>> we need to raise rates higher, we will. i think for now, as i mentioned, we see the likelihood of credit tightening. >> jerome powell reiterates fighting inflation remains the fed's top priority less than two weeks after the second-biggest bank failure in u.s. history. conflicting messages about deposit insurance from powell and treasury secretary janet yellen baffled the markets. the s&p 500 whip sign before ending the day sharply lower. plus, with inflation concerns continuing to swirl, policy decisions are on tap. rate hikes are expected across the board. european markets assessing that decision from the federal reserve to go ahead with 25

basis points and yes ultimately jay powell and the fomc did pick a side between inflation and financial stability. financial stability taking a sidestep as the inflation fight remains a key priority. this was also a fed leader in jay powell that opened the door potentially to a pause in rate hikes. there is a lot of uncertainty with the fomc and for jay powell as they weigh up those inflation pressures with the longer-term impact of the crisis around the banking sector. we look at the open, the spanish ibex, it was a positive session in asia. some relief coming through. earnings driving index higher. here, the focus is on the inflation question. as we look ahead to the boe. a drop of 29 points.

let's look across asset given the selloff we saw. the whip sign. certainly the janet yellen, jay powell split screen that caused concern and angst. janet yellen suggested there was no discussion around guaranteeing deposits putting her at odds with the signaling from jay powell. in little bit more relief coming through as u.s. investors away up those mixed messages. yields coming up about 23 basis points at the front end. that's deepening of the yield curve continues. the pound and focus as we lead up to the bank of england. strength coming through for sterling. the bank expected to hike. that is the shape of things across these assets. let's get back to the fed. hiking by 25 basis points jerome

powell signaling may be more in store. >> if we need to raise rates higher, we will. for now, as i've mentioned, we see the likelihood of credit tightening. we know that that can have an effect on macroeconomy. we are going to be watching to see what that is. tom: in a senate hearing at the same time, janet yellen said regulators are not looking to provide like it insurance for u.s. savers. >> it was not considered or discussed anything having to do with the blanket insurance or guarantees. tom: for more, let's bring in bloomberg's markets reporter. what were the main takeaways? it was a confusing day. >> powell really sent us a

dovish hike. the two year yield rallied since the decision was released. the markets are saying this can be the last hike of the cycle. it could be the turning point. he was especially candid about the risks that had to, the uncertainty and the unknown ahead. this is the key change in the opening statement where he specifically talked about the recent developments in the banking industry are likely to result in tighter credit conditions, which will weigh on inflation, but the extent of these effects are uncertain. he went on to speak about the banking turmoil, saying a pause was considered and that a significant number of fed members see tighter credit conditions ahead. it could be modest, it could be significant, we just don't know. he did say some positive things about the deposit outflow, that it has stabilized. tom: a pause was considered. swap traders pricing and 50/50

on whether or not get another hike. what is the bar to go further and add additional tightening? >> to me, they need to see complete confidence that the banking system problems are behind us and any tightening of credit conditions that come from it don't leave to below trend growth. they need to have confidence the economy is running above trend to warrant another hike. the shift i think in markets is going to shift rapidly from inflation to the more surveys on lending standards that we get. how many banks were affected by the turmoil? will they tighten lending conditions as they have reaction? we have six weeks until the next fed meeting. will it show up in the data enough to warrant the fed to pause at that meeting? tom: saying that the banking

crisis has led to any of the -- an equivalent 1.5% tightening around loan conditions. valerie tytel assessing that decision and commentary from the fed and jay powell. let's bring in francine lacqua back in zürich covering another critical central bank. the team a bloomberg economics expects a 50 basis point hike. the focus will also be questions around financial stability given ubs and credit suisse. francine. francine: one is the last time we sent a full reporter to cover this conference? they usually do a presser at the headquarters and today they are moving into a hotel because there were so much interest. they have the same dilemma as the fed had yesterday. there is a banking crisis. the trend of inflation is very different than any other country.

