Iran War: Trump Hormuz Plea & Trump-Xi Summit Possible Delay: FT | Daybreak Europe 3/16/2026

Live from london. This is Bloomberg Daybreak europe.

I'm Vonnie Quinn with your top stories. Brent crude trading above $100 a barrel as president trump demands help reopening the strait of hormuz, reportedly threatening to postpone this month's China summit unless Beijing takes part. Military action continues as Donald

takes part. Military action continues as Donald Trump suggests there could be a deal to end the war, But Iran says there's no reason to talk. Plus, a bumper week of central bank decisions as the Fed, the ECB, the BOJ and the U.S.

all attempt to weigh the economic fallout of the war in the Middle East.

With all that said, then we have a future is pointed higher.

But look at Brent. We are trading not that far below $105 a barrel and WTI is very close to $100 a barrel.

This, of course, after the car of island bombings.

Now, not the infrastructure to do with oil, but the question is, will Iran retaliate? How will they retaliate?

retaliate? How will they retaliate?

When will they retaliate for those bombings of the military installations?

As you can see, the two year yield has been creeping higher.

It's a 370. We'll see what the Fed says later this week. But traders are now priced out any kind

week. But traders are now priced out any kind of interest rate cut this year. Equity index futures, they're higher today. You wonder why going into week three

today. You wonder why going into week three with no end in sight. They might be higher, but it's potentially a cold over effect from the China data, which really put a glow on things in China and in Asia today. And just also this idea that there is some risk on trades and some risk of trades happening.

If you look at Bitcoin, we're very close to $75,000 a coin, even as gold heads for another day of decline. So it's just really interesting to see this market trade. We also have a little bit of a weaker dollar index today to the benefit of many currencies, perhaps that that's about central banks this week and what they might do.

Of course, not just all of those five central banks, but there are 22 central banks actually meeting today. But generally the dollar is stronger.

Bloomberg opinion John is saying today that the window is now closed For Trump to do a taco turnaround and game theory suggests more escalation from here.

All right. Your risk events today.

We have EU foreign ministers meeting later this afternoon and 12:30 p.m.

UK time Canada CPI is out for February and of course the in video global air conference, the market often moves on the TTC.

The US ramping up pressure then on other countries to contribute to securing the Strait of Hormuz, which Iran is effectively closed to oil tankers?

Speaking aboard Air Force One, Donald Trump says he's in talks with seven countries to get involved with the UN, demanding that these countries come in in particular to do it because it is their territory, it's the place from which they get their energy and they should come and they should

help us reject. The complex showing no signs of slowing down. The Islamic Republic carried out

down. The Islamic Republic carried out retaliatory attacks on Israel and Arab states after the US struck military sites on Kharg Island. Let's bring in Bloomberg's Anthony de Paola in Dubai. So Anthony Trump urging NATO allies and China to come and help to do something in the street.

I mean, obviously, each is its own sovereign nation and will make its own decisions. But what could they do even if they

decisions. But what could they do even if they wanted to, quote unquote, help in some way?

Ivan, good morning. That's right.

He he is asking some of those other nations, we're not sure what the behind the scenes is in terms of the discussions, but that was kind of a call on Air Force One there, as we saw, as well as through some truth, social media posts, social media posts. So that that seems to be how he's making the call most publicly right now. We have seen all these countries band

together in terms of trying to keep navigation open through the bubble.

Mandeb That's the strait. At the end of the Red Sea and that had been blocked, as you remember, over the last couple of years by the Houthis from Yemen doing a drone strikes, launching missiles, sometimes some attacks on vessels. And so that had really impeded traffic

vessels. And so that had really impeded traffic through the Red Sea and up through the Suez Canal, lengthening voyage voyages, adding cost to shipping. And so that was a big issue.

A lot of nations had come together with some naval forces there. They weren't fully successful in stopping the Houthis from attacking that shipping.

And even at the start of his administration, Donald Trump had a campaign against the Houthis with lots of aerial bombing that, again, also didn't fully resolve the problem that came to about to a more diplomatic solution. So we are hearing also some entreaties

solution. So we are hearing also some entreaties from some energy buyers who are asking the Iranians to let their ships pass through. We did see over the weekend two LPG

through. We did see over the weekend two LPG tankers that were taking that vital cooking oil and chemical feedstock to India. So we have seen some of the countries

India. So we have seen some of the countries trying to discuss letting their vessels through.

The Iranians have let some of their own crude vessels through those most likely going to China. So it's really up to the Iranians at the moment because they are the ones that are putting the threat on the on the Strait of Hormuz. It would take a major military engagement, really, to to ease that up and to make that that really secure,

because it's enough to have the threat, as we see from the moment it's enough to the threat. It's enough to bomb a few vessels and

the threat. It's enough to bomb a few vessels and set an example to show that it can be done for that waterway to effectively be closed. And that's the situation that we're in

closed. And that's the situation that we're in right now, choking off so much of that oil flow opening.

So, Anthony, the US strikes on Kharg Island put a shiver through oil markets for sure on Friday after the US market closed.

