shery: we are counting down to asia's major market opens. haidi: the top stories, risk appetite returns with u.s. stocks near all-time highs. treasury yields tumbling as the fed pivots towards rate cuts. chair powell still sounding a note of caution. >> inflation is still too high. ongoing progress in bringing it down is not assured. in the path forward is not certain. shery: also add, country garden surprises creditors by repaying a bond in full, avoiding what could have been its first local default. haidi: why some critics say tesla's largest ever recall will not ensure enough safety surrounding the autopilot system. the morning after the fed decision here in asia, we're expecting a risk rally when it comes to sydney stocks. seeing .3% higher at the start of that staggered start to cash trading.

futures are indicating a pop of about 1.5%. this comes at a time where we are seeing the asx looking a little overheated. technical suggesting we might see a near-term pullback. also when it comes to mirroring the fed decision as we get the hong kong monetary authority, leaving the base rate unchanged at five and three quarters of one percent. official interest rates moving in lockstep with those of the fed, given the hong kong dollar is pegged to the u.s. dollar. we are seeing quite a bit of stability across australia and new zealand yields. there was particular vulnerability when it came to rates traders in australia of a more hawkish tone by the fed. but that is not what we got. we got that much more dovish pivot to rate cuts with inflation headed toward that 2% goal and the expectation, little

more dovish than what we had in september. we are seeing some weakness for the aussie dollar despite the biggest slide we have seen for the greenback in almost a month. that weakness should play through to some gains across the rest of the asian currency trading complex. the aussie dollar could be influenced by some disappointment out of stimulus pledges from china that led through to a pullback in this recent rally we have seen in iron ore prices. shery: take a look at how u.s. futures are coming online. we are seeing muted moves after the s&p 500 topped the 47 level at the highest since january 2022. stocks and bonds jumping, the dow closing at a record high, the nasdaq 100 touching a record high, finishing at the highest since 2021. being led higher by megacaps including apple, which finished at a record high as well. really it was about reacting to that dovish tone coming from the fomc ahead of the fed decision. we had producer places -- prices

slowing down so that was adding to the narrative that inflation is being reigned in. we have the dollar declining, oil also getting a boost. we continue to see that upside in the asian session but still below the $70 a barrel level. treasury yields plunged. the two-year yield dropping the most since march. really to do with that steady hold for the fed fund rates at a third meeting. 325 basis points cuts now implied with the dot plot for next year. even chair powell acknowledging rate cuts were discussed. take a listen. >> the question of when will it become appropriate to begin dialing back the amount of policy restraint in place. that begins to come into view and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today. haidi: our next guest says she

believes the fed can stick the soft landing, but the question is whether 2% inflation can be achieved. joining us now is professor sebnem kalemli-ozcan. specifically to your point, it is whether this sticking of a soft dish -- softish landing can be held all the way to 2%. sebnem: thank you so much for having the on the shelf. yes, that is now the question. the fed did signal the rate cuts. on this backdrop of soft landing. soft landing is continuing. but our be to have this soft landing until we go to 2%? that is not clear. that is why it is also not clear when they are going to cut. during the press conference, several reporters asked this question and chairman powell

basically answered this question as, we are just starting having those discussions of the rate cut. so even the dot plot shows some cuts in the next year. it is still not clear how many cuts there are next year. especially because we are not sure and the fed is not sure yet in terms of, can we keep the soft landing until we reach 2%. shery: what are the biggest risks to get there? yes, inflation is not at 6% but it is nowhere near 2% yet. there is a lot of uncertainty that can play out between now and then. sebnem: exactly. the biggest upside risk on the inflation side is inflation turns out to be sticky because of the slow improvement in the

labor market and the services sector. in fact, chairman powell did say a shift to services is still not complete. and there is still not full balance between labor demand and labor supply in the labor market. so if this process proves to be much slower than what we are expecting, that means of course longer sticky inflation. if somehow this combines with a new supply shock at the global level, or at a regional level, that of course will make this whole thing worse. that is the worry that it will take a long time for us to get to that 2%. but on the other side, why they are now having a dovish stance and outlook and why financial markets respond to that by easing financial conditions is this risk of defaults. in the corporate sector, commercial real estate, all

these loans between to and five-year majority that needs to be rolled over. now they have to come to grips the fact they have to be rolled over at a higher interest rate. and that of course is a risk to default in that sector. in my view the fed is trying to balance these two things. and we will see how it goes. so far it has balanced well so we have to wait and see. shery: how successful do you think the fed's communication was today? going into this meeting we felt there was perhaps no incentive for the federal reserve to sound dovish at all. we are now at the 10 year yield at 4%. sebnem: yes. no, but i mean, this is a very, very hard balance. they were good today.

they tried their best. it is very difficult to do. they want to get some sense that they are done with tightening, financial conditions can ease so that they can help those type of risks in the economy and the corporate sector. but at the same time they want to give some hawkish message in the sense of, look, if we are wrong and going back to 2% is not as quick as we want, then we are just going to stay here. very carefully he said we are at or near peak rate. so that statement itself as the very tiny possibility of even another hike. if you are at were near the peak rate, that says we may end up -- he also said we may not. again going back to this data-dependent policy. this coming down, we are very

close to 2%. at the same time the latest job report came out very strong. unfortunately this is the nature of this inflation shock from the start. our research and our papers show the earliest papers in 2021, and chairman powell said that. he said literally this inflation is not your classic demand inflation. yes there is strong demand, but there are also restrictions on the supply side and we are basically working with a vertical labor supply curve. that means it is very hard to guess the timing of this soft landing. shery: is that the reason why we are getting individuals, fomc members expectations vary so widely? the rate outlooks seem to be so different when you are looking at the dot plot. sebnem: exactly. you are exactly right. it is very difficult because this is not your standard macro

model. it cannot speak to this episode of inflationary shock. that is why estimates vary. one of chairman powell's answers today was exactly that. these are people's estimates, but they are clearly not just based on one model because that model doesn't work for this inflation episode. they are also based on your expectations of how the data is going to show up in terms of how strong is the economy going to be, how long. so it is difficult to formulate those estimates. that is why they are varying at a wide range. haidi: i know a lot of your work also focuses on the impact of global monetary policy on emerging nations in frontier economies. we know a large number of these economies probably cannot wait for the easing cycle to begin. is this going to potentially take some of the pressure off, particularly when it comes to

the burden of debt? sebnem: exactly. especially for the much poorer countries, late developing countries, african countries that have quite a bit of soaring debt and they have to turn this of the global interest rate. any easing definitely is going to be good news for those countries. shery: sebnem kalemli-ozcan, good to have you back, of course on this fed day, dissecting that decision by the fomc. still to come, cop28 ending with a historic deal to transition away from fossil fuels, but also cementing a role for key oil industry priorities. the details are next. this is bloomberg. ♪