they are 3.4%. the s&p president said he needs to keep a handle on it. i'm expecting a lot of questions on the banking system, on whether they can stabilize this, and the regulator after five days where this government led togetherness or put togetherness of credit suisse and ubs wiped out $17 billion, they finally put a statement in saying why they made that statement. i'm expecting the tightening is not casual. i'm expecting them to feature a lot of questions about that. this is banking crisis versus higher inflation. what will they do? tom: a day where the snb's decision jumps to the top. francine lacqua covering that story throughout the day. let's check in on these european markets. you had the selloff in the u.s.

as investors wait up that decision. a dovish hike from the federal reserve. it was a comment certainly from the treasury secretary around the fact that they were not discussing or considering a blanket guarantee that led to the selloff toward the end of the day in the u.s. a more positive session in asia. losses of 0.4%. the ftse 100 is down by 0.3%. let's get more analysis now. good morning. thank you for joining us. your views on the fed decision. is there a risk of a policy messed up by the federal reserve given the financial tightening, given the banking crisis as they raise rates? >> yeah, there is always a risk, right? this is kind of normal course for a tightening cycle. we have gotten used to this.

rates at the lower bound. now that we are getting this tightening, you are getting this bubbling up of market fragility's being exposed. we are just not use to it. we are having these stumbling blocks along the way and there is a real possibility that there is a mistake made, but i don't think this is the mistake right now. the ecb hike has been well digested come the fed hike has been well digested. the biggest thing policymakers have learned is that if you react quickly to crises to fight these risks, contagion doesn't spread as much. i think you are seeing that one fragility is exposed. and they continue to stem the

tide. tom: are there pricing in the cuts? >> this is interesting because we have had a call for very aggressive cuts for quite some time. we have had that since last year. that was largely because this is normal for a tightening cycle. the economy gets squeezed. it happens rapidly. when you do get recessions, it happens quickly. between the drop in unemployment and the peak, it takes 12 months on average. it means recessions are nonlinear and the response tends to be quite aggressive. you get at the very least 200 basis points. the other important point to make is that regardless of whether we get a recession, even though i believe that will happen, if they keep fed funds where it is and inflation falls

back to what the market expects, real fed funds get artificially tight you would expect cuts. tom: that's a big call. what does that do to your view on the economy? you think the economy is recovering, how long does that going to be? >> it is 0.6 percentage points off average gdp. it is a mild recession because we have seen it coming. it is the most pretty did recession in history. it has been caused by the fed funds tightening. it has been a relatively mild recession. i would expect fixed income to rally quite strongly.

you are starting to see that already. not particularly deep. the fact that we have had the banking crises. we are already seeing lending standards. this accelerates that. it raises the risk of a hard landing. tom: money continuing to move into the front end. given the 23 basis point move lower in yields at the front end , that continues in terms of the momentum. skyler stays with us and we will get more of her calls in the next couple of minutes. dollar bears roar with delight. more pressure on the greenback. is that suffering from a lack of confidence? what does it mean for the broader fx space?

this is bloomberg. ♪

tom: welcome back to the open. happy thursday. losses across the european benchmark. it is a brighter picture as you futures in the u.s. gains of 0.7%. a solid session in asia partly as a result of softer dollar. the bloomberg dollar index fell. rate cuts act by 25 basis points. we are joined by eddie. maybe we will get a question in on crib it was well. six straight days losses for the greenback.

