haidi: welcome to "daybreak:

australia." we are counting down to asia's major market opens. annabelle: the top stories this hour, asian stocks set for a positive start any week that will be dominated by data including the fed's preferred u.s. inflation indicator. haidi: g7 finance chief blasts china's trade practices and tougher protections for their economies and critical industries. annabelle: israel's military presses ahead with his incursion into rafah in southern gaza, despite a world court ruling ordering it to stop. haidi: taking a look at how we are setting up at the start of the trading week. obviously geopolitical elements are playing there with the g7 story as well as the latest tensions in the middle east. sydney looking pretty positive. asia stocks are set to climb broadly as we see a rebound of risk sentiment. the wall street session a little

higher on friday. consumers tempering inflation expectations and that brought back sentiment the fed may have room to cut rates this year. it has been a back-and-forth when it comes to easing expectations driving some of the moves in both directions when it comes to the markets and that is passing through to the asian session. new zealand off by about .5%. we are heading into a delivery of the budget there. that is one story to watch for the kiwi markets. nikkei futures looking pretty flat. a50 china futures up about .3%. annabelle: let's take a quick look at how u.s. futures are trading this morning to we have markets that will be shut monday for memorial day but we are just online here, very steady so far this morning. something else traders will be going back to on tuesday, the t plus one rule coming into effect as u.s. equities will be steadily -- settling down to one day as a question is how the

financial plumbing handles the changes. futures fairly steady. oil trending around the three month low. the big question around where we go in terms of the stocks moves from here. deutsche's amongst those saying we can continue around all-time highs. bank of america saying the rally is looking a little overheated. really comes down to the fed moves as well. haidi: which seems to be in terms of expectations, move on any given day. that is the volatility we are expecting as data comes through. taking a look at what we are expecting, eco-data out of the u.s. of course top of the agenda for that very reason. bloomberg economics expecting the preferred gauge to moderate. also revised reading on first-quarter gdp and growth cooling from the governor. the fed also issuing its beige book report out on wednesday. in asia china's monthly business

surveys are expected to indicate the factory sector is holding up. we get a separate gauge of industrial earnings that could show profit growth returning in april as well. for japan we are walking tokyo's may inflation rate. that seemed to be climbing on higher utility rates. also looking at natural factory production and labor market data for april as well. and that is your week ahead. annabelle: let's get more on that and bring in senior economist or apac thematic research. we can look a little bigger picture here but broadly in a disinflation narrative because we have spoken so much about concerns around stickiness and concerns around structural issues that will be harder to bring down. when you think the fed will be confident to cut rates? when you get target bound or sooner given you have the lag transmission effect as well? gary: i do think there could be

a divergence in central banks in the coming quarters. of course on the one hand the fed will see stronger pressure to implement rate cuts. because the inflation seems to be more sticky than others and the economy is not doing too poorly. if we look at europe or another agent central banks it is a trade-off between the prices going down even though it may not be as quickly as expected. but growth pressure will start kicking in. so i think in the short run we will start to see some more central banks acting even though the fed may not act as expected. it will probably start in europe and then probably also see a move in asia as well. annabelle: speaking of asian central banks, we have seen them really constrained by the actions of the fed. which ones are most likely to move and who has the greatest capacity as well? gary: i think many asian central

banks are facing different difficulties. one of the biggest challenges about capital flows. of course japan will probably see a move to hike rates further because of the very difficult situation it is in right now with the yen. for the rest of asia it is about when inflation can start coming down. the move will probably come from china which is possible to see a further rate cut while others are in a mixed situation to see when inflation data will come down. haidi: in terms of the set up for the boj, is that about biding time before we get a clearer direction from the fed, and how do you expect more bouts of structural yen weakness could be a problem? gary: i think it is hard to

anticipate the yen to appreciate too much in the short run for two reasons. the first, the yield divergence with the u.s. will continue to be quite wide. we are getting story from the fed only about the boj. and second movie look at about services prices in japan in terms of structural acceleration the corporate are more willing to height wages as well put this would put boj with prices going up come of the yen weakening further. economic growth may not pick up as expected. so yes i do think the pressure will still persist and it is hard to see the boj turning to a dovish tone even though we might see short-term economic weakness. haidi: when it comes to some geopolitical risks, we were talking earlier of this key trilateral summit. the key pressures of china overcapacity that are impacting a lot of trading partners, do you expect this to be a thematic

