anchor: on the hold for now. thet yellen points to market turbulence as the reason the fed did not move. drops, bondsar jump, and emerging markets read a si -- breathed a sigh of relief. another coalition in athens after sunday's election. welcome to "countdown," i am guy

johnson to read the biggest news fed left interest rates on hold. janet yellen pointing to the fact that the international fedy may be something the needs to think about. here is our report from the news conference last night. reporter: fed officials were reluctant to end the time of -- while policymakers say none of this has significantly affected the economy, they cannot be sure they will not. abroadlen: the outlook appears to have become more uncertain and concerns about growth in china and other economies have led to noticeable volatility. michael: she says she and her

colleagues would be reassured if unemployment continues to fall, suggesting the economy is using up slack. ee the jobless rate at 4.8% next year. they also see inflation rising at a slower pace. shows a slower, shallower path of tightening. just one move this year. a maximum of four by next year. what yellen could not explain well is, given the inflation outlook, why move at all. ms. yellen: i would like to underscore the appropriate path 's conditional on participant individual predictions. our actual policy actions over on how economic conditions evolve, which is

uncertain. michael: yellen did suggest a move in october is possible but they made no provision for a news conference after the meeting. michael mckee, bloomberg, washington. guy: what is happening now. the markets, awaiting this decision from the fomc. stateside?ed julie has the details. julie: u.s. stocks were relatively unchanged until the fed came out and said there would be no increase in interest rates. we saw quitehe -- a bit of volatility. 193dow rising as much as points and then falling as much as 100. the nasdaq finishing higher. investors trying to figure out

what all of this means and trying to parse through the janet yellen press conference. stocks climbed to the highs of the day as she gave her prepared statement and then fell as she answered questions, including saying a rate increase is on the table for october. we saw those gyrations across asset classes. the two-year note was also an injured team trade. calling the most in six months. before the beginning statement coming out. we saw the 10 year yield falling, in this case down the most sense june. no change in the interest rates at this meeting. we saw them meeting and other assets. the dollar index falling the most since the august market meltdown. finally, one of the assets

that is benefiting, gold prices rallying by more than 1%. as investors, amid the uncertainty, which janet yellen says is here to stay, there is no way of resolving it for sure, we don't know exactly when rates are going to rise. she says she does not know when rates will rise. amidst that uncertainty, investors buying gold. guy: julie referencing a couple of things. let me you with the charts have looked like. this is the dollar index. you can see clearly the drop generated by the fed decision not to hike rates. into other asset classes. one of the biggest moves has been the rally we have seen in the u.s. two-year which continues to push higher.

up, yielded down is what you are looking at. understandable reaction at the front end of the curve. we will have more on the bond market story a little later. let me show you what is happening in asia. let's see what is going on with zeb eckert. zeb: australian and south korean bonds jumping on the news. we are closely following the equity action today. the asia-pacific index, look at this screen. headed for a one-month high. contribution to global volatility, if you call it that, given the recent market for tillery. take a look at what is happening. the hang seng up 0.3%. latest home price data out of china, driving some of the developers higher.

price growth whitening to more cities. helping the housing market recovery across china. we will watch closely. home prices rising and half during the month of august. yuan beginning today. speaking of the fed, look at what is happening across south east asia. gains for many of these markets with the exception of malaysia. that is because the indecision is good for these countries. don't see a negative hit to their currencies. that is a positive for investors. take a look at what is happening in japan. safebecause this push into haven assets including the yen continues. what is good for the emerging markets, not necessarily the

best for japanese equities because the yen as the safe move comes into play. the australian dollar looks like this. trading at 7191. the governor commenting in parliament about the impact of the chinese slowdown on his country's currency any general of the aussie dollar on markets. let's take a look at the japanese yen. trading at 119. we will turn it back to you, guy, and london. .uy: joining us from hong kong the decision not to raise interest rates might make the ecb resident mario draghi's growth a little bit more challenging career there is an alternative view we will talk about later. let's get perspective from hans

nichols in berlin. i am sure mr. draghi was there in his armchair watching the press conference. . are he and yellen on the same page right now? hans: they are on the view of china. the slowdown in china has forced them to rethink macro policies. but in some ways there interests do not align. wants a weak euro. when the euro went close to 140, you saw it rise. now it is all the way to 114. looking formy growth outside the eurozone, and we saw how weak growth is within the eurozone, we know the emerging markets looked grim. it is that that point that the

helped exporters. we have the second quarter year t figures.expor up 20% year after year. by the weakained currency in part. in may for strongly to enlarge or lengthen quantitative easing. thet yellen may have sent emerging markets a lifeline. the brazils and turkeys will have less full authority -- volatility for their currency. they would take the u.s. alternative. that is why mario draghi may be painted into a corner with his next round three at whatever he

says next on the size and scope of quantitative easing. guy: hans nichols joining us from berlin. there is a number of ways of looking at the story from a european respect to. raise rates,re to yields rise? there was the dollar story we need to think about. plenty of angles on the story. more to discuss. stay with bloomberg. we have big hitters weighing in throughout the morning including economist at danny, a pimco and mr. desai. we will see you in a moment. ♪

>> i think there was a plausible

case they would look past some of the volatility created by china, but that left them to did delay liftoff off. >> it almost came with a be being. they were backing off from what they have been saying for the last year or so when they said the zeroed to get off bound. but conditions do not warned that. >> we will see some pickup in nominal wage growth which will be positive. she mentioned that in the press conference. that will create upward movement in inflation toward the 2% target. in the end, i agree. there is no need to start the hiking cycle. by: some of the biggest names giving their reaction to the fed non-decision.or