It does mark some kind of an escalation, but President Trump was very quick to suggest that they didn't hit any oil infrastructure.

It was just military infrastructure. Where should we expect oil prices to head next? Given those particular strikes?

head next? Given those particular strikes?

Yeah, that was really something. On a vital infrastructure asset for Iran. As you mentioned, they hit the military

Iran. As you mentioned, they hit the military facilities. Of course, that led to speculation that

facilities. Of course, that led to speculation that the U.S. was potentially looking at a ground

the U.S. was potentially looking at a ground assault of cargo, sending reports that they're sending some Marine expeditionary units over. That would be a difficult task potentially, given that it's so close to the Iranian mainland.

But we did see those main oil export facilities spared and the Iranians themselves came out and said that ships were continuing to load and and ship oil. Speaking with some of the vessel

oil. Speaking with some of the vessel trackers that that follow the industry, we saw that there were two vessels reportedly at Kharg already on on Saturday after those attacks.

So so the Iranians themselves saying they're continuing to use that island.

They did strike back, hitting a vital Middle Eastern trading hub in Fujairah in the United Arab Emirates, setting some some crude storage tanks on fire there. And that halted operations for the

there. And that halted operations for the better part of Saturday before they could resume later Saturday, early Sunday. So so we are seeing these kind of tit

Sunday. So so we are seeing these kind of tit for tat attacks.

And, you know, we talk about red lines, but those red lines are kind of really shifting there. We thought that energy infrastructure

shifting there. We thought that energy infrastructure was a red line kharg for the Iranians was a red line, saying that if you destroy our ability to export, we will destroy your ability to export.

So far, we haven't seen real material damage to facilities yet. We have seen some facilities knocked off line. The Royce refinery, for example, in Abu

line. The Royce refinery, for example, in Abu Dhabi, it's the biggest in the Middle East that a fire was put out there over the weekend after an attack on Tuesday. So that's a that's a long time to contain that fire. Rust Tinder is still dealing with the effects of an attack. That's a Saudi refinery is still dealing with the effects of an attack last week. So we are seeing these facilities hit.

However, those are facilities in the Gulf not exporting any way because we have the Strait of Hormuz shut. So it's a compounding of problems. And the longer we see the strait shut, the longer those problems will compound for the facilities within the Gulf, as well as the problems on the oil market, as prices stay high, as supply is cut off to chemical makers refineries in Asia. And that that just is going to have

knock on effects for the supply chain and for the economy, really.

So that's the situation where we are right now, Bonnie.

Anthony, thank you so much. That's Bloomberg's Anthony DePaula there in Dubai. The U.S.

in Dubai. The U.S.

and Iran have signaled no end in sight to the conflict, despite President Trump suggesting the possibility of negotiations with Tehran.

However, we heard contradictory comments from the foreign minister who claims Iran has no reason to speak to the Americans.

No, we never ask for a ceasefire and we have never asked even for a negotiation.

We are ready to defend ourselves for as long as it takes.

And this is what we have done so far and will continue to do that until President Trump comes to the point that this is an illegal war with no victory.

Joining me now is Bloomberg Horizon's Middle East and Africa anchor Jomana Versace. So, Jim, on mixed messaging between the

Versace. So, Jim, on mixed messaging between the US and Iran, it seems still. Do we know what it might take for either side to actually get to some kind of negotiating table eventually?

Well, over the weekend, President Trump conducted several interviews.

One of them was with NBC where he suggested that Iran were open to negotiations, but that they were not exactly where the US wanted them to be, and therefore the U.S. would have no option but to continue with the war efforts. And then when he was pressed and asked for what the US were looking for in terms of negotiating stance, he he didn't. He failed to provide further details.

didn't. He failed to provide further details.

And it's interesting that we then heard from the Iranian foreign minister.

He himself was in an interview with CBS last night signaling that they have no intention to negotiate, that there are no signs yet of a cease fire.

And as we enter into the third week of this war, it's the 17th today of 20.

Really no signs of things de-escalating. You were just speaking to Anthony there about the attacks that took place on Kharg Island, the US targets and key military infrastructure there, but certainly raises the thresholds for engagements with Iran also threatening to strike back at non US assets,

specifically in the UAE, at ports, at docks because they claim that the US launched those attacks on Kharg Island from the UAE, which is a claim that has been rebuffed completely by the United Arab Emirates.

But that is to say that there's no real signs of things.

The intensifying and the Iranian calculus here is that so long as they can continue to inflict economic damage and damage on oil infrastructure and on the global oil industry, for them, this becomes a war of attrition and one of deterrence in which they would, in their eyes, deter the US from ever getting

involved militarily in a conflict in the region again.

Shyamalan, take us to some of the other countries that are seeing action here, specifically Lebanon, more Israelis into Lebanon from Israel again.

Yes. So this is a front that has been operating in parallel since Hezbollah decided to join in with the IRGC launching those attacks into northern Israel very early in the early days of the war, in retaliation to that. What the Israeli military did say is they warned the residents of southern Lebanon to evacuate, which has led to

the displacement of over 700,000 people within Lebanon.

