European bond sell-off gathers pace

Added: 2026-05-26

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[00:00:19]Welcome to Squawk Box Europe. I'm [music] Karen Chew with Steve Sedgwick and Ben Leto. These are your headlines.

[00:00:25]Inflation in focus. A fixing come sell-off puts new attention on today's readings [music] as investors continue to dump bonds across the continent.

[00:00:35]Mixed messages on the Middle East.

[00:00:36]President Trump threatening Iran. Here we go again with another big hit. But Brent pulls back after tankers manage to exit the straight. And Vice President [music] J.D. Vance says the two sides are in a pretty good place.

[00:00:52]And Google debuts its latest AI models as it races to keep pace with [music] competitors. But all eyes on Nvidia today. The US chip giant expected [music] to report a near 80% surge in revenue when it posts numbers after the bell.

[00:01:10]>> [music] [music] >> We kick off the show this morning with big focus on inflation and the data point has come through lower than anticipated. So the breaking news are for April CPI in the UK 2.8% year over year. A Reuters poll thought we would see a drop to 3%. So it dropped even further than anticipated. But this is thought to be down to Ofcom lowering the energy price cap from the start of April by 7%. So that having a fairly large swing factor here. In March we were running at a rate of 3.3% on the inflation level, well above the 2% target. So 2.8% certainly welcome news at this point. Just picking my way through some of the other numbers here.

[00:02:01]Services CPI for April, this is at 3.2% year-over-year. Again, lower than the 3.5% that the market was pricing in today. The month-over-month rate was 0.9 of a percent below the 1.2% anticipated.

[00:02:14]So, services often seen as uh one of the drivers when it comes to some of the inflation pressures. Producer input prices, 2.4% on the month. Again, uh this is uh lower than what was anticipated. So, those numbers coming through uh much better. The The April core producer prices index, 2.4% year-over-year versus March of 2%. So, what we're seeing here on Sterling reaction, 133.80. We are sliding about a tenth of a percent. Let's get to Josie Anderson, who is European economist at Nomura. Josie, thank you so much for joining us. As we pick our way through the numbers, the fact that the headline is lower than anticipated and clocking a two-handle, not a three, is that positive for the Bank of England? Yeah, well, actually, this is in line with our forecast, but I'll take you back to February before the Iran war. The Bank of England was expecting inflation to print much closer to 2%, about 2.1% averaging around 2% this quarter. So, even at 2.8%, it shows what a different situation we're in, and it's all to do with energy prices. Um as mentioned, the Ofgem energy price cap was actually lowered in April um despite the Iran war happening, and that's because it's decided a few months in a few weeks in advance um of the month that it happens.

[00:03:26]So, we're going to see the impacts of the Iran war in the July uh print and on a household energy bills. But today, we have seen um well, likely, I haven't seen the figures yet, but we have seen uh a rise in uh the petrol and diesel prices. So, that continues to put strong upward pressure on inflation after that March print it did as well. And And then in April, lots of different things happen uh in the UK that affect inflation. Uh um So, a year ago there was a change in vehicle excise duty and that matters for what happens in the print today because that's the base effect. So, inflation is an annual print. So, so that will also have had an impact on inflation.

[00:04:07]>> Josie, I had the the pleasure of chatting to you beforehand so I know exactly where to go with my question.

[00:04:11]>> [laughter] >> And that is this is the calm before the storm, isn't it? And it's just a question of whether those when those massive prints hit and they will be big prints that hit because all the factors we are concerned about will inevitably lead to inflation as well. Can the Bank of England hold their nerve and not hike as many times as the market fears they will? Yes, so that's an important question and lots of economists comparing this crisis to 2022 when we also saw wholesale energy prices rise and we saw a number of rates rises from the Bank of England. So, will they increase rates again? Well, an important factor in that is the fact that interest rates are now already so much higher than they were in 2022. The Bank of England was trying to normalize them by bringing them lower prior to the start of the Iran war. And so now they're they're more comfortable waiting to see what happens before deciding if they need to raise their policy rate. And a key factor that will drive them to increase it is evidence of second round inflation effects. But they know that petrol and diesel prices are rising and they can't really do much to affect them. The question is will workers start demanding higher wages? Will that mean that services businesses who don't have large energy costs will start putting their prices up? If that happens and the Bank of England starts to see evidence of it, then that is when they are likely to raise rates.