haidi: take a look at how we are setting up to the start of trading in japan. a little bit more pressure coming off the yen when it -- seeing that the dollar slid. also watching aside from the fed's dovish pivot, the bank of japan potentially looking at stronger gdp indicated and stickier price inflation as well. we do see potentially giving a bit of a left when it comes to japanese equities if we get the better than expected large manufacturing and nonmanufacturing indexes as well. that should play through in today's session. the topix is looking a little higher in the indications for today. the nikkei futures are trading up by about .1%. possibly a bit more follow-through. we're also watching ftse a50 china futures looking pretty positive. the offshore yuan is really in

focus. the chinese currency up by the most since september 11 after the fed giving its clear signal yet that rate cuts more than expected coming next year. potentially it is could be a confidence factor for chinese risk assets. country garden saying the onshore unit is repaid in full an 800 million yuan bond. the move avoiding what would otherwise be its first default. let's get more from our greater china senior executive editor jean-luc who joins us in hong kong today. was this about trying to shore up confidence and the signaling behind trying to make this payment? john: i think the market will take some confidence from this act. it was a bit of a surprise. we reported earlier that country garden would avoid defaulting because because they reach -- because they reached an agreement with a lot of holders,

that they would forgo asking country garden to pay back the bond and instead wait until next year to collect their money. instead country garden went ahead and put up the money and paid off the bond. it certainly will send a signal to the market that perhaps country garden has enough resources to get through some of the rough patches it has ahead of it. it has more debt coming due. obviously we also had lots of government officials coming out and trying to provide, at least rhetorically, support for the sector. so we will see how things trade today. shery: will we get -- that they will try to help property developers a little bit more here? john: i think that pledge was a bit hedged. because he said we are going to do what we can to avoid all these developers defaulting all at once.

i think any regulator anywhere in the world, their responsibility is to make sure things don't happen in a chaotic way, that there is no repercussions for other markets and the broader financial system. if we had a series of developers all defaulting at once that would be very injurious -- dangerous. beijing is reiterating they don't want that to happen and it will take action to prevent that from happening. haidi: john liu there in hong kong. some other stories we are following, president xi jinping called on vietnam to stop outside forces to causing problems in the asia-pacific. it's a veiled presence to washington's presence in the region. this was his first visit to vietnam in six years and comes six months after president biden 's jaunt. they also pledged to control disagreements. the u.s. sentient over 250 companies and individuals in china, turkey and the uae,

alleging their continued support for russia was crucial to moscow sustaining its invasion of ukraine. the measures take aim at what the u.s. agencies call russia's procurement network, a coalition of firms that help keep the country supplied with cutting-edge technologies and weapons. shery: the cop28 climate summit has ended in dubai with a historic deal that convinced the world to transition away from fossil fuels. but it also cements a role for natural gas and carbon capture, two key priorities of the oil industry. su keenan joins us here with the latest. there was a lot of back-and-forth when it came to the draft text. how do we get to that agreement? su: it was not easy. reaching consensus around 200 diplomats. it went into overtime come overnight meetings, but they finally came up with a brokerage summer deal strong enough for the u.s. and the eu, who believe in the need to dramatically curve possible -- while also

keeping saudi arabia and other fuel-dependent producers on beale -- on board. it got commitment from all the nations participating to transition away from all fossil fuels. and to do it quickly in a just and orderly fashion. it also indicated that natural gas, which is somewhat more carbon intensive, can play a part in cutting emission and also placed co2 capture and storage alongside nuclear as key technologies that would drive the transition. these are areas where big oil has been making multibillion-dollar bets so there is debate on whether they truly endorse this pledge or undercut it. and that was an issue. you are looking at the uae's sultan, the president of the u.n.-sponsored summit. he presided over a summit-wide victory lap when they finally reached this deal. a lot of hugs and congratulations all around. most participants leave for this

many participants from so many countries to reach this kind of uae consensus was truly a victory. haidi: meanwhile a large drop in u.s. oil inventories managed to put rain on the screen for oil futures for a change. su: that was in new york and we are seeing extent into asia trading. a bit of a relief rally many are saying after the sharp drop we saw yesterday followed -- followed -- preceded by seven weeks. u.s. inventories fell. that is the 2nd street weekly decline. it was enough to give the bears pause and potentially cover some of their bets that oil would container -- continue lower. to quote one veteran oil trader, the drawdown we saw in the inventories was all in all pretty bullish. it was certainly enough to spark

a true believers rally. maybe not really but it was enough to give those betting on a continued slide lower. time to take some money off the table and pause those positions. west texas intermediate has been under invidious pressure along with brent, both down 25% since recent peaks in september. the overriding concern has been the access of oil production including outside opec-plus producers like the u.s. russia having a big uptick in imports -- exports over the last week. venezuela and others. and be concerned about a global oil glut continues to be the overriding fundamental factor pushing prices lower. shery: su keenan with the latest on the energy industry. we have more to come. this is bloomberg. ♪

shery: you are watching daybreak asia. tesla is recalling over 2 million cars after u.s. regulators determined its autopilot system does not do enough to guard against this use. keith naughton joins us now. what exactly is the problem with these tesla cars? keith: they found they did not -- the autopilot system did not automatically keep drivers engaged in the process. it is a driver assist system, despite the autopilot name, so drivers are supposed to keep their eyes on the road in their hands on the wheel. haidi: tell us more about this autopilot system. is it actually self-driving? what is the full self-driving system they are testing? keith: they have two systems.

autopilot is on all of their cars. it is not a self-driving system, it is a driver assist system. there are five levels of autonomy and autopilot is level two, the second one up. that requires driver engagement at all times. their full self-driving system also requires driving engagement at all times despite the name. there has been a lot of controversy over the way tesla has named these systems because they do suggest the car can drive itself when it cannot. shery: in order to fix the problem, tesla is going to deploy an over the air software? what exactly does this do, and is this enough? keith: they're going to do an over the air software update that will improve sort of the warnings and the systems that will encourage driver engagement. but yeah, critics say this does not go far enough. tesla has an internal driver

measurement system and if you are getting a low score on that, the critics say that the autopilot system should be disabled and you should not be able to use it. others are saying there should be fixes for the autopilot system recognizing fire trucks and other first responder vehicles. there have been crashes involving those. so there is a concern that it took too long to get this recall and that the fixes will not be adequate. haidi: is this something that is causing a lot of concern among investors? keith: not really. tesla's stock was up today on this news and tesla's stock has nearly doubled this year. tesla, as you know, is the world's most valuable automaker. so, for now, investors are very bullish on tesla. a big recall like this, which, if it were a legacy automaker, would have surely sent their shares down, but in tesla's c ase, it sent them up.

haidi: keith naughton there. another story getting heavily read on the terminal, citigroup is offering to pay some employees a portion of their bonuses early if they agree to leave, as executives continue with the restructuring. the bank is making an offer to a limited number of staff in addition to punish -- to bon uses. they will also be allowed to keep all of their deferred stock awards. plenty more to come. this is bloomberg. ♪