going forward too? gary: this is probably one of the biggest things that we will see ongoing in 2024. and i guess one of the biggest problems that china sees right now is there are spot like sectors like electric vehicles, batteries, and solar panels with quite good export performance. but this channel may eventually be blocked by a lot of other countries because of worries about overcapacity issues. i think if we look at it from an even bigger picture, it is not only about g7 or the west because we see india, brazil, mexico, basically all the other countries are targeting different products that china may be exporting. so yes, this is one of the biggest challenges china will face and it is about how the world will be able to negotiate with china in probably containing their worries. haidi: does the leadership have

many other effective choices when it comes to triggers to booth grossed -- growth? the expectation being boosted seems quite weak. do they need to rely on more on this industrial policy? gary: i think if you look at what happened in china in recent years, there is indeed quite strong manufacturing. some of the phenomenon we have seen in our days. manufacturing production capability has increased. the utilization rate has declined. if there is not enough demand domestically, the and of course it is a natural choice to the overseas market. export is one of the short-term drivers. when we look at it from the chinese economic structure and consumption investment continues to be more relevant than export over years. boosting consumer confidence

will be one of the key factors to see whether china can actually reach the 5% growth rate in 2024 and we are likely to see more policy support coming up in july. haidi: gary ng, senior economist for apac thematic research. really great to have you with us. still ahead, talking boj policies. the former bank of japan board member will join us later. but first, china asks south korea to maintain stable supply chains as both nations begin their first three-way summit with japan since 2019. this is bloomberg. ♪

>> our general view is that it is really important that the world does not unintentionally creep back into protectionism. so, our starting point is that we really think hard before imposing tariffs or trade remedies. >> we believe that the g7 level that we have an issue with chinese overcapacity's. this is not anything against china. china is an economic partner. but we have an issue with the economic model in which china is

producing more and more cheaper industrial devices. it could be a threat not only for the eu, not only for the u.s., but for the global world economy. annabelle: that was the french finance minister u.k. chancellor speaking to us at the g7 finance ministers meeting in italy over the weekend. that gathering ended with a communique that criticizes china's global trade practices and hints at possible retaliatory measures. our chief north asia correspondent stephen joins us for more. these words, it really was a very market -- marked escalation from what we have typically seen on language from trade. stephen: the g7 meeting in italy i guess going into it, the speculation would be that they would focus mostly on engineering aid for the ukrainians. but in that final communique coming out of italy, it was a

very pointed jab at china, naming china by name, essentially saying on the one hand reaffirming our interest in the balance of reciprocal collaboration with china but we expressed concerns about china's comprehensive use of nonmarket policies and practices that undermine our workers, industries, and economic resilience. they went on to say they will continue to monitor the potential impact of overcapacity and will continue taking steps to ensure a level playing field. yes, there was a united front, but on the other heard -- on the other hand you heard from jeremy hunt saying it is really important that the world is not unintentionally creep back into protectionism. on the one hand of course everyone wants to do business with china, but at the same time they want to try through the g7 at least, which of course china is not a member of, to level the

playing field. it is going to be a long road to ho obviously. china will reimpose tariffs on around 400 products from china, basically a real -- allowing tariffs to expire that had been spared, trump-era tariffs. again, there is more pressure being led by the u.s., but g7 at least on the shores of the lake in italy showing a united front on china's trade policies. annabelle: this makes -- haidi: this makes an interesting background as we get underway between this first trilateral meeting since 2019. we have already her discussion about supply chains. what are we expecting with this meeting? stephen: the three leaders had dinner last night. they have not had this trilateral summit since 2019. so, pre-pandemic.

at the same time, where we have had a shuttle diplomacy developed between japan and south korea, they have vowed in their internal meetings between them to continue that warming of relations between japan and south korea, which of course have more aligned in recent years with the united states. there is increased pressure for japan and south korea to add onto export controls as well as chipmaking equipment. china has been resisting to further add to the list of export controls to china. this comes at a time obviously of great importance for china. it is an opportunity for china

to improve relations with two of its most critical neighbors without u.s. sitting at the table. the premier of china has already met with the two. they all had dinner. they also met with samsung electronics and said the right things about about leveling the playing field for investment into china. so he is trying to court south korea and japan at a time when the united states obviously is trying to do the same thing. haidi: stephen engle there. some other stories we are following, the nvidia boss in a bipartisan delegation of u.s. lawmakers have around separately in taiwan. he has highlighted the role taiwan plays in ai supply chains while legislators are due to meet with the president. the visits come after china wrapped up its largest military drills around the island in a year. the u.s. has since accused

