paul: good morning. i am paul allen nep renee and our way from the -- i am paul allen in sydney. shery: from bloomberg's level headquarters in new york, i am shery ahn. sophie: and i am sophie kamaruddin in hong kong. welcome to daybreak asia. this our top stories monday. talking trade president trump says negotiations with china are making progress, but he is still not ready to make a deal. protests continue in hong kong amid warnings of widening fallout the government talks

economic typhoon. turbulent times when out for cathay pacific" protest in hong kong and the loss of the ceo. -shery: we are seeing futures higher by four tens of 1% as we see more positive rhetoric from president trump on the u.s. china trade talks. this on the back of a strong rally we saw on friday with the dow gaining 1.2% and every sector on the s&p 500 in the green. the s&p 500 gaining 1.4% on friday. we saw chipmakers leading the gains, after we had positive results out of nvidia. there was also positive sentiment out of europe as officials there hinted they would come to the rescue if the region's economic data deteriorated further. that gave a boost to investor sentiment. 1.7%.sdaq gained there was a lot of volatility

still with those things -- swings on the s&p 500 with more than 1.5% intraday. this week the focus will be on jackson hole as we will wait to hear from a fed chair powell making comments later in the week. let's see how we are setting up in asia. place: the pieces are in for a risk on session. in china that pboc is said to liberalize its interest rate system by lowering borrowing costs. checking more details on that on august 20. the boj is expected have more data this morning with july trade figures like this showing week exports and slowing asian man as well as yen strength. on currency this morning the yen holding onto a two day decline. we have it trading around 106 106 spot 44 against the dollar. in new zealand, you've kiwi 10

year yields just above 1% with positive data to chew on as well. he had producer prices for the second quarter coming in higher for that tune quarter. the hong kong dollar trading steady this morning, with option traders boosting their bearish bets they will -- that will breakthrough. the 11th straight week of protests. at all getting job data time when we are seeing political's to build the undermine economic growth. paul: let's check in on the first word news now. >> first up is argentina. the company has been downgraded into junk as markets brace for a potential default. was after president mcrae soundly beaten in a primary election. see putsches to triple argentina on par with zambia and the congo. as lowered its sovereign rating from b to b minas and added a negative outlook. the last seven days have seen the peso file to record low.

switching to hong kong, tens of thousands of protesters divide hong kong on sunday to march 4 and 11 weekend. protesters claim 1.7 million people took part, spreading far beyond a park where police estimate around a hundred 30,000 people initially gathered. hong kong finance secretary chan is warning of an economic typhoon for the city because of the continuing unrest. u.k., leaked government documents suggest the u.k. will face food, fuel, and medicine shortages after a no deal brexit. that is along with job losses and disruption of channel parts. the sunday times says the governments operation yellow hammer file warns of restricted supplies of the fresh food and interruptions of the supply chain. government ministers say the document was only setting out the worst case scenario. is the case as everyone

knows that if we do have a no deal exit, there will inevitably be some disruption, some bumps in the road. that is why we want a deal. it is also the case that the u.k. government is far more prepared now than it was in the past. and it is also important for people to recognize that what is being described in these documents, operation yellow hammer is emphatically a worse case scenario. >> to the changing, acclimating italy, the companies teetering populist coalition looks likely to collapse after one of its coleaders said it is no longer believable. the antiestablishment five-star movement released a statement saying in its partner the league , and its leadership, are not credible. prime minister giuseppe conte is set to address parliament tuesday. the split sets the stage for an election. global news 24 hours a day and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

paul: larry kudlow says recent calls between the u.s. and chinese trade and go shares have been positive, potentially opening the door to further progress toward a deal. president trump has reinforced that message tweeting, we are doing very well with china and talking. let's cross now to washington. did we learn anything new about ?he talks today ech interesting comment by larry kudlow saying the talks we have had this week by telephone have been more positive than indicated by each side he suggests him thing going on there and talks about a timeline with more talk in the next week to 10 days, and potentially face-to-face talk scheduled for september but not confirmed and he sounded optimistic.

donald trump said the u.s. and china have been talking but did not provide details, and he muddied the waters in his comments leaving new jersey this doernoon, about i do not to a trade deal with china yes, and china needs to do a dealt more than the u.s.. there's certainly nothing terribly clear coming out of the white house. i think after the days' comments are sifted through, i think it is net positive. president trump was pumped up about the u.s. economy and what he sees as the relative strength. but his advisers would certainly be telling him that if the chinese economy is weak and other economies are weak, the u.s. cannot be totally inoculated that, so that would be an up and just toward keeping these trade talks going. we have had so many headlines when it comes to the china u.s. trade talks, not to mention fear of her session with the yield curve and burning last week.

i think the comments the president has made on europe have been overlooked. president trump does not seem to be happy without trade relations with europe are progressing. >> that is out so they write. he talked about that in new hampshire thursday night. its possible he is being animated as well by some new figures on the e.u.'s rising trade surplus with the u.s.. it is up in 2019 from a year ago , and germany has the biggest trade surplus. trump is often talked about that metric and there is no doubt he is not happy with it. probably no decision on auto imports, which is a big thing with president trump until november. that is a deadline he has as to whether or not to levy tariffs on auto imports, which would be a big hit to germany. that is certainly something in the background. coming up more quickly is the g7 leaders meeting in france at the end of this week.

mused publicly and privately about taking action because ofnch wine attacks on u.s. technology companies. so it is possible we may see something about that in the next few days, maybe even before he leaves for france. so watch this space because tariff man probably is not finished yet. shery: thank you so much for that. our bloomberg editor joining us from washington. bank, america's biggest to bloomberg exclusively about the big geopolitical risks from brexit trade and hong kong. up next, treasury investors are increasingly wary after data royals the u.s. bond market. we will hear from you be at --

we'll hear from ubs. this is bloomberg.

asia.this is daybreak i am paul allen in sydney. i am shery ahn. in new york. starting this august the central bank will announce a new reference rate at 930 a.m. on the 20th of each month. lenders will be required to reference this new prime rate when saying the prime rate to businesses and households. the goal is for the pboc to lower borrowing costs. the green line to stimulate the demand for new credit and support economic growth. for banks that are hoping to set this new loan prime rate that has expanded. hsbc has not been included in the lineup. paul: let's focus on fixed

income now after a lot of rough looking data in bond markets last week. from ubs, thanks for joining us. i want to start with a chart from the bloomberg terminal. it is one of our favorites. we can see they're now $60.3 trillion.$16.3 of negative yielding blondes. to what extent are global bond traders be held hostage by this global gloom narrative now? was certainly something powerful last week. i would say reaching a crescendo. it is more the narrative last week around the yield curve and the incredible decline in yields. this week our attention shifts to getting some stronger commit occasion from the central blank

