Bloomberg Daybreak: Mortgage Rates, Denmark Election, BYD Earnings

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1:39This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our daybreak anchors all around the world. Straight ahead on the program, a look at what we can expect for U.S. mortgage rates in 2026. I'm Alexis Christophorus in New York. I'm Caroline Hepke here in London, where we discuss the snap election in Denmark shaped by the standoff with President Trump over Greenland. I'm Doug Krisner, looking at earnings in the coming week for the Chinese EV maker BYD. That's all straight ahead on Bloomberg Daybreak Weekend, on Bloomberg 1130 New York, Bloomberg 99.1 Washington DC, Bloomberg 92.9 Boston, DAV Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business app.

2:32This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, a look at what we can expect for U.S. mortgage rates in 2026. I'm Alexis Christophorus in New York. Good day to you. I'm Alexis Christophorus. We begin today's program with a look at U.S. mortgage rates. For more on what we can expect this year, we're joined by Erica Edelberg, Bloomberg Intelligence Chief Mortgage-Backed Securities Strategist. Erica, great to have you here. So glad you're on the show because this is a hot topic right now, mortgage rates.

3:04We saw them rise last week to the highest level so far this year. Big drop in refinancings as well. What's going on in the mortgage market? Hi, thank you for having me on and good morning to you. Yeah, mortgages, mortgage rates in particular, are right at that interesting cusp where there have been so many borrowers who had to take out mortgages at higher rates over the past four years that were told to, we like to say, date the rate, marry the house. So a lot of these borrowers really had to stretch to take out these mortgage rates. And at the same time, since these were the highest mortgage rates in about 20 years, they were acutely aware that they were locking in relatively high mortgage rates and were hoping to be able to refinance.

3:50And in fact, some of them are really hoping because they'd really stretch to take out these mortgage rates. We saw a 30 % drop in refinancing applications just based on this very small shift back upwards in rates. And we can talk about what caused that as well. And what that really highlights is just the huge percentage of borrowers who are right on that cusp of refinancing. And a 30 % drop one way or increase one way or the other could really make or break a year for like a mortgage banker, for instance. Sure. So what we're also seeing is that mortgage bankers themselves are really intent in getting as many of these refinancings through the pipeline as quickly as possible as they can.

4:33Before rates go any higher? Before rates go higher. Okay. What about the 15-year? Where is that sitting at the moment? Which I know that's more popular with refinancers. Yeah, it is more popular with a lot of refinancers. However, it incurs quite a bit of higher payment. You know, a lot of times when that is, in fact, a popular item, it's because there's been enough home price appreciation or enough seasoning in the mortgage loans that it makes sense. You know, for instance, I even refinanced into a 15-year a few years ago because we had a 30-year mortgage. mortgage and if we'd refinanced into another 30-year mortgage, our whole interest stream would have been higher.

5:16Sure. Is this really all about the war with Iran, what it's doing to the oil markets, and how that can be inflationary? And we've seen how that has impacted the 10-year treasury, and the 30-year is very closely tied to the 10-year treasury, more so than what the Federal Reserve does, of course, with its overnight interest rates. So is that what's behind this rise, this recent rise in mortgage rates? That's an excellent question. And just for the fun of it recently, I was working on a note where I was looking at the correlation between, say, mortgage rates or mortgage spreads and oil rates. Pretty much no correlation.

5:49Okay. You know, I mean, you can see times. But what really is driving this, as you said, the key here is what it's doing to inflation expectations. And more importantly, it's also creating a lot of uncertainty about what the Fed's going to be able to do, what direction rates are going to be able to go. What does uncertainty mean? Uncertainty means increases in volatility, both implied and actual rate volatility. Now, volatility is a huge driver of mortgage spreads because mortgage borrowers have the option, is what it's called an option, to refinance or just not move anytime they want. So as a result, the higher volatility is, the harder it is to hedge that borrower option.

6:36And the more expensive, the wider spreads need to be to both attract investors, but also for the rate that lenders are willing to offer, the primary rate. And on top of that, you have added to that the fact that if inflation is expected to increase, mortgage rates are probably going to fall less quickly, which means long-term rates have also risen, as you pointed out, which includes 10-year treasury. So you have the actual base case rate, the 10-year treasury rate rising, and you have mortgage spreads widening because of this increase in volatility generated by the uncertainty of what's going to happen with oil and the war in general.

