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Newsmakers and market movers. This is The Pulse with Francine Lacqua. Well, good morning, everyone, and welcome to The Puls. I'm Francine Lacqua here in London. Now, Treasuries falling across the curve as a surge in oil prices and a hotter-than-estimated U.S. inflation reading last week have heightened concerns ahead of tomorrow's Fed decision. Now, traders are now pricing in a more than 90 percent chance of a rate increase. Tech also again in focus as President Trump continues to resist the push to slow the pace of AI development. All of this, of course, weighing on markets. So we'll get to Peter Elstrom in a second, but let's begin with coverage with the move on U.s. Treasuries. Again, the 10-year yield hitting its highest since 2007. With us now, Koku Agboblua, Global Head of Economics, Cross-Asset and Quant Research at SockGen CIB. Koku, thank you so much for being here. Look, we knew that these yields were going to rise. I mean, no one had given me, frankly, a good idea of why they would stop rising. And then you see it above 5% and your heart sinks a little bit. Like, what would stop this rise? Well, I think there's a confluence of a lot of points. I think the key one is that the biggest buyer of Treasury used to be the Fed. So before the COVID crisis, we were roughly $4 trillion of Fed balance sheet. We peaked at $9 trillion in 2022, and now we are roughly at $675 trillion. So they reduced the balance sheet by $2.2 trillion. In addition to that, you have obviously the deficit, $5.8 trillion. You have $2 trillion of debt service now. But I think there's also an interesting point, which is the Fed chair, whole of mirrors problem, which isthat the Fed, through forward guidance, was essentially telling the market where it saw interest rates. Then the market priced that expectation. And when the Fed looks at the market, it was literally looking at itself. Hence the blind leading the blind. So this is creating more uncertainty and additional term premium. And add to that Japan, China reducing their balance, their treasury exposure as well. So one of the key point I think is the Drucker Miller points on let the bond market speak. And it is simply reflecting stronger nominal GDP growth. So if you. Is there. I mean, if it goes to five point five, if it goes to six. I mean what else does it break in the markets. This is a good point. I think if you look at nominal GDP we are less late 2 percent real GDP growth and then you have 3 percent inflation. So fair value for Treasury should be around let's say five five and a half if you have term premium. So if it goes two let's a five and a half six and growth doesn't pick up because it's there simply reflecting higher nominal GDP then you can sort of break the whole economics of a debt capex for example because you can see the order book coverage ratio was five times in February and now it's going down to two times. So investors are becoming more price sensitive to fuel the AI capex cycle. Okay, Koko, keep that thought because we'll come back to markets, but we also do really need to talk about AI. It's been a crazy week for AI. President Trump has criticized the push to slow the pace of AI development as politically motivated or a Chinese scheme. Now, he was speaking in the live phone call with the NVIDIA chief executive, of Jensen Huang on stage at the Olin Summit in Los Angeles. They're just playing right into the hands of a lot of people that don't want to see it happen. And that could be political people. It could also be China. And we're not going to let that happen. It's a hoax. Now, we're joined by Peter Ahlstrom, our executive editor for Global Technology. Peter, it's so, so good to speak to you after the week that we've had. First of all, how dangerous is AI right now, Given all the warnings we've had from also some of the researchers with the U.S. president actually not wanting guardrails, not even that. He's going further. He's saying it's a hoax. Yes, certainly. We're seeing these AI warnings come out and they're getting more and more intense at this point. You've got different employees at these companies resigning. We had Coxson resign last week from Anthropic warning about how AI could could damage humanity. And then somebody from Anthropic came out, one of the leaders at Anthropic, came out and said we think there's a greater than 10 percent chance that AI could indeed inhumanity before the end of the decade. So that led to this weekend, very exceptional moment where Dario Amadei at Anthropic came out and said, we need to have some sort of pacing mechanism to be able to regulate how we proceed with AI. That was echoed by Sam Altman at OpenAI, Elon Musk and pretty much everybody else within the industry. And then you get this pushback from the Trump administration saying, no, no We're not going to slow down. So there are many different motivations for that I mean partly the AI investments have been a tremendous boost to the US economy at this point They're a big part of GDP growth. They're of course a big of the markets too We're seeing that help out stock prices across the board. So Trump is pushing back on that front But the industry is still insisting they would like some sort of regulatory mechanism And you're seeing other people weighing with different kinds of options for doing this including David Sachs who has been one of the advisors to the Trump administration. But Peter, just so we understand, I mean, I know it goes back to money, but actually, even if we slowed it down, you still need the data centers, right? You still need The Investments because companies still want to buy into AI. So do we need AGI? Do we need like the top, top thing that is dangerous for humanity? I think what the concerns are around right now is recursive self-improvement, RSA, where AI agents are able to improve themselves. They go rogue. We had this series of incidents at OpenAI in particular. So, yes, there's still going to be the investments in the data center. There's still gonna be research at the frontier. But the question is, at what pace and what kind of mechanisms do you set up around these companies to make sure that they don't end up ending