And the numbers continue to mount. They've also warned residents of Beirut to evacuate as well and have begun with a series of aerial strikes over Beirut.

Different parts of the country, too, in the also in southern Lebanon.

And this morning also saying that they have begun a limited ground operation.

This is a put out by the IDF to the so expanding what they were saying before they started limited targeted ground operations in southern Lebanon, which is the part of the country where they have advised residents to leave.

Of course, residents in Lebanon don't have that many options of places to go to. And there's a real risk of a growing

to. And there's a real risk of a growing humanitarian crisis there. This as the death toll continues to climb. It's above 800 now per the latest

climb. It's above 800 now per the latest figures released. But what we do know is that there have

figures released. But what we do know is that there have been several attempts from a diplomatic standpoint to try to bring down the temperature there. The French president, Emmanuel Macron,

temperature there. The French president, Emmanuel Macron, has been trying to organize direct discussions between Lebanon and Israel to avoid the scenario of this intensifying further and to avoid the scenario which some Lebanese foresee could be the foundations for Israel setting up a buffer zone or even an occupation zone in the southern part of

the country. So the diplomatic channels are being

the country. So the diplomatic channels are being worked here. But what we know the latest on that

worked here. But what we know the latest on that front is IDF are now saying that they have started limited ground operations in the southern part of the country. Shimano, Thank you so much.

That is Bloomberg's amount of research either.

Stocks in Asia have been fluctuating after oil pared gains.

Let's get an update from Wendy Sue in Hong Kong.

So what's the latest, Winnie? Yeah.

Morning, Bonnie. We really are seeing a bit of a cautious mood in Asia today. As you just mentioned, it makes AP here up just 0.2% after two weeks of decline. Now, a bit of a mixed picture when it comes to stocks from with a cost B here helped by the tech stocks.

But you can see that Japanese stocks are still slightly under pressure ahead of that. Expect a meeting between Prime Minister

that. Expect a meeting between Prime Minister Tata and Trump. And also when it comes to the Japanese yen space strengthening just a bit with some cautious comment from Finance Minister Katayama that she is urgently watching the moves in the space.

But overall, it is quite weak around that 160 level against a dollar.

Now, that is also coming ahead of that BOJ policy meeting expected later this week. Now, we also want to flip the board and

week. Now, we also want to flip the board and take a quick look at the latest number when it comes to China's data.

Overall, pretty strong rebound, all beating expectations across the different numbers, specifically industrial production here up about 6.3% for January and February versus the 5% gain back in December.

Retail sales also nearly 3% gains for the first two months versus just nearly 1% in December. So that really overall sets up China for a good foundation when it comes to hitting its 2026 growth target.

But remember, the set of data came before the war.

So really we have to assess the further impact when it comes to the impact of the war on the oil prices. Overall market reaction, you are seeing that the CSI 300 narrowing some losses. Still some concerns around if the Trump and Xi meeting might be delayed. But we are seeing some bright spots when it comes to the developers and consumers help buy those set of numbers.

Back to you, Bonnie. Yes.

Such a surprise this morning when he thank you so much.

When he stood there in Hong Kong, one of the world's top central banks convene this week facing a renewed inflation threat from the war in Iran and the possibility that they'll be forced to delay interest rate cuts and in some cases even consider hikes. Let's bring in Bloomberg live strategist Mark Cranfield. Mark Bond investors may be looking

Mark Cranfield. Mark Bond investors may be looking beyond the Fed even this week. Where exactly is the focus?

Yeah, it could well be that investor look at the Fed and see that their hands are relatively tied. We had recently some pretty weak employment numbers and on the other side of the equation, the dollar is relatively strong, so it offset some of the inflation problems for the United States. That is not the case for people like the

States. That is not the case for people like the European Central Bank, Bank of Japan, Reserve Bank of Australia.

So starting with tomorrow, we're likely to get a rate hike from the RBA that's back to back hikes. If they go ahead, that'll will be a very strong signal to people around the world that the Australia is taking inflation threat very seriously. That is coming down the line.

European Central Bank may sound more hawkish than expected.

Again, they have the same kind of situation with oil prices rising dramatically and the Bank of Japan could well set the scene for an interest rate hike in April. They're not expected to move this week, but certainly with the yen as weak as it is, as Whitney was saying earlier, a hike in April. So the combined picture may well be to investors that it's other central banks, not the Federal Reserve, who are really

giving a much clearer picture on how dangerous they see the inflation situation and how quickly they would need to respond in terms of raising interest rates. Also, people are watching the Swiss

interest rates. Also, people are watching the Swiss National Bank very closely as well. Swiss franc is extremely strong and the National Bank in the past has talked about intervention to weaken that currency. But they are going maybe in a tight spot

currency. But they are going maybe in a tight spot here because they have to take into account the the Swiss franc is the main haven currency against what's happening in the Middle East.

So they're in a more difficult spot as well.