has it lost its mojo and has that safe haven status crumbled? >> not only was this a very dovish hike, but also expressed a lot of uncertainty about the economy. that rattled investors. normally when investors have been rattled, they went straight to the dollar. not so yesterday. there is a difference in messaging from the ecb. they sound much more hawkish. you see the euro rally in the dollar not getting the haven bid. tom: this is a temporary phenomenon or is dollar weakness, losing the haven, does that continue? >> i think the ecb will probably start reassessing its hawkish

messaging over the next few days. i think they still sound quite hawkish in the messaging have sent up until now. but given just how bearish, how bearish powell sounded, i think the ecb will start questioning themselves a little bit. if they start reassessing, i think we see the dollar finding the haven trade again. tom: briefly, bitcoin up above 27,000. is this a safe haven bid or a bet rate cuts? >> it is a plague on all of your houses bad. we don't trust the financial system bet. i don't like this. i don't like the financial system. bitcoin has it's in fundamentals at the moment. there is definitely dissatisfaction with the financial system. tom: bitcoin currently trading

at 2,7680. always excellent. thank you very much indeed. let's bring back in skylar montgomery koning. before we get to positioning, i want to get your view on their tightening as a result of the financial stabilities issue, is there another shoe to drop? is that real estate, the credit markets? is there another area of concern you are zeroed in on? >> i think this is the problem in terms of no one really saw this coming. i think the broader market wasn't really concerned. i think these unknown issues for

unknown vulnerabilities, they become unexpected. banks have commercial real estate on their books. they have been written down in value. it has pretty much been frozen. the values will have to be written down. that is somewhat of a concern. i think it is marv a slow burning concern. more than a matchbox issue. tom: how do change our locations? the -- your allocations. >> we have kept them the same from two weeks ago. the one thing that has changed is the rising of ability of a hard landing. as i said, credit conditions were already tight, i think this accelerates that. credit conditions feet into the economy quite a lot and i think

that means you get lower growth or deeper recession. in a hard landing scenario, you would expect government bonds to rally, you would expect risk assets. end of looking through the gdp numbers to look at the fed and the privet and thinking about that being a positive, but in a hard landing scenario growth is bad enough that equities do suffer. reduce your location and then we still like ig credit. credit has been quite great in terms of if you are a spread investor, spreads have widened, but the total returns have more than compensated you. it is kinda between that soft and a hard landing is where you would want to be. that is where we are allocated. tom: ig credit cutting exposure to equities. always excellent, thank you for joining us. coming up, to be or not to be. that is the debate between coinbase and the sec.

i may not have done it justice. this is bloomberg. ♪

>> the banking system is pretty sound. we are talking about a few banks. we heard it from chairman powell, this is not something spread across the entire banking system. this is not a credit crisis.

this is a situation where it is a few banks. tom: the citigroup ceo speaking in of the state of the banking sector. talking of which, let's bring up the premarket movers. focus on coinbase and we will get into that shortly. also first republic. premarket gaining 3.5%. he also have chewy, the pet supply company. let's get into the coinbase story. the u.s. sec has warned the crypto exchange of its plans to sue. let's bring in alex webb. what do we know? >> the sec has brought an enforcement notice against coinbase which is the largest crypto exchange. they have been in discussions for much of the past nine months

or so. coinbase asserts it's in a this. these are securities, the government is saying that they are. >> why is the sec being so aggressive at this point? >> a lot of it is the fallout from the ftx scandal where you saw lots of investors and retail investors wiped out. they have been accused of not necessarily protecting retail investors as well as they could have done. it is not just coinbase, we have seen other competitors beside. tom: and coinbase saying they will fight this if it goes to court. they believe they have a very strong case indeed. an indication the sec is taking this more seriously. >> and parallels a lot of the things we have on social media. they say we are not responsible

for the content on the platforms because we are connecting people. >> it is a similar argument that they say we are not securities, we are not a publisher. tom: that is an interesting comparison. it is not doing much. currently trading in 27,000. the boe looks to cement its tightening cycle. more on that next. your markets in europe currently off by 0.4%. this is bloomberg. ♪

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tom: welcome back to the open. 30 minutes into the european trading day. here are your top stories.

jerome powell reiterates fighting inflation remains the fed top priority two weeks after the second biggest failure in u.s. history. conflicting messages about deposit insurance baffled the markets. the s&p 500 whip sawing before ending the day sharply lower. european equities turned negative. with inflation concerns, policy decisions are tap. that decision has come through. we await the boe. raising policy rate by 50 basis point. that rate being raised to 1.5%. the s&p raising by 50 basis points. on the back of the move.