>> i just think they are very happy with how the economy performed. basically they have had decent

growth, unemployment rate is stable and inflation has come down a lot. that's basically as good as it can get. >> i think unlikely that rates will go back up. likely that there will be cuts in the fed funds rate. when i got out of the dot plots is that most, well, all of the participants now feel fairly confident that another rate increase is not going to be needed. >> this is a green light for investors. this bullish sentiment can go on for a while until we get a new round of economic data. >> my own view is that the fed is going to be cutting rates in 2024. we're clearly done in terms of rate hikes. the possibility of another rate hike is very low at this point. shery: given the dovishness of the fomc, we saw markets react to that. sort of an early holiday gift, if you might call it, an early christmas gift and away. because we saw the risk assets rallying throughout. the hold for a third meeting was

very much expected of course but it was the fact that the latest dot plot implied three 25 basis point cuts next year which was a sharper pace of cuts. that really surprised markets. the vote was also unanimous although the rate outlooks are different. it was really interesting to me that chair powell acknowledged for the first time that officials had discussed the question of when it will become appropriate to begin cutting rates. and we have now seen two central banks come up with decisions. the hong kong monetary authority, not surprising matching with the fed does. we have also seen brazil, which was way ahead of the cycle, actually cut rates as expected by 50 basis points. they are expecting more cuts of that magnitude in the next few meetings. haidi: and of course we're not done yet. this 60 hour of frenzy bank decisions. we had the ecb and the ble.

traders are really ramping up their bets on cuts by the bank of england next year. we have softer gdp data reinforcing the view that boe policymakers will not be able to keep policy tight first that long. this is the first time where markets have fully price 100 basis point of easing in 2024. that would take the ble borrowing cost with the first quarter point expected in june. there is also some easing priced information if you take a look at swaps tied to central bank meeting updates. when it comes to the ecb, markets have also raised wages and one of the most aggressive easing cycles as well. data there also pointing to weakness in the economy which would potentially support that. we have of course heard from a number of different analysts saying that when it comes to the ecb, he also really sees the need for policymakers to do

more, saying the fed rate cut could come after the ecb's. he says u.s. core inflation levels are significantly superior to the euro zone. that of course is the former european central bank president speaking. lots more when it comes to central bank watchers to look forward to. shery: we have seen the currency markets already react. you are talking about the ecb, the euro continuing to gain ground against the west dollar overnight. we saw volatility touch a three month high. the u.s. dollar now falling to the lowest level since august. let's discuss with ken cheung, chief asia fx strategist at mizuho bank. great to have you with us. of course we have seen this path downward when it comes to the greenback. how linear will that downtrend be, given that it will not only be the fed that might potentially be pivoting to cuts next year, but as we signaled, the ecb could be doing the same?

if you have this competitiveness when it comes to these pivots and you have the euro also potentially weakening, what is your outlook for the dollar? ken: it looks like the major central bank entering the rate cut cycle. we believe the fed is not the only one to deliver a rate cut. as you mentioned, i think the ecb could be even ahead of the fed. you can see inflation, downward momentum was pretty strong in the euro zone. i think this is good news because this year we know that the major central bank quite aggressively is raising the interest rate. this headwind is likely to become a tailwind next year and this will pave the way for next year. shery: we saw weakness on the

chinese yuan given the disappointment that we did not get bazooka-style fiscal stimulus coming from the annual economic conference. we saw a little upside would dollar weakness but what is the outlook for 2024? ken: i think in 2024, we're looking for a stabilized renminbi. although we did not get updates from the china side, clearly they have fiscal expansion. they are not only relying on monetary easing but they are taking a bigger step to use fiscal stimulus to support the economy. so we believe this will be more direct and effective way to support the china economy.

also a burden for monetary easing. so this year we noticed that whenever the previously lowered their interest rate it actually triggered a wave of renminbi depreciation. if next year they are switching their target to focus on fiscal stimulus and the property market, i believe there will be a better combination to support next year. we are targeting the renminbi to break the seven level in q4 2024. but the property crisis is still in play so i think it will make foreign investors admit cautious. so the appreciation case for the renminbi will be quite more next year. shery: i was going to say, because we continue to see these very small targeted measures coming from beijing but that is

not really helping when it comes to building confidence in the chinese economy or chinese policymakers as well. how much more pressure can we expect from the lack of confidence there? ken: i think it takes time to repair the foreign investor's confidence. it is not only causing measures. i think it is more of a longer-term impact due to covid policy and china's regulation reform. we have observed quite a lot of policy changes. it catches the foreign investor on the wrong foot. also the domestic side. i believe investors are quite weary about policy changes. so it makes sense to lower their investment. i think the whole market and the labor market looks quite weak.

although we saw some pick up in some small ticket items but for the big ticket items such as automobiles and also property, we saw that residents are quite cautious to buy these items because they are quite weary of the labor market. china policymakers, they will still need to spend more time to fix it. i believe q1, q2 later on, we will start to see some pick up in the china recovery momentum. shery: so if stability will be the theme for the yuan, who will be the outperformers among asian currencies next year? ken: we look at the korean won and taiwan dollar. we believe they will give us

some outperformance next year. because we saw this currency is quite related to the semiconductor cycle. if the fed is going to pivot i believe the lower interest rate will be favorable. it will spill over to the korean won and taiwan dollar. we also observed the semiconductor cycle may be hitting bottom. and then we may see some restocking to be happening next year. then i think there will be some upside momentum for these two currencies. shery: and of course we are awaiting taiwan's rate decision today. ken cheung, it was great having you with us. thank you. haidi: india's former central

bank governor believing expectations of rate cuts by the fed as early as march are overly optimistic. at the bloomberg india addition newsletter event in mumbai, he said the fed will likely want to see inflation come down further before easing policy. >> the only condition in which they will cut rapidly is if the economy tanks. it is not clear why that would happen. there are no signs. >> based on the data you see right now? >> much later in the year. >> second half or earlier? >> at the earliest. maybe if the economy has not slowed sufficiently, they might hold on at these levels. the point is if these rates are not doing damage, why worry? the traditional routes through which rates start hurting are not working as well as they used to. a whole bunch of corporate's

have pushed out their borrowing into 2024, 2025, 2026, rolling over their borrowing. many corporate's are sitting on a pile of cash. offsetting the higher rates also. higher interest rates are not hurting corporations, especially the wealthier corporations. certainly it is hurting some of the riskier corporations. bankruptcies are going up. but that is not consistent with the kind of rate rise. >> [indiscernible] you did warn of former -- further vulnerabilities. if we stay higher for longer, something will break? what will that something be? commercial real estate, private debt? >> what is already happening is

the banks are tightening considerably. so what we were worried about in march where the small and medium banks, big losses. that is happening. but what is happening instead is private credit was sitting on a lot of cash. they have come into fill some of the gaps in the market today. so in that sense, credit has not swooned as much as would have been suggested by the tightening of bank credit. because there is this other side which is coming in. now, good question. as the wall of maturities starts happening, you will have more bankruptcies. you are already seeing the bankruptcies increase. but is it going to be a steady process? one of the fears in march is that this would become a more serious banking crisis. the fed and the treasury intervened in a massive way.