humanity? And so how are chief executives organizing themselves? I mean, without the U.S. administration, can they do anything? I know they're meeting in the UK. Well, David Sachs, again, who's this advisor, said you don't need anybody's permission to slow down. You can just go ahead and slow down on your own. That's not the issue. I think they're concerned about the competitive race at this point, and they are putting out proposals for putting in place some sort of safeguard, some sortof guardrails around what we could do at thispoint. Sachs's point is there's already product liability. If you create something that's going to damage anybody or hurt something or kill people, you're going to be responsible for that, so you don't need special permission. But Amadei did ask about some antitrust exceptions so that they could talk to each other about how they're goingto slow things down. I think many in the administration are reluctant to grant that kind of permissions to these companies. But China's also saying, like, look, we shouldn't worry about this. So if you have the Trump administration not worried, if you Have China not worried and you're a chief executive that is worried, can you really slow it down on your own? China's China's worried, I think, in a different direction. AI is much more popular in China right now than it is in the United States. I think the support for AI within China is much stronger, probably because the government has a lot more control there. They have a different kind of regime where they can exert those kinds of those controls. But at the same time, their companies are not at the leading edge of AI. They're not pushing the frontier in the way that we're seeing with open AI and anthropic in particular. They feel like they do have much more control. They're more concerned about social unrest and whether AI could be used to somehow upset the stability of the Communist Party. Peter, as always, thank you so much for joining us. Peter Elstrom there, Bloomberg's executive editor for global technology. Let's get back to Koko Agbo-Lua from Soggen. Koko, when you look at AI, and again, I know there's a lot riding on it, it goes back to CapEx, it goes Back to Growth, but how do you see it from an investment point of view, given all the question marks we have today? Yeah, from an investor point of vue, it's essentially an earnings boom. And there's been a lot of analysis on the global total addressable market for AI. If you look global GDP, it is about $120 trillion. Total labor income share of GDP, $63 trillion. sort of knowledge workers, which are the sort of target for AI, is 30% of that. So $18 trillion of total addressable market. So if AI has 10% of THAT, that's $1.8 trillion on an annual cost savings or revenues to be compared to the $500 trillion capex we're talking about. If AI has 20% market share, that $3.6 trillion. So the numbers are staggering. And when you look at the corporate profits, in terms of pricing power, for compute, for token, they are essentially monetizing this sort of competitive advantage. So I think it is here to stay, and this is what the equity market is reflecting. The free cash flow generation is quite outstanding, and we just need to wait and see. To quote the great philosopher, everyone has a plan until they get punched in the face, so better be careful what is to come. That's so true, especially for markets. Coco, I mean, when you look at it, this has to be inflationary. Yes. Yeah, it is inflationary, which you can see that with CapEx, semiconductor, memory chips, et cetera. So he's essentially creating an inflationary sort of a cost push inflation, if you will. But there's an interesting point around wage inflation, because if AI start displacing workers, you could see that was Kevin Walsh argument that it could put pressure on wage inflation longer term. But we're not seeing that yet. But it is one of the elements to monitor. What are you expecting from the Fed? I mean, so done deal, I imagine. But what happens after that? So we are anticipating three hikes by the Feds, sort of September, December and March. You have Bank of Japan hiking three to four. You have the ECB that's likely to raise as well. So three hikers after the two they've already done. Potentially the Bank of England, the Curbs pricing will hike. So we're essentially heading towards a rate hiking cycle across the globe. What does it mean for the Bank Of England? Because I know we saw massive repricing yesterday. I mean, no one was really expecting anything from the Bank OF England. Is that just because they get put up with the with the rest of the tide. Yeah I think there's a beta effect to it. And you have to remember the reason why the curve is pricing all these hike is really because of the oil price. And this situation is worse than it was before. Think about Ukraine attacking some of the Russian refineries. Russia stopped exporting their products to you to Europe. So two and a half million barrels per day. You have the straight of Babel Mandab which is sort of 25 percent of global trade in addition to the Homo straight. So if that's situation does not de-escalate, I think these hikes will continue to be priced in. However, if the oil price was to go down and we sort of have a deal, which even though the probability is pretty low, you could see a lot of these hike being priced out. So at this stage, it is a challenge for central bank because it's a supply shock, not a demand shock. And it is very tricky to address a supply shot through your higher interest rates. What are your expectations for energy? Again, we went into April thinking that, you know, we'd see Brent at, I don't know, 110, 120, people were saying 150. China took a lot of demand out of the market, and that helped everyone. They're going back into the markets now, and it feels like the war is escalating. Absolutely. Reserves have essentially tanked. We have a bunch of scenarios on our side saying, you know, these levels were not sustainable. But I think, long story short, there's sort of 104 million barrels per day in terms of global demand. Straight over most were 20 million. But the key thing is that 7 million barrels per day were going through the east-west pipeline