6:15 and london. let me take you through the stories you need to know. the slowing economy, chinese property markets have shown signs of improving. that compares with 31 in july. the recovery is being helped by interest rate cuts. and a loosening of home purchase restrictions. sung may be forced to stop using some features and its phones. and the big story of the day, the federal reserve decision not to move on rates has been getting a mixed reaction in asia. the yen gained as much as 1%

earlier while astral yeah and south korea had bonds -- while austrian and south korean bonds jumped. let's get some more thoughts on what has happened. dartmouthampshire, a college economics professor, danny blanchflower. the right decision? denny: absolutely. i have been saying they were not going to go. the big thing, they would have worried about giving the market a surprise. a 34% probability of a rate rise. the big thing was only one person voted against. that is because the data did not

sustain going. the reasons they gave were china and no inflation. it is not a surprise. the story people have to understand, there is not a plan. they are following the data. the data did not sustain a rate rise. people heard a lot from the dissenters. from jennaot heard yellen. it says is she is taking control of the committee. what we have heard is her view that we need to wait. it is not time to go yet. we will probably not see a rate rise this year. guy: do you agree with that, lawrence? they probably still managed to go in december but a lot of those point are right.

the data have not supported a ro move now. have hearding we from her is she hasn't said anything. you would have thought for the chairman not to have set anything at all, it would have with ange to come out hike. guy: she has a number of events fewduled over the next you date weeks. what did she have to do to calibrate market perceptions? me, ice: it seems to thought there was a interesting contradiction. what happened is a lot of dovish things came out of the statement , the new economic projections. fromet we got a firm voice

the chair saying we still think we are going to have to go. despite the fact that everything shifted dovish. around whyo color in that is the case. guy: does she seem to still be pointing to -- has she boxed herself in a little bit? the fed does maybe go this year. and if it doesn't go this year, early next year? she is very much pointing to that as the biggest probability. right and i think that has been a big mistake. saying they are essentially to raise that. it turned out to be a mistake. i thought when you look at what clause, it was quite remarkable. surely said rates

should be negative. anyway, this story is trying to look forward and to be hopeful and say, we would like it to get back to raising rates but the data have not sustained it. i think they have boxed themselves in. what they should have been emphasizing was, let's follow the data. the question is, where is china? she has to stand and say, we are going to watch the data. there are issues in china. we don't know how to create inflation. there is confusion. if the data doesn't fit, we are not going to see a rate rise. i don't thicken off is going to change between now and december plots.ill those

the data are not those strong. lawrence: i take all of that on board. the question is, is it still a mistake? if they had the same view of inflation that you do, but is that a good thing for the central bank to say publicly to the markets and domestic public? reality is they don't know how to create inflation. the other big mistake they made is saying the full employment, they are close to full employment. they are a long way from full employment. full employment is less than 4%. it, we'd growth is nowhere. how is that suddenly going to change? guy: two lawrence's point, can

fed, it meant they createh know how to inflation. danny: they have been saying, trust us. this magic lack box, we will fix it. the reality is everyone understands not only can they not create inflation, if you look at the forecast on the bed members, that is dropped. there forecast continues to drop. that is the reality. we have central banks that are supposed to target inflation. that is the reality. guy: can you think of any central bank anywhere which has made a public statement, we don't how to create inflation. it may never happen. would that be, i think that is

whicht part of their role is to be a cheerleader for nominal growth and encourage spending to that mechanism. arey: it is fine to say we targeting inflation and we would like to create it. we are seven years in. we have seen falling commodity prices. maybe we should start thinking about the next step, stimulus. we have moved away from that. this is the first time anybody has put a plot in which says, they think rates should be negative. perhaps we should think about qe4 as the next step. the next move is a cut, not the rate rise. guy: the market has been more

cautious on growth and inflation. the market has in some way been right and the fed has been wrong. is that the right way of looking at it? lawrence: as was a knology yesterday, inflation under shot what the fed was expecting. site continuing rounds of one-off effects from oil prices, commodity prices, the dollar. there is the question of how many one off affects can you have? in a sense, that is why they said they have to be data dependent. interview before the meeting emphasized that evention was not going up though he characterized the labor market as being roughly where it should be. it does make sense to say, yes, we are waiting.

sayink it is not unfair to danny is at a one and of the expectations.ding nonetheless, it may be that other people will move more toward that position. we have seen some of that in bond markets. that is something that would be zarre for the fed to ignore. they think they will be able to go. what is new from yesterday, she gave the reason she wants to go. we don't want to fall behind. we don't want have to raise rates later. guy: danny, always a pleasure. an economics professor and member of the monetary policy

committee. we will carry on the conversation in a few minutes time. we will talk about the market reaction and twitter responses to the head decision. we will see you in a moment. ♪

guy: it is 6:30 in london. here are the stories you need to know about. chinese property market showed signs of improving. inces in new homes rose august. the recovery is helped by interest rate cuts. takingond highest official has been relieved of duty following corruption allegations. he is the right hand the man to president set latter.