a way that we still don't fully appreciate. they basically ensured all of our demand deposits. so what was a bleeding bank run in the process, they stopped. now it is just bleeding. it is small and medium banks have repriced deposits which are high interest rates. their assets are not hurting as much. commercial real estate you talked about is starting to show up as bad loans on the balance sheet. that is why they have pulled back on credit. but it has not become a solvency problem so quickly. haidi: you can get the latest updates on all things india by subscribing to our india addition newsletter. plenty more to come here on daybreak: asia. this is bloomberg. ♪

haidi: take a look at how australia new zealand assets are faring. seeing a pretty strong rally when it comes to the asx, tracking on the back of the risk rally we saw on wall street overnight. a bit of a sigh of relief in terms of the fed following through with these dovish expectations of fed cuts going into next year. there were some concerns of still perhaps a more hawkish tilt would potentially do for risk appetite.

piercing upside of 1.4% when it comes to trading. in australia we are about 45 minutes into the start of the cash trading session. seeing perhaps more weakness when it comes to a couple of the mining-related names and we have seen a pullback in iron ore. certainly across the board real estate up by 3%. technology up 3%. a lot of these growth and were rate,--- utilities and health care, just about every sector we are seeing trading in sydney firmly in the green. new zealand also picking up the pace when it comes to these gains, despite the unexpected drop in third-quarter gdp. that contraction really not weighing on risk sentiment today. shery: and we are watching japanese politics with prime minister fumio kishida reshuffling his cabinet following a scandal that raised questions about how long he will be able to stay in power. our east asia government editor

jon herskovitz joins us now. what is this new cabinet starting to look like? jon: we are going to see about four members being replaced. the right hand man of the prime minister, the person who is the top government spokesman, and also the trade minister along with two other positions. further replacements, we are likely to see the former foreign minister take on the role of chief cabinet secretary. he has meant a loyal servant in his previous post and probably will move in smoothly to this new job. the trade minister post, the outgoing one, had been kind of a policy wonk. he did covid policy as trade minister. before he pushed japan's chip sector. it will be interesting to see if the new person who comes in will

be as active as the outgoing minister. that is something that we will see in the coming months. haidi: does this mean the ruling party could potentially lose their grip on power? jon: despite the hits the party is taking, that the prime minister is taking, the width of this scandal, they are quite doing -- they're still doing quite well in the polls. the main opposition groups are mainly in the single digits. the voters do not see them as a viable alternative at this point. so we don't need to have a general election until 2025, and at that point it looks almost certain the ldp will keep our. it is just a matter of how much damage they will suffer between now and then as this scandal unfolds. shery: even before the general election we could seek ashita replaced -- we could see cushy to replaced? jon: that is correct.

in japan long serving prime minister's are the exception and not the rule. cushy to -- kiss cheetah -- he's the third longest-serving prime minister since the start of the century. this may be speeding up his reign as prime minister. there will likely be a state visit to washington with joe biden. these events may keep prime minister cushy to empower-- ]e . jon:fgw jon:e haidi: more coming up. that's at 11:30 a.m. tokyo time.

u.s. house republicans voted to authorize an impeachment inquiry into president biden. the investigation focuses on the biden family's finances, particularly hunter biden. biden has denounced the inquiry as baseless. more to come. this is bloomberg. ♪

shery: breaking news out of japan. we are getting the core machine order for the month about tober, a gain of four -- the expectation was for contraction. it is easing but still in positive territory. this is an indicator of future capital spending. the year-on-year numbers a contraction of 2.2% at a smaller contraction than what was expected. perhaps not surprising because we got the fourth quarter numbers yesterday that showed confidence of big manufacturers perking up so perhaps these investment decisions are being made and we are seeing in october machine orders rose .7% instead of contracting in the month of october. haidi: yeah. we continue to watch our markets across japan and korea open.

also watching hedge funds and brokerages facing new requirements to clear more u.s. treasury trades in an overhaul of the $26 trillion market to require all transactions involving repurchase agreements to use clearinghouses. sec chair gary gensler told us the move will reduce risks. >> what we did today is one part of a set of reforms that we are looking at. but an important part of it, because it has to do with lowering risk in the system and the u.s. treasury markets. and to your question, there is a lot of borrowing, leverage in the treasury markets. bringing things into central clearing can address that in a number of ways. one is the clearing itself does something called multiparty netting, which lowers a lot of risk in the second -- system. second, they collect margin, they collect collateral against

transactions. and right now a lot of the markets is operating and not collecting collateral or margin. >> lengthy icbc hack we saw just recently, which was disruptive to the treasury markets in some ways, is what passed today a step -- >> i think there is some relation but that is a separate risk. we have to be very aware, there are risks in our system from cyberattacks, and that circumstance publicly revealed it was a ransomware attack. and that ransomware attack disrupted a treasury clearing broker dealer. and so the clearinghouse operated smoothly through that. but for that one clearing broker and its customers, they had to

quickly find workarounds. shery: sec chair gary gensler speaking with kailey leinz. take a look at how we are setting up for the major market opens across asia. we already have the asx 200 trading in positive territory. every sector in the green and really at the highest level since august. you can see u.s. futures continuing to gain ground. after stocks and bonds jumped in new york. the s&p 500 top 4700, the highest level since january 2022. of course markets are reacting to the more dovish tone coming from the fed. the market opens in seoul and tokyo our next. ♪

hi, i'm jason. i've lost 228 pounds on golo. so when my doctor told me i needed weight loss surgery, i knew i had to make a change. golo's helped me transition to a healthier, sustainable lifestyle. i'm so surprised just how crazy my metabolism has fired up. i have a trust in golo 'cause i know it works. golo isn't like every other program out there, and i'm living proof of it. (announcer) change your life at golo.com. that's golo.com.

shery: this is daybreak: asia.

we are counting down to asia's major market opens after that risk rally we saw on wall street with the dow finishing at a record high, two-year yields plunging by the most since march. markets really reacting to that dovish tone from the fomc. chair powell even acknowledging that rate cuts were discussed. haidi: exactly with the markets wanted to hear. but my question is given we saw signs of exhaustion even through the course of that press conference, i wonder if this is setting up for a disappointment when it comes to the ultimate santa claus rally. the question is whether we can stick the soft landing scenario all the way to 2% inflation. shery: and as we get there, we have already priced in the dovishness coming in 2024. we saw the dollar declining to the lowest level since august. on the other side we saw incredible strength for the japanese yen, which is holding at that 142 level. take a look at the nikkei right

now coming online, .66% higher and extending the gains we saw in the past three sessions. perhaps reacting a little to a more strong japanese yen against the u.s. dollar. we also had core machine orders coming out just a few minutes ago, surprising to the upside, a gain of .7% instead of a contraction. really adding to more signs that perhaps we are seeing more resilience in japan. the survey also showed confidence of big manufacturers perking up. take a look at what south korea is doing because we had seen it falling the previous session. we are seeing a gain of more than 1% already. the korean won at the moment weakening also against the u.s. dollar, or strengthening against the u.s. dollar. that 1295 level. the bank of korea it reacting,