[00:05:31]>> jump in on that point because there's evidence there if you look at the input prices 7.7% year-over-year and Reuters also 5.9% on the output prices side 4% versus Reuters saying 2.8%. So, there's evidence there of the pricing pressure that could be coming through the system.

[00:05:48]Yeah, precisely. But at this stage, we're most likely to be seeing those direct energy effects and perhaps indirect effects as well. One thing I'll be looking at when I get to my desk, is air fares because they have obviously been very driven by jet fuel costs. And so that's kind of indirect effects, the impact on on consumer prices of of air fares.

[00:06:10]That we classify that is indirect effects, whereas it's those effects that aren't quite so driven directly by impacts of the Iran war that we that the Bank of England can actually do more about with its policy rates. Yeah, there's a I've said there's an excellent jet fuel deep dive on the CNBC website.

[00:06:26]Someone put it together, I don't know who it was, but it's brilliant.

[00:06:28]Absolutely brilliant. But Josie, just to pick up on the points that you make in the note, you're expecting the Bank of England probably to raise rates in July. Is that right? That's your your expectation. But we've seen that softer labor market data this week, haven't we? And the drop in payrolls. If you look at core CPI, I appreciate you don't have the the access to the the the numbers that we have on the screen in front of us, but core CPI in April came down to 2.5% down point from 3.1% in March.

[00:07:01]Does that still lay the ground for a rate rise in July? Yeah, well, I mean as I as I said that these numbers actually printed off the top of my head with 2.8% is what we were forecasting for the headline. The core we were also expecting to slow and and a lot of this is to do with dynamics. As I said, base effects from a year ago, pricing dynamics heading into April that don't necessarily have much to do with the Iran war and and pressures on inflation can take time to build. And so even though these figures were roughly in line with our forecast, albeit slightly below consensus, we are still forecasting inflation to rise, particularly heading into Q3 when we get that rise in the off-gem energy price cap. Um and so today's figures are good news because they were lower than market expectations um and and probably mean that a June hike, which is not what we're forecasting, that's less likely to happen in combination with yesterday's um softer labor market data. But July is still in play. We will get more data before then um and also we and the Bank of England are expecting inflation to rise um from this 2.8% figure um and that's all to do with um more price pressures likely coming through later in the pipeline. Okay, and I suppose the the challenge now is investors are not just looking at the the economic data that we've had out this week. They're also looking at the political goings-on in the UK and how that feeds into borrowing costs. We've seen the sell-off in bonds. We've seen uh the UK already at at higher borrowing costs than um other G7 countries.

[00:08:36]What's your take on sort of the the direction of travel um where things go from here on that front? So the most important thing in terms of politics, no matter who is Prime Minister or Chancellor, is that for the bond market is that they commit to fiscal rules um because bond traders, they don't want to see the potential um for debt to become unsustainable. That is when they become very concerned um about buying bonds. Um and uh for instance, if Andy Burnham was become Prime Minister, he has committed uh now over the last few days to keeping the current fiscal rules. And and that is what bond traders are particularly concerned about. Um so actually that commitment potentially from a potential Prime Minister is important and now we have seen that. That is probably good news. I hear you. And yet finding growth has been problematic, shall we say, for Starmer and Reeves and will be problematic for Streeting, Starmer, or Burnham. Especially when you get lines like this. Um and you and I were talking about this earlier on about the Treasury. Uh, Clive Black from Shore Capital came out with this particularly pithy comment, which I like, this morning. Uh, "Whilst the UK is on the ropes electorally, the government it appears to be losing its mind in mind in an orgy of neo-Soviet policy ideas seem seemly popular to elements of the electorate in Camden. Um, but these kind of things, price control, I've never heard such nonsense. What do you think?"

[00:10:01]Well, yeah, I assume this was related to headlines yesterday, um, to do with the >> pricing caps on essential goods. Yeah, the Chancellor, um, I I think, um, is is due to, uh, announce some some measures to help households deal with with the cost of living and and the crisis that we're currently going through that's already impacting, um, fuel and diesel prices, but will likely impact household energy bills in July and and many other prices. We've talked about jet fuel. And so, the Chancellor, you know, it it's her job to to, um, help people out, um, in terms of the the broad economy, uh, keep fiscal responsibility, but she will want to, uh, be thinking about what she can do to help with the cost of living.

[00:10:42]But, the important thing here, actually, uh, for the bond market, as I mentioned, is she's got to keep the fiscal rules.