he denied the allegations. it governing body has requested an investigation. decision noteserve to move on rates has been given a mixed reaction by markets and asia. allied. have r story in and south korean bonds jumped. ustralian and south korean bonds jumped. yellen say? let's recap it. ms. yellen: the federal open market committee reaffirms the target range for the federal funds rate. in july, committee met

the pace of job gains has been solid. the unemployment rate has declined. conditionsor market have continued to improve. inflation, however, has continued to run below are long-run objective partly reflecting energy and import prices. we expect the downward pressure will pay to overtime. recent developments are likely to put further downward measure on inflation in the near term. the outlook abroad appears to have become more uncertain as of late and heighten concerns about growth in china and other emerging markets have led to volatility. development since our last meeting, including the drop and prices and a widening in

risk spreads have tightened overall financial conditions to some extent. the committee anticipates inflation will remain quite low in the coming months. we expect inflation to move gradually back to the 2% objective. guy: twitter obviously alive as she spoke. big names out there, this is what we got. from pimco, no hike september. no reason to think the fed thinks it will hike in december, either. george magnus, the u.s. has avoided a possible reversal by holding rates. the reserve did not want to follow the countries that have

raised rates and then reversed. and saying, holding rates is dovish. but the market was positioned dovish sleep. uncertainty may be the lasting legacy of this. is the fed a cause of all ability or a dampener? marketseck in on how are reacting. caroline hyde monitors what we are looking at. caroline: the melodrama continues. aversion takek flight in the u.s. stock markets. equities did fall after the overall announcement, a downward trajectory. during their gains. concerns about the global economy. interestingrkets,

comments from jpmorgan. saying, we are no longer just the u.s.. the world is our problem. e.e dollar, a big mov dropping by more than 1% over two days. you saw the havens do very well. u.s. treasuries. yields on two year debt, dropping the most sense 2009. think thef where they fed will raise rates. phenomenal moves. all of them pushed lower. remarkable outliers. for the first time ever, the u.s. should have negative

interest rates. the treasury market being affected. money moving into the gold price. from emergingef markets. a relief rally across emerging markets. japan, one of the developed markets. the yen rallying. a haven trade. you seem to see japanese stocks lower but movement after the property data from china. about half of the city's posting gains overall in terms of property prices. a mixed reaction. stocks falling from the u.s.. emerging markets doing well in terms of stocks. this is a move to the havens. a havengher, this is

trade. were obsessing about the fed, we were obsessing about greece. we are not done with greece. greek voters heading to the polls for a third time in less than a year this sunday. bloomberg takes a look at how the election could unfold and what it means for the bailout program. the greeks countdown to their third vote in eight months. the parties are in the running to win. if you believe the polls, neither party is close to getting the majority. that is why many are betting on a coalition. new democracy says they are ready to team up with the pro-european parties contesting the election.

they want another coalition with the right wing independent greeks. they might not get back in the parliament. is important because greece needs a stable government to enact the latest bailout deal. they backed the deal but says they will negotiate on the implementation. new democracy also backs the deal but once that restructuring. wants debt restructuring. the most likely outcome is another coalition and a more sturdy, but if the big parties failed to reach an agreement, the election might lead to another. geico tom mackenzie joins us from athens. voting for take starting to kick in? tom: this is not an insignificant election.

the fifth general election in six years. voter fatigue.l half the people say they will sit it out or are undecided. undecided voters could prove crucial. as many of 12% people don't know who they are going to vote for. and then there is turnout. in january, 63%. they managed to get out a strong youth vote on their calls for the ending to the bailout. they have done a u-turn and is a lackluster campaign. the parties will focus on getting the parties out ahead of the vote. whoever wins will inherit a difficult past. the economic picture is grim. 26% unemployment to read is 0.9% growth, but another is an expectation for 1.4% by the end

of the year. that compares to 2% growth expected back in january. the banks are hardly working, very little credit. who ever inherits this will have to push through and implement the terms of the bailout deal. pensions, labor market reform, adding more pain. coalition is going to be under huge pressure. will it hold together or are there huge elections on the horizon? guy: tom mackenzie joining us from athens. bnp headng back in the of strategy. .arkets don't seem to care are they making the right call? >> there is a firm expectation that the outcome of the election will be a workable government

that will support the package that has come in. systemicof is this a risk for the eurozone the way it used to be, and indeed for the greek economy, i think the markets are assuming that is not the case. guy: let's talk about the wider european story. how did on markets open this morning? lawrence: we are going to follow the u.s. to some extent. the fact that the u.s. market theged to move so far after fed decision shows there were priced in.ikes we can learn from yellen, what is it she told us about the world economy and u.s. economy? inflation is not doing what it is supposed to do. a littles been

disappointing. the international situation has been disappointing. a lot of that is true for europe. drug isyou think disappointed or elated? if you would like the to keep a bit more pace than it might have had, you are pleased she did not raise rates. our point ofrom view, the ecb is going to look at the developments over summer. the developments over summer had the fed back from moving, at the beginning of a tightening cycle. the ecb, means for still in the midst of easing, implies more easing. guy: you think more qe comes down the road. think in the fourth quarter they will announce an

extension of qe. you raise the pace of purchases, and the lady groundwork to do that, or you extend the going to end of the program. guy: thank you. it is a 6:40 three in london, 7:43 in paris. let me tell you about the stories you need to know. the federal reserve decision not to move on rates has received a mixed reaction in asia. n gained as much as 1% well australian and south korean bonds jumped as well. croatia has become the latest hotspot in the mass exodus of refugees towards western europe itsr hungary sealed off borders.

japan, the upper house descended into chaos. toosition lawmakers tried stop a vote. mp attempted to jostle the committee chairman. they eventually went ahead and the bills will go before the entire house or approval. the prime minister wants to change the japanese pacifist constitution, allowing them to defend allies even when the country itself is not under attack. let's get back to the fed. on hold in december. for how long, i think is the question. people are trying to ask themselves. during us now, the chief european economist. yellen box yourself into a corner?