saying market volatility could expand on fed rate expectations. so we are watching that very closely. haidi: taking a look at how we are seeing that relief rally really playing out in this part of the world. we know sydney stocks are already pretty hot at the moment. arguably if you look at technicals looking overheated. we could be due for a near-term pullback, whether that potentially extinguishes a rally going into christmas given how few days there are left of trading before the holidays. but for today we are up 1.4 percent and just about every sector and subsector in the green. even some of the miners, perhaps surprising given the pullback we have seen in iron ore and disappointment out of not enough china stimulus being announced. pretty calm when it comes to 10 year yields and also on the shorter end of the spectrum when it comes to trading. the aussie dollar back on the front foot, reflecting that biggest pullback by the dollar

in the wake of the fed announcement in about a month. watching a bit of an upside when it comes to oil markets as well. this has been a little bit of a turnaround given the weakness we have seen across crude markets. we did have that deal cementing the role for big oil's priorities in cop28. at this point we are seeing crude advancing from the lowest since about june. a lot of that coming from the u.s. drawdown as well. taking a look at treasuries, that was the other big move we saw in light of chair powell's statement, some of the repricing around fed rate cuts. treasuries surging the most since march as we had that kind of green lighting of the narrative that the markets have been selling to themselves for quite some time. fed swaps pricing an additional easing over the next 12 months. we saw a big move in the two-year yield falling more than 30 basis points in the session. shery: right.

so, the fed, really getting the clearest signal yet its aggressive hiking campaign is done. take a listen to what chair powell had to say when it comes to those potential rate cuts next year. >> i think you can say that there is little basis for thinking that the economy is in a recession now. there is always a probability that there will be a recession in the next year. inflation has eased from its highs. this has come without a significant increase in unemployment. no one is declaring victory. that would be premature. but inflation is still too high. ongoing progress in bringing it down is not assured. participants also did not want to take the possibility of further hikes off the table. that is really what we were thinking. given how far we have come along with the uncertainties we face, the committee is proceeding carefully. haidi: let's get more on how the markets will play. ben powell is chief strategist

at blackrock investment and joins us now. always great to have you. particularly to talk through on fed deck. -- fed day. looking at the 75 basis points of cuts in christ in for 2024 versus that year ahead dots picture. it is worth mentioning the decision was split among the 19 members as to what happens next year. eight see less than 75 basis points. how much uncertainty is they still in its outlook? does it change how you prioritize the way markets are going to go next year? ben: good morning. there is still a lot of uncertainty but i think chair powell was very clear on a couple points. firstly, it's too early to declare victory in the fight against inflation. clearly there has been a tremendous effort over the last year. and giving up on that too soon and potentially giving inflation more room to recover, if you

will, would be a huge mistake. chair powell is acutely aware of that. i think that is why when you look at the 19 dots underpinning the one dot we all focus on, 18 of them are more hawkish. the message today was dovish, but i think the market has probably got a bit carried away in the short-term. the fed is still saying a more hawkish message relative to where the market has moved to in the last several hours. haidi: for all the rally we see continued in the u.s. it is the market that is looking very short of breath, given how much we focus on the magnificent seven this year. outside of the u.s., who do you see as the biggest beneficiaries of an easing fed and some of the pressure taken off of asia and potentially emerging markets too? ben: i think that is a key point. i think a lot of emerging-market central banks naturally take their lead from their big

brother the fed. with the fed now having signaled the discussion now is on the pace of cutting, hiking is very likely done. i think that will be an encouraging signal for a lot of central banks across the emerging-market complex, including here in asia. it has been a game of two halves, with emerging markets including brazil today cutting, but actually central eastern europe and asia being on hold or even edit hawkish. i think this is quite encouraging news. we have seen the dollar depreciate the last several hours. let's see. but from here, maybe this is an encouraging signal for central bankers in asia to signal that they have peaked and can start to move to a cutting cycle, which i guess is one of the reasons why we at blackrock have a relative preference for e.m. equities over dm because the inflation and rates outlook is more favorable in our part of the world. haidi: for e.m. equities it is

clearly still all about the fed and the weakness of the dollar. is china less of an anchor now? ben: china continues to be challenging i guess. the property situation is unresolved. property obviously is an important part of the chinese economy in and of itself. more importantly is the downdraft property malaise bringing to consumers, a lack of confidence. for the moment, policymakers in china are tolerating that slower growth to a greater degree than might have seemed likely six or 12 months ago. i think china continues to suffer from the property headwinds and critically how that is bleeding into broader confidence. and for the moment, policymakers have not done enough to kickstart confidence so there are still ongoing headwinds in china. shery: china is a big story but the bank of japan will be the other big one for 2024.

haidi: do you think the boj will move sooner than expected? do you think now that the early part of the rally is maybe done for japan equities, what else do you like within that market for next year? ben: i like a lot of japan equities. the nominal growth outlook for japan is totally transformed from where it has been over the last 20 or 30 years. that is a huge deal. you have a much better growth outlook, particularly for outlook -- equities. they can put their prices up the first time in maybe two generations. there also needs to be, over time, a very huge reallocation from japanese savers away from, let's say, bent upon this -- i still think there is a significant way to go in the japan story driven namely by nominal growth change, from not so good to very good, or relatively very good. and of course we have tax reform, corporate reform.

i would not try and be too cute in japan. it is a real ongoing theme. obviously that is why we are overweight japan equities into 2024. haidi: good advice going into the new year. don't try and get too cute with the markets. ben powell at blackrock. we're seeing some big moves on account of this dollar weakness. shery: basically almost every asian currency right now on the other side of that trade gaining ground in the japanese yen holding at that 142.81 level. after significant strength we saw it spike when chair powell was speaking as we have the dollar weakness at the lowest level since august. take a look also at the korean won which is seeing its biggest gain in about a month. we are seeing the aussie also continuing to gain ground. we had seen a jump earlier in the week because of resilient household spending data and the

kiwi dollar also up .3%. coming up, distressed chinese developer country garden surprises creditors after repaying an 800 million yuan bond in full. more details next. this is bloomberg. ♪ hey, doc, if you had to choose, would you give yourself a root canal or run payroll? oh, run payroll. paying my team with gusto takes just a few clicks. they automatically file my taxes for me too. can i run payroll too? choose payroll without the pain.

shery: you're watching daybreak asia. distressed chinese developer country garden says its onshore unit has repaid in full an 800 million yuan bond with a put option that was due wednesday. it avoids what would otherwise be the builder's first default on a local bond. let's get more from john liu.

