things could get worse. The dollar has weakened with positive and negative data surprises. Oil, a day winning streak, the longest since 2014 for wti. After the bear market we saw recently, the bets on the route may be peaking is Money Managers have been adding short positions at a slower pace. Manus thank you very much. Lets have a look at the mobile version. You know how to get it. It is on your mobile and your bloomberg machine. The cover story, plan b, a plan b for brexit. City of london allegation heads to brussels with a secret plan for a free trade deal, and based on a concept of mutual access. That is citing people familiar. The plan has unofficial support in whitehall and german officials and comes as the u. K. Chancellor Philip Hammond urged is this leaders that the government is listening after disasters general election. Anna the next story is on qatar , given another 48 hours to meet the demands of its gulf neighbors. The extension was granted after the foreign minister delivered a letter in response to the list and set on saturday his country wont concede and was set to let todays deadline pass. Fed minutes on wednesday of the june meeting, part of significant insight into Balance Sheet unwinding. Might be ruffled on thursday. The upturn in inflation is not yet selfsustaining. Anna four former barclays executives will appear in court. And three senior managers and the bank stand u. K. Seriouse fraud office of conspiracy to commit frauds. Joining us is our Bloomberg European legal editor. Thank you for joining us. Talk us through the details of this case. It goes back to the financial crisis in 2008 when several banks were being bailed out by the u. K. Government, and barclays did not want to be taken over by the government and was trying to get there own had 12 billion pounds at one go from qatar, and with the prosecutors are looking at is another part of the deal. They paid 300 Million Pounds in firmory fees to a qatari and made a 3 billion pound loan available to qatar at any time. Manus what is going to happen at todays hearing. Procedurally easy. Come in, state names, given bail hearing,or another 1015 minutes altogether. What we are hoping for is getting a look at the indictment , which will have more details on the charges. All we know is they are charged w