Wherever you look. There are very interesting central bank meetings, but the Fed this time is way down the agenda.

That's amazing. Mark, thank you so much.

Bloomberg and live strategist Mark Cranfield.

So ahead, as Mark was saying, packed week for central banks.

We're going to set you up for all of the decisions we're expecting with MFS Investment Management's PR, Gomez, Bravo.

That's later this hour. But first, why President Trump is reported to be threatening to postpone this month's planned summit with the Chinese president. That's next.

Chinese president. That's next.

This is Bloomberg.

Welcome back to Bloomberg Daybreak Europe.

The Financial Times is reporting that President Trump is threatening to delay his summit with China's president if Beijing doesn't help secure the Strait of Hormuz. Chinese and US trade negotiators are

of Hormuz. Chinese and US trade negotiators are meeting in Paris ahead of that summit. Let's bring in Bloomberg's China correspondent, Matt Menlow. So Mittman, will China be threatened into helping secure the Strait of Hormuz, assuming that that can even be done right? Yeah, well, the US has been asking

done right? Yeah, well, the US has been asking countries like China to send warships to the region, and I'm sure China will be weighing the risks and opportunities very carefully because if they do, it would set a very unusual precedent to this situation, because in the past China has so far been quite unwilling to commit military backing to a conflict

that is far away from its political backyard.

And so far, China's support of Iran has been rhetorical.

And yes, about 45% of China's oil passed through the Strait of Hormuz.

But bear in mind that China has been ramping up the renewable energy push and that oil from the Strait of Hormuz only makes up just over six and a half percent of China's overall energy consumption.

So is Iran has already said that the Strait of Hormuz is only going to be closed to enemy ships, meaning that Chinese ships may be able to pass through safely. Then why should China commit to sending

through safely. Then why should China commit to sending warships to the region? So it's not clear whether China will seat to this request, but certainly we're a couple of weeks away from that Trump Sea summit. A lot of things could change.

We will be monitoring to see if there would be any face saving gestures from both side to keep that summit intact come April.

Right. And of course, you know, there's preparations ongoing already at the weekend, but also, you know, starting again today, prepping for the summit as if it is going to go ahead.

What should we expect, assuming it does? Go ahead.

So yesterday, the trade envoys from both sides already met for about 6 hours.

They did not speak to the media after that.

But we are hearing from Reuters and this is based on their sources that the meetings were candid and constructive. And it seems like China has been showing some signs of goodwill, saying it is open to buy more agricultural products from the US. Beyond the soybean purchases that they previously pledged. So that includes things like poultry,

previously pledged. So that includes things like poultry, beef, non soybean, raw crops, for example.

The US has been also pressuring China to buy more US oil and gas.

So in this case, this is where the US perhaps emerged as a winner in the Iraq war. They are the largest exporter of LPG, so

war. They are the largest exporter of LPG, so that's another issue on the table. We're hearing from Reuters as well that the two sides are looking at the creation of technical talks, a so-called Board of Investment and Board of Trade. And these two mechanisms will allow both sides to meet to identify specific sectors and products where both sides can increase. Tweet to rebalance that trade

can increase. Tweet to rebalance that trade relationship and the Board of Investment would review and address discretionary investment issues. And this is coming as China has been

investment issues. And this is coming as China has been keen to put more money into the US. But in the last few years they have been facing a lot of restrictions on investment, a lot of scrutiny from the Commerce Committee, and perhaps this talk could maybe pave the way for both sides to mutually invest in each other's countries.

All right, gentlemen, thank you so much. That is Ben Menlow there.

Plenty more coming up. This is Bloomberg.

Welcome back to Bloomberg Daybreak. You're up some breaking earnings now out of Honda high end. The fourth quarter net income was a mess. In fact, although full year net income

mess. In fact, although full year net income did beat. Now, if we look at operating profit,

did beat. Now, if we look at operating profit, that was quite the beat, reflecting demand from the latest iPhone and NVIDIA servers, of course. So once again, kind of a mixed set of results from on high. We were looking for profitability to surge and indeed operating profit did beat estimates coming in at 85.59 billion Taiwanese dollars. That was about a $6 billion beat.

Net income, though, for the quarter missed, although for the full year, again, it did beat devices.

Some flights are gradually resuming at its main international airport after a drone strike halted takeoffs. The earlier drone attack caused a fire at a nearby fuel tank. The fire was successfully contained and no injuries have been reported. The world's busiest international hub has faced a series of attacks since the war started, regularly disrupting flights. Aluminium.

flights. Aluminium.

Bahrain has started a phased production shutdown of the world's largest single slide smelter. The company, which is known as ALBA, is

slide smelter. The company, which is known as ALBA, is trying to preserve its inventory of raw materials and keep other parts of the pound operating. All of this move comes as the industry

pound operating. All of this move comes as the industry braces for widespread supply blockages. Coming up, has the war in Iran changed the path ahead for interest rates? We'll discuss that next with MSF investment management's Pilar Gomez. Bravo.