how significant is it that country garden was able to repay this yuan bond? john: i think it could turn out to be quite significant in the sense that we had reported earlier that country garden had actually gotten its bondholders to agree to forgo this option to ask that the company pay that this bond now, and instead wait until next year to get their money. instead, that would have meant country garden didn't need to pages money yesterday. instead the company has gone ahead and paid it. the question now we are trying to answer is why did that happen? why did this curious thing happened? and was it perhaps some signal, should we understand it as some signal that the authorities in beijing, action coming afterwards showing greater support for the sector. haidi: for a while we were questioning whether country garden might get a bailout given the sizable role they play a

costly broader sector. what does this tell us about the potential to shore up confidence? john: i think it has been very clear that the overall tone of rhetoric coming out of beijing has shifted very much to support the property market, to support the developers. if this does turn out to be an instance where country garden was able to pay this loan because it got some assistance from either the government or state owned lenders, that would signify a major change in policy. and i think would give the market a lot more confidence. haidi: our greater china senior executive editor john liu in hong kong there. china's credit supply expanded at a slower pace in november while weak -- also worrying economists. enda curran joins us here in sydney. great to have you back in sydney. you have covered country garden

before. this is perhaps a small step ensuring up confidence, but confidence is still pretty low across the board and you can see that in the lack of willingness to take up credit. enda: one of the big stories globally this year is everyone has been waiting for the big china stimulus story, and when might the economy gain traction which is so important for all the key trading partners. credit data suggests that is not happening. households are not borrowing yet, companies are not borrowing yet. a lot of the numbers are government spending, some spending on infrastructure. stimulus so far is not working. the theme of either managed expectations or disappointment is continue waiting. because the readout we got a few days ago suggested industrial policies number one and maybe supporting the economy or extra stimulus is lower down that list of priorities. it adds to this idea that there

has not been any big bank stimulus and at my temper expectations going into 2024 about china's rebound. haidi: of course here in the u.s. we are very much focused on what the fed did and we are now factoring in a potential dovish pivot, especially with rate cuts expected in 2024. what will be the impact on china, especially with it giving perhaps more leeway for the pboc to do more? every time they have acted they have opted to increase liquidity instead of cut rates. enda: this looks like a material change out of washington overnight. certainly compared to what chairman powell said a few weeks ago. on the surface he would have to say for china, it would take pressure off the portfolio outflow story. investors have been pulling out of china. obviously some of that reflects a geopolitical story but it also reflects a yield differential story. that has been crushing the e.m. trade. if the fed is going to start

reversing some of those rate cuts next year, that would take pressure off the portfolio. for china, and by extension, it would take downward pressure off the yuan, which of course the authorities would probably welcome. now, how much of that will play out which to be seen. we don't know -- you have to say that on paper at least, it is potentially a positive for the china markets portfolio story because the fed and the pace of interest rate hikes was one of the key variables. we assume china would welcome that. shery: enda curran joining us from sydney. we've seen a little bit of support for the offshore yuan as chair powell was speaking. a little bit of a spike against

the u.s. dollar. let's get a preview with our asian equities reporter charlotte yang. we have seen significant pressure on chinese assets just because of the lack of confidence and the fact we did not get that bazooka-style stimulus from the annual economic conference. what can we expect in trading today? can we expect that risk rally from wall street to catch on in china? charlotte: there are a few things playing for today. we had a more dovish note from the fed and that will be a tailwind for equities market, especially hong kong ones. they are in lockstep with the fed rates. the high borrowing cost has been hurting the property sector. high burrowing cost for property developers as well as households. so we could see some action there. on the other hand the latest credit data for november is

weaker than expected and could hurt investors because that could signal the monetary and fiscal stimulus has not been gaining traction in terms of facing the weak demand. long-term demand as well as long-term household demand good worry investors. we're also waiting for this big data dump coming tomorrow that is likely to show china's industrial and property investment weakening from october. i think investors will also be waiting for that. haidi: so what is the next step forward for this market? we have seen small caps outperform. but going into 2024, are expectations still pretty low for any kind of rebound? charlotte: i think expectation is still pretty low, given how

this year -- the broader market will still be about how the economic recovery comes. that said, i think investors see opportunities and everyone will be more focused in specific sectors and companies. some have been companies that have been showing great overseas expansion or in some sectors has been trading on really cheap valuations. i think it is going to be a lot of focus -- [indiscernible] haidi: charlotte yang there with a look ahead to today's mainland market. you can get a roundup in today's edition of daybreak at dayb on your terminals for subscribers. it is also on the mobile in the bloomberg anywhere app.

you can customize those settings so you just get the news that you care about. this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

shery: breaking news out of japan. the trade minister says his tendered his resignation. he was a key player in japan's efforts to revive its semiconductor industry. he was also among the members of prime minister kishida long ruling democratic party, accused of consumer link -- concealing income. fumio kishida had already said he would reshuffle his cabinets and his name had been floated as one of those cabinet members that would resign. we are now hearing from the trade minister himself that he

submitted his resignation. haidi: yeah. and of course the other stories we are watching closely is country garden, particularly in light of the fact that we saw somewhat surprisingly that repayment that was not expected of that yuan dollar note, the bond payment being made. we are hearing an update from the developer saying they will use the net proceeds for offshore restructuring. the first payment will be used to settle debts. they will be selling 1.79% of a company for just over 3 billion yuan. country garden to no longer have any interest in zhuhai wanda. we heard that country garden -- the onshore unit saying it had repaid in full that put option bond due wednesday. shery: the cop28 climate summit

has ended in dubai with a historic deal that commits the world to transition away from fossil fuels. but it also cements a role for natural gas and carbon capture, two key priorities of the oil industry. su keenan joins us with the latest. after a lot of back-and-forth the almost close to 200 diplomats were able to agree on something. su: reaching consensus was not easy and it went over time. late-night meetings, early morning discussions, and finally they have this landmark agreement which had to be strong enough to satisfy nations like the u.s. and the eu on the need to dramatically curb fossil fuel use while keeping saudi arabia and others on board. 200 nations practically agreeing to transition away from all fossil fuels. natural gas, which is somewhat more carbon intensive than oil and coal, can play a big part in cutting emissions. alongside renewable and nuclear as key technologies that would

drive the transition. the real debate is wiggly big -- is will the big oil companies roll in. that remains to be seen. you are looking at the president of the u.n.-sponsored summit, leading an end of summit victory lap. a lot of hugs all around. many who attended believe getting this consensus document and pledge going forward was key. shery: su keenan with the latest on the cop28 final text. take a look at how treasuries are trading. the 10 year yield has fallen below the 4% level for the first time since august. of course this coming after that dovish tone from the fomc and chair powell acknowledging officials did discuss the appropriate timing of cutting rates. we had seen the two-year yield also dropping the most since march. we are continuing on that downward trajectory towards that

four point 39% level and the 10 year yield now at the moment holding just a touch below that 4% level. remember, that pullback in treasury yields in recent weeks has erased much of the run-up we saw since the summer and into october. remember, that was something the policymakers had pointed to as helping with significant tightening in financial conditions, potentially lessening the need for further interest rate hikes. so we will continue to watch for a fed official commentary, given that we are seeing treasury yields dropping across the board. we have more to come on daybreak asia. this is bloomberg. ♪ i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app.

can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with the xfinity 10g network.