7:13Are you thinking we might see a 30-year back at 7 % again sometime soon, especially if the war drags on? You know, that would be a really tough question. I actually didn't see them getting above 7 % in the first place. You know, I don't think that's certainly the long-term equilibrium. I don't have a crystal ball. But it does seem to me that the widening of mortgage spreads that we saw that contributed to how high mortgage rates got in 22-23 was mostly because the Fed had just started running off its portfolio. It was still in tightening mode, which is certainly not my base case expectation. Our thanks to Erika Edelberg, Bloomberg Intelligence Chief Mortgage-Backed Security Strategist.

7:58Let's take a look now at some stocks making news in the week ahead. I'm Alexis Christophoris with Tatiana Darrier, Bloomberg Strategist for Markets Live. Tatiana, you brought three names with you. Let's begin with, if you're a pet owner, you know them well, Chewy. Chewy, exactly. Chewy will report fourth quarter earnings next week, and analysts are expecting a solid profit increase versus the year ahead. And that may come to help the stock revive some of that momentum because it has come under pressure this year on concerns over growth and the profitability outlook for this year and next year.

8:37And analysts at Morgan Stanley expect the sprint to set the tone for the year ahead. And they expect full year guidance of about seven to seven and a half revenue growth. So remember that number, because anything less than that could come to pressure the stock again. The company, you know, has named a new CFO in February, reaffirmed its financial outlook. So it has tailwinds in place. Its revenue has been steadily climbing through the years, even as we've seen consumers come under pressure from all prices rising elsewhere, basically. Basically, so it has a momentum there. It's just that when people are looking ahead, they're concerned about consumers pulling back.

9:21Now with high oil prices, so we sort of need to see revenue outlook and that guidance be lifted so that the stock investors feel more reassured. Now, it's interesting when you talk about consumer spending, because sometimes we'll pull back on things for ourselves. But I think history has shown people don't necessarily pull back for their pets. They're still going to pay for their pets. Also, they have their Chewy vet clinics that I guess are in stores. I understand that's going to be a bigger part of the Chewy story, I guess, in 2026. Yes, exactly. A push there. And they also have their sort of revenue or their online platform where you can schedule deliveries.

10:06And that's also been a big focus for the company and for the stock. But yet again, as those growth concerns have been battering the stock, it will be very important for them to go back to what analysts have been saying, to a beat and raise cadence, which they have not had in recent quarters. We have a great function on the terminal where you can see how results have been coming in pitted against expectations. And five or four of the past five have not really been great. The last one was better, which sets up hopes that this one will come in also better than expected. And just want to add, Morgan Stanley kept its overweight rating on Chewy, trimming its price target to$50 from 51, saying the stock is offering a, quote, compelling entry point following its recent decline.

10:55So Chewy on the move here in the coming week. Also, Beyond Meat, which I know is dropping the name meat from its official title, right? Tell us what we can expect there. Well, the maker of alternative meat products is also due to report, but expectations here are much lower because they've already reported preliminary revenue and it came below expectations. With that, they also said that they will delay the filing of their 10K annual report because the company requires additional time to complete a review and analysis related to its inventory balances. And, you know, when you get messages like that, that always spooks the market.

11:36And this is something that this company did not need. Because if you look at the long-term chart, the stock has fallen dramatically since its much-talked IPO in 2019. It's lost more than 90 % of its value since then. So it really doesn't have a good story. It keeps getting worse. And it doesn't have a good track record when it comes to earnings either. Four of the past five quarters have seen earnings really disappoint expectations and shares fall as a result. So the bar is pretty high here for a surprise. Yeah. And, you know, I know they're trying to expand beyond fake meat. They're rebranding as Beyond the Plant Protein Company.

12:18They're introducing these new products like high protein sparkling drinks and what they call simplified plant protein foods. We'll see if it's, you know, that's what it takes to turn things around. All right. Let's squeeze Carnival in here. The cruise line. How are they doing? How are they expected to do? Carnival reports before the bell on March 27. What the street wants to know here is how much will higher oil prices impact its year ahead outlook. This is sort of the big question when it comes to earning forecast just overall in the S &P 500. But specifically to Carnival, Morgan Stanley identified the name as the most exposed among cruise liners to oil prices because it does not hedge, which they reckon that this would translate into about a 45 hit to its EPS outlook, or that's about a 20 % hit to its overall guidance, if you want to think in percentage terms.