In terms of markets on the move, we do see futures pointed higher in Europe and in the United States. The dollar index is now back to flat as we get a little more trading on line. Brent crude, though, still very close to $105 a barrel followed by WTI and gold is flipped.

Now it is positive to the tune of 2/10 of 1%.

This is Bloomberg.

Live from London. This is Bloomberg Daybreak Vonnie Quinn with your top stories. Brent crude trades above $100 a barrel as President Trump demands help reopening the Strait of Hormuz, reportedly threatening to postpone this month's China summit unless Beijing takes part. Military action continues as Donald

takes part. Military action continues as Donald Trump suggests there could be a deal to end the war, But Iran says there's no reason to talk. Plus, a bumper week of central bank decisions as the Fed, the ECB, the BOJ and the VOA attempt to weigh the economic fallout of war in the Middle East.

This market is going to attempt to weigh that again, as we are now fully in week three of a war that many thought might be over by now.

Brent crude trading just below $105 a barrel and WTI following behind very close to $100 a barrel. It was I mean, it was below $65 a barrel literally three weeks ago. So it is quite the stunning move.

And the attacks on Kharg Island not helping, even though apparently no oil infrastructure was hurt. But there is the question of whether Iran is going to retaliate, how and when it might retaliate as well.

Brent crude up 70% year to date. John Alter is of Bloomberg opinion saying the window now for an easy taco exit for Trump is closed and that for all that he wants a brief war. The game theory is actually pointing to an escalation. We also have central banks obviously

an escalation. We also have central banks obviously meeting this week and that two year yield has been rising.

Obviously, we're down just two basis point there at 370 this morning in terms of futures were higher into Europe and the United States.

We'll see if that sticks. We also have Bitcoin higher as well and the dollar index very slightly lower. Time now for your front page news, The Financial Times Leading on President Trump.

A warning Nieto faces a, quote, very bad future if allies fail to help the US and Iran. The US president also tells the left

Iran. The US president also tells the left that the China summit could be delayed if Beijing doesn't help secure the Strait of Hormuz. The Wall Street Journal splashes on a top Apollo executive, sounding off on, quote, the arrogance in private markets.

Discussing the software sector, Apollo John Zito reportedly saying, quote, I think private equity markets are wrong and those that go leads on the latest on the French municipal election results. With the socialist candidate winning the first round of the Paris mayoral vote while in Nice, Marine Le Pen's far right candidate won the election's first round there.

And you get a roundup of the stories you need to know to get your day going.

In today's edition of DAYBREAK, Terminal subscribers can go today be go.

President Trump has told the Financial Times that Naito would face a, quote, very bad future if member states failed to help shipping in the Strait of Hormuz. The paper says EU foreign ministers are

Hormuz. The paper says EU foreign ministers are considering plans to widen an existing naval operation to include the crucial shipping channel. Oliver Crook, Bloomberg's chief Europe

shipping channel. Oliver Crook, Bloomberg's chief Europe correspondent, joins us from Brussels. Ollie, how serious is the issue of access to the Strait of Hormuz for NATO, given these comments by President Trump?

And I mean, what can it do? Well, I think that that's the big question. And yet again, another day, another week

question. And yet again, another day, another week where President Trump threatens the Naito Alliance in some sort of abstract but very sort of meaningful way. And now foreign ministers who are assembled here in Brussels a little bit later today to try to figure out what the impact is going to be of Iran domestically on Europe and as a consequence, what their response should be.

This will now top the agenda without without a doubt, there is the sort of EU naval mission that already exists sort of in the area.

It is meant to safeguard the Red Sea. The passages there due to the Houthi attacks that we had over the last couple of months, that is an EU mission that's currently active. That's one of the issues that they're

currently active. That's one of the issues that they're going to discuss today on whether or not to expand that mission and potentially divert some of those energies over to the Strait of Hormuz.

But of course, now this quote from from Donald Trump in the Financial Times saying it's only appropriate that people who are the beneficiaries of the Straits help make sure that nothing bad happens there if there is no response or if it's a negative response. I think that will be very bad for the future of NAITO. We know that President Trump is trying to enlist more aid from other countries like the U.K., France, South Korea,

Japan, China, and trying to get that waterway reopened.

But it poses yet again all these sort of new questions for Naito.

Is the conflict in Iran really a sort of naito problem, a naito question on Friday? I think the answer to that question was

Friday? I think the answer to that question was no on Monday. It is now going to be an active debate for the ministers that assemble here today.

We should also say that, of course, Neda was not consulted before this all kicked off and they're now potentially being dragged in in some sort of way.

So, again, this is the sort of conversation we're going to have among ministers. The other thing that they're going to be

ministers. The other thing that they're going to be very focused on, VARNEY In addition to obviously the increase in energy prices is the question of Ukraine. There is a lot of fear here in Europe that basically Ukraine is being left out in the cold, and that is a fear that has been reinforced by the prime minister of Belgium who gave an interview over the

weekend to Lysenko in French saying that we must end the conflict in Europe's interests without being naive about Putin.

That's a mistake that we must never repeat.