haidi: we have breaking news

when it comes to australia. unemployment just coming through. the jobless rate just going up slightly to 3.9% against estimates of 3.8%. breaking that down, full-time employment rising, 56,980 jobs month-on-month. employment of all rising 61.478 positions month-on-month. much more than the executions of 11,500 but quite a significant rise when it comes to part-time employment. the participation rate is the other one we are watching, 67.2%, higher than the 66.9% as was expected. secondly the unemployment rate -- the jobless rate is rising to 3.9 percent, perhaps a bit of food forethought for the fda given were seeing expectations after the last rate

pause that the rba could potentially be looking at with a or not the cycle of easing will start to come through from the year. the employment headline number rising 61,474 jobs in the month, and i'm employment rate -- and the unemployment rate ticking up. shery: when it comes to the expectation of a dovish pivot, very much the case after a more aggressive forecast was put forth for easing in 2024. more, let's bring in efforts and rate strategy, david finnerty. the dollar having its worst day in the amount given how treasury yields are plunging. the 10-year yield below the 4% level. what do you make of the fomc statement and chair powell's commentary? because i thought going into this meeting, your best bet would be a hawkish pause if you

don't want to lose in financial conditions anymore? david: that is a good point. the question was, how hawkish is hawkish enough for the market? the market, as we know, is heavily biased towards the rate cuts. and because the fed didn't push back on the easing of financial conditions and the dot plot went from two cut to three rate cuts, marcus said you are behind the curve and we will put in additional rate cuts. now the fed is going for three rate cuts. the market goes, we actually think there will be six next year. the market is very happy to push with this theme. the fed has to be really, really hawkish. without that, the market is happy to keep running with this theme of basically, yields go

lower, dollar goes lower. the only hope if you are a dollar bull is you want for the market to turn its attention to the fomc and ecb and get them to start pricing it rate cuts there. that could help the dollar a little bit to weather the storm. haidi: what do we see for treasuries? we just saw the 10-year yield falling below 4% for the first time in august. how much of this has been priced in when it comes to yields? david: the general consensus is there is room for yields to push lower. i was speaking to a contact before i came on, and he said they could be 3.7 in the three to 10 month time span. at the moment it is yields lower, and no people of the moment are trying to fight that trend. shery: fx and written started just. central banks are likely at or close to peak rates, and i could

win a global economy that feels more "normal," in 2024 than the last few years. our guest is the chief market analyst for mastercard. david, great to have you with us first of all, give us your reaction to the fomc. david: a little bit like we have been talking through with the market reaction, i think that's absolutely right that there would have been opportunities to counter some of that dovish slant that the markets have towards what the policy outlook is for next year. instead we have seen clearly a very major moment of clearly signaling that the next moves are cuts. it's the question of how many cuts. there is the data dependency compared to 2020 and the sort of aggressive forward guidance we used to get, that is unlikely given we've had these swings in so many economic factors. so this is probably as good as it gets for how clearly we could see a signal from the fed.

which then also gives a lot more room for other throwbacks to also be able to feel, at least from the external environment, that they no longer have any pressure to be hiking. instead they should be thinking about whether some cutting could happen. a few good examples of that could be in places like the philippines or indonesia that recently did raise rates, but most likely driven by external pressure that has now gone the other way. shery: so when you say that the global economy could feel more normal tr, what does that look like -- normal tr, what does that look like? david: the way we are thinking of this is we have had enormous swings in the last few years, disorienting swings and inflation, and interest rates and the lagged impact from that is being placed in places -- still being felt in places like new zealand that have touched the most. next year, what we will see as inflation headed down towards normal levels and in line with

central bank targets, at least on the horizon that they expect it to go that way, we also think that goods demand will have more of an improvement. well services demand that had been booming, that out and about spending by consumers we saw in the post-covid environment will ease off. . we have seen this year,'s exports of goods around the world have been particularly weak after a few years of booming during the pandemic years. there may be some convergence in the two with ghouta doing a bit better and some of the services, travel and tourism growth still growing robustly, but not booming as much as it had been in the earlier stages of the reopening. shery: so are we going to see convergence when it comes to the manufacturing and services sector, because really manufacturing has continued to disappoint? david: yeah, that's the way we think we should be seeing it for next year. of course, a key component with this when you think about, say, consumer goods demand will also be fun how relatively strong the

labor markets remain around the world, and real wages. movies which growth actually exceeding levels -- will we see which growth exceeding levels of the last few years as when inflation was so high? as it gets down, you get real wage growth that after adjusting for inflation, people have more purchasing power than they had on a year-to-year basis in the last few years. that could also be adding to that resilience of demand even with these high interest rates that should eventually be coming down around the region. from around them of the year, for example, we should have central banks easing rates. but there should be some of that convergence going on. i would stress that even within that story, it's no one-size-fits-all for the asia-pacific region. in northeast asia, for example, we still have lots more to go on the reopening story for international travel, in particular we would point to

the only around 57% recovery to the pre-covid levels of passenger traffic coming out of china. now if we see that continue to rise further, there is plenty of markets in the region that can benefit from that extra spending coming in from tourism. so it's not only about goods, it should be from northeast asia also favoring services. shery: will we see a pickup and spending and domestic demand in china? what will it look like in 2024? david: it is still an environment in china where we are still watching to see how the housing and property market developments unfold. there is a relatively low level of confidence. given it is so low, i would argue that the main room there is its way to improve. the key thing i would stress when i think about how this would impact the rest of the region, is that the consumers that do most of the travel will be relatively less impacted than the average consumers in china from some of these domestic

challenges ongoing. and really from them, there is pent-up demand, there is an excess leaving story that is yet to fully rundown in china as has already been doing the case, for example, in the united states. therefore, from that angle, even with a weaker economy, that segment of consumers that travel would still be a strong story, we would argue, for impacting economies like thailand next year. shery: cop28 in dubai has wrapped with an agreement to tradition away from fossil fuels. when it comes to the long-term outlook for asia, how important will it be for these businesses and consumers to actually be resilient to climate risk? david: certainly, the climate risk issue and the event risk is a major factor that everyone is taking very seriously and we need to think about the extra amounts of investments that we are likely to be seeing. we have already been seeing that in europe and in the u.s.

globally, the numbers involved for the infrastructure-related investment and the green energy investment are major economic stimulus positives that should also be good news for this region too. there is a key question of finding the financing for it and just how quickly it can come through. it is interesting that that is being pitched as a reason for higher inflation, we would argue that inflation will continue to come lower. the other reason for it is actually due to demographics. we still have shrinking populations. the one thing i would stress the, though, is implicit like australia where we are still seeing strong inward migration flows -- you saw the earlier report of a participation rate well north of 67%. that means if you were to adjust the participation rate, that an implement what it would be significantly lower than what we have today. that is an extra factor that could keep the resilience of consumers in place for some time, higher inflation. longer time, you wouldn't see the flows quite strong as that

and that should be easing off some of the inflation pressure there too. shery: mastercard's chief asia, david mann, good to have you with us. we are keeping a close eye on the repercussions from the fed. one asset management group says the fed is making data-dependent moves, and traders should assess how the central bank handled inflation in the past. the marathon ceo bruce richards spoke with bloomberg. >> in my mind, my base case, june of next year. the why -- it could come earlier, but that would be data-dependent. the why is data-dependent. the data is inflation coming down to 2%, or slowing towards recession. that will be the why. the ecb goes first. because their economy is already around a recession right now. germany probably is, two or