she talked about the possibility of a rate hike. she implied that was an imminent occurrence. she talks about a whole range of issues. you think of her communication? pendants -- dependence is king. the fedong to think knows exactly when they are going to tighten. say, whateed to do is do you need to seeing the data for it to happen? for us, the gradual unwinding of the tightening of natural conditions has happened. see the needle stay roughly in the same place on gauges of consumer confidence. you need to see the labor market continue to display momentum. you need to follow, if you need to predict what is going to happen, you need to predict the

data. lawrence: the crucial thing is inflation as well. anyway, as we already heard from it is the question is already surprising inflation has not picked up. janet yellen keeps giving us reasons why this is a one-off occurrence. if we think back to the days of ben bernanke, there was a time when the big debate was, is inflation cyclical structural? it because of globalization, technology, demographics? when unemployment was very high, that debate went away. is high.ent of course there is no inflation. as it comes down, we'll get some. we are not getting some though. how long should we wait before we say, maybe there's something structural here after all?

>> it is whether the structural factors are persistent. i placed more weight on that structuralen a process but you can see it both ways. lawrence: how are you going to see inflation come back up? wages, productivity. product to the growth in the u.s. is week. ofwould not take a lot pressure in the u.s. economy. if you really want to know what will happen, you look at the beginning the pipeline. wages. guy: the point we were talking about earlier on, not realizing how low full employment actually is. in thehere is more slack economy.

unemployment can be weaker. before that source become a problem. make a case for the natural rate being lower if you look at the wage data. is, has something happened? has the structure of the labor market changed over the past five years? when we look at the u.k., we don't see any great reason to think the structure has changed. is 5%, like it was before the crisis. you have to decide how much weight you place on the current weakness of wages. guy: it was interesting yesterday, the survey of economic projections, we got a of whatn in their view you could call the nerd of as well. i think there was a question, i can white recall, in the press conference about where that came from. i don't think there was a very

clear answer. you have a view? jamie: we were talking about something unobserved, you don't need a justification. maybe it is just as simple as that. see? guy: we will see. all of the people saying that this morning. jamie, thank you. lawrence, staying with us. watcheddecision closely right across the world of finance. not the least by the banking sector. launches in the u.k.. interview on bloomberg.

congratulations on your launch and what you will be doing. we will talk about that in a moment. you run a bank. how much do care about what we are talking here? >> of course we do. no matter what kind of bank, you have to what's that carefully. even if it does not affect you directly, it affects your customers. indirectly. we watch it closely. it affectu think we w sentiment more than reality? x this is a question we raise often. particular are discussing what is the crisis. we talk a lot about it but does it affect me in reality? we will see. guy: can consumers take the rage rise? there is a good reason

to keep it like it is. ?uy: how long for such a what is about the u.k. market that makes you think this is a good time to launch? our concept is a digital concept that can go across borders. we see a lot of concepts are within the digital environment which we account ourselves which are meant to be cross-border. on the other side, we think the u.k. market is interesting. we look to customer satisfaction rates. the digital adoption rates. the size of the economy. out of this, the u.k. is compelling. guy: your balance sheet relatively small.

we are around for 5.5 years. we are an independent bank. policy no big corporate to follow. we take care of the customer's interest only which is a new concept to follow. half amoving up to billion. we have 100,000 customers in germany and 300,000 users which makes us the biggest independent retail banking concept. bank inld you launch a the u.k. the question i could not understand, do you like the it is advanced? the customers are advanced for digital financial transactions wemore it is the opposite, are lagging so we have scope to catch up? matthias: that is a fair point.

i think the audience is very more advanced then my german audience. you have your prejudices with the germans. in germany, we are very conservative. in particular, so the like the nsa and so on gave a german retail customer a lot of distrust into anything delivered in a digital way that sure data. they are not easily jumping on the new concept. contentness for digital in the u.k. is higher. this is my perspective on the customers. on the other side, i think the market is dominated by four major players. additionalroom for content. guy: we wish you good luck. thank you for coming to see us.

take a look at some of the top stories on bloomberg.com. want tohe things we focus on is the fact that one we don't the fomc, who for sure, voting for negative rates. this is quite significant. perhaps we have members of the fomc hinting at that. that is in credibly fascinating. it showed, as he said, one member said we should have negative rates. significant. lawrence: the question was raised in the press conference. in a way, there is no box you ick.t

this is the only way of existential expressing more ease. remember, when the fed started doing the whole qe process in 2010, the idea of negative rates, trying negative rates and a large economy, was considered too risky. it seems qe was the thing to do once you got to zero. what the rest of us has learned is you can go through the zero bound. we haven't really discussed this. were a need for another round of easing, i guess the possibility of negative rates would be on the table as an alternative to qe in a way that was not the case in the previous rounds of qe. a guy: central banking is in a new world.

tim: yellen would not rule it out. she left it on the table. guy: we are on a long way from needing a new round of easing in the u.s.. guy: years? how long is this cycle? how many more years has this cycle still got? she is talking about a slow, gradual cycle. different to any other one we have seen? lawrence: we are starting with negative real policy rates. to -- compared to other measures, we are talking about -100 basis points. beget back to zero would accommodated of.

and then if you consider we have to tighten, a lot longer. guy: thank you. we will take a break and see you in a couple of minutes. ♪

guy: on hold for now. janet yellen puts to the outlook .broad and financial markets the reason why the fed did not move. the reaction, the dollar drops. u.s. bonds drop. emerging markets breathe a sigh of relief. greece decides again. a kosovo that's a kosovo to another election -- a close vote to another election in athens. ♪ 7:00 in london, i am guy johnson. the federal reserve decided to leave rates on hold. asia has been reacting.