through Saudi Arabia to the Yambu port. And this is now shut because it was attacked by drones. So the situation is pretty dire. What is more interesting is the products. If you look at diesel crack spreads, we used to be at $10. Now it's $100 in addition to the oil price itself. So the pressure on U.S. consumers is going to be pretty dire if we do not have a de-escalation. So to conclude on this point, if you think about Newton's third law of motion, every action has an opposite reaction. So the higher the prices go, the higher The likelihood of the escalation, because the pain that the collective system is going to take is saying that for a while. It hasn't really quite worked out, especially as we get closer to the midterms. So is there going to be demand destruction? Well, this is where it's getting interesting, because we've done a lot of analysis in terms of energy intensity, how an oil price of 100 compares to sort of 20 years ago. it's obviously lower because people, consumers don't spend as much on energy as before. So it's a question of paying thresholds. The problem is that we have the AI capex boom that is sort of protecting corporate balance sheets, et cetera. So unfortunately, things may need to get tougher or higher in terms of oil prices before they're normalized. OK, Coco, thank you so much for all of the briefing. Coco Agbo-Blu out there from Soggen CIB. Now, oil, as we were talking about, is gaining as traders weigh disruptions to Middle East supplies with a critical Saudi Arabian pipeline still offline. The east-west pipeline, which carries oil across the kingdom to the Red Sea coast, had been used by Saudi as a workaround for experts out of the Strait of Hormuz. So let's get more with Stephen Sapchinski, who leads our Asia Energy coverage. Steve, thank you so much for joining us. Do we know when this pipeline might actually come back online? you know that's one of the big key unknowns the one thing that we are hearing from the Associated Press which are citing two regional officials is that it could take several weeks for this to come back online U.S. Energy Secretary Wright said he expects it up and running soon but analysts and traders are all left guessing as to exactly what happens from here it is a key pipeline and if this comes back online pretty quickly then maybe the Yambu port can use the storage that has and continues shipments through Red Sea and to customers in Asia. If it is offline for longer and they run through their storage, then this takes, again, you know, three to four million barrels a day out of the market, further tightening supply. That's about three to 4% of global supply at a time when we're already above $100 for Brent, thus, you know, essentially threatening a further increase and a tightening at a time when markets are already quite strained. Stephen, meanwhile, President Trump and Ukraine have offered differing accounts of a supposed agreement with Russia to stop attacks on energy infrastructure. So very quickly, could this agreement provide relief to energy prices? I mean, I think the big thing in the market has been the disruption in diesel exports from Russia. And if they are able to end these tit-for-tat attacks, if Ukraine halts their drone attacks on the refineries then you could see more diesel entering the international markets and then thus that could also reduce prices because diesel prices are also at a multi-year high and diesel is a workhorse fuel of the global economy it's used for transportation it's also used for power generation and as we get closer to winter and gas prices are natural gas prices as well are quite high then you couldn't see companies or utilities trying to shift to diesel so without a deal if there isn't some sort of slowdown and attacks you could not see any relief and that's higher higher prices there as well. So that's being closely monitored. Thank you so much Stephen Sapchinski there with the very latest of course on oil and energy. Now coming up we'll discuss the data center boom and the outlook for commercial real estate with the chief executive of JLL. That's coming up next and this is Bloomberg. We'll be right back. he cares about inflation. Tune in to Bloomberg Surveillance. The Fed decides starting at 1.30 p.m. Eastern. The conversations that matter, the insights you need. This is The Pulse and I'm Francine Lacroix here in London. Now, the AI infrastructure race is breathing new life into parts of the commercial real estate. Billions are pouring into data centers to provide the computing power behind artificial intelligence. While commercial real estate services and investment management company JLL says North American data center demand hit a record high in the first half of the year, doubling from a year earlier. Well, we're now joined by Christian Ulbricht, JLL's chief executive. Christian, thank you so much for joining us. As always, talk to me first about just real estate at large. It's had a little bit of a tricky few years given interest rates started to rise. How are you seeing it now. Yeah we have been on a very strong recovery mode over the last let's say 10 quarters. Now interest rates have continued to rise and so as we heard earlier today we moved for the first time about 5 percent of the 10 year Treasury now for almost two decades. So that has an impact. But generally there's a very healthy underlying growth trend to commercial real estate markets around the world and particularly in the US. When you look at commercial real estate are there you know are there any parts of that market that you think need to be repriced and given the way yields are. Well I think everything has to adapt to the cost of capital. Interest rates are just part of the cost of capital and there will be obviously other factors influencing that repricing whether you have expectation that rents will continue to grow very significantly. So when you look at the industrial space, which has been pretty much the strongest asset class, there is an expectation that rents would continue to rise. So there hasn't been much repricing. But in other sectors, especially around offices, you will see people kind of expecting that the rise in interest rates are reflected in the prices. Do