We must rearm and re militarize and at the same time we must normalize relations with Russia and regain access to cheap energy.

Now, that is a position that has been held by some of the more fringe EU countries, like, say, Hungary, to now have the Belgians coming in, weighing in with that sort of what they will call a more pragmatic approach with what some other European nations will call a sort of betrayal of the sort of main line on Ukraine is going to be a big conversation as we lead to that European

leaders meeting on Thursday and Friday here in Brussels.

Yeah, that series of meetings being held in Brussels this week.

All the EU energy ministers are gathering today, as you said.

What measures could they consider? I mean, has the calculus now changed now that Trump is sort of threatening even the EU countries?

Yeah, I think it's going to be a very active discussion for EU energy ministers. I mean, these are meetings that we don't

ministers. I mean, these are meetings that we don't usually closely watch unless there is a crisis save the sort of invasion of Ukraine and the energy shock that sort of derived after that.

There are now a lot of different conversations happening at the EU level about potentially subsidies to the energy sector or subsidies to the gas prices, a cap on gas prices, all of these sorts of things.

Some of these measures were rolled out around the energy crisis around Russia but were never actually implemented. These are going to be the active discussions that we have today. Will try to get a couple of questions to the energy ministers as they walk in. One of the main things they're going to be discussing is this European trading system, the emissions trading system, which basically is an effective trading system on carbon output for many

countries within Europe, a number of them, including Italy and some others.

That is effectively seen as a tax on the energy system.

So there's going to be some debates on how to tweak that and this all vonnie in order to try to dampen some of the influence that we've been seeing on the energy prices that have been rising as a consequence of the straits of hormuz and the war with iran. We should say that not much of the lng that comes to the European side is from Qatar, but we should also say that the

Europeans are much more dependent today on LNG than they were before the war with Russia. So any disruption to that market is

with Russia. So any disruption to that market is going to have a major effect on two thirds of energy generation within Europe is still from fossil fuels. So again, it's going be very active in the sort of discussions in ways to try to dampen that as we see inflation going to presumably tick up higher over the next couple coming months.

Well, all of our cook is going to be monitoring all that for us.

He is Bloomberg's chief Europe correspondent.

Thanks, Ali. And next hour, Oliver will be speaking with Lithuania's foreign minister about NATO's response to the Iran war.

That's at 7:30 a.m. London time.

Spain's Conservative People's Party has won its third regional election in as many months, while Prime Minister Pedro Sanchez of Social Party also posted a strong showing. The People's Party won 33 seats and

strong showing. The People's Party won 33 seats and Castiel and Leon's 82 strong legislature with almost all votes counted, with the Socialists increasing their tally to 30 seats.

The election was the first vote in Spain since the outbreak of the war in Iran.

In France, Socialist candidate Emmanuel Gregoire has topped the first round of the Paris mayoral election as the left seeks to extend its quarter century rule over the French capital. Kagawa won about 38% of the vote, setting up a high stakes runoff for next weekend in Nice.

France's fifth largest city, Marine Le Pen's far right candidate won the first round with 43% of the mayoral votes. Interest rate decisions by major central banks will take center stage this week as policymakers assess the economic damage caused by the first two weeks of the conflict in the Middle East.

With me now is Villa Gomez Bravo. She is Coles CEO for fixed income at MFS Investment Management. Peter, have you started to make any kind

Investment Management. Peter, have you started to make any kind of portfolio adjustments in the last three weeks or were you and are you waiting to see what we have?

We did some of the adjustments actually before the war started, especially knowing that the ships were on the way. So we did things like buy some two year inflation swaps in the US to protect us for potential moves higher and inflation expectations in particular because of oil.

We also bought credit protection through derivatives in our portfolio to protect for any hiccups that could Actually we started doing that, frankly, when the Greenland news emerged so well for quite some time, just in anticipation of more risk. And it's more recently post the war

risk. And it's more recently post the war broke out. The things that we've been doing is

broke out. The things that we've been doing is using liquid markets. So for example, reducing the underweight that we had in the US dollar, shifting a little bit of our duration exposures across the countries, reducing exposures to, for example, European rates, markets in general because of the moves that we were expecting.

So you really anticipated that something would come of all this, even as the markets sort of dismissed some of it, frankly, as a potential taco trade?

I mean, I think that we've seen since Liberation Day some of the impacts that crowded trades can have. So the easiest thing is to adjust kind of expectations in your portfolio around these very consensus positions.

So what were the most consensus trades money, So underweight dollar, very big positioning and underweight dollars. So that's one of the first things that we did when the war broke out, is to cover the underweight credit crop sectors. Everybody thought that the front end of the curve, central banks were going to cut rates, right?

So we reduced a little bit of those credit steepening.

So I mean, curve steepness, so we have the portfolio.

So if you were well, you weren't early, as it turns out, but if you were earlier than some, when will you start unwinding some of those trades or beginning to sort of say, okay, maybe, maybe we have enough profit here?