-- central banks by way of minutes and of course jackson hole. paul: let's talk about federal reserve commit occasion. do they have a comedic case in's problem? is that what we are waiting for out of jack's -- did they have a communications problem? >> i think the clarity and credibility is christ crucial. part of this amazing flattening of the yield curve reflects a degree of fear, but also confusion around what the fed is saying or what they are not saying. this week is an opportunity for a particular chairman powell to straighten up the message and show that they are at one. and there is a clear view about where the economy is going. shery: yes, especially given that there have been discord in the views of fed members. what part of that message needs to be clarified for investors to be a little bit more at ease? particularly the

reference previously to that we are midcycle. because the market has spoken. yields,the decline in not just in the united states, but globally, the market is telling you something. i think this fear needs to be arrested. clearly over the weekend we have had some charm offensive, if i could call it that, from certain u.s. regulators, speaking more positively about the economy. but there is as distinct concerned that if there is a the of clarity around where u.s. economy is going, and of course the global economy, that is definitely undermining confidence, business confidence, which ultimately will manifest in much weaker growth. our bond markets positioning this way because a

recession is imminent here in the u.s. economy? or is it just because we are seeing lower and potentially big at interest rates abroad? anne: i think it is moreover the latter. i think potential growth in the u.s. is declining. .here's no question let's think about it. growth is hovering around 2%, perhaps a little bit lower. is also reflective of where potential is now. it is a bit of a step change to one in growth in the u.s. to go to negative. so i think this narrative around recession is perhaps overblown. the risk has gone up but the fed has capacity for forward guidance that will support business and consumer floor underto put a

things. i think that is the important component. shery: if the fears of recession are overblown, at least because this would not happen imminently, what about in the next 18 months, as this gtv chart on the blue burke shows -- on the bloomberg chart. once we see the inversion, it is not until once the curve starts to steepen again like we saw in 2007 will restocked letting prices whether it is the s&p 500 as well as bond prices and gold gaining ground because of a safe haven demand, should we be ?uried -- worried down the line and if not when she we worry or position that way echo? anne: i think last week that is what the market dead. i think because the yield curve -- the fact that the yield curve keeps flirting with this inversion i think that is

significant. the fact that it is come back to not be ignored. for me it has a portent of weaker growth. but it does not necessarily mean that we fall into recession. i think it is critical, again, that the fed in particular, gets on the front foot, and provides some supportive comments and decisive action, to underpin growth. obviously the global environment is somewhat weaker than the u.s. . so it is critical that there is a broader sense that the authorities can do something. so we will hear from the acb. there was some chatter friday about fiscal stimulus in germany . that is not concrete of course. positiveome more narrative, i think, to arrest disease. paul: i want to turn to the situation in australia. we have seen the yield on the 10 year execute a very impressive

slide. we were back around two point 5% around christmas and now we were at a record low. % around christmas and now we are at a record low. has been central bank clear they will provide further support. the economy is doing ok. with two easing, the tax cuts, the service ability criteria, the housing market did well on the weekend. that will serve to support confidence. but again, we have been told that interest rates are low, they're going to stay low. inflation forecasts are going to take a very long time to even reach target. is againnd market reinforcing that view that it is very must lower -- were much lower. paul: moving the goalposts on jobs as well. we are long way off from full

employment at 4.5%, we are still at 5.2% is that enough to head off the near term x dictation's of more easing? -- near-term expectations of more easing? anne: i do not think september is likely. i think the rba would like to see the past through what they have done today. particular the when they have not got as much scope anymore. things are not that deleterious. the economy is doing ok. i would be surprised if they went in september, i must admit. shery: just before we let you go, we see this talk come up now and again, after the slide in the 30 year yield to a record low, we have seen the treasury department now saying that it is weighing whether or not to have those 50 year or 100 year bonds. what is your take? is there demand at that

duration? been duration in pension funds and others, people that are found them selves wanting. even the bond yields alone, we have looked at how many are now negative. there is this requirement to lock in rates. but i think that might just, i think it led to a slight reversal on friday night. the u.s. 30 year. it would be extra nearly interesting to see at what level of demand there would be. shery: thank you so much for your time today. of course you can get around of of the stories that you need to know to get your days going at today's addition of daybreak asia.

you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg.

shery: this is daybreak asia. i'm shery and in new york. i am paul allen in sydney. >> the recent bond market terminal driven by issues outside the u.s.. outlining some of the biggest geopolitical risks that he is seeing right now. >> for things that would help the world a lot in terms of geopolitical. one would be to get the u.s. budget deal done. people forget that a shutdown in 18 -- 2018 was around the four have tax reform. if you had that now would be much different environment. good news is they took that

off the table for a couple of years. the second question was the usmca. we have to get a trade deal done between these three major trading partners to provide stability to trade around the world and also show that countries can agree on trade. because now nobody is getting deals done on trade. that will be fed number two. number three, we have to get through brexit without having a major blow up. we'll worry about that. it is not clear how it is going to happen. it is not been clear for couple of years. now we are getting more to the fats. -- to the edge. the fourth is the china situation. it is the hardest to solve. at the end of the day when you around the world and talk to businesses they believe the situation between china and the rest of the world has to be fair, freer, more open access at with intellectual property has to be more taking care of across the board. these are very difficult issues. and i think that is why it is going to take longer. i think if we're going to depend on china and the solution here, , think it could not get worse

and i think it could bounce around. the ebbs and flows you are seeing, it is very tough negotiation compared to the other ones which i think they could get done and we could get through. >> how we added up for the recent days, hong kong? is there a threat to hong kong as a financial center? >> i do not think it is outsized. it is a serious situation but it is a geopolitical situation. our teams are going to work every day. we watch out and monitor, they meet at 6:00 a.m. every day. is not a pleasant operating structure. >> are you cutting back on your footprint? >> now we are not doing anything. the teams there is a great group of people. our thoughts are with them because it is a tough environment. those types of environment are no fun. we have had a different markets with different things happen. at the end of the day, who wants to get up every morning and asked about go to work today are not good or today? that is the human being count.