you think deal volumes in Europe have been on the low side? And why is that? They have been slightly lower, although we have to say in the second quarter, especially on the continent, we saw a very strong uptick in deal volumes overall. It was the U.K. which was lagging significantly behind, but on a stronger previous year quarter. And so we know that we have seen that in relativity. But overall, deal volumes are also a reflection of what the overall outlook of the economy is. And we haveと admit that the European economy is clearly not as strong as the U S economy. How does AI change everything? So how, first of all, does it change just our working spaces and how does that change real estate? Well, at the moment, it changes our working space, but differently than people would expect. It has gone up. I mean, the significance and office take up in the U.S., especially on the West Coast, San Francisco Bay area, but also in the New York area, Manhattan area, has been very much driven by AI companies who have a high demand for new space. So we saw a significant uptick. What people are expecting that at some point we will see a decline. I would be cautious with those predictions for the time being. AI is in the booster to the overall economy. And usually when you have a booster tothe economy, the space demand goes up. Yeah, but how do you see it? I mean, as I guess there are fewer workers, do they, you know, go converge in an office space to have that human contact or have you, you know, modeled it out? What kind of impact this has on workforce? I think it's way too early to say. I mean if you were to see AI really having an impact, it's probably first and foremost in those shared service centers where you aggregate people and then you can use AI to automate a lot of the work there. But again, I would be very cautious to make predictions at this point in time. We are too early in the cycle. Talk to me a little bit about data centers. I mean, this week we talk, of course, a lot about the fact that we need to maybe slow down some of the technology. Does that have an actual impact on the data center demand that we have? Well, for the time being, the data Center demand is incredibly high. almost 77 percent of every data center which is currently under construction is already pre-leased if you compare that to other asset classes this is outrageously high so there's a very significant demand we have now that debate which has started around ai regulation i'm expecting that debate to continue and it would be surprising if we don't get any type of regulation everything is pretty much regulated around the world. But I'm not expecting that this will have a significant deep kind of downward pressure on the data center demand going forward because there's just so much demand coming from everybody in the world the broader population but also all these different industrial sectors who are dependent on the use of data and that drives data center demand. But there's also been a big backlash especially in the US on people not wanting data centers next to where they live. I mean there is you know we're looking at the list. There's Blackstone there's Brookfield. There is a number of organization piling onto this. Is it too frothy. Well I think this is a normal situation which we have seen in other areas before. People all need power and still they don't want a power plant next to their home. And so people don't like to have a data center next to the home. I think we have to be just wise in where we choose the locations of data centers. Sometimes I I think there is a bit of an overambition that those data centers should right be in the middle of a city. You know, what we see between 23 and 25 data centers were on average about 50 kilometers outside of the large European hubs. And when you look forward 26 forward, the new sites are being developed more than 150 kilometers outside of the big European hubs, and I think this is what's going to happen, that data centers move first of all where there's power, where there is access to grid, but they will also move into more rural areas where the impact on the neighborhood is much smaller than it is when they are in the middle of the city. And is there too much cash in there? Are there too many investments? Well, the cash is there because people are expecting that there will be high demand and therefore there willbe a return. That's what they expect. And so for the time being, this is just capitalism which is playing out. OK, Christian, thank you so much for joining us. That was Christian Ulbricht, the chief executive of JLL. Coming up, we'll be joined by Daniel Pinto, EMEA chief executive at Corrient, to discuss how he's advising clients to navigate, of course, uncertainty and volatility in the markets. Also, let's check on the, well, treasuries. Treasuries really changing everything. We knew they'd go this high. And still, I have to say, I'm looking at the charts and it's a bit of a surprise. The 10-year U.S. Treasury yields rising to the highest in almost two decades, driven by surging energy prices, mounting debt and inflation. And look, if you look at the yield now, again, it's rising above 5.02%. That means it's surpassed the peak from 2023. And I have to say, it takes a little adjusting to get used to it. This is Bloomberg. Good morning, everyone, and welcome to The Pulse. I'm Francine Lacroix here in London, and these are your top stories. The yield on 10-year treasuries hits its highest in almost 20 years as the bond sell-off deepens ahead of this week's Fed rate decision. Oil gains for a second day with a key Saudi pipeline still offline. President Trump says Ukraine is to blame for the surge in fuel prices. Plus, the U.S. president dismisses AI safety fears as a hoax, continuing to push back on industry calls for regulation. Now, markets are pricing in a greater than 90 percent chance that the Fed will begin raising interest rates this week as rising oil prices and debt burdens bolster concerns about inflation. So how are wealth managers advising clients to navigate the uncertainty and volatility? Well, with us now, Daniel Pinto, EMEA chief executive of Corrients. Daniel, as always, thank you so much for joining us. You're