13:11Well, if you look at the stock, that's about how much it has fallen since the war has started. So basically, you could argue that the market has baked that in already. But although this is an estimate, not a confirmation from the company, So we'll have to see if that comes in sort of higher or lower than expected. But the point is that the market has already baked in some bad news. Now we have to see how bad will the news actually be. And Carnival, we'll have to see whether or not they pass those higher fuel costs on to consumers in the way that some of the airlines are doing that. I know some international airlines are charging fuel surcharges, but some American airlines, U.S.-based airlines, I should say, are adding it to the ticket price, to higher ticket prices.

13:53and whether or not that's going to mean a slower summer travel season. Right now, it doesn't look like it's going to be. Lots to look forward to on the earnings front in the weeks ahead. We're going to leave it there. Our thanks to Tatiana Daria, Bloomberg Strategist for Markets Live. Coming up on Bloomberg Daybreak Weekend, there is an election in Denmark this week. We bring you a preview. I'm Alexis Christophoris, and this is Bloomberg.

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15:48Do that. Do that. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Alexis Christophorus. This week brings us an election in Denmark, and Daybreak Europe anchor Caroline Hepker is here with a preview. Caroline? Alexis, Mehta Friedrichsen's party was polling at historically low numbers, but barely a month ago, the Danish prime minister called a general election. Now, proportional representation means that there are more than a dozen political parties running in this vote, with governments in Denmark usually formed from parties within two main blocks, either the blue block on the right or the red block on the left.

16:36Denmark also faces many of the same issues in this election as in many other European countries, from housing costs to food prices, welfare, inequality and immigration. But it is President Trump's efforts to control Greenland that have created a major foreign policy crisis as we head into Denmark's 2026 election. And joining me now to discuss is our reporter in Copenhagen, Sanna Vass. Great to speak to you, Sanna. I just want to ask you how important you think these elections are now for Denmark? They're very important. Denmark is in the middle of a diplomatic conflict with Donald Trump over Greenland, which is part of the Danish Kingdom.

17:23Denmark is currently negotiating with the US to find a solution to Trump's desire for more control over this island. And the next government in Denmark will have to deal with the next steps. So our Prime Minister, Mette Flaxen, she's framed this vote as a decisive election because Danes in the next election term will have to define their relationship with the US, but also the future of the Danish kingdom. So it's a very important election. Yes, indeed. But then why was the election called quite a few months early? Yes, that's right. I mean, in Denmark, it's the prime minister who decides when to call an election.

18:05There is a four year constitutional deadline, but it is quite common to call the election early when the prime minister sees that the timing looks politically favorable. And that is the case right now for Mediflex, now Prime Minister. And it's all tied to Trump. She performed very poorly in the polls in December. And then she got this massive boost when Trump, he started making new threats over Greenland in early January. And this spat, it just really reinforced her image as a disciplined and steady leader during periods of national crisis. And that is something that she's hoping to capsize on with this vote.

18:49So then the US and President Trump looming over this election, what are people saying in Denmark and also in Greenland? And you might explain also that there are some seats in the parliament in Denmark, correct, for Greenlandic representatives? Yeah, Greenland elects two representatives for the Danish parliament and they could definitely play a very important role in defining the future Danish government. And for sure, the future relationship with the US and the future of Greenland will be an important question in those negotiations. generally for both Denmark and Greenland it's the first time in their modern history where geopolitics is really top of mind for voters and we've seen the topic feature in national party leader debates and that's quite unusual we also saw a poll earlier in the campaign that found that foreign and defence policy that was the number one concern for Danes And so in a way, Trump, he really turned foreign policy into a domestic issue.

20:01And voters are likely to assess politicians on their leadership skills and their capacity to handle the unknown. And that is favouring especially the governing parties and the prime minister. So then tell me a bit more about who is favoured to win according to the polls. Prime Minister Mérida Freyxen, her social democratic party looks set to become the biggest party by far and that will give her the first shot at forming a government and looking at the polls she is the most likely candidate to secure a majority backing to make her prime minister again. And the biggest outstanding question, I'd say, is whether she will return to a traditional left-leaning red bloc government or look to renew or expand the quite unusual centrist kind of cross-bloc coalition that we have at the moment.

21:04And one of the biggest challenges for going with renewal of this government is that Middiflexen has proposed to introduce a wealth tax. And it's something that's drawn sharp criticism, especially from wealthy people in Denmark. Some are threatening to leave the country, but also from the liberal parties who really struggle to enter a coalition on those terms. But remember, Denmark has a very fragmented political system and political landscape. And there's 12 parties in the running that leaves the outcome very open to kind of late shifts and alliances and policies once coalition negotiations start.