thatlieve is that situation itself is age applicable situation not a financial situation risk now. shery: now let's get it quick check of the latest business flash headlines. volatile times call for volatile calls. jp morgan is hosting a special conference call tuesday to help clients deal with the recent market swings. the bank says the call will focus on the health management impact of high-frequency trading amid worries on wall street that current volatility could cause quant driven funds to dump billions of dollars worth of stocks. reports from tokyo say japan is stepping up scrutiny of foreign investment in the chip sector, focusing on the purchase of shares with voting rights. the nikkei news says new rules will be introduced that would force overseas investors and tech companies to undergo what government review if the transaction result in 10% or more on a voting rights basis. coming up next, more mass

marches in hong kong as the finest secretary warns of an economic typhoon. this is bloomberg. ♪

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su: this is daybreak asia. we start with president trump, he has indicated trade talks with china remain generally on track, ahead of schedule meetings with washington next month. he said things are doing well and the two sides continue to be in contact. the top economic advisor larry kudlow also said recent phone calls with beijing have been positive with more discussions for the coming days. to india now the country is reporting to be easing the lockdown in kashmir with a curfew partially lifted on communication links restored. landline and low speed mobile

phone service have resumed and schools will open the later -- will open later monday. the un's security council discussed the region for the failedime since 1965 but to produce a united statement. gibraltar rejected a u.s. request to hold an iranian oil tanker, and the vessel has left port. last month ond suspicion of smuggling fuel to syria. iran denies that but has not disclosed the intended destination. u.k. flagged tanker in the gulf. to china now the country is successfully launching a new rocket, lifting three satellites into orbit. it lifted off from the space center in northwest china saturday. its cargo included satellites from three beijing companies and

they are designed for remote sensing services, communications and internet service -- internet systems. president trump suggested tough duties on french wine in retaliation for a planned tax by the french on multinational tech companies. tech companies say -- sources say he mentioned 100% tariffs at a recent fundraiser but it was not clear if he was being casual. the u.s. trade were presented's office is holding a public hearing monday with tech reps affected by france. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. could be heading for a strong session across asia. let's check the markets. lookingsentiment is risk on to the yen trading flat

while gold under pressure off .2% rate we have s&p and nikkei futures gaining ground. we could see an open of 1% when the nikkei comes online in half an hour. cheap valuations across asia, that may entice bargain hunters to come online after asian stocks cap a fourth straight week of losses. when it comes to the ego data light up, there could be some potentially negative catalysts when we get july trade data from japan and second-quarter gdp figures that indicate further weakness in exports. also on tap hong kong jobless data do after the city capped an 11th straight weekend of protest. let's continue discussing hong kong. thousands of protesters defied heavy rain in the city in one of the largest the restrictions since the unrest began in june. let's go to hong kong. yvonne man, the rally was

largely peaceful. it seems there have been a change in tone from the protesters? calm.: it was relatively we are seven hours after intesters left this area admiralty. massive showing, 1.7 million people showed up on the streets and also at victoria park. the government putting at 128,000. as you mentioned, one of the biggest rallies and marches we have seen since the movement began. it was like running water. they overflowed into victoria park and stop letting protesters in like they were forced into the streets where they disrupted traffic and closed on the roadways. it was a more peaceful message. they talked about especially no violence from the organizers. it seemed to be a reflection after the violent week we saw at the airports last week.

they learned the way to keep momentum going is through peaceful demonstrations because violence has not led the government to budge. rishaad: the protesters -- shery: the protesters did not get permission to market, so what was the reaction? we saw a change in tone from the government as well. these were three days of rallies with no tear gas or fires. a sense of calm and relief from both sides. the government with a statement sunday saying it was generally peaceful, they did not condemn sunday's event and they will begin dialogue with the public when everything has called down. potential reset. the key question is what will be on the table when both sides meet? if we saw a big showing of 1.6 million, it goes to show public

opinion hasn't changed after 11 months of protest, and they continue to define the backlash we saw last week and china's condemnation of these escalations. we are 11 weeks in, a lot of disruptions. let's talk about the economic impact. too bad.rs were not how can they be attributable protests? we saw the contraction of 0.4% was much more than what economists were expecting. this was attributable trade war as well as political unrest. we saw and heard from the finance secretary on sunday in a blog post talking about a looming economic typhoon and using terminology we use when there is a storm in hong kong. saying it is fairly level three danger on a scale, level eight is when the city shuts down.

is material. that is why we saw the fiscal $2.4 billion.ge the biggest victim out of all of pacific been cathay with the ceo stepping down friday. , thank you. man on the subject of cathay pacific, the long-running protests in hong kong are hurting the economy and cathay pacific has been one of the high-profile casualties with a share price tumbling and the ceo resigns. they had to cancel flights after criticism from china. joining us for more on this is an aviation analyst. an eventful few weeks for cathay pacific. rupert hogg is gone. the commercial officer is gone. what does it mean for cathay

going forward? be resetting with a new ceo and chief commercial officer. that should give them an opportunity to rebuild confidence in hong kong and in mainland china, which is an important market with high exposure. hopefully the outlook will brighten gradually. there will be a major impact but the long-term outlook is still pretty bright especially if hong kong can recover from this which is usually the case. ceo is a veteran of swire. what will he have to do apart from appreciation to not upset china? >> look at rebuilding the confidence in cathay, mainland china and local markets. the local market inbound visitor

traffic to hong kong has been impacted by the situation. that has impacted all airlines has been impacted because they have 53% of hong kong. there is a lot to be done in the in terms of business and demand, local demand and trainnd china demand and and traffic demand. cathay pacific's traffic is also train traffic. the airport shut down for a day and passengers would be trying to book away from hong kong, worried about connecting flights. it is a global issue for cathay although the focus is on the localhina and hong kong market. there is still a lot of long-term issues you will need need toss -- he will address. hong kong express has been acquired. the ceo is joining him as chief

commercial officer, so they need to find a new ceo of hong kong express which is important because the budget and is one of the faster growing -- budget end of the market is one of the faster growing segments. ,hey might have to look outside given they have had to take everyone internally to manage this crisis and also next year cathay pacific looking at placing new aircraft orders for their long-term strategy in the future. 2024 is a key year because that is when the third runway opens at hong kong. a lot of the work had been done by rupert for that. it will slow down but they will have to look at it quickly to position cathay for the future. , i am given everything quite surprised you are optimistic about the long-term outlook for cathay. the budget end of the business

is a real problem. they are competing with other budget airlines and state backed airlines in china, not to mention middle eastern airlines coming in to play in the region. intensified,n has and that is one of the main reasons they did swing to losses . they had recovered in 2018 with a profit. intense, buton is not as intense as the other markets like singapore and southeast asia and even korea. the reason is there is a loss of strength in hong kong, because of the fact there is no reason for any significant number of services. that is a real advantage for cathay in terms of dealing with the competition and they just acquired hong kong express.