part of a larger group now. I know you sold Stan Hope. Talk to me a little bit about some of these wealth managers in general. Does size matter? Do you need to be bigger to reach more clients? Size matters. If you look at the landscape of wealth management it is very polarized between two extremes. On one side you have large banks that have substantial resources but are still in a model where you never know if they advise clients or sell to clients. And that creates a degree of ambiguity which many high net worth individuals do not accept. At the other extreme, you have hundreds, if not thousands, of independent wealth managers that do not have the conflicts of the banks, but do not have the resources either. And what we have done with Corrient is we positioned ourselves as the best of both worlds, which is having the scale of a lot of institutions, we're currently managing close to 600 billion, but having the ethos and the lack of conflict of interest of independents. And as such, we are a magnet for firms that are smaller, understand the limitation of not having the resources to invest globally and across asset classes, and join us to pursue their entrepreneurial journey under the Korean flag. Do you see any more acquisitions in Europe? We do. Again, this is a consolidating space. We do, actually. We announced the acquisition of Bedrock, which is a firm based in Geneva in London, managing about $10 billion. We announced the acquisition of letters private office which is managing about five billion out of Paris. This is done and we are in the process of looking at potentially more acquisitions. It's a funny old market. How would you describe it. There's a lot you know I'm looking at the 10 year Treasury above 5 percent. Our clients asking for. Yeah I think there is There is a great degree of anxiety and your guest reflected this kind of anxiety. I feel that it's important to step back. A few weeks ago the level of anxiety was not where we are. It's all triggered by a sudden spike in oil prices. And you have to look at the other side of the coin which is the minute oil prices come down suddenly this talk about interest rates going from 5 percent on the 10 year to 5.5 to 6 to 6.5. These stocks will stop and people will become calmer. So what we tell clients is to step back not overreact. Obviously we had already taken the precaution of being fairly short in terms of our bond duration which protected us. But the bottom line is that you have a year where earnings growth in the U.S. has been absolutely spectacular. 25 percent expected for 26 fueled by the profits of tech companies but not just the profit of tech companies largely. Yes I know. Absolutely. And I think that once you look at the positive side of what's going on AI has been a tremendous source of productivity increase across the spectrum not just productivity for tech companies but productivity across the board. Just to give you a sense over the last three years productivity has gone up by 10 percent in the U.S. against 2 percent in Europe. Just gives you a sense for where things are going. How does AI actually change your space. You know wealth managers. Does it is massive in every aspect of the business. And it's the case in every sector in our business. Obviously on the operations side you can do more with less in terms of investment decisions. You are an analysis is enhanced by AI. We do not want to replace the analysis by AI but AI informs you in a way that was not possible before. So it is a major major source of change. I know you've said let's look at the positives but do you worry about the concentration in AI. I mean we can even leave you know there was concerns this week about the end of humanity. So let's not talk about that. But just the fact that there's these big IPOs and it feels like the whole equity market is just beholden to five companies. Look I'm not worried because these kind of revolutions if you look at the economic history always happen with a few leaders taking a huge share of the market and then the world spreads to others. So we are exactly at that stage. I am not as worried as most on A.I. and the talk about the end of humanity etc. I think the genie is out of the bottle. You cannot put it back when you hear that the three leaders of A. I. companies are saying we're going to slow down. You have to take into the pinch of salt. They compete fiercely. And the thought that one of them will decide or collectively will decide to slow down is hardly credible. I think it's desirable. They should slow down, but I don't think it is going to happen. And also, the competition of China forces U.S. companies to keep going. So, I don' t think – I think there is more PR in this whole wave of interviews being given by the leaders of these companies. There is more PR and substance. I think they will carry on. I think the regulator you know governments will need to regulate a bit more. But they need to be very careful because AI is a global business and China is there as a leader. Daniel talk to me a little bit about high net worth individuals based in London. So you deal with them regularly. There I mean there are question marks about what's in the budgets with this new government. October 28th. Do they move. Do they stay in London. Like how do you see. Look there is concern. And I think the dispatch that will be a test as to whether this government can reconcile social ambition and fiscal credibility. We know about social ambition. The fiscal element is more complicated because they have said that they will not increase. They will not tax work more through you know rises in income tax. They have said they don't want to raise VAT. What's left capital which basically means wealth tax higher capital gain tax. And all of this is a worry because there is a lot of talk about the attractiveness of the UK and London in particular as a financial center. Guess what. You announce a raise in an increase in CGT. You announce wealth tax. It destroys credibility destroys the attractiveness of the UK. And that's the last thing you want to do. This country is indebted. The amount spent on interest payments is a hundred ten billion pounds every year which is more than a defense budget. Forty