some reaction in the u.s. markets as well. let's tell you what you need to know about what we learned last night. was in janet yellen's news conference. here is his resort that here was his report -- here is his report. rising international risks and slow inflation at home. say none havekers affected the u.s. economy so far, they cannot be sure they won't. abroad has appeared to become more uncertain. it heightened concerns about lack of growth in china and other emerging markets have led to volatility and financial markets. mike: she and her colleagues thed be more short if economy continued to fall. they now see the jobless rate at

4.8% by next year. at the same time, they see inflation rising at a slower pace. because of that, where policy path ofs shows a slower tightening. just one move this year, a maximum of 4% by next year. a neutral rate of 3.5%. what yelling could not explain well is given the inflation outlook, why move this year at all? >> public underscore that the forecast of -- is the appropriate task of the federal -- individual projections of the most likely ,utcomes for economic growth employment, inflation and other factors. our actual policy will depend on how economic traditions evolve, which is quite uncertain. -- mike: shedid did suggest that a move in october is possible here it just

possible. -- possible. mike mckee, washington. guy: how did u.s. markets react? juliette: u.s. stocks were relatively unchanged until the fed came out and said there would be no increase in interest rates. we saw quite a bit of volatility. the dow jones rising as much as 193 points at one stage. then falling as much as 100 points. the s&p and the dow finishing lower, but the nasdaq finishing higher. they are try to figure out what all of this means. we are trying to parse through the janet yellen press conference. as sheseemed to climb was giving her statement and then falling as she answered questions. saying and -- saying a rate

increase is still on the table for an october meeting. the 2-year note was an interesting trade. we saw it by the end of the trait -- and of the day falling the most. declineline -- it's beginning just before the statement coming out. the fed said no change in those interest rates at this meeting. we saw this movement and other assets. the dollar index falling the most since we saw the august market meltdown. with rates.ong one of the assets benefiting from all of this action, gold prices rallying by more than 1%, as investors amid all of this uncertainty which is here to

stay. for now there is no way to resolve it for sure. she says she doesn't know when rates are going to rise. amidst the uncertainty, inestors buying gold prices this environment. back to you. guy: julie hyman. in asia, we are getting opening of european bond trading. the me show you what the german 10 year is doing. this is the year charts. you are seeing it throughout the curve. the mid-end ofo the curve. you're seeing this dropping yields. that is a three-day chart. the german tenure as you can see. the yield dropping as we speak in reaction to what is happening with the fed. at lowering of rates around the world. kind of in reaction to this. .his was the biggest move

this acts opposite to the yield. this is the u.s. two-year. this is the biggest move we have seen since the introduction of qb six years ago -- introduction of qe six years ago. you saw a big move in the u.s. last night. the front end of the curve moving. you're now seeing a reaction i can to europe this morning, as which isis move here the german tenure move. let's get the asian market reaction to what we have seen. >> a perfect place to pick up, because you discussed the bond yield. you mentioned the two-year. this is what we are seeing. the u.s. move, let's take a look at the australian 10-year note. bond jumping in australia and south korea. we have the australian yields

here on the 10 year. pointsept about 10 basis to 2.77%. in korea, we suffer your notes moving today. the most in three months. in terms of equity markets, that is what you see on the screen. they are in the modest gains there. this is what you seek. as we near the end of the session, friday, the nikkei 225 extending those declines, down 2%. to these safe in haven assets. negative for japanese equities. the shanghai composite treating lower by .5%. we see a modest move on a specific. across southeast asia, rallying underway, because this decision by the fed to stay on hold, that is positive for them. they don't see the automatic out close for them.

take a look at what is happening in australia, fx 200 advancing as well. seeing oil moving. we are costly watching gold. gold is maintaining well. guy, that is the latest from hong kong. zip, thank you indeed. let me give you a quick heads up on what we are expecting when it comes to european equities. are looking broadly at a negative open, projected at the moment. the euro stocks desperately down by 2.3%. by dax faring better, down .4%. in terms of what we are think a slightly negative open. that is consistent to what we

are seeing in terms of nonmarket story, where we are seeing yields falling in the german curves. prices rising. european equities are forecast to open a little softer. let's keep up with our top story, the fed's decision not to raise rates. maybe making mariota draghi's job a little harder. rising.lds let's talk to hans nichols in berlin. draghi broadly on the same page, you think? posco china is serious and it is a slow -- hans go china is china is serious and it is a slowdown. it comes that the lending or borrowing costs.

we saw the borrowing costs working parallel back in autumn 2013 when there was talk about the taper. we saw problems here, lending slowed down. the question is will be that instinct this time. mrs. yellen's affect on the euro has already taken in. already 20.14. a stronger euro which will make exporting more difficult. if you look at the global economy, where europe is explored -- is exporting to, everyone talks about the u.s. being the engine of growth. it's not like they're looking to , therazil's, the turkeys emerging markets. the fed may make it a little easier for those currencies in turkey, and result to be to beer -- and brazil stronger. at eu exports, year over year, 20% increase. that gives you a sense at how much europe's exporters have

benefited from a weaker euro. it was up to 1.40. now it is around 1.14. , am inclined to look at this less of a lending cost story. the lending cost should not be discounted. guy? guy: guy -- hans, joining us from berlin. any surprises in the reaction? obviously the yields will have to go down again. the reaction tells you the about had caught itself the likelihood of a move from the fed yesterday. in terms of the size of the interesting, it is not nothing, but it is pretty

contained. to that extent, it is interesting that when we think about is the fed confusing markets? are they misleading? are they a source of liquidity? the answer is, really they're .ot done too badly the volatility doesn't happen around the meetings. it starts with the taper tantrum. it starts as the news flow develops. reaction to any move from central bank is we thought that would happen. about the bondng market reaction, it shows we were wrong. the market most implied too much for this meeting. if they have to push back beyond the end of this year, the front end of the u.s. will rally further.