beijing of military provocations. north korea has given japan notice and intends to launch a satellite. the window is open through june 4. north korea said it successfully deployed a spy satellite last november, a move washington and its allies say violates u.n. security council resolutions. ukrainian president volodymyr zelenskyy urging leaders of the u.s. and china to attend a summit to discuss ukraine's peace blueprint. the appeal comes after ukraine's at russian bombs hit a store in kharkiv over the weekend, killing 12 and wounding dozens more. the summit is scheduled for june 15 to june 16 on the back of a g7 meeting in italy. israel is pressing ahead with its operations into the southern gaza city up rafah despite a u.n. court ruling that ordered it to stop. it comes after dozens were killed in an airstrike near the city on sunday. for more let's bring in bloomberg's michael heath. so this was always going to a go-ahead.

michael: that is exactly right. the strike that the hamas-run health ministry has said killed 35 people, israel says they had precise intelligence on a target. but it was not an area where israel had given in vacuum asian -- had given evacuation orders or told people to leave. they said they did hit high-level hamas targets there, and that was their justification. but you are exactly right, in a built-up area when you try and launch some kind of missile strike, you're always going to have collateral damage. it comes at quite a difficult time. we had the court ruling on friday saying israel should halt its rafah operations. it was initially interpreted as they should stop. but with the court said it was they should avoid civilian casualties. as you say, how can you do that in a very built-up area? one million people have tried to move out of rafah into other

parts of the gaza strip to try and avoid the fighting. but again, hamas is popping up all over the place. so it just seems like we are going to continue to see this spiral of violence. it is hard to see how israel can abide by what everybody wants, and it cannot stop until it is finished as well. annabelle: the negotiations for a cease-fire are supposed to be re-commencing this week. how does this latest offensive really jeopardize most talks possibly? michael: i'm not sure if it does but i'm not sure the talks are expected to get too far either. where they left off, my understanding is there has been no progress since it. it left with israel agreeing to a pause in order to get some of his hostages released. hamas then wrote back with its own version that israel would stop the war. qatar, the u.s. and egypt then

said they could try to make progress pretty the heads of intelligence of the u.s. and israel and qatar's prime minister are meeting again to try and bridge that divide. as to the strike, in many respects hamas sees these civilian attacks is almost a benefit for it, because it just intensifies international opinion against israel. and you can see this in the courtroom. israel's international room for maneuver is getting less and less. as to the release of the hostages, it is difficult to see where we are going to see progress on that given there is such a structural divide between them. haidi: hamas launching missiles again, tel aviv, you have zelenskyy on the other front trying to convince war leaders to pay attention to this piece summit. china has its own plan, biden has a fundraiser so he will not be there. the bandwidth seems very stretched. michael: it does.

because of the israel/u.s. relationship, the republicans are so strong on their support for israel that it is always going to take priority over ukraine. the strike on the supermarket was horrific. it is equivalent to what is happening in rafah as well, but it just does not get the attention. you have to feel for zelenskyy, because ukraine is trying to find a way out of this now. they recognize they are not going to be able to push russia back. but without china and without the u.s. there, it is almost irrelevant, it is a talk-fest. so he is really in a bind. even the vice president is not going to go. china had their own version of it, it will likely be pro-russian and on acceptable to ukraine. annabelle: that was michael heath. you can get a round of the stories you need to know to get your day going in today's edition of daybreak. today it is about those stories we were just discussing, chinese trade practices, also the trilateral between china, south

korea, and japan. it is available on dayb and on mobile in the below burger -- on the bloomberg anywhere app. this is bloomberg. ♪ [introspective music] recipes. recipes written by hand and lost to time. are now being analyzed and restored using the power of dell ai. ♪

annabelle: some stories were attracting, or this morning, the u.s. department of agriculture has banned imports of some poultry products from australia after an outbreak of avian few. restrictions will come -- cover both birds and eggs. it only applies to products from victoria where around 400,000 chickens were reportedly -- were recalled last week. bad weather hitting the philippines as the country's first storm of the year intensifies. officials warned it could