five percent of the UK GDP is spent in its public spending. So what needs to happen is not more tax. It's less spending and it's a government that has the courage to tell we should spend less. Do you think there will be a wealth exodus? There has been already and there will be more. But you know what? The issue with wealthy clients is not so much the absolute level of tax. It's the visibility. The minute you break trust and visibility, people go. They need to know even if the absolute value of tax is high, if they feel that it's stable and they have a clear plan as to what might happen in the next few years, they stay. If they feel that every time, every budget, you have a new announcement, they go. Daniel Pinto, thank you so much for joining us today. That was the PMEA chief executive at Corrient. Now, UK employers shed more workers than expected last month in a sign of continued weakness in the jobs market. The data here in the UK alongside tepid demand for workers and steady unemployment suggests that the UK remains in what the Bank of England governor Andrew Bailey has described as a low hire, low fire economy. Let's get more with Matt Bunny, our UK economist at Bloomberg Economics. Matt, thank you so much for joining us. So what do you think stands out to you in this ONS data? So the latest batch of jobs data showed the labor market continued to cool. So we saw payrolls data fell. We also saw more weakness in vacancies. Set against this, we saw the unemployment rate held flat and we also saw that pay growth held flat in the month. So broadly speaking, it's a picture of continued weakness in the UK labour market. Now, a weak labour market means that pay grow is less likely to feed into persistent inflation. So that is good news for the Bank of England. Of course, the bigger question facing the Bank at this stage is the recent surge in energy prices, which will be front of mind coming into the meeting later this week. So will these figures direct the you know change the Bank of England's rate path later this week. So I mean we're expecting rates remain on hold this week although there may be a hawkish tilt in the communications particularly on the back of the shift in energy prices. Today's data won't be front of mind in their thinking but certainly it might help temper a more aggressive tilt in their communications. So the data today broadly suggests that inflationary pressures remain contained. obviously we saw the weak labor market figures as well today. However the run up in oil and gas prices mean that we're now forecasting inflation to peak over 4 percent potentially in 20 27. If this rise in energy prices sticks if that materializes it certainly will be hard for the Bank of England not to act. And indeed we could see a hike before the end of 20 26. What I would add is that we don't expect that the hiking cycle if it materializes to be as aggressive as what is priced in by markets. All right Matt thank you so much. Matt Bunny there at U.K. economists at Bloomberg Economics. Now European banks stocks have fallen after Bank of America's chief executive said trading revenue will be quote relatively flat compared with last year's third quarter. That would mark an unexpected break from the surge that Wall Street saw in the first half. To keep a perspective if we end up with a quarter what we just said flat it'll be one of the best third quarters that we've ever had in the trading history of the company. The team is doing a great job. It's just sometimes the market quits doing things. And that's one of these times. Now, the pipeline investment banking is full. The activity level is strong. But with rates moving up 100 basis points over a short period of time, people pause a little bit. And leverage is coming out of the system. Now, let's bring in Charlie Wells with more, of course, on what we heard from Brian Moynihan. And Charlie, thanks so much for joining us. So this warning, again, came after we had a really good quarter for a lot of U.S. banks. So put it in perspective for us. You know, Francine, if that was not expectation setting for the earnings period ahead, I don't know what is, right? Because it's actually been a very good time to be a Wall Street bank, to be in a global bank, really, right. I think Bank of America shares are up some 18 percent since a year ago. I think Citigroup up about 36 percent. And basically, we know there's been really solid IPO activity for the most part. We know that a lot of the volatility that we've seen in the markets has benefited these banks. It's benefited their trading businesses. But as we say a lot times in kind of, you know, the banking world, volatility is good up to a point, right? It means that these traders can make money off of a lot of the sort of unexpected geopolitical events that we have been seeing, a lot the, you now, sort of rates issues that we had been seeing. But what Moynihan was effectively saying is or kind of indicating that, you know, maybe volatility has reached that point, right? He was talking about fixed income and some of the problems there. So what does it mean for European banks? I mean, look, we're seeing them down this morning, right? We're seeing UBS down, you know, a fair amount. We're saying a number of the others. And I think when you think about the pattern here, when you about, you know what banks are getting hit this morning? It really is those that have more trading exposure, right. So this is the market effectively taking Moynihan's words, taking what he's seeing at Bank of America and thinking about how it's kind of fitting over the European picture. And think, you should take this with a grain of salt though, right, Because a lot of these European banks, yes, they have trading operations, but they are smaller relative to the overall business mix than in a lot of the U.S. banks. So I think taking that into perspective. And then also, interestingly, a lot of the banks that we're seeing that have these retail operations are getting hit, or at least were earlier this morning, a little bit less than some of these larger banks with bigger trading operations. Charlie, thank you so much. Charlie Wells there with the very latest, of course, on some of These banks. Now, the