they have five to 6% of the market and they also have half of the low-cost carrier or more than half of the low-cost carrier market in hong kong which is relatively limited. hong kong only had 12% compared to over 30% in singapore and 50% in places like kuala lumpur. they are somewhat insulated with this new strategy. they have a lot of short-term challenges but the long-term picture is good. you mentioned a lot of the strength comes from the fact hong kong is a transit city. how much will this be challenged because of the protests? hong kong loses its economic clout, position as a financial hub in the region? the transit traffic is competing with singapore, kuala and other airports

for connecting long-haul passengers. 30% is transit. for cathay pacific that is -- the other carriers don't have much transit traffic. they don't have hubs in hong kong. it is very important to compete. for this issue it is really about having a steady, stable and reliable hub. that should come back quickly now the protest has moved from the airport. shery: thank you so much for your insights. the chief analyst brandon sophie. the latest on wobbly as president trump repeats the u.s. is not prepared to do business with the firm on security grounds. this is bloomberg. ♪

shery: this is daybreak asia.

i am shery ahn in new york. paul: i am paul allen in sydney. president trump doesn't want to do business with huawei. mr. trump: we don't want to do business with huawei for national security reasons. will see what happens. i am making a decision tomorrow. the comments come after weekend reports that they could extend a reprieve that allows huawei to bypass from u.s. companies. selina wang is watching this story. what do we know about what the administration is planning? there are certainly the commercehether department will extend this 90 day reprieve allowing huawei to consider -- continue doing business with some u.s. customers to allow it to maintain existing relationships. this was granted in may, the 90 day license which will expire

august 19 and the purpose was to minimize disruptions to many of its customers, many of which are rural network operators and allow it to continue maintaining all of the tele-communications networks, software updates. this important distinction is in a separate from a reprieve of reprieve of the broader export brand broader -- export brand, the broader export list. while it cannot get new brands. the status of those licenses is still unclear. bloomberg reported because china was halting its agricultural imports, those licenses that are being called off are being delayed. this is kicking the can down the road. a solution is necessary for any trade deal. while trump is happy to use it as a bargaining chip, many have pushed against that. shery: president trump also making comments about tim cook losing out to samsung.

selina: this was part of a wide-ranging discussion he was having with reporters about how apple made a good point because the tariffs could go in place, this would hurt its competitiveness against samsung and not be as adversely impacted . the majority of apple products are manufactured in china, samsung has manufacturing in south korea and the and him and other countries. this would threaten apple, but not that of its competitors. , thank you sowang much. plenty more ahead on daybreak asia. this is bloomberg. ♪

shery: breaking news out of japan, getting the export numbers for the month of july. year on year exports contracting 1.6% in the month of july in japan which is a smaller construction than was asked --

contraction and was expected. seeing the unadjusted trade balance also swinging in the deficit. this is a larger deficit than was expected, 249.6 alien yet billion.r -- ¥249.6 126.8 billion yen. we have seen a lot of pressure when it comes to export numbers, the disputeade war, with south korea and a stronger japanese yen. not so much today with weakness, but we have seen the haven demand affecting export numbers which year on year fell 1.6%. exports to china contracting more than 9% year on year, rising 8.4%.e u.s. let's get more details on these numbers. joining us from singapore is continuum economics jesse lou.

we continue to see the pressure on those export numbers, not as big as initially expected but a contraction of 1.6% for the month of july. domestic numbers have been a bit more supportive of the japanese economy. for how long can domestic demand offset pressure we are seeing on the external side of things? yes, i think it does look better than we expected. we are expecting 3% decline in both exports and imports growth. i think the trade numbers data is slightly better. is actually entangled in various trade battles, and these trade tensions are putting downward pressure on japanese exports. we are seeing the biggest concern still comes from the u.s.-china trade war and increasing tariffs by the u.s.,

chinese goods is going to put japan in a tougher external environment. you mentioned the japan-south korea trade dispute. that could weigh on japan's exports in the near term. for how long the domestic demand can support japan's economy, that is a good question. that japan'smember government is set to implement a sales tax hike in october this year. the sales tax hike could be another blow for the economy. the impact is likely to be smaller this time around compared to previous tech hikes. paul: the electoral mandate is certainly there. if there was an argument for doing it but does it make economic sense? jessie: i think the reason the

japanese government is trying to push ahead with a sales tax hike is they are trying to restore the physical balance and trying to do it at a time when the economy is growing at a resilient way. i think right now from recent gdp numbers, domestic demand does provide some modest support for growth and perhaps the japanese government is feeling this time they can push ahead with the sales tax hike. all of this at a time with global yield crashing, the jgb yield crashing to a three-year low. ? at does it mean for the boj what measures can we see? jessie: i think for many other banks past easing, it is good

for bank of japan as well. bank of japan based on its massive stimulus program, it has options in our view. each option comes with its own pros and cons. the bank maintains it can cut the negative interest rates further but by doing so it will have a far options in our view. each option comes with its own pros greater adverse impact on japanese banks. we think this is going to be a last resort by the bank. , but withcan expand doj already dominates the japanese government bonds market, it will drag further liquidity out from the market. perhaps the more likely scenario allow a widery trading band for the 10 year jgb yield. the bank is likely to emphasize upper and lower limits of jgb yield could be using a more .lexible way

in the event -- the bank would allow a temporary drop in the long-term interest rate. yen: let's talk about the because it has been strengthening. there was a boost for japan in some sense that asked -- imports are cheaper but is there a cost as well. there has been cost -- maybe stealth intervention could be on the way? what are your thoughts? theie: i think looking at yen, it was driven by two main forces. the prospect of more easing from the fed and the ecb and global easing of bond yields down, narrowing u.s.-japan into rituals -- differential pushing the yen higher. secondly because of safe haven demand for the yen, it has a tendency to strengthen in ,vidence of sharp escalation trade tensions, geopolitical tensions.

we think the boj is really hard for boj to counter the pressures, pushing up the yen. we don't express -- we don't expect serious intervention unless the yen is a lot higher. shery: thank you so much for that. let's continue to watch the markets. we have the open in tokyo, seoul and sydney. futures are hinting at gains and the yen is steady. risk obsession with the bond rally also stalling with other cemented that policymakers -- in sydney keeping an eye on earnings reaction, bluescope steel hinting at a weaker steel going forwardgs and over in tokyo, keeping an eye on chip stocks as we had trump note huawei is a security threat. we are watching reaction to nvidia results after the

chipmaker came in with a stronger report card thanks to earnings. watching samsung and nintendo on the back of that. that is something we are watching. this is bloomberg. ♪ is bloomberg. ♪ from the couldn't be prouders