strengthen into a typhoon before leaving the southeast asian nation wednesday. authorities say about 7000 people were stranded in various seaports while some flights have been canceled. haidi: take a look at how we are setting up when it comes to currency trading this monday morning. that key inflation gauge will be the one to watch in terms of the next direction for the u.s. dollar. we have seen something a very cover he and -- of a recovery in risk sentiment with the hopes that perhaps there is room for easing. the aussie dollar could be set up for a bit of weakness going forward. pretty steady at the moment. but the hopes that we will see more strengthening beyond that closely tracked level of about $.69 u.s. could be disappointed. there are more concerns about the fading and the china economic rebound, the weakness in property policy, and local economic weakness as well. up about 2% since may. dollar china is also steady at the moment and of course when it

comes to dollar-yen, 157, just under 157 i should say. watching keenly for any remarks from governor ueda when he speaks later this morning. annabelle: last week he was signaling perhaps a level of comfort with the 10 year yield for jgb sitting north of the 1% mark. this is the outlook for equities. it is fairly mixed. we don't have u.s. futures -- u.s. markets are going to be shut monday for a public holiday. you have futures fairly flat looking a little bit mixed. aussie stocks pointing towards a move higher at the open. geopolitical questions in focus with the trilateral between china, sout hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery.

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annabelle: concerns over a two

speed global economy skewed by u.s. strengthen european weakness was a hot topic at the g7 meetings in italy. the secretary-general told us more about the growing challenges. >> many of the debt issuance will have to be refinanced and at higher rates. the challenges here are obvious. we have been warning that there is a real need to rebuild fiscal resilience and add credible medium-term strategies to address the debt challenge. >> when you look at the risks across the world, inflation, growth, geopolitical, what worries you the most right now? >> the key risks we are focusing on, there is the risk still of inflation that proves to be more sticky than anticipated. conversely there is also the risk that monetary policy measures overshoot and we will end up with having too hard an impact. that is something that remains

challenging to balance moving forward. but the geopolitical risk is significant. it is very hard to see how you can take effective action depending on where you are in the world. you are on the receiving end of significant economic and social implications. depending on what happens in the middle east we could see another supply shock. we could see another supply shock causing inflationary increases. there are things not immediately under the direct control of countries in other parts of the world. haidi: the korea exchange ceo has urged a record list of companies to play a more active role in shareholder returns. he said in a statement -- monday the exchanges will allow

firms to start disclosing their targets and plans. a group of minority holders of eastern are resisting a billion-dollar takeover bid. the group of more than 100 shareholders says the offer to buy 11% of great eastern is around 25% singapore dollars, and that is too low. ocbc says the number is roughly a 40% premium. as joyous pension giants are seeking to diversify its portfolios and boost returns. let's bring in amy bainbridge. what kind of credit products every talking about looking at interests here? amy: good morning. that's right. the australian pensions are looking further into these kind of products to beef up their returns and diversify their portfolios. we know that amp, one of the

biggest pensions in private wealth money manager mers -- money managers has recently launched a $300 million debt fund looking at some of these products. looking at credit risk transfer which is one of the different kind of products perhaps more commonly seen in parts of europe that now seems to be making its way to australian shores. especially here as australian pensions continue to grow in size and scale. we know the pension funds are already putting a lot of money into private credit as an asset class. i have had multiple conversations over the past week meeting with funds, talking about their plans. in the past six to 12 months the biggest super said it is significantly increasing its allocation in rivals also beefing those up. the other areas of the market they are looking into our credit risk transfer and distressed credit. more esoteric products as they

describe. one of the biggest asset managers here working with pension funds. there is a lot of interest in these more niche products to see what returns can be had and how they can balance their portfolios as they get into private credit more and more. annabelle: zooming out a little bit, private credit is very attractive for australian pensions. why is that exactly? amy: they are flush with about 2 billion australian dollars in inflows each week a lot of money is coming in from compulsory contributions from worker salaries right across the country. basically the funds need to put that money to work. there is only so much you can allocate to the stock market for example. we have already seen very big slices of the local share market here being taken up by the australian pension fund. so this is just a story of growth. it is a story of how big the industry is getting and continuing to grow currently.