we know of course that there is a major cap. we also expect to hear about the financial stability given his role in engineering the ubs takeover. that is the headline from the essen the. the s&p can't include more rate hikes. it is saying it is prepared to intervene and currency markets if needed. the essen bc inflation before moving down to 2% in 2024. also saying that credit suisse measures have put a halt to the crisis. snb saying they have put a halt to the crisis. francine lacqua is on the ground

in zürich and will bring us more on this story throughout the morning. currently the swiss gaining 0.6% against the u.s. dollar, so a decent pop for the swiss franc. likely tied to the guidance that the snb cannot exclude more rate hikes in the foreseeable future. ok, this story will get more details live from zurich in the coming hours. let's get the bloomberg business flash. >> thanks, tom. neither billionaire jim radcliffe nor the qatari consortium interstate in manchester united have submitted bids for the british football club. both were granted extensions to last nights deadline to increase those initial offers. groups are competing to acquire the club from the american glazer family. china evergrande group has announced its long-awaited

multibillion dollar reconstruction plan. they say they will give creditors the option to swap debt into new bonds and equity linked notes. returning to normal operations will mean financing of at least $36 billion. the world bank president says that global recession still not off the table. the lender is reviewing its global growth forecast following china's lifting of its covid lockdown. they say the lack of investment in developing economies is of particular cause for concern. >> in the latest what we have seen as advanced economy growth expectations have gone up some late last year. that is the u.s. and china in particular as china lifted the embargo, the lockdown. as we are looking at it now, growth is slow, but positive in advanced economies, but in developing economies, not much

investment taking place. that is the big challenge. >> renault is preparing to list its electric vehicle arm. renault is considering listing the firm on the euronext paris as soon as the fourth quarter and aiming for evaluation of nearly $11 billion. global news powered by more than 2700 journalists and analysts in more than 120 countries. tom: madison, thank you. yesterday was the fed. today is the turn of the bank of england. the latest rate decision is due to be published at noon in london. it comes a day after markets were surprised by hotter than expected u.k. inflation data. lizzy burden is outside the bank of england. what are we expecting today?

>> i would say that upside inflation surprise yesterday in complicates matters for the bank of england. there had been some economists not naming names who said the recent banking stress acts thoroughly meant that conditions had tight so much that the legwork had been down and it is time for a hold. but this print really makes it look as if it 25 basis point hike is coming today. that is what markets pretty much expect. there are expectations of a vote split. they are worried a previous jumbo hike has yet to fully take effect, but given his responsibility for financial stability, perhaps he will vote for 25 basis points to show his confidence in the financial system. also a question over the

committee's big hike -- shock -- talk, will she go for a 50 basis point hike. that should be an indicator as to how many and whether the bank would continue to increase interest rates. >> i think merging hock and hike with catherine man is hershey aiding -- appropriate. to what extent does the print we saw yesterday derail the prime minister's ambition? >> well, it wasn't the news rishi sunak wanted to get at 7:00 a.m. yesterday, but by the end of the day he seemed to emerge pretty much unscathed. on inflation, economists recommend it come down by the end of the year. he also had some good news on the northern ireland deal. the vote yesterday was in the government's favor even the liz

truss and boris johnson joined the rebels. boris johnson was giving his televised testimony and parliament on the gatherings at downing street during the covid lockdowns. it was a heated come along testimony. he sometimes lost his temper. but that seems to reflect well on rishi sunak. it reduces the chances of a johnson come back even if it casts a long shadow over the conservative party. tom: lizzy burden, thank you. let's bring in liz martins. great to have you on the show this morning. is it going to be one and done from the boe? >> yes, we think so and this is quite a close run. following the inflation number yesterday, we do think it tilts the balance in favor of a hike, but i don't think it is a done deal. all the central banks agonizing

about what to do in terms of financial turmoil, i think the boe is the most likely to be dovish, to hold rates, to have a few votes from people wanting to hold rates. andrew bailey said before the financial turmoil began, don't assume we are going to hike rates again. i think the inflation print has swung it and we will get a hike today, but i think we are at the end. i think that is it then. tom: you touched on the banking term. we have had tightness in the financial conditions in the u.s. do you have enough data at hand to make an assessment as to what extent financial conditions will be tightened as a result of the fallout in the u.k.? >> i think it is really hard to say because it depends how long the turmoil lasts. a little bit more risk aversion toward banks.