Canadian prime minister, Mark Carney, is pitching his country to some of the world's biggest investors at the Canada Investment Summit. This comes as he looks to diversify the Canadian economy beyond its trade with the U.S. Bloomberg spoke exclusively with Carney about trade negotiations with Washington and the red lines Canada will not cross. There's not a pride thing from our perspective. We're practical people that know what our bottom lines are, what our red lines are for sovereignty, for culture, not being restricted on our ability to sign other trade deals. I referenced, you know, we are on a path to double our trade access to 3 billion consumers around the world. We are not going to slow down on that. But within that, with understanding those, and I think our American colleagues perhaps understand those red lines a little more clearly now, given what's happened, we're ready to sit down. There's no pride in this. We'll do what's right for the Canadian people. This did, over the past few weeks, get a little bit ugly, even, this trade fight. You had Trump cabinet members mocking and trolling Canada at times. Do you expect that's going to affect the atmosphere at the summit here, the nastiness that happened once trade talks broke down with the U.S.? No. Short answer, no. These are all professionals. One of the things at the summit, which is why it's important, is it's not just the headline assets that are managed by these institutions, the $120 trillion Canadian that are managing, but it's the fact that it's the decision makers who are coming to the to the summit and you know they they know their responsibilities in many cases they're managing money for doctors nurses firefighters their pensioners families future generations in their countries they take these decisions very clearly and look and i think you can see how i hope the federal government is has reacted to this calm, professional. We're looking in terms of the best interests of Canada. As I just said, we'll sit down when it makes sense. Canada and the U.S. have a very long relationship. We sometimes go through periods where there are tensions in that relationship. Provided we continue this approach, we'll come to some agreement at some point. Well, that was the Canadian Prime Minister Mark Carney speaking exclusively with Bloomberg's Brian Platt. Coming up, as oil and gas prices surge, we'll discuss the case for renewables with the chief executive of Indian clean energy company Renew. That's coming up next, and this is Bloomberg. The U.S.-Iran war is reshaping the economics of energy, while soaring oil and gas prices are strengthening the case for renewables as governments and companies look to reduce their exposure to fossil fuel markets. In India, the world's third largest greenhouse gas emitter, renewables, are taking a growing share of the country's electricity mix. Well, I'm delighted now to be joined by Suman Sinha, chief executive of Indian clean energy giant Renew. Thank you so much for joining us. I have many, many questions because India is really also rapidly adding renewable generation capacity. When you look at the energy transition, where are we in India's journey? I think we're making pretty good progress as far as electricity is concerned, which, as you know, is about 20 percent within the energy mix. We have lots of renewable energy-based solutions that are now coming to the fore. We're combining renewables along with storage and giving semi-firm or, in some cases, firm power. We're able to move the generation profile to the peak times in the evening. So we're making very good progress on the electricity front. I think on the rest of the energy front, India and the rest of the world, frankly, is struggling right now because we need to really move a lot of the user industries as well towards becoming users of products that are made using clean energy. And that is beginning to happen. For example electric vehicles is a good example of that. But that whole thing is moving a little bit more slowly than it should. I mean some of the things that we've been looking at for example is solar right. And the curtailment there has been an ongoing challenge for India. So has this impacted energy producers earnings. It has it has. I think that grid is becoming a problem everywhere right now. In India we've been actually fortunate that the grid build-out has been pretty good so far and we've got a single national grid which allows us to move power to where it's producing from producing areas to generating areas. So we've done a pretty good job but now renewables is getting added so fast in the grid that the grade is struggling to catch up. So I think we'll have a little bit of that issue happening for some time. I mean is battery storage a solution if you look at energy storage you know it does how much does that help with the grid bottleneck? And how can India actually speed up some of the battery storage infrastructure while China maintains still the stronghold on supply chain? Yeah. No, look, I think there are two separate parts to your question, and I'll deal with both of them. I think, first of all, batteries is an absolute must right now. In most countries which want to really have renewables become a much bigger part of the electricity mix, it's the same as the case in India. We've now started really ramping up on adding much more battery capacity, and not just batteries, but also pumped storage solutions which give us longer duration storage as well and as you know that obviously is built within the country itself. So I think on that front now India is really ramping up installations of batteries and hopefully that will then begin to deal with that you know the classic ducker problem that has begun to come in. You know last year we added about 50 gigawatts of solar in a total grid which is about 550 gigawatths in size. So when you have so much solar suddenly coming in in one year and that's going to keep happening for the next several years obviously is that problem does become a little bit acute. So now I think over the next six or seven years we'll probably see a few hundred gigawatt hours of batteries getting installed and probably the same amount of pump storage as the