21:46And that could really reshape the balance of power. So we are preparing ourselves for potential surprises once talks begin. That'll be interesting. What about other issues, though? The Danish prime minister is known for her tough stance on immigration. How could the outcome of this election shape Denmark's directional mass front? Yeah, that's right. She originally in 2019 rose to power in Denmark because she managed to steer her social democratic party towards a tougher stance on immigration. And she, in that way, reclaimed working class voters who had drafted to the right. she's also been very outspoken in the EU pushing for stricter border controls and and tougher immigration policies and the election could really shape Denmark's direction on this topic in the future especially if Alexan were to pivot to the left to create a more kind of left-leaning majority it could complicate her ability to maintain this strict approach to immigration So that's definitely something that not just the Danes are following, but for sure also across Europe.

23:05So then what role do you think that Denmark wants to play then or will want to play in conversations around the EU and the US? I think a striking comment that Prime Minister Medeflex made in a debate on TV quite recently was that the US is no longer Denmark's closest ally. Instead, she's called for closer collaboration in the EU, but also with other like-minded nations such as Canada, for example. And we are seeing also various ways in which sentiment in Denmark, especially on defense and EU collaboration, it's really changing as Denmark is adapting to a new global order. I mean, Denmark, it's a very good example is that Denmark earlier this month entered into an agreement with France on nuclear deterrence.

24:02And that is quite a dramatic move for a country that has long been opposed to atomic weapons. But it's also an example of the changes that Denmark is now seeing necessary as it realizes it can't rely on the US for security and it needs to build deeper alliances elsewhere. Whoever leads Denmark next, though, yes, they'll be thinking about the EU, but surely front and centre will be any possibility of a clash with the US. You've been reporting about the idea that there were actually deeper preparations by Copenhagen for some kind of the possibility of some kind of military confrontation with America.

24:41We've seen new information come out this week. A Danish broadcaster, VR, reported quite extensively on some of the preparations that Copenhagen had been undertaking earlier this year in the event of a potential U.S. attack on Greenland. For example, Denmark deployed troops with live ammunition. they were prepared to blow up airport runways in Greenland to prevent US forces from landing if Trump chose to take the island by force. DR also reported that Denmark dispatched blood supplies to treat the wounded if fighting were to break out. It really shows how worried Copenhagen were back in January when Trump was most vocal in his threats.

25:35Denmark was extremely worried. And as Danish Prime Minister Mette Fragson said just this week, negotiations underway, we hope for an agreement, but Trump's desire to take over Greenland remains intact. So clearly that nervousness has not gone away and a future government may well have to have to deal with the outcome of no deal or potential deal with Trump. hmm so then finally this vote is also going to be a very interesting test about whether campaigning on an anti-trump message can work perhaps a lot of other countries will be watching this what do you think that they're going to be thinking about and looking at when it comes to the danish example yeah i think the danish example is very interesting because even though foreign security policy has taken on greater urgency it's unclear whether it will move votes really to swing the election um i think in denmark generally parties are very aligned on foreign policy and so it leaves little opportunity for candidates to differentiate themselves um so parties they're still they are instead directing their energy towards more domestic issues like taxes and pension reform and agriculture, that's where party divides are clearer.

27:03But so far, polls suggest that voter preferences have not shifted very much during the campaign. And of course, there is also another element of unpredictability still, and that is that the election is very vulnerable to outside attempts to influence it. Denmark's intelligence service It's warned recently that foreign powers, including Russia, but even also the U.S., may seek to interfere in the vote. And there is especially a worry amongst lawmakers running for election in Denmark that Donald Trump at any time could post something on social media and that could really shape the election more than he already has.

27:46so that's for sure something that we are watching for and and that across Europe we'll be looking at okay Sana thank you so much for being with us yes well we look forward to hearing more from you and understanding the outcome of the Danish vote in the next few days that is Sana Vass our reporter in Copenhagen my thanks I'm Caroline Hepker here in London you can catch us every weekday morning for Bloomberg Daybreak Europe. That's beginning at 6 a.m. in London. That's 1 a.m. on Wall Street. Alexis. Thanks, Caroline. And coming up on Bloomberg Daybreak Weekend, we preview Chinese EV maker BYD's earnings.

28:23I'm Alexis Christophorus, and this is Bloomberg.

28:34So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs.

29:19In Season 3 of The Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare. You need to make a huge presentation in an hour. Adobe Acrobat uses AI to take all your documents and generate a presentation with a single click. Build slides quickly and streamline the process. Need a last-minute pitch deck? Do that with Acrobat. Need to level up your presentation design? Do that with Acrobat. You have 30-plus documents that need to be simplified into a proposal.