guy: laurence mutkin. stay with us, on bloomberg. analysis of it. lord desai and goldman sachs president abby joseph cohen would, some of the names we are going to be talking to throughout the day. we are going to take a break. we will see you in a moment. ♪

>> i think there was a case that the fed would look past some of the volatility that was created by china and weakness in the economy around the world. that ultimately led them to delay left off. i thought the most surprising thing about the announcement was it almost came, because they were backing up from what they

have been saying for the last year or so. they want to get off the zero bound, but the conditions don't warrant that. >> will start to see some pickup on the wage growth and compensation. i think she mentioned that in the press conference. that will help create movement in inflation port the 2% target. in the end, i agree that there is no need yet to start the hiking cycle. guy: 7:17 in london. big names giving their views on what the fed did not do what it told us. plenty of thanks to kick about. let me run you through the key stories. the federal reserve decision not to move on rates. giving a mixed reaction in asia. japan growling alongside traditional -- japan rallying alongside traditional havens. south koreand

bonds jumped last night. the biggest divides in that's the biggest advance in -- european bonds are rallying. the leader of one of brazil's parties says he doesn't think impeachment is viable. who alsort of leonardo leads the largest party in brazil. japan -- opposition try to stop a vote on a bill expanding the role of the military. he snatched his paperwork and microphone. the bill will go before the entire house for approval. transitions -- they want to change japan's constitution did -- constitution.

let's get more reaction to what we heard last night from the fed . to let us knower who said this. no hike in september. no reason to believe that the fed will hike in december. the economist george magnus says the u.s. has avoided a reversal by holding rates. they didn't want to follow the other countries who have raised rates and reversed. standing pat for now, but for how long? -- holdingweights rates is dovish. we will talk about that. , a source of volatility. wager --s, bhanu by baweja.y wa

bhanu: a muted reaction. the yield will come down and despite that, ian was selling well. e.m. has a china problem. the income variables that have been weakening have contaminated the balance sheets. you have a problem with the stop variables. maybe a modest rally, sure they can. there has been aggressive selling in august. the u.s. bond market is important. the e.m. has bigger issues. positionsl be listing into this rally. fed a focused institution is now all eyes on

what is happening international. >> i guess it is not only emerging markets they are talking about. the eurozone is not firing on all soldiers. global economic backdrop. from my point of view, i am a macro rates kind of guy. it is interesting to hear the discussion about how much of what is going on in emerging markets have to do with domestic matters. havemake, one question i when i think about what they hadive easing did this thing about the portfolio balance channel. to be forced out of treasuries and investment grade into high-yield. you would think if that process reversed that would threaten

emerging markets. bhanu: whydo it -- do we hear bad news is good news guy: is the markets are being o the -- good news jack -- u.s.are being driven high yields have widened out. emerging markets have suffered. financialis the conditions have tightened, not because the u.s. economy is weak or the european economy is weak, but because commodity prices have been volatile in china. eventually, if the u.s. fed does hike, and asked -- and adds to the risk-free rate problem. guy: is the fed a source of all

until the? volatility? are we in a situation where the fed is adding to that story? bhanu: the fed is adding to the volatility in the near term. that's a smaller situation. qe is toe point of reduce volatility. and not cut 25 basis points? you want to make sure that companies can borrow 50 aces points above liable. what has been more subdued than the economy has wanted in the last five years? to point of qe is to reduce volatility. it is running into diminishing returns in the market.

guy: laurence? laurence: your volatility has been muted because the fed has not done anything. if the fed -- with the fed needs to do is to make sure everybody is ready for it. iswhat the fed needs to do make sure everybody is ready for it. this was a dovish story being generated by the fed and yet yellen felt it necessary to talk about this idea that rates are not going up. what was she trying to do? laurence: i think she was try to dampen the volatility. everything was dovish. the economic forecasts, look at how they changed. everything is down. the emphasis on

inflation and expectations in the bond market, lower. if you look at the overseas development, all worse. why was it she didn't go we still want to keep a rate hike? october is still live. i think part of the reason is this, if she has said the market it hasn't been working out, we going to look at again in march that i think you would've gotten an enormous positive action -- positive reaction. she would've generated volatility by everyone relax for six months and taking that away again. maintaining this pressure that rates to go up at anytime, she stops emerging markets and other risk markets. bhanu: it is tension between the two objectives.

the employment objective and the inflation objective. the inflation objective. the globalnding out telescope is flat. you are seeing this inflationary wins. that is why she is reasonably dovish. laurence: i would say one other thing about the idea that we have to think about moving soon, because if we leave it to late, we have to go quicker. that's a bit of a change from janet yellen. when she came into the job, she was talking about optimal control. along the lines of leaving it lower for a lot longer.