how banks take that risk aversion and reduce lending or are a bit more cautious about lending. in theory, that does the central banks work for them. if you have a big rebound, and that might be quite limited. at the same time, you have seen swap rates come down which is the opposite. you have to wait and see what things like the credit conditions tell us and bank lending more generally, about how much work the market turmoil has done and how much those inflation pressures are still in the system and need to be dealt with through monetary policy. tom: gilt yields coming down at the front end again. liz, take us through, it is a murky picture, i get it -- a lot of headwinds and uncertainty -- but look through to 2024, where do you see rates? >> we think there will be one more hike and then we think we are done.

we've kind of got rates on hold from there. the market clearly thinks the next move is down and it may well be right. if inflation drops like a stone, maybe have a mild recession. it is more than possible the boe does tackle that by cutting interest rates. on our forecast, inflation is not going back to target and we have a very tight labor market which means that pressures from that including the supply-side damage means that may be is structurally higher. the question for the boe becomes if inflation stabilizes at 3%, do we continue to hike rates and damage the economy in the process to try to get it down or do we say we can tolerate inflation? that is an open question. it is something economists have been talking about since this inflation upturn began, whether central banks might tolerate a

higher level of inflation. we think them cutting is quite high because that is one thing to stop hiking, but actually cutting back, things would have to get considerably worse from here. tom: structurally higher inflation and rates, any question about how they get it back down to 2% if they stick to that decision, that target, that forecast. how do you map that to -- in to the health of the u.k. economy? do you align with the forecast that we avoided technical recession? >> we are forecasting a small technical recession, but given everything this economy has been through i think that is a pretty good outcome. you think about the huge consumer income squeeze and we have been waiting to see the impacts of that on demand and yet as we have come into 2023, it has started to pick up. business confidence, consumer confidence.

now, we will see what the impact of the financial turmoil is an it think it will have an impact. generally speaking this economy has been incredibly resilient. we spent 2022 worrying about energy and household energy bills. coming into 2023 we are worried about food prices, rent prices, and the impact of those rate rises on mortgages and the cost of business and it is a constraint on government spending as well. we have gone from worrying about inflation to the impact of the medicine for inflation, the rate rises. tom: and those sausages in our supermarkets. the call that the boe will go one more today and then down hold for a while. thank you. stick around. later today, we will have coverage of the bank of england rate decision starting at 12:00 p.m. u.k. time on bloomberg tv

and tv . you are seeing losses across european equities of 0.3%. paring some of the heavier declines. futures looking positive in the u.s. after the losses yesterday. it was a decent session in asia. the benchmark gaining 1.3%. softer dollar was a play. strength from tencent. here's a look at the ftse 100. currently down 0.5%. the dax off just by 13 points. the benchmark down 0.3%. gilts. yield sticking up by two basis points. 23 basis points lower on yields. coming up, the swiss national bank hikes by 50 basis points. more on that and the credit suisse. this is bloomberg. ♪

tom: welcome back. let's get out to switzerland where the central bank has raised its key policy rate by 50 basis points. it comes switzerland's banking sector faces scrutiny following the credit suisse turmoil. let's bring in the swiss bureau chief in zürich. walk us through this rate decision. such a central time for the

central bank. >> very central time, very important. the message i get here as there is nothing to see. the central bank raised rates as expect it by 50 basis points. that was expected before the weekend and then in the last couple of days maybe they were saying a be they less or not at all, but it shows there is nothing to see here. if they haven't raised at all, there may have been speculation. then there would have been on the. clearly, rates went up as expect it. that shows that the central bank but its focus again on inflation. inflation is not as high as it is everywhere else. that was a bit of a surprise. prices went up more than expect it. for the central bank, it is really important to keep the inflation rate where it is or bring it down as well.