[00:10:47]So, she won't have much money, uh, to to play with in terms of, uh, you know, potentially, uh, helping out people out with that. So, one thing she's been looking at, it's been reported, um, is potentially, uh, trying to persuade supermarkets to voluntarily limit price increases. So, we'll see what happens there. As far as I'm aware, they they haven't yet agreed to that, so it might not even happen. Um, but that would pretend Food is 10% of the inflation basket. So, so, changes in food prices will have big impacts on inflation.

[00:11:18]>> it won't have got lost on all of you, you are European economists rather than UK economists. So, why don't you put it in context to what we're seeing elsewhere? We We in the UK, or certainly the scribes in the UK from the red tops who suddenly discover business every now and again, uh, think that we are in our own unique bubble of crises at the moment. Well, we're not. This is going on around the world and others are worried about bond yields from Japan to United States to elsewhere in Europe as well. So, just kind of put it in context for us. Yeah, that's true. Yields have risen across the world because of concerns about the Iran war. Right, that's what's driving bond yields even in the UK even more than politics.

[00:11:53]And and all sorts of countries are very concerned about the fiscal impact of of of higher energy bills.

[00:12:02]What that will mean for the fiscal situation and and for inflation of course that is the most important thing.

[00:12:07]The first area that we're likely to see the impact of the Iran war come through for all of these countries. And the question is for across the world will central banks raise their policy rates.

[00:12:18]We're also forecasting the European Central Bank to raise rates in June and July in response to this. Lovely. What a what a great conversation. Josie, thanks very much indeed for that. Really nice to see you today. Josie Addison who is a European economist at Nomura. Now, right, talking of the bond yields. Yeah, let's take a look at what we're seeing this morning on the the 10-year across the board as a bond yields don't forget have been marching higher over the course of the last week or so. The 10-year note we are now seeing at 4.65% bonds 318 so we've peeled off about 2/10 on that paper. The JGB rate down 2/10 of a percent but where we are seeing some elevated behavior is on gilts upper fraction 5.13 on that 10-year. The 30-year we cast the net a little bit wider and take a further look down the line. You can see we're 5.17 at the 30.

[00:13:08]The paper out of Germany 3.7 slightly higher there. Flipping lower on JGBs 4.1 to handle and also longer term gilts we're seeing a slight drift there too in terms of the yield.

[00:13:20]Now, I want to take you to what we're seeing on US markets. The investors are taking note of the bond market and that is having an impact on what you're seeing in terms of the equity market performance this week. It's taking some of the steam out of the technology trade. The question is whether Nvidia can revive that later on today. Nasdaq down 18 points plus in the trading session. Alphabet actually one of the underperformers despite some very strong news flow around search in the last 24 hours. We are seeing a reversal there.

[00:13:47]Want to take you to the Asian market.

[00:13:49]This is a state of play across the region today. Japanese stocks down more than 1% along with South Korea. A slightly more modest tone out of the Shanghai Composite down about 1/4 of 1% and Hong Kong losing territory. So, red is the color of the day across in Asia.

[00:14:05]Well, European futures on the back of what was modestly a firmer session on the European boards. We clocked higher by about 2/10 of a percent, fourth positive session out of five yesterday.

[00:14:15]But again, if you look at some of the individual markets, we gave back territory on Italian and French stocks.

[00:14:20]It was just the FTSE and the DAX out of the core markets that traded higher yesterday. This morning, we look like we will step up into negative territory.

[00:14:27]The DAX seeing down 6/10 of of a percent out of Germany this morning.

[00:14:32]Still to come on the show, President Trump suggests he was just an hour away from attacking Iran, reiterating his threats if a deal is not reached. Dan will have the latest from Abu Dhabi.

[00:14:42]Plus, it's Nvidia day with investor attention on the AI darlings earnings set across the wires after the market close stateside. We'll look ahead to the numbers.

[00:14:52]And we'll also discuss the impact of the war in the Middle East on the global economy with the World Bank Group's managing director, Paschal Donohoe. That conversation at 9:15 London time.

[00:15:06]>> [music] >> Executive Decisions is the new podcast from CNBC where I ask powerful leaders about their decisions that changed everything. I'm Steve Sedgwick. Here's the CEO of the London Stock Exchange Group, Julia Hoggett. There is no >> [music] >> justification whatsoever for not doing the right thing, even if the right thing is hard to do. Which also means that if the context changes or the information changes, it is absolutely fine to also change your mind. That's Executive Decisions with me, Steve [music] Sedgwick. Get it wherever you're listening to this.