where is the hockey stick? guy: we have to wrap it up. thank you very much indeed. bono, it has been great to see you. ♪

back 7:30 here in london. let me tell you about the stories you need to know this morning. european stock index futures are down this morning. they weigh the federal reserve decision to keep interest rates at zero. the u.n. rallied -- the yuan rallied. the dovish announcement by the fed. the two-year treasury since qe began six years ago. refugees set up significant bearings -- refugees could have significant bearings on greece elections. greece has had to handle an influx of migrants despite

limited financial resources. virtual reality introducing 10 titles for the playstation here. fromifts focus away unprofitable tv businesses. be desperateg to proposing a headset, helping to extend its lead over microsoft. back to our top story, the federal reserve leading rates on hold. a half-hour after the decision was announced, we had the janet yellen press conference. this is what she had to say. >> the federal open market committee reaffirmed the current zero two quarter percent target range for the federal funds rate . since the committee met in july, the pace of job gains has been solid. the unemployment rate has

declined. overall labor market conditions have continued to improve. inflation however has continued to row -- run below our objective. declines in energy and import prices. what we still expect, the downward pressure of inflation from these factors will fade over time. recent global economic and financial developments are likely to put further down the pressure on inflation in the near term. the outlook a broad appears to have become more. -concerns about growth in china and other emerging market economies have led to notable volatility in financial markets. developments since our july meeting, including the drop in equity prices, the further appreciation of the dollar and a widening and risk spreads have

tightened overall financial conditions to some extent. thatommittee anticipates inflation will remain quite low in the coming months. fade,se temporary effects an important -- and a portly as of the labor market improves, we expect inflation to move gradually back to our 2% objective. guy: janet yellen giving her thoughts post that decision. market reaction looks like what it is. caroline hyde has details. caroline: we'll be following the u.s. low. futures signaling it is going to be a down day in the eurozone. .ff by .5% suddenly the world is weighing on the u.s.'s shoulders. banks is of jp morgan saying the u.s. has a more global perspective.

therefore equities is selling off. u.s. getting concerned. the s&p 500 worries about the global growth. european equities is showing it is going to be a lower start. the big move in u.s. treasuries, you're talking about it, two-year yields falling the most since we saw the start of qe, since 2009. the yield dropping dramatically. affect having enzymatic on borrowing costs -- that is having a dramatic effect on borrowing costs here in london. itnce, the 10 year down here the outlier, greece. 10 year debt, very liquid, but yields still rising amid concerns as we go into a weekend of the voting. neck will we see -- the with undecided voters. greece causing foreign costs to

rise there. clearly there is nervousness. moving out of equities when it comes to europe. clearly it is going to be a down day. many trying to work out what the future is, in terms of the fed's hike. will we see one in december? guy: against the very same tweet last night. caroline, talking about what is happening with the german 10 year, let me show you the charts. this is the yield. we have seen this big drop. we are continuing now to a brief hiatus as the market marks time. the downside on yields. the german 10 year is rallying. you are seeing this from the front end of the curve. an interesting chart. move off of the markets and get more reaction to what we

learned last night. what we now need to know. let's bring in wendell perkins. nice to see you. good morning. your reaction? wendell overall i was not surprised. overall i was not surprised. -- wendell: overall i was not surprised. i don't think it will happen. obviously that door is still open. when you look at what was said yesterday, it was quite clear what conditions may restrain economic activity. it is putting downward pressure on at the rate of inflation in the u.s.. that is something that is of concern to the fed. they have an opportunity to delay. yellen ideally would've liked to have been able to raise rates. the reality of the current condition is going to push that

into 2016. guy: maybe the market was ahead of itself. a muted reaction in equities. how do you think she will read that? they are clearly nervous about causing more volatility. wendell: we will see more volatility. the reaction yesterday in the equity market was because by the time we got yesterday, most participants in the equity markets, it was a foregone conclusion that there would be a delay. that was no surprise. it does raise questions about when are we going to see a launch? what are they afraid of? how much a are they of global conditions? it raises greater uncertainties that will see greater uncertainty. we saw the yen surging overnight in response from japan's -- from

japan. we'll see what plays out today. guy: how much you think the fed understands the derivative of fact -- derivative of fact of emerging market. it's difficult each arms around. clearly they have a demented focus. they have to have it the mystic focus. -- have a domestic focus. i know some of it has to be in the back of their minds. we get into 2016. we see a rate hike. -- the longer they leave it, the steeper the rate hike is. regardless of how long they leave it, the rate bonds will be shy.

wendell: any delay we see today, doesn't mean that the rate hike will be any faster. it will be a gradual rate hike overtime. givene delayed that, global conditions. weremething should change start to see wage inflation. certainly we are not seeing that today. we see very low unemployment in is u.s., the employment rate not at its peak before the financial crisis. a lot of jobs have been added. they have been lower paying jobs. point, the feds has ample time to gradually raise rates. we are probably looking at it being a 2016 event. echo on that note, we will leave it. think you very much -- guy: on that note, we will leave it. thank you very much.

we have not talked about greece very much. it was the crisis that dominated before we focused on the fence. let's get back to it. bloomberg looks at the election and how it could unfold. what it means for the countries a lot program. >> greeks cap down to their third vote and eight months. are both in the running to win. if you believe the polls need a party -- if you believe the polls, neither party is close to a majority. new democracy says it is ready ,o team up with syriza contesting the election. teresa has ruled out working with any of them. it was another coalition with the right-wing independent greeks.

they might not get back in the parliament. this important, because greece needs a stable government to enact a recent bailout deal. .ir reza backs of the deal -- theties on the french parties on the fringe all reject the bailout and want to return to the drachma. the likely outcome will be another coalition. if the big parties fail to reach an agreement, the election might lead to another. elections.eek another greek vote. we back to the ballot box. a little bit of fatigue maybe? >> absolutely. you don't have to go very far to find people in cafes,