Yes. We've been looking at, for example, spread markets. So we don't feel that strongly enough of

spread markets. So we don't feel that strongly enough of the growth impact that we're sort of seeing from higher oil prices is being recognized in credit markets yet. So we haven't rushed in to add any credit sectors into our portfolio. We're just kind of adjusting maybe some of the sectoral exposures and things that have become a bit more dislocated with rates, for example, in terms of which markets we'd be looking at, we're

waiting to sort of see kind of the US price out any cuts at all this year in order to potentially add duration in the US.

Again, in the UK it's the same thing in Europe.

We don't think that the central bank is going to hike rates.

So if we continue to price any more hikes and then we might start getting tempted to buy back some of the duration we sold.

So when does the ECB hike? And you know, on that line, at what point does the market price out completely?

Any interest rate cuts from the Fed this year?

I mean, it basically has at each next meeting.

But, you know, just overall, yes, I mean, I think that the reality is that there were two central but two large central banks where it still were kind of late to the game in terms of cutting rates.

So the U.S. and the U.K.

and what we've seen is a dramatic shift, especially in the UK, to price out any any sort of cuts. I think in the US we still think that those cuts are delayed rather than suspended, but we're going to have to wait probably until the second half of the year to sort of see, you know, obviously how long this war lasts and the impact on oil markets, but more

importantly, inflation expectations. Now the ECB is going to meet.

It's really difficult for the ECB to talk the markets, given that almost two hikes have already been priced for this year.

So I think that the word is going to be vigilance from most central banks that are coming in rather than sort of hinting at very quick hikes given kind of this is a supply shock. It seems to me that if we had some other kind of private equity headline, that that might tipped us markers into disarray. I mean, at the moment we're fairly

disarray. I mean, at the moment we're fairly orderly. I mean, there were times when we were

orderly. I mean, there were times when we were looking like we might tip, but it has been pretty orderly.

Are you looking for any kind of private equity headline and how are you?

How are you reflecting that in your day to day activities?

Yes. I mean, I think that the problem we have right now is that and this is kind of why, you know, we finally realize, again, the value of active investing is that you have three elements that are basically colliding at the same time. There's obviously the war.

There is private credit concerns. And on top of that, there's a CapEx binge, basically. And these three things are coming head

binge, basically. And these three things are coming head to head at the same time in terms of market.

So the private credit elements are really reflected in high yield markets and leveraged loan markets and potentially in banks, the CapEx market is impacting supply and investment grade markets in the US in particular, posing concerns as to how much these markets can absorb.

And you know, second derivative would be impacting investment grade emerging markets, for example. And of course the war is impacting commodity sectors, transportation, real estate given the impact on.

And higher potential rate expectations. So we are concerned that the markets maybe can handle one each time, but the three of them at the same time.

If this lasts, I think Qantas can continue to put pressure into the risky assets in general and that could be a very, very nasty situation.

Which do you prefer? The data center trade, which might pay you a little more, or the hyperscale or trade which might pay you a little less, but if one goes down, maybe they all go down.

We're actually more interested, if funny enough, in sort of some of the structures that we're seeing in the real market in the US.

These are double B structures that are directly linked to a data center built out a little bit like a project finance, but these are like five year bonds guaranteed pretty much by the hyperscale or thesis.

So in a way you get better risk adjusted returns even though you're going down the quality spectrum than just buying unsecured debt at the hyperscalers.

So in a way, I think there are opportunities, especially in markets that are new. So again, sort of data center financing is relatively new both in high yield as well as in structured credit.

Amazing. Polaris, thank you so much.

Come back soon. We want to know this is all going to be over and you guys seem to know Peter Gomez, Bravo, co-CEO for fixed income and investment management. China surprises with an unexpectedly strong start to the year. Details next.

This is Bloomberg.

Welcome back to Bloomberg Daybreak Europe.

Economic data out of China has surprised to the upside, with industrial production growing at its fastest rate in September.

Retail sales also rose while fixed asset investment expanded unexpectedly after contracting for the first time ever last year.

Let's get more from Bloomberg's China bureau chief, Charlie Zoom.

Charlie, quite a turnaround from 2025. Why was the performance so good?

Yeah, the numbers all look very strong. You know, as I mentioned, industry output, retail sales and fixed asset investment or beat expectations.

And the financial markets, you know, reacted positively to the data this morning. Stock market, you know, trimmed losses.

morning. Stock market, you know, trimmed losses.

Currency strengthened against the dollar and the bond yields rose a bit.

So in general, investors, you know, like like, like like to see the number.

But the reality is, you know, we're just only, you know, like 2 to 3 months into a new year. It's probably too early to tell, you know, how how the growth was, you know, we'll look like, you know, for the rest of the year. And the spokes the spokesman of the National Stats Bureau, you know, said the to the first two months, you know, economic performance will pave way you know, lay a solid foundation for, you

know, China to realize economic target for this year.

But, you know, it remains to be seen you know whether the consumer recovery where, you know, we saw in the first two months of data, you know, can sustain, especially given the country's property market, you know, it's still not out of the woods yet. You know, as you can notice, you know, the price slump is still continuing, although although, you know, it's it has eased a little bit, you know, from from the previous quarter.