by the way, they did make comments around credit suisse and they did say that the measures that they put in place, they helped halt a number. tom: they also touched on can you give us more light on what is happening with the controversy around the additional tier one bonds? >> there has been lots of controversy over the last couple of days. we have seen bondholders try to figure out what to do. who can they sue? can they sue the swiss government? they just feel very unfairly treated. finland came out and laid out its reasoning and justified its decision. they said that they an the federal decree and based on those two things that it was ok for them.

that in the case of the viability event, that those bonds would have been written down and that is exactly what happened, so they feel this is how it should have been done even if bondholders and the bond market doesn't agree necessarily. tom: ok, thank you very much indeed. for the analysis in the take on that decision by the snb and the language about potential hikes coming from the swiss national bank. don't miss francine lacqua's interview -- really fascinating -- with the swiss national bank president later this morning. there will be lots of questions about financial stability and what led up to the takeover by ubs of credit suisse. that conversation 11:00 a.m. u.k. time, 7:00 in new york. coming up, it is one so far.

extra time, but who will score the winning goal? we get the latest next. this is bloomberg ♪

tom: welcome back to the open. 53 minutes into the european trading day. european stocks paring some of

the heavier losses in the session. just a very slim amount of optimism coming through from the dax and the cac 40. the bank of england decision after the red hot inflation print of yesterday. futures in the u.s. pointing to gains after the losses on wall street yesterday. let's take a look now at some of the other things we are watching out for today. i flagged this. the preview of the bank of england. we will have the latest in terms of the rate decision from the boe. followed by the u.s. initial jobless claims. i will clock p.m., treasury secretary janet yellen testify before a house subcommittee on the federal budget request and the economic outlook. interesting to see if you walks back her comments around no guarantees for deposits. at 3:00 p.m., the march euro area consumer confidence reading. also eu leaders are gathering in

brussels for a two day summit. later, president biden heads to canada, where he is due to address the canadian parliament. now the football another billion or jim ratcliffe nor the qatari consortium interested in buying manchester united have submitted improved bids for the football club. both bidders have been granted extensions to last night's deadline to increase their offers. let's get some insight on this true sporting contest with the bloomberg u.k. business reporter and expert on all things football. where do things stand? >> well, we are coming close to the end game. there are all sorts of processes that still have to be completed like due diligence, which can take a few weeks. yesterday was a significant milestone. there was a deadline for bids. as with these processes come the

chelsea process which was also handled by the u.s. investment bank, there is a certain flexibility. we really only had two publicly named bidders, the can tarry consortium and jim ratcliffe. that is far fewer than one we had the same situation with chelsea. tom: why is it just two public bidders? had -- how many did chelsea have? >> chelsea had about 20 in the beginning. it was whittled down to four. and then one pulled out, actually. it is a big difference. one, everybody knew that chelsea had to sell. it's a very different situation here. the glazer's have made it clear that they don't have to sell, they could carry on. they are really demanding a big price.

and then the price is the second thing and the third thing as well. the price is at least double chelsea. according to analysts. so that rules out a lot of people. tom: david, thank you very much indeed and we will continue to keep across the reporting from david and their team as it continues to unfold. thank you for the latest on the story. that is that for the european market open. surveillance early edition is up next. a dovish hike is a way to compare it. futures in the u.s. up 0.7%. this is bloomberg. ♪ everything's changing so quickly.

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>> our banking system is sound and resilient with strong capital and liquidity. my only interest is we identify. >> they may be underestimating which is exactly why i would have favored a pause. >> he said he does not know what kind of credit tightening is going to come but we do know that inflation is a real problem. i think what he said was jolly still as simple -- jolly sensible. >> is :