[00:15:48]>> [music] [music] >> Do you know how it is to negotiate with a country where you're beating them badly, they come to the table, they're begging to make a deal? Cuz they're begging to make a deal. I hope we don't have to do the work, but we may have to give them another big hit. We may have to give them another big hit. I'm not sure yet.

[00:16:13]Uh you'll know very soon. How close were you to striking Iran yesterday? Uh I was I was I was an hour away.

[00:16:21]We were all set to go. You're talking about yesterday.

[00:16:24]>> Yes. We were going to be striking very It would have been happening right now.

[00:16:28]Yeah, it was all done. The boats, the ships are all loaded. They're loaded to the brim.

[00:16:33]And we're all set to strike.

[00:16:35]Oh, apologies for the background noise there. It was a property developer doing his extension. Uh moving on, US President Donald Trump says that they're uh doubling down on his threats against Iran, while suggesting Tehran is eager for a deal.

[00:16:48]Very eager. Uh meanwhile, two Chinese tankers carrying roughly 4 million barrels of oil exited the Strait of Hormuz today, according to Reuters citing shipping data. Oh, damn, both stories absolutely fascinating. I mean, the timing of the Iranians letting through two Chinese tankers, that will not be lost on you or anyone else in the region. And once again, the president's saying the Iranians are desperate, desperate, desperate to do a deal.

[00:17:14]What do you think?

[00:17:17]Steve, good morning. Well, markets are obviously watching to see where this latest rhetoric from both sides takes this conflict, which is really showing no signs of progress as we track into the 3-month mark next week. President Trump keeping up the threats towards Iran, as you've just heard. He said overnight, and I quote here, "We may have to give Iran another big hit. I'm not sure yet. You will know soon." The president also now setting another new deadline, giving Tehran until Friday or Saturday to show meaningful progress in negotiations or face fresh strikes. The president said he was just an hour away from giving that strike order on Monday before standing down at the request, apparently, of the Gulf leaders. At the same time, as well, Iran not backing down here, at least publicly. The foreign minister, Abbas Araqchi, responding with his own warning, saying Tehran has gained military knowledge from previous hostilities, and I quote here, "A return to war," he says, "will feature many more surprises." Again, markets have seen this movie before.

[00:18:19]Axios also reports the latest Iran counter proposal did not show a significant progress, and Axios says today that many US officials now admit they're confused about which direction Trump is actually heading. And then also this morning, a new data point out of Reuters on the state of play inside the Strait of Hormuz that is important to watch. Two Chinese tankers carrying roughly 4 million barrels of oil have exited the strait. That's according to new shipping data. It's a notable development and worth watching really closely. Whether this represents a deliberate signal from Beijing following last week's summit with Trump or simply a commercial transit that Iran has chosen to allow is not yet clear. But, of course, 4 million barrels moving through the strait that has been effectively closed for nearly 3 months is not a small number. Markets now watching and looking out to determine whether this is going to be a one-off or perhaps the beginning of something much more. It's back over to you. Dan, can I ask about the Iranian negotiating position what they're seeking at this point because it feels as though despite all the twists and turns in the story in the last couple of weeks, they haven't budged a very far from some of their initial proposals. Is that your reading, too?

[00:19:31]That's exactly right. And on top of that list is war reparations. For example, the Iranians also not budging on the American hardline which is this request from President Trump that they can never have a nuclear weapon. It seems as if it's a position that Iran is yet to soften on and perhaps may never will.

[00:19:51]They have long suggested that their own nuclear ambitions are within the remit of their own rights as a sovereign nation. And of course, for the United States and for Israel, that is simply a non-starter. So, the nuclear issue is one thing. And then on top of that, you also have other major sticking points like Iran's missile and drone program.

[00:20:11]And of course, other key issues perhaps also near the top of the list is the fact that the Strait of Hormuz and who controls it into the future is an issue that's also still largely unresolved.

[00:20:21]So, as we come into this three-month milestone next week, obviously a lot of contentious issues yet to be narrowed and the gap between the United States and Iran remains wide, which is why we have ultimately seen these threats continue to ratchet up on both sides.

[00:20:38]Dan, what are your thoughts about the medium term with this one and about the production that will be coming out of the coming out of the Gulf because we know that UAE are not constrained by OPEC anymore. The Iranians presumably as part of any deal will want to sell as much product as they possibly can. Saudi will be chomping at the bit to sell product aggressively.