three countries are in recession. so the ecb should go first. if the ecb goes first, and the fed turns out to be higher for longer, everyone think the dollar will be weakening. >> so the ecb and the fed will be cutting for different reasons, bruce, is what you are saying. the fed could cut because inflation is coming down and as a result of which it can stay restrictive, but it can still cut. the ecb is cutting because the economy is slowing and it needs to cut. in terms of the order of magnitude therefore, how should we be thinking about it? if the fed needs to cut a little, what would a little look like? if the ecb has a bigger problem, what does that look like? >> let's talk about the fed first. the fed, every quarter they come out with a dot plot. the dot plots are going to be very revealing today. the market is expecting five cuts next year, i think the

market is way ahead of itself. i think it is probably two, maybe three tops. those dots can be very revealing. 5.5% today it will probably be 4.75% at the end of next year, not what people are expecting at all when i was looking back at data in the last few decades to when we had a normal yield curve and when things were more normalized back in the 1990's, you had the fed increase rate sharply. 300 basis point beginning in february of 1994. they raise rates from 3% to 6%. they brought it down by 75 basis points over the course of a year, only to raise its 25 basis points so anyone that thinks they know the path of this fed funds rate over the next two to three years should look back to the charts of the 1990's and just be humbled by the fact that you really don't. but to the point -- >> but if the -- sorry, just to

jump in -- if the fed is cutting because of inflation, there is a greater risk that we see hikes further down the road, because inflation can be fickle. but if they are cutting from a point of view of slowing growth, that is a different ballgame and those cuts are likely to stick, my hearing you right? >> all i am saying is that it is data-dependent. inflation is coming down rather sharply, but what we saw from the cpi yesterday it inflation sticking around 4%. 3% to 4%. getting to 2%, you aren't getting there in the next several months so i don't think the fed is moving in march, like the market seems to think. it's a little later than that for the first move. i think the fed will get inflation down to 2%, no doubt in my mind. haidi: marathon asset management chair and ceo bruce richards there speaking with bloomberg's guy johnson. you can watch us live and catch up with past interviews on a

interactive tv function, tv . you can also dive into any of the securities that we talk about, plus, become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

haidi: take a look at how we are seeing treasuries as well as

asian sovereign bonds trading so far, in the wake of that dovish pivot from the fed. we have seen treasury futures extending gains and now in the cash part of the trading session, a big move when it comes to 4% for the 10-year yield. the first since august. we are seeing slightly dramatic move when it comes to jgb's. . we had the stickier inflation outlook impacting what we saw in the movement across to bees in the previous session. in australia, aussie bonds really jumping a -- and the move in treasuries. the jobless rate rising to the highest level since september, the increase in people seeking work outweighing the surge in hiring. alongside the aussie dollar, we are seeing some moves in the 10-year yield, potential he alluding to expectations that may be we could see more of an active role for the rba at this

point in the cycle. also watching quantitative easing sovereign bonds, we saw the disappointment in the third quarter, gdp showing an unexpected contraction in kiwi sovereign bonds. next year is likely to be more of the same. for more, let's bring in bloomberg microstrategist. have seen asian bonds in general scored lower than its peers across global em. >> just let me put it up front [indiscernible] -- asian bonds will officially rise alongside global em peers. asian bonds were lacking in performance. two can broadly, we look at the valuations, also the prospects of easing next year, as well as

inflation surprises. what we came to in conclusion is that, if you look at where we are right now, latin american bones are doing better. a lot of it is due to the fact that previously, back in 2021 and 2022, these banks were more hawkish and raised their rates more proactively. yields are higher as a result. because of their previous hawkishness, inflation has also been very tame as a result. so we have this very nice set up where these bonds are more attractive. they just offer more to investors out there, and as a result, we think that these bonds will probably see outperformers in 2024. shery: you mentioned valuations earlier. why are we seeing asian bonds rather expensive compared to global em's, and what does that

mean for the performance in 2024? marcus: basically we looked at a few metrics. we looked at cost across five years for nominal yields. real yields as well as over treasuries. what was clear was that the spread over treasuries, basically it is below average is for asian bonds. above average for latin american bones. it just makes sense that bonds in these other regions offer more value. if you look at this especially for indonesia and for malaysia, they are two standard deviations below the five-year average basically. these bonds -- when the fed dies

what we're seeing right now, we can see that their performance and value is just not as strong as a result. shery: bloomberg microstrategist marcus wong with the latest on em asia bonds. more to come under -- more to come on "daybreak: asia." this is bloomberg. ♪ ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

haidi: bloomberg intelligence believes vader hong kong developers could ratchet up competition in selling their inventory in 2024. let's get the outlook with senior asia-pacific real estate analyst patrick wong. hong kong's secondary home prices have been following, what has been pressuring the market, and what are we expecting in 2024? patrick: for this year we see the challenge for hong kong property, especially the residential market. the major reason is that interest rates increased a lot for the mortgage rate in hong kong, over 4%. that is why the investment is slow. it affects developers launching new projects. so that is a really challenging situation for the developers to cut prices, to sell further for 2024. that is why for this challenge,

we can see that the prices falling 5% or 10% for home prices, in 2024. haidi: we are seeing some real estate developers, those trading in sydney, some of the biggest gainers today on the back of signaling from the fed that the tightening cycle is over. how does this potentially impact aipac real estate -- apac real estate? patrick: it's an interesting situation, because for the interest rate over the past year, it has been very challenging affecting the overall market, not just hong kong. also australia we see singapore. that is a problem across apac except for japan. next year, if the interest rate will fall from the current levels, this is a good signal for the two market. especially for market like australia and even singapore. that could be a positive sign

for them. but for hong kong, it could be an added challenge. hong kong, who didn't move it up a bit fun when the u.s. when the rate is cut for the u.s., for hong kong, the mortgage rate may take some time to adjust. that is why for hong kong, i am a bit more cautious than other markets. haidi: are asia-pacific real estate senior analyst patrick long there. that is it for "daybreak: asia." are markets coverage continues looking ahead to the start of trading in hong kong, shanghai, and shenzhen. we are seeing the risk rally play out across asian markets. stay with us. "bloomberg markets: china open" is next. th is bloomberg. ♪

first time i connected with kim, she told me that her husband had passed. and that he took care of all of the internet connected devices in the home. i told her, “i'm here to take care of you.” connecting with kim... made me reconnect with my mom. it's very important to keep loved ones close. we know that creating memories with loved ones brings so much joy to your life. a family trip to the team usa training facility. i don't know how to thank you. i'm here to thank you. first time i connected with kim, she told me that her husband had passed.

and that he took care of all of the internet connected devices in the home. i told her, “i'm here to take care of you.” connecting with kim... made me reconnect with my mom. it's very important to keep loved ones close. we know that creating memories with loved ones brings so much joy to your life. a family trip to the team usa training facility. i don't know how to thank you. i'm here to thank you.