there has been a wave of consolidation we are waiting to see if there will be more mergers. as more money comes into the industry they are looking for more ways to juice those returns and this is the latest iteration of what these money managers are thinking about. haidi: what kind of deals are talking about? what is being looked at here? amy: it is interesting you should ask. there has been a real push by the pension funds to move offshore. we know about half of assets owned by these pension funds are overseas now and we have seen some of the biggest funds open up offices in london and new york. and they are eyeing deals. it seems with these private credit deals at the moment in north america and in europe. some pension funds are looking for these midmarket orbit debt deals pretty others are zooming out and looking for these

bigger, more diverse companies that they are looking for lending deals of. the size of these deals as we go forward are going to be at a scale we have not seen previously here. because we know that some of the pensions are increasing private allocations or they have aspirations to increase to as much as 6% of overall asset allocation. at the moment it seems the deals do not necessarily seem to be here in australia. there is so much interest across europe and north america and they are using their officers -- offices as the basis for deals. haidi: amy bainbridge there in melbourne. we are about 25 minutes away from the start of cash trading in sydney and opening across major markets in asia. sydney futures looking positive, .6% higher. broadly seeing the opportunity for gains in asia particularly

as we had a strong handover from the u.s. in the previous session. some consumer inflation expectations getting a bit of a reset as we get into a week that will give us the preferred gauge for inflation for the fed and that will cement news hopes the fed might have room to cut rates later this year. we saw asian stocks more broadly seeing their worst week in more than a month last week. these worries over the pace of easing in the timing and the effectiveness of rescue policies out of china as well. kiwi stocks already on the back foot. we are seeing singapore nikkei futures trading pretty positively. s&p futures looking a little more temperate. and a focus when it comes to japan as well particularly in terms of the direction of the yen and where the boj can go from here. we are awaiting that speech from the boj governor ueda a little later this morning. the former board member will be joining us next with some of her expectations.

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haidi: the constitutional democratic party will be running for tokyo governor. over the weekend it was reported the incumbent governor will also be running for a third term as

the independent candidate. we are watching shares when the market opens in about 20 minutes. they announced a buyback of 35 union in shares. the main event for japan watchers, we are awaiting governor ueda's opening remarks at today's boj conference taking place in tokyo. annabelle: going to be very close. especially when you put it in the context of where we are seeing certain japanese assets trading pretty the japanese yen of course has been very sensitive to the yield gap between the doj and the fed. also longer data securities. guessing the 10 year yield hitting a 12 year high on friday. so far the indication we are getting is policymakers are comfortable with it. haidi: pretty comfortable and perhaps not at the levels where the boj might be willing to take action. let's bring in in terms of the bank of japan excitations takako masai, chairperson from the

economic research institute who previously served as a board member at the bank of japan. great to have you with us and i appreciate your time. governor ueda and comes to the direction of these yields seemed pretty comfortable. he also seems pretty comfortable with the broader trajectory of growth. the weakness we have seen in gdp does not seem to indicate a derailing of the boj's path. what are your thoughts on that? takako: first of all, i don't think the governors or any board member has yet to be able to say they are comfortable regarding the macroeconomic situation in japan. but all those messages or communication from the bank of japan side, it seems that they are comfortable with the current macroeconomic data. but they want to be very putin

to make the hike decision. however, it seems to be there more prioritized to make the yield curve steeper better than the interest rate hike on short-term interest rates. that is my take from the whole communication, including opinions i read this month. haidi: what are your expectations in terms of the yen? so much of this is down to the bank of japan. having to tread water until the fed does something. do you think further structural weakness in the currency is going to complicate the policymaking abilities of the bank of japan? takako: i would like to focus on the communication from the bank of japan. according to those communications, as i said, they like to move the short-term

interest rate in a very putin way. meaning it is for the yen weaker. also if they stay short-term rates vary lower, meaning real interest rate in the short-term remains very low, it will be back up for the yen weakening. so i would not be surprised if the yen keeps in this low-level for longer. because according to communication, it is justified. annabelle: there is a concern that the weak yen will start to impact consumer sentiment. how strong is the consumer

within japan do you think? takako: i do really have a feeling that the yen is so weak. as you said, this is sort of the silo affect of the current monetary policy. any policy must have some side effect. when i was a board member, the scale of the policy was a side effect. but now yen weakening is a side effect for the aim to make sure that they want us to make sure there is a complete exit. now there is kind of a balance to be needed. too much yen weakening as you said, and i feel that too much yen weakening already harms activity of consumption. they need to make more balance in a good way. that is what i thought. annabelle: how are you seeing

that impacting, for where is the bigger impact from that weaker consumer sentiment? do you see it in terms of household spending power, for do you see it in the reluctance of companies or businesses to pass those higher costs onto consumers? takako: the difficulty is they are aiming to see the wage increase and transformation into the pricing decision. as you said, if consumption is weaker, meaning that the company tends to hesitate to hike the prices, meaning that a good mechanism could be deteriorated to achieve their purpose. so it is kind of a trade-off situation. so they need to modify somehow. they are looking into it right