[00:21:00]Just your thoughts on what you're hearing from oil experts about what could actually happen physically in terms of crude uh once this is over.

[00:21:11]Well, Steve, I thought one of the most in conversa- one of the most important conversations we've had on the network this week was your conversation and Ben's conversation with Jeff Currie, our former top commodities analyst at Goldman Sachs, now weighing in from the Abax Markets perspective, saying that in the next couple of weeks, perhaps as soon as the 4th of July in the United States, we could be reaching that critical juncture when it comes to supply and storage. And the fear is that we could see airline bankruptcies in Europe, for example, if we begin to see genuine shortages of fuel and products uh and of course crude supply as well.

[00:21:49]The the main issue is the time frame here. At the longer the Strait of Hormuz remains closed, then the higher the risk is. And when I speak with experts in this part of the world and also analysts who have been weighing in on the state of play, the thinking on the supply side is that when the Strait of Hormuz does eventually open up and normalize, then perhaps we will see quite a significant rush to market. There's going to be a big focus on OPEC unity, for example, and whether or not we're going to see compliance staying intact, because all of these producers who haven't been able to get their product to market are obviously going to be very keen to begin monetizing their natural resources once again. And then at the same time as well, just because Hormuz reopens, it wouldn't necessarily mean that we'd see an immediate normalization either, because it's going to take a long time to get that backlog flowing again. In fact, the transit could take many more months off the back of uh freshly reopened Hormuz. So, this doesn't really seem to be normalizing anytime soon, and we're already starting to see that now spill over into other risk assets. The surge in yield off the back of higher energy prices and the expectation that we'll we'll inflation staying higher for longer is a case in point now. So, this is really starting to have an impact. I think we're going to have to watch and wait to see exactly what happens next on the diplomatic side or whether we see a resumption of military hostilities here, but the general sense in the region right now is that this is nowhere near over at this point and perhaps has many more months to run.

[00:23:23]Dan, excellent work. Thank you very much indeed for that. I just want to tell you that you can see on the screen in a couple of seconds after we've sync about it, Dan.

[00:23:32]We have a President Xi and President Putin this very second. Our timing was perfect for once.

[00:23:38]Coming into conduct their press conference after their meetings. Now, look, as we saw with President Xi and Trump, there will be platitudes. There will be platitudes about the relationship going forward, about how they have to coexist, and how they've overcome many issues. But, the fact of the matter is President Putin is in the far weaker position and is doing to a certain degree what the US president was doing was trying to see what kind of level of support he can get from the Chinese president for various initiatives. Now, the key for Russia, let us be brutally honest about it, is the fact that it is shut out from selling a vast amount of product on the world market. And specifically, via Nord Stream, it cannot sell its gas to Europe. Although, it is of course still selling LNG, which is a interesting hypocrisy from the European Union. Anyway, the point being is what he really wants, what he would love, what would be the absolute peach on top of everything, would be that if he could get the Chinese to agree to a second pipeline, east-west pipeline, to supply vast amounts more gas to China. It's been something that's been on the table, the power Siberia 2, I think it was called, for many, many years. But, the Chinese have been really hardball on terms on this one as well. And as of yet have held back. Now, I haven't seen anything yet that says that that deal is getting any closer to being inked because the deal obviously, from the Chinese point of view, they are in a very strong position and want an incredibly low price of product as well. But, it'd be very interesting to see where we see any progress on that. That aside, I quite frankly expect more platitudes.

[00:25:16]>> There was a lot of commentary in the last 24 hours about how Xi thought about Ukraine and whether he'd made some comments uh suggesting that Putin would regret the invasion. Uh the Chinese side has been pushing back saying that it's completely fabricated. So, again, smoke and mirrors around what was said between that conversation between Xi and Trump, whether there was any way in by the Chinese president. Of course, it's very difficult optics now as Putin arrives on the ground, whether that was part of the conversation and whether the Chinese will help when it comes to geopolitics for Putin or whether they will stand back. And don't forget there's an incredible amount of technology that the Chinese now have at their disposal, the the amount of capabilities that they have, and whether this weaponry technology is freely available to the Russians. Mhm. It's interesting. A moment ago, we saw the two leaders there exchange the folios, which presumably contain some of the details of some of the points that they've agreed on. It'll be interesting to see when commentators pick apart the two versions, whether we have the same sort of disparities that we saw between all the detail on one side from say the US readout and then the slightly more vague versions of the agreements from from from the Chinese side. And and whether these this time the two versions align more closely and what that tells us about the relationship and the talks that have gone on. Can't help but wonder whether on his way there, Putin read that FT report about the conversation between President Xi and President Trump and talking about controversial. Well, it's the most it's the most four years of of of which has been a sharp rupture out of the world system has caused economic calamity. I don't care what the the the bluster says on the surface. They have hundreds of thousands, if not millions, of young men, especially, who are coming back maimed from a war that was unnecessary. Many aren't coming back.