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paul: good morning. i am paul allen in sydney. shery: from bloomberg's headquarters in new york, i am shery ahn. sophie: and i am sophie kamaruddin in hong kong. welcome to "daybreak: asia". paul: our top stories this monday. talk in trade, president trump says negotiations with china are making progress, but he is still not ready to make a deal. protests continue in hong kong amid warnings of the widening fallout. the government talks of a new

economic typhoon. shery: and singapore grapples with growing export in a roebling trade war. as current leaders prepared to hand over to a new generation. what are you seeing in hong kong? sophie: take a look and tokyo nikkei adding .8% by the end is holding steady after a two-day decline. jgb is not budging at the start of the session but still within beyond that targeted range from the boj below that 20 basis points level. we are keeping in mind reaction to japanese trade data, exports falling for an month in july but at a more modest pace than expected, growth contracting 1.6%. mood in seoul south korea, up .5% while the korean one is firming up low the 1209 handle against the dollar.

keeping an eye on chip stocks up .8% thea, samsung aussie is rising with yields. this is the treasurer josh fienberg saying that australia well-placed to handle the trade war peered will keep you apprised of earnings in australia and deals and deals in energy this morning. paul: let's check in on first keenan. with su argentina has been downgraded into junk after markets braced after president mike regan soundly beaten. - pres. macri that is argentina on par with exam you and the congo. s&p lowered its sovereign rating b-.be minus - to

the peso fall to record low. a leaked document from the u.k. government suggest u.k. will face fuel, fall, and medicine shortages with the no deal brexit. that is in addition to job losses and poor issues. the government is saying that the governments yellow hammer file warns of restricted supplies of fresh food and interruptions of supply chain. government officials say the documents set out the worst case scenario. >> it is the case as every one knows that if we have a no deal exit, there will inevitably be some disruption, some bumps in the road. it is also the case that the u.k. government's farmer prepared now than it was in the past. it is also important for people to recognize that what is being described in these documents in operation yellow hammer is emphatically a worst case scenario. >> to the changing clinical climate in italy.

italy's teetering populist coalition looks likely to collapse after one of its coleaders said it is no longer believable. the antiestablishment five-star movement released a statement saying it its partner the league and its leadership are not credible prime minister just happy conti is set to dress parliament on tuesday. the split sets the stage for a new election. global news 24 hours a day and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. su keenan i am this is bloomberg. for to watch in asia-pacific markets. our live editors with us. what is on the agenda for this looms larger than the events at jackson hole? >> yes. we also have fed minutes in the middle of the week. and the bank of indonesia. there is likely to be plenty of

speculation and perhaps talk from fed speakers and others in other central banks. there will be a strong eye out for that. pmo'sso for the flash that are coming. japan, australia, europe, the u.s., toward the second half the week. meantime perhaps what traders most want to do is enjoy a little bit of peace. thanks to, to some extent, trump's comments on sunday in , mild and moderately upbeat on trade. there was a decent finish to last week in the u.s.. we are actually going to get the first positive monday for asia stocks in six weeks. shery: that is huge. let's see how long it lasts. as you said, the focus will be on jackson hole later this week. we have seen so much uncertainty in the emerging markets. yes, that is why when you're

talking about jackson hole and also there is a g7 summit coming up. i think your not wanting anything disruptive to the view that global easing is moving ahead. i think maybe investors would feel a little bit calmer if both the message was, easing is theng, but is not coming in sort of panicky bursts we got may be at the beginning of this month. there some expectation that powell will make it clear that he does plan to cut rates next month. i think anything that cast doubt on that would definitely mean that this monday rally ends up being a very brief episode. shery: so what can we expect in terms of, what the markets will be watching later this week in terms of what happens within asia? we have seen tons of earnings out of the region.

howell those other factors to stay in valuations at this point. >> australia is set up for summing of an anxious earnings season that may well reveal some of the damage that is being done to australia's economy both by the trade wars but also by its own to messick slowdown. -- own domestic slowdown. the concern is with the consumer. when it comes to sort of more broadly in a lot of ways people are looking to the american consumer, which has stayed. and here in asia, asia sent a lot of goods, not just china, sent a lot of goods across to those american consumers. so we want to see continued strength from them. and we want to see some comments from companies that they expect that to continue. that the earnings situation would not be as dire perhaps a some of the other economic data have been painting it. shery: thank you so much. we are live in asia you can

follow more of this story on our market live blog. ivgo.is ml there's also commentary and analysis from bloomberg's x per editors. seek and find out what is affecting your investments now. -- bluebirds expert editors. so you can find out what is expecting your investments now. the start of long-awaited reform across beijing. our bureau chief joins us. will this new prime rate make lending rates a bit more market-driven, is that the hope here? >> yes. that is the hope. the pboc lands to replace the current benchmark one-year lending rate with this new reference rate which will be announced on the 20 have each month, as you mentioned. this lpr will be calc lighted based on the interest rate for when you're loans. will18 separate banks

offer their best customers print they will disregard the highest and lowest and find the mean -- of the 16 summations. pboc are being told by the to mainly use this rate as a basis for new loans to households and businesses. the central bank says at things this can touch sent chief -- can achieve the lowering interest rate for loans. it will be reported as a spread with the current top interest rate the central bank offers which is 4.35 -- which is up 3.3% now compared with the one-year lending rate of 4.35%. if we look at just the information that we have now, it looks like there will be is a get discount. -- will be a significant discount. paul: there's a new rate in place. does that mean there will be any change to china's monetary policy. scenario, this will help make that transition mechanism smoother, and allow

the central bank tuesday late the economy at eight growth. it will make it -- to stimulate the economy and eight growth. growth. control interest rates and the final mile in the central bank's monetary policy. on what is check in happening on the markets now. on stock am focused movers and sydney. sliding more than 10% after 35% yarn more than a your drop. the company expects week still spreads -- two debt earnings. has given the nod for an expansion in its northstar mill in ohio in the united states. beach energy is gaining ground in sydney after reporting higher sales revenue and output.

it increased its five-year production goal as it allocates more investment with plans to purchase paid in as many as 196 wells. for the philly are coming up, beach sees output -- for the full year coming up, beach sees output. paul: singapore's leaders prepare to hand over to the next generation. we will discuss priorities later this aft. -- this hour. shery: first and exclusive loss.iew with base - biswas. this is bloomberg.