now to hike the interest rates and then make a balance between too much weaker yen and to prevent from a bad side effect into the real economy. haidi: i think you hit the nail on the head when you talk about the policy balance and the challenge for the bank of japan between compression coming from the exit of deflation and the contrasting too much with the gap between the boj and the fed policy. do you think there is the right balance, and how difficult is that going to be? takako: that is the point. as i said, from the whole communication in this month, from the opinions to the comments from the governor himself. it seems they are focused on long-term interest rate or yield steepening, but not for short-term interest. i'm not sure how they think this current economic situation from

the weakening yen. they need to make some communication on this aspect. haidi: you talked about the idea i guess of a stress test. because we have looked a lot about the impact of an exit from deflation and an exit from negative rates in japan. do you think we should be looking more at what it means for broader global investment if rates in japan are back to 2% to 3%? takako: i think they need to communicate more in terms of short-term interest rates. and then to be able to control excitation on the markets on the currency markets. this is something they need to do. annabelle: what is your expectation around how much room the boj has to move this year?

there are some people who are saying perhaps we could still see three hikes from here. takako: it really depends on the real economy. if expectation stays current -- stays like the current situation , i think it will be ok for a one or two times hike. 0.5% or so. annabelle: and so, when it -- it depends on where the economy goes from here. what are the brightest spots you are seeing? are you seeing any change that has come through in the mindsets of individuals we were talking about, but corporations as well? takako: i think the corporations

mindset has been changed quite a lot. also households as well. for the first time this century it has happened. the boj wants to make sure everything is ok. at the same time they have to deal with the riskier side effect which is a weaker yen. so it is a really difficult path still that they have. but the bright side is the corporations have good results and also they have enough capability to make investment for the future. so that is a bright spot. and i hope that the policy and the people who accept that policy would work towards compression of the exit for the

deflation spiral in japan soon. haidi: stability has been key here. there was a time when we were talking about free hours. several of those hours got left by the wayside. do you think there needs to be a renewed focus, perhaps from the government side as well as the boj, to think about longer-term drivers for growth and reform, particularly in light of demographics? takako: of course we have the long-term issue has been tackling over two or three decades as well. the key is in productivity. to make productivity higher. it is easier if we have a reasonable size of inflation. this is a huge difference from other country policies. we need to accept this kind of a situation meaning that we need

some sort of side effect. but if we don't do that, the economic growth will not be sustainable. so i think it is very important for the long-term japanese economy as well. annabelle: in dealing with longer-term challenges, particularly around the demographics challenges, what change do you think in japan is needed now or needed most urgently? takako: making productivity higher is a priority. also it could be possible because if we could adapt all those technologies, -- in terms of inflation if we

think the strengthening of the number of the labor force with higher productivity, when you think about it, inflation, it will be higher than the past. then i think including the japanese people and also markets people are not really used to it. the third or fourth largest economy having inflation coming in 10 years time. we need to think about how investors in japan, their behavior could change or not. and if they change, then how it looks like to be. that is something looking at the investment space we should consider or examine or practice what is going to happen if japan has 2% inflation in the long run. haidi: really great to have you

with us. takako masai, chairperson at the sbi financial and economic research institute. you can catch japan ahead every week monday at 8:40 a.m. bloomberg's subscribers can watch us live on the terminal easing the tv function. this is bloomberg. ♪

annabelle: take a look at how we are tracking trading in currencies. ed big week for the u.s. dollar as we look ahead to the fed's preferred inflation gauge and whether that supports hopes coming back into the markets that we could see sooner easing then later with the inflation expectations in friday supporting what was a return of risk appetite if you will. some concerns we could see headwinds when it comes to this 2% rally we have had this month for the aussie dollar with these worries about that rate divergence as well as implementation concerns of chinese economic policy at play. this is bloomberg. ♪

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annabelle: this is "bloomberg daybreak: asia." the really big event this hour will be the boj governor ueda speaking at a conference, and i was looking at the theme of that. it is old and new challenges for monetary policy, but certainly that boj seems to be confronting both of those. haidi: that is pretty apt given the nature of the challenges that face the bank of japan as it looks into this beyond actually having interest rates beyond negative territory, so interesting conversation as we have seen a degree of patience or comfort in terms of where japanese bond yields are traveling as well as weakness we have seen in the economy as well. annabelle: that is right, and lots to be discussed in terms of market action in japan in