[00:27:09]Hundreds of thousands of dead, as well.

[00:27:11]An economy which has had to be geared towards industrial production, towards a military industrial complex, as well.

[00:27:16]Where, actually, they've drained their resources. They've drained their rainy day fund, as well. Is it Is it surprising that an even if it's off-the-cuff comment from two world leaders that, "Yeah, I bet he's regretted this." 4 and 1/2 years later on, when Look, I remember February 2022.

[00:27:32]You remember it, and you remember it. We all thought We all thought, let's be honest about it, that the Russians would be in Ukraine, in Kyiv, on the streets within a couple of weeks. There was no one thought that Ukrainians could hold back. Certainly not the Russian generals. And if that had been the case, then it would have been a clear, easy win for Putin, but it was not the case.

[00:27:50]And if you think back before that, all those trips that you used to take to Russia, all the trips that international business people would take to Russia, it was a very much part of the global economy. It was bringing in more investment. It was setting itself up for the future. Now, all that, of course, has come to a standstill, and one of the times when you've got the biggest technology investment in generations. So, is Russia missing out on this technology wave around AI?

[00:28:13]Has it really put itself in the slow lane for for decades to come because of the war? Yeah, the point about what President Xi says being uncontroversial, as in friendship, as in global diplomacy, you know, you can speak the truth, but people would rather you say it to their face, rather than to someone who is there, perhaps their rival, behind their back, you know? And the fact But was it that big a deal? I mean, well, what do you expect? Is he regretting it? Yeah, he's regretting it.

[00:28:39]For for someone who doesn't make that sort of personal comment, remember the weight of words. When President Xi says something, you know, in international diplomacy, I think it does carry weight.

[00:28:49]I think it does. Especially when he's on he's on his way to go and visit Putin.

[00:28:52]>> you on this one. Sorry, we've got to go to break in in within the next half an hour. I'm going to roll with you on this one. What does it mean then? If he did say it, so what?

[00:28:59]If he did say it, what what's Putin going to say? "I wish I hadn't said that." Then then what? Well, no, but it's it's it's about setting the tone for the conversations that are about to happen.

[00:29:06]>> No, no, but Ben, hang on. I'm I'm all-powerful Xi, which he is pretty powerful at the moment. And we all agree with that.

[00:29:12]He He makes an aside. Let's say he makes Let's Let's go with the Well, the Chinese are saying he didn't say it, but let's say he did, just for the sake of this argument. I bet he's regretting that. And Trump goes, "Yeah, I bet he's regretting that." And then and then Putin goes to Beijing and says, "I wish I hadn't said that." And he says, "Well, I didn't say it." Then what?

[00:29:29]But who cares?

[00:29:31]How is that going to change the relationship between Russia and China?

[00:29:34]It's not.

[00:29:34]>> Is it calling the outcome of the war because of the hint of regret suggests that you're the the losing party, that you're also not going to get an outcome?

[00:29:40]No, I've made loads of things I've regretted in my life, but actually they've turned out okay. So, I don't know if he was calling the All I'm saying is Putin's in such a a dreadful position. If if if your mate, let's say they're saying they're they're on the same side and they've got this eternal friendship between Russia and China. Let Let Let's say he did say it, and your mate says, "Well, I bet you regret that." I mean Yes, so what? What's What's Putin going to do? "Oh, I'm not going to sign that big gas deal I need now." Or I'm not going to desperately require some other trade deals with you to shore us up because our economy's teetering.

[00:30:11]I'm not sure if the relationship is as matey as you would like to portray it. I think it's very fragile.

[00:30:16]>> I'm I'm I'm I'm going down a a trite line, but the fact of the matter is they do have they have signed these huge Sino-Russian deals or or or compacts of eternal friendship, which quite frankly, I think are being challenged.

[00:30:29]>> Yeah, I don't know. The final point the face-saving element for the Chinese is a huge one. And so, if he's indicating that there's been a loss of face from Putin around entering the war, that is quite a serious connotation from the Chinese perspective.

[00:30:45]>> [music]