shery: this is daybreak asia. i am shery ahn in new york. i am paul allen in sydney. paul: let's get a look at the

latest headlines. japan is stepping up scrutiny on purchases focusing on shares with voting rights. new rules will be instituted which force oversee investors to overcoat a government review if that transaction results in 10% or more on a voting rights basis. bluescope is surging, and beat analyst estimates. milliond approved a 700 dollar expansion of its northstar product -- plant in ohio. that will give an extra 850,000 of u.s. steel making facet each year. paul: india's largest lenders says credit growth will slow this financially or as demand falls way. the state bank of india says it also needs to overhaul its lending practice in the agriculture sector, due to a high level of bad loans. the reserve bank of india is trying to avoid a credit crunch

by relaxing rules for lending to consumers in an effort to boost the slowing economy. come's plenty more to "daybreak: asia" on "daybreak: asia" this is bloomberg.

this is "daybreak: asia" i am paul allen in sydney. shery: i am shery ahn in new york. we are seeing gains of .8% in the nikkei exchange. we can to need to see weakness in the n at 106 at the moment after the very strong haven demand we saw with the fluctuation in global markets. this on the back of the relief rally we saw the u.s., despite a volatile session. we saw two days of planes on wall street. gaining .3%.o

worst collecting that risk on mood across asia. -- reflecting that risk on mood across asia. producer posted its up 22%ocess -- profits and record output. for look at the adults and outlook we are joined exclusively from melbourne by newcrest mining ceo sandeep biswas havefocus on projects you running the moment, the one in british columbia, how long do you foresee before that becomes a productive asset? the first priority for red crest is to drill the or body to understand the full expense --

extent is it acadia like or just one block at the basis of the investment. that will take 12 months to 18 months to determine. then it will be the development thereafter. in the interim it will be about optimizing the current open pit operations. paul: blockade mining is isthing that newcrest known for having expertise in. besides redcrest do you have any other assets to apply this to give yourself an edge? guinea, thatin new thehere newcrest comes to four. no other company can unlock gold tensile as well as weekend. -- as well as weekend. we can.

you looking to that when it comes to north america. you only have a single operation there. are you looking to add? we have an extensive exploration program and the americas. in chilly, ecuador, nevada. wyoming. redill now be exploring the chris property. a target forare increasing our presence. whether that translates into any further m&a or not depends on the opportunity. we are value focused. and return to shareholders is our prime directive. but we are definitely more active there than we ever have been. shery: with your really strong results we continue to see this free cash flow generation, right? so how are your priorities aligned the moment. m&a.alk about potential is all about investment, it

returned repaying debt, returning to investors, what are your priorities at the moment? in greatlance sheet is shape. our priority is to get the best shareholder returns. we do focus on where we can add strength. in any sort of m&a that we look at. we look at well how can new crest run this better or unlock value currently suppressed otherwise you're not going to get the rates of return that we need to invest. investing in our existing operations, looking at developing new progress -- new ngulpu, redcrest, heberon. returning to shareholders. we read increased art dividend by 19% which also shows a sign of our commitment to shareholders. are well-placed. our methodology for investment has stood up well over the last five years. we intend to continue the focus

that we have had. m&a, but i'mtioned wondering under what circumstances would you go down -- largesalvation path consolidation path. >> it is very difficult to comment on these matters. unlikely is what i would say. we have to be in a position to see where we can add value to our preference is for asset level deals. which is what you see. because we can then bring the entire focus of the company and our technical expertise to that asset. as opposed to a broader, or delete are self over a -- dilute ourselves or a broader suite of assets. waffee gold plume mine in public, new guinea.

a series of delays there. splitt gold sing at 50-50 with a new license with the png government you see that is thely? and what kiddies progress. what could bring into to these delays. that what could ease the progress? we did sign terms for the investment with the previous government but as you point out the leadership has changed. engaging with the puernment on waffee gold when they are ready to engage. there was a fair split in the previous, you and we are about discussing this with the new government. they have said. they want to ingressive -- progress it. it is a matter of sitting down and hammering out the right deal that works for all parties.

1 what are the conditions in new government is proposing. >> they have not proposed anything eerie to be honest we their workinggage on the lng agreement. i'm assuming that thereafter they will turn their minds to the waffee gold pu project. it is a matter of sitting across the table and coming to agreement. when they are ready. your thoughts on what is osselwan] with the [g mine in indonesia. you have said you may sell part of your interest there are would you look at exiting the whole thing? 26%, onve to sell down the basis of the new contract of worked we negotiated with the government last year.

that process is underway. if there is a compelling offer made for the entire ownership we have, we will look at it seriously. but the allegation is only to sell down -- the obligation is only to sell them 26% which will take us out to 49%. shery: thank you and congratulations on your results. newcrest mining. tune into blumberg tomorrow we will be discussing with bhp ceo. were thern singapore prime ministers shaking things up as he prepares to pass on power 20 generation. we know the singapore economy is such an open economy, really sees the impact of the global economic slowdown. what did we hear what it to

singapore's economy? >> certainly a tone of caution by the prime minister, reinforcing the message that singapore must stay independent in this u.s. china trade war. he said we must always be principled in our approach and not swayed by emotions in the mender portion of his remarks delivered in three lang which is last night. it represents a tough decision -- in three languages last night. wreps is the toughest decision. there three biggest trading partners. china number one u.s. number two and strong military -- military ties. all of this weighing on the singaporean economy. recently as we have tracked, the government revised its growth outlook for the year down to 0- -2.5%. from 1.5

reinforcing his belief that it is not yet time for stimulus. going against the belief we saw last week among thailand, and in jesus, promoting stimulus -- kinds thailand and indonesia writing stimulus. stimulus.ng he said singapore is faring well now. paul: can you run us through some of the longer term priorities? the first on retirement age. as they had signal previously they announced they will raise the retirement age to 65, from 62. and the reemployment -- age from 70 to 67. that is the age at which employers do have to offer employment in the same organization to a worker. encourages older workers to do that. and then a lot of climate change initiatives. he outlined that this is a priority as much as military

defense. and they will be spending almost as much as singapore dollars 100 billion over the next century. thank you very much. bloomberge to come on "daybreak: asia". this is bloomberg. - custom shirts help people