storage costs really need to come down for that to work. Storage costs have already come down quite substantially. But coming to your second question you're right that a lot of it is getting imported from China. India does not really have a lot of battery manufacturing capacity domestically. Now in the case of solar manufacturing for example we are in the process of localizing the solar value chain. We are now massively surplus on modules. We will be surplus in cells in the next few months time. And now hopefully in the next couple of years we'll do the same thing in wafers and poly as well. So we've got a we've got a certain mechanism or a certain playbook of actually being able to indigenize where the supply chains in clean tech. And we need to do a similar thing for batteries as well because obviously importing everything from China is is great in the beginning. And we may have to do it just to solve the grid problem very quickly. But I think longer term I think most countries realize that energy security is now becoming a very big issue. And in that sense supply chains are also very critical. So we do have to have that manufacturing in the country. But is there a specific way when you if you look at that supply chain is there specific bottleneck that if you took that over it would significantly make it easier. Not really. You have to look at the entire supply chain because obviously you know making cells is important. So first of all you have battery packs that is very easy to localize but then you have cell manufacturing and there it becomes a little bit technology intensive and then you have all the components as well which are the cathode the anode the electrolyte and so on so all of those eventually we have to localise to make sure that the entire supply chain gets into the country otherwise you'll always have dependence on on the outside world talk to me a little bit about your your buyback operations like when are you expecting that to conclude you know we're in the process of taking the company private yeah an An offer has been made to the board, which the board has accepted. That is going to be going to the shareholders for a vote very soon. And if the shareholders should vote affirmatively for that, and we are hoping that they would, then I think in the next few months' time, that take-private process would conclude. Why do you want to be private? I mean, you're not the only one, actually. There's been, I guess, a big surgence in the last four to five years to companies that say, look, we've tried IPO-ing. Fine. Thank you very much. I'd rather be in my own hands. Yeah, I think what's happened to us is that we chose to live in the U.S., Unlike a lot of our peer group companies that are listing in India and we in fact got listed before a lot of the other companies got listed in India. And our listing in the U.S. really hasn't worked out perhaps because we are an Indian company listed in the US. You know it's not a natural home market for us. Investors in the U. S. don't understand the Indian environment as well. You don't be that as it may. It's it's really not worked out. And I think that from a long term standpoint it's probably better for us from a capital access standpoint and being able to give liquidity to some of our larger shareholders that we eventually, that we go private. And then we revisit what we need to do after that. So you could list elsewhere? I mean, once the buyback is done? I think the first thing is step one is really to get the listing, the delisting done. I think once that is done, then we'll sit down and reevaluate all of our options. You know, we could also just carry on being a private company for some time. We could, you know, try to get listed. We could list different parts of our business. So I think all options would be on the table for us to consider. What's your priority in the next six months? Look, I think right now what's happening is there's just a ton of opportunities in our sector right now because the energy transition is moving really fast. It has been moving on the IPP side, on the generation side so far, but now it's really broadening out. There's a lot happening on the manufacturing side, and the cleantech manufacturing side. Our company makes solar modules and solar cells as well. They're backward integrating into wafers. So there's going to be, I Think, a lot to do on the Manufacturing side. So that's a very exciting space. And then on the IPP side, we're seeing a lot of opportunities coming up on the commercial and industrials area because that part of our business sells to data center companies, hyperscalers. That looks like it's going to grow quite well. So I think that's another area that we're going to go somewhat in the future as well. Sumant, thank you so much for joining us. Sumant Sinha, the chief executive of Renewed. And we'll have plenty more, of course, also on the markets. This is a picture across the board. Look, coming up later, former U.S. Secretary of State Antony Blinken joins Balance of Power. Catch that conversation at 6 p.m. London time. And the focus on that will really be what's happening in the price of oil. Now, U.N. stocks are falling, elevated oil prices, really fueling further selling in treasuries, pushing the 10-year yield to levels last seen in 19 years ago. Now, the rate on the 10 year treasurys rising four basis points to 5.03 percent. That's the highest level since 2007. Again, Brent crude topping one hundred and seven dollars a barrel. Some of these lofty bond yields are setting the tone for markets, bringing risks from surging enemy costs and mounting debt firmly on the radar of traders desk. I'm also looking at Europe. Look, a couple of things we need to watch out for in Europe. Deutsche Bank leading losses in banking shares. We've been talking about it all day. This is after we saw declines in U.S. banks after Bank of America warned that trading revenue for the current quarter will be flat. And then yields here in Europe with the rates on two-year gilts, for example, climbing four basis points as traders again adding wagers that the Bank of England will raise interest rates at least twice this year. Up next, Bloomberg Brief. And this is Bloomberg. Thank you.