Now, China is quite sufficient when it comes to oil and so on, self-sufficient, I should say. But there are risks ahead given the war in Iran. What are you most looking out for,

in Iran. What are you most looking out for, Charlie? Definitely, you know, China, you know,

Charlie? Definitely, you know, China, you know, over the past few years, you know, has done a lot to beef up its energy security. And, you know, the great expansion of

security. And, you know, the great expansion of the renewables, you know, industry that, you know, would mean China would be probably less vulnerable to any oil price shocks from the from the current war in Iran and the Middle East. But the thing is, you know, China remains exposed to, you know, global economy.

If the war widens and and, you know, costs damage to the global economy, there will be implications for its exports, you know, which has been a growth engine for China over the past year.

You know, and also there are some, you know, geo political risk can relate to that. You know, as you may have read the news

that. You know, as you may have read the news this morning, Donald Trump, US President Donald Trump, you know, was saying, you know, they he can consider delaying his his summit with Xi Jinping in Beijing later this month if China doesn't help the US secure the Strait of Hormuz.

All right, Charlie, thank you so much. Bloomberg's China bureau chief, Charlie Sheen. The Swiss government is set to decide in

Sheen. The Swiss government is set to decide in April on how much additional capital it wants us to hold.

This as the administration finalizes new regulations following the collapse of Credit Suisse, according to a local newspaper.

The Federal Council will determine new rules for the valuation of intangible capital and decide on a proposal for capital banking per capital banking of the lender's foreign units. The new rules are due to come into effect from the start of 2027. According to a national polls, was voters are in favor of squeezing wealthy residents with higher taxes to fund the

military and pensions. More than two thirds support the idea of levying a federal wealth tax of 33% on assets above 5 million francs.

Lawmakers have already proposed a sales tax increase to fund extra spending.

One battle after another won six Oscars, including Best Picture, delivering a long awaited win for the veteran filmmaker Paul Thomas Anderson.

There were also awards for Centers for Hamlet.

Michael B Jordan won the Best Actor award for his performance in the American Horror film Sinners, while Jessie Buckley took best actress for portraying William Shakespeare's wife. Netflix's K-Pop Demon Hunter is won best animated film. Plenty more coming up.

animated film. Plenty more coming up.

This is Bloomberg.

Well, certainly the cavalier, non-serious way in which President Trump, Secretary Haig, Seth and others have talked about this war.

We have, Secretary Haig said, talking about no quarter, which is basically a military term for for no survivors, kill everybody.

I think that attitude has really undermined our ability to build, support and move forward. It's far from the largest problem with this war. President Trump is ensuring that Iran

this war. President Trump is ensuring that Iran cannot have a nuclear weapon. That is paramount.

And all of my Democratic colleagues, including Adam Smith, just said, Oh, I hope it works out. I hope we get regime change.

I hope. I hope.

I hope. Well, hope is not a strategy.

And you actually have to be willing to take action.

And that is the fundamental problem and why Barack Obama's attempts at this and Joe Biden's attempts at this have failed so miserably, because hope is not a strategy. U.S.

strategy. U.S.

Representatives Adam Smith and Mike Loeffler speaking on Bloomberg this weekend. All right.

weekend. All right.

Let's take a look at some charts to set you up for what is now firmly the third week of war, extending its sharp rally. We've seen that for the last number of weeks. The dollar has been the only risk on

weeks. The dollar has been the only risk on trade, really, that you can count on. It's likely nowhere today, of course, versus some of its trading partners. But it is a huge week for central banks.

And I'm thinking you can continue to expect that dollar to go higher.

A world of hurt, of course, for emerging market currencies, really, everybody from Japan to India to Indonesia, many of whom have already intervened in the currency markets, many of whom were thinking of intervening and some of whom have verbally intervened, including China.

Let's take a look at the Mike seven, because we have entered a technical correction now for the Magic seven. And as you can see, it's just been a bit of a bloodbath over the last couple of weeks.

Now, that said, overall, the indices are not hugely off their peaks.

So the Nasdaq, for example, it's around about 7% of its all time high.

But the magic seven is definitely not helping.

And then let's take a look at some credit indices, because it looks like investment grade credit is cracking just a little bit.

So we have oil prices, we have a flood of new supply and we have CDs is just driving ever higher. We were speaking earlier with MFS investments and they've been making adjustments since before the war, since Greenland. Actually a little bit of breaking news

Greenland. Actually a little bit of breaking news now. We have UniCredit offering to buy

now. We have UniCredit offering to buy Commerzbank via an exchange offer. So that would be a fascinating deal.

UniCredit offering to buy Commerzbank. Coming up, Bank of America is president of International. Bernie Mentha will be on the pulse.

of International. Bernie Mentha will be on the pulse.

That's at 9 a.m. London time.

You don't want to miss that interview. The opening trade is coming up right here, right now. So stay tuned.

This is Bloomberg.