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and our shirts from custom ink help bring us together. - [announcer] custom ink has hundreds of products to help you look and feel like a team. upload your logo or start your design today at customink.com this is daybreak asia. tens of thousands of protesters defied heavy rain in hong kong on sunday and marched for an 11th straight weekend. su: protest organizer said 1.7 million people took part and police estimated 130 park -- 130 thousand people initially gathered in the park. finance minister chan is warning of an economic typhoon for the city because of the continuing unrest. meanwhile, president trump

indicated trade talks with china remain on track ahead of meetings next month. he tweeted that things are doing very well and the two sides continue to be in contact. the presidents top economic advisor, larry kudlow also said recent phone calls with beijing have been positive, with more discussions planned the coming day. india is reported to be easing a lockdown in kashmir, with a curfew, partly lifted and to mitigation links restored. landline at low speed mobile services have resumed. school and government offices will reopen monday. the unc critic council discussed the disputed reason -- region for the first time since 1965, but failed to produce a united statement. gibraltar rejected a u.s. request to hold on a rainy and oil tanker, the vessel has now -- to hold an iranian oil tanker. the vessel has now left port. it was detained earlier last month on suspicion of smuggling field to syria.

iran denied that but did not disclose the ships intended destination. flaggedzed a u.k. tanker in the gulf further raising tensions between tehran and the west. ,hina has launched a new rocket lifting three satellites into orbit. the smart dragon one booster lifted off from a space center in northwest china saturday. its cargo included satellites for three beijing companies. for aey're designed remote sensing services and internet. global news 24 hours a day and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan this is bloomberg. paul: let's check on the markets now. sophie: it is looking like a risk on session with the first positive start to asian stocks since july 15. nick a adding .8%.

dusten holding steady nikkei exchange adding .8%. 1.6% lower. in the bond space treasury futures heading lowered. check out the u.s. 30 year yields adding four basis points, retreating from the 2% level hit last week. asian markets are tracking what we are seeing across treasuries. the 10 year yield back toward 1%. stock movers across the region. itily mart gaining ground as seeks to boost its stake in pan pacific by 10%. pan pacific operates donkey hotel stores in japan. quioteest move -- don independent going while the cup says. jumping as the

best-performing stock after the stock was upgraded, citing zillions in the company's recent results. paul: jumping as the best-performingthousands of pros defied heavy rain in hong kong in one of the largest demonstrations since the unrest began in june. the weekend was largely peaceful as recent violence has become a sticking point in u.s. china relations. with president trump warning about the consequences for trade talks. is a hard thing to do if there's violence. that president but that is behind me. -- beyond me. i think there would be tremendous, a sentiment not to do something. i hope that we are going to end up doing a very good deal. i think china needs a deal more than we do. if this were not part of the deal, possibly something would've happened already a long time ago. paul: let's get over to hong

kong and bluebird -- bloomberg markets asia. how are things different this time? changeeems there was a of tactics from the protesters. he sought one point 7 million people according to organizer show up on sunday. one of the biggest rallies and marches we have seen since this movie began. the government puts it at one hunter 28,000. but there was relative - 1 relativebut there was calm and no teargas was fired. no violence and rational thinking as well as peace. we certainly saw that despite that they did disrupt traffic and blocked roads and they did march, despite the fact that the government did not allow them to do so. police took a bit of a step back and didwe certainly not escalatr tactics here. it seems like both sides are showing some signs of restraint. a potential reset.

here, the government also coming it isming out and saying ready to do some sincere dialogue now once everything has calmed down. shery: we have seen the hong kong economy slowing down in the second quarter was in peak contracting from the previous three months. as this gtv chart on the bloomberg shows happens if this unrest continues? from paule have heard chan, the finance secretary, talking about a looming economic typhoon. they flagged the risks here if they unrest continues on here that hong kong could fall into a technical recession. that is why we saw that fiscal stimulus package last week. giving out handouts to noncollege students and the light care. is it going to be enough, one of the hardest hit companies has been cathay pacific which continues to deal with continued

scrutiny after rupert hogg former cathay ceo step down on friday. not all because of the airline disruptions because of the protest but also pressure from beijing itself? they have reach normal operations in the airport. this fresh layer of uncertainty is what the airline has been dealing with. can they moved past the debacle of allowing some of their employees to take part in the demonstrations which angered given the fact that hong kong and china account for 50% of the airlines revenue. we have heard from state when radio, the global times, a newspaper tied to the commonest party. they suggest it was not enough to satisfy beijing. that the departure

may not be enough to atone for cathay's lukewarm attitude to dealing with employees. one comment that this is most appalling kowtow to peking. should all ceos resign here? analysts say that given the uncertainty now this may not the end of it. you may be able to pacify the civil aviation reg latest for now. this may be the start, not just for cathay, but other copies and hong kong dealing with a similar situation. shery: thank you so much for that. now hong kong aipac trade policy director. 11's great weekends of demonstration, -- 11 straight weekends of demonstrations.

how does this affect hong kong, its economic clout and his position as a financial hub in asia? >> on the latter, i do not think it does. hong kong performs indispensable roles for intermediate think between china and the rest of the global economy. roles and finance, not just in finance, but banking, and accounting, legal services, and of course in trading services. indispensable role played. so they will not spare. -- so they will not disappear. but impacts generally combining the trade war between the u.s. and china, with the demonstrations here, have in the short-term inflicted quite a lot of harm on parts of the economy. the retail economy badly hurt. areas, 30%fected down rivals through the airport never to play down on the very short term. whether that will show for the full year is difficult to tell.

presidente heard trump also suggesting that is going to be difficult to reach some sort of trade agreement with china, as long as the violence in hong kong continues and we did see peaceful protests over the weekend. defined that a curious thing to say, especially after china has acute foreign actors of stirring up discontent in hong kong? does this affirm that narrative? >> i do not know how much credence we give to the curious comments from trump. it is really stream of consciousness commentary for my point of view. linkage ine direct any clear sense, between the demonstrations here at the moment and the u.s. china trade war. there much bigger implications in terms of china's broader

economic relationship with the rest of the world. we should remember that hong kong, since 1997, has very much been an icon by which china tells the world, we are committed to rejoining the world economy, after the 1970's and 1980's -- 60's or's 1970's and really quite cut off from the rest of the world. byming hong kong, whether demonstrators shutting the economy down or by sending in some heavy boots from a in the harm to, would do great china's reputation as a committed participant in the market driven economies. the global economy, and so on. that is what i would be looking at for the medium to long-term. in terms of hong kong's importance, vis-a-vis china and

the rest of the world economy. you say there a lot of compelling reasons for beijing not to send over boots on the ground across the border. and those peaceful protests that we saw the weekend, does that also eroded the legitimacy of any heavy handed response from beijing? >> clearly, yes. the leadership on the mainland has very much said that they want the hong kong leadership to manage this problem. they also very definitely want the hong kong police to manage this process in the event of violence. so their intention will be to try and keep at arms length, at almost any price. moment not see at the -and there's a lot of saber rattling-but i do not believe

anybody has got close on the mainland to bringing sabers out. it is very comforting that there was no violence over the weekend. the fact that there was no violence still leaves us with some extremely emphatic comments from the population as a whole, about the failings of the administration here. and if the administration does not take that messaging clearly seriously, then we have some serious problems ahead. shery: to your point earlier on china wanting to join the international economy, i think some countries including the u.s. would find issue with those remarks, given that the u.s. claims china is not perspective up itsts, is not giving technology transfer. how fair really is china in

become a player on the global stage? >> it is a good question. and maybe too big a question for today's commentary. the claims that china has not lived by its wto commitments are largely false. does not is true, respect ip rights. as we would like them to. and that he is subsidies in ways we do not like them to. but those are not yet properly part of wto rules. when into thousand one china signed up to debbie too roles, by a large those rules were manufactured trade rules, not to do with services and ip and subsidies and so on. these are still unresolved areas in the debbie too. -- in the wto. china does not scratch rose because there are no rolls. but the u.s. does not subscribe -- china does not subscribe to roles because there are no rules .