, you ask about elections, they roll their eyes. they say not again. undecided voters according to the polls around 10%. frontpage of the newspaper saying 650,000 people are still undecided. all the parties are out trying to get those voters out. this all points to the coalition. whether or not we have a huge democracy. how fragmented the boat is going -- going to be. whoever wins this vote -- the question marks are going to be very big for them. the economy is on a bad footing. sick year of recession here and greece. record unemployment.

the banks need to be recapitalized. we have questions over pensions, text, labor market reforms. those have to be addressed. in october, the creditors will be coming here to assess the status of the bailout. the party and -- departing coalition are going to have to face up. that's going to put pressure on any coalition. they're looking for a strong coalition preferably headed by new democracy or so reza -- syriza. guy: tom mackenzie will be back on monday. coming up on countdown. 30 minutes until european markets give their reaction. we will be back in a couple of

minutes time to talk about that. ♪

guy: 7:46 in london. 8:46 in paris. european stock index futures are down this morning weighing the fed's decision. in asia, equities down. government bonds have been rallying pretty hard. we saw the biggest move in the the qeom two-year since began six years ago. -- the support of leonardo who -- bourbonast party group is using snapchat to

unleash next week. collection -- burberry's -- only to disappear 24 hours later. adam pay is standing by. those markets have been impacted. re-count of what we have learned. adam: good morning. rallying markets across asia. let's start with a broad picture. asia-pacific, the main benchmark .2%., up policy down to the feds but came out last night. that dovish sentiment is helping across the board. down.is

it closed down 2%. that was driven by insurance and the banks. you got the upcoming japan ipo. that is coming to market and transferring money into getting rent -- getting ready for that. it is a three-day holiday in japan next week. australia,rkets, and we saw a bit of strength there. the governor of the rba was speaking. his outlook for central-bank policy across the board. that helped to support the yield, paying stocks like the banks and australia. we saw support and the emerging markets. the dovish statements giving rise to south korea. guy: adam, great roundup. let me update you on what is happening here in europe.

we've got around 10 minutes before the european equity segment starts. the bond markets have been open for an hour or so. this was the reaction in the german 10 year. yields have been dropping sharply. a very big move at the front end of the u.s. term as well. u.s. equity markets, initially with a story is. looking like we're going to have a softer open broadly. .5%. a softer european equity market --jected since the markets michael hewson is here. any reaction? the dollars have been reflected in reaction to the euro-dollar here -- dollar. on the one hand on the commodity

side, there was in a citation that we will get a softer dollar. on the currency side, there was the opposite reaction. as a result, the markets are the wrong way. we could see the canadian dollar do well on the back of this. guy: the commodity currencies. that is the old story that you are talking about. is that a short-term in and out? is that something that can be more sustained. michael: that is something that can be more sustained. i been watching the canadian dollar for some time. -- i have been watching the canadian dollar for quite some time. this scenario has been going on with the fed for quite some time. i am sure we are both sick of talking about it. guy: not quite yet. michael: what i would say is the window is closing. it is very small. we could see that rate hike next

year. if that is case, there is a lot of dollars the need to shift back from their long position. if we are talking about the commodities focus, it should push positive, shouldn't? michael: it should. performed on the way up but it has underperformed on the way down. the reaction on the dax highs have been much more marked. moment, we are in a bit of a race between 61 and 63. marketill be an emerging relief rally. potentially, i'm still being cautious. feds are worried about it.

it's not as if defense of the thing you need to be worried about. coco the -- michael: the china story might be overplayed. majors are taking -- no evidence of that yet. we have pmi's this week from china. that's a give us some indication. guy: what is it that they have seen that they should not have seen? michael: they were not paying attention to the inflation data. that is what i was focusing on. think it is unlikely the fed will go this year. i said that at the beginning of the year. commodity prices have been in decline since 2011. it is not transitory at all. that's a trend. there is no evidence that we are going to get a strong rebound. we make it consolidation, but i don't think it -- i don't think

we will get a rebound. guy: good to see you, michael. mr. ferro is up next. -- next. jonathan: is it hello 2016. softer inflation, financial tightening and then global risks. the vote on the fomc last night. would corrode and drug he had to send it last night -- would had -- a and a druggie to boost inflation. what you got yesterday was a stronger euro and yen. this that increase that those two central banks need to respond? what i need for my show is

someone that knows something about the bond market. i want to go to pimco. guy: looking for to that, jon. let me leave the program with a look at how the market story has been developing. this is the german 10 year. the reaction, yields coming lower here it -- lower. european equities, this is what we're looking at. a softer open. .5%. a softer open. you in the hands of jon ferro. see you monday. ♪

jonathan: good morning and happy friday, welcome to "on the move." i am in london, moments away from the start of european trading. let's get straight to your morning brief. hikes in global risks, tighter financial conditions, and stock inflation forces the federal reserve to keep monetary policy unchanged. is it a case of one and done? the u.s. bank signals a good it could fit in a rate hike but for 2016. --rging markets strengthen draghi and kuroda need to respond.

i am looking at futures markets lower --. -- lower. a big rally in the european bond market. let's wrap up all of that with caroline hyde. caroline: happy friday. but maybe if you are on these markets, not so happy. we are expecting a down day following u.s. equities lower. is it risk aversion? is it the fact that they are delaying the inevitable? will we see a rate rise this year? not be as there may reason to left rates in december, either. the cax was off by 7/10 of 1%. there does seem to be a general risky than search, and risk aversion in the market, but for what reason? you are seeing the bond market move on the back of the u.s.. we saw yields come screaming down. they are still falling on u.s. 10 year, at yesterday