but the u.s. does not either. managing guidance on ip rights. there is a good case for going back to the wto and getting the debbie too to bring its roles up-to-date to -- getting that wto to bring its roles up-to-date to address that when he first century economy. that is different from saying that china in some senses breaking roles. break in no rules to the area discussed. paul: you can get around of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to db go on your terminals. you can customize your settings see only get news on the industries and assets you care about. this is bloomberg.

this is "daybreak: asia" i am shery ahn in new york. >> i am paul allen in sydney. alicia, we have had warnings of an economic typhoon about to hit hong kong. but at the same time paul chang, the financial chief has said that protest have nothing to do that credible? >> i would say that without the protests, hong kong need a much bigger stimulus the stimulus is barely 0.8% of gdp. it is based on the assumption that hong kong was going to continue to grow about 2%. you think about hong kong getting into recession or barely

0% growth, you will have already very little out of that stimulus to let the economy grow. in other words, even without protest, that is very small stimulus. for hong kong economy that was still already slowing down pretty aggressively in the first and second quarter this year. at of consequences such as the trade war, and the whole deceleration of the global economy. so maybe does not because of the protests, and we should wait for one more stimulus to come. and that is indeed not enough or hong kong. said, doed on what you expect to see more stimulus coming, and what might it look like? >> i think the next stimulus which we will see soon, will be marked targeted. the second problem of the stimulus package is that it was not -- it will be more targeted. the second problem of the stemless package is that it was not targeted. i think we will see more afford

a housing, perhaps more something like pension schemes for elderly. basically things on how to -- housing and elderly population is what i would expect to see very soon. paul: talking about stimulus,king about the pboc announcing the release of a new reference rate for bank loans. does this signal that the pboc is not willing to implement some big stimulus measures such as key interest rate cuts, and so forth? this measure is unrelated. the reality is that the pboc has long ago liberalized the lending rate. and actually deposit rate was liberalized in 2015, the latest to be liberalized. the reality was everybody was using the pboc rate. in a way is just a

liberalization measure. i do not think that pboc will cut rates. i think they have other means to stability economy. -- to stimulate the economy. especially asking banks to lend to the private sector. do not see much of that happening. so i'm sure they will indeed come back to the banks and make sure that this happens. alreadye, which is happening, major issues of bonds on short for the economy to continue to grow. for the economy to continue to grow. the sentiment is negative per window central governments are sentiment is negative. we know governments are issuing bonds but they are not using the receipts to invest. local governments are not investing in infrastructure as long -- is much as we would've expected. to change the sediment, the trade war is not helping. that is indeed very important. i do not think a rate cut will

make it. so i hope to do not do it. them. who can blame these ongoing trade tensions continuing, hong kong issues per it also at the forefront. and the u.s. seems to be a bit worried itself. with seen economic advisor peter navarro, larry kudlow come out and talk about the strength of the u.s. economy. take a listen. certaintyell you with is that we are going to have a strong economy through 2020 and beyond. here's why. things are shipping up well. -- shaping up well. words seem to be in order to reassure the markets after last week's chaos, when it came to the yield curve inversion when you compare the u.s. economy with china's economy at the moment, who has the bigger leverage in trade talks? >> it depends on the timeframe. , china can't but have

more leverage for a simple reason. it is that it actually has a capital account that is close. it still has excess savings. remember the current account has turned toward a surplus. not see outflows in a way beyond the current account surplus. for reserves. as long as we can tell, and it is hard. because this data is pretty, obscure. we know that for the time being china has room to accommodate more stimulus. the u.s. has the luxury of having reserve currency. so whatever it prints, whatever issues, there will be a demand for it. that is partly why we have an inverted curve as well. we should not forget that long-term rates in the u.s. are low also because of global risk aversion. in other words, the u.s. has

maybe too much of a good thing, which is its reserve currency that pushes long-term rates down. in a way, for analysts like us, we read that as a sign of a future recession. so that is why they try to reassure the market. i do not think we will have a recession in 2020 in the u.s. frankly. i think a lot of what we see in the inverted yield curve is global risk aversion. shery: and its not really imminent even if we see it down the line. thank you so much. we will have plenty more coming up on "daybreak: asia" this is bloomberg.

paul: a quick check now of the latest business flash headlines. china's due to start liberalizing its interest-rate system as part of ongoing reforms to loosen state control of the economy. the pboc is set to replace its current benchmark with a new reference rate for bank loans that will be announced each month. the move will bring china's policy closer to the approach taken by other central banks. we will be watching cathay pacific when trading opens in hong kong after the resignation of the ceo. the airline has faced criticism from china over the participation of employees in the ongoing street protests. chinese state media says the me -- the move may not be enough.

tory: let's go straight sophie kamaruddin for what to watch in the markets. sophie: we watch for chinese bond yields move lower as china continues the pboc revamping intended to ease. the move could put the squeeze on profits at chinese commercial banks. the interest rate for deposits remains unchanged. in hong kong will be watching developers as poppy prices are made relatively stable despite protests -- as property prices remain stable. morehead predicting a step percent short-term -- a 10% short-term price drop. this is bloomberg. - my family and i did a fundraiser walk in honor of my dad,

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that everyone has for my dad. - [narrator] check out our huge selection of custom t-shirts and more, for teams, businesses, and every occasion. you'll even get free shipping. get started today at customink.com. >> it is not a clock a.m. in beijing. >> we are counting down to the open on the chinese mainland. we are talking trade. president trump says negotiations with china are making progress. that he is still not able to make that deal. the new loan prime rate will come on the 20th of each month. david: protests continue in hong kong amid warnings of a widening fallout.