>> good morning, welcome to "daybreak: australia." >> we are counting down to asia's major market opens. >> good evening. top stories this hour, the fed tightens its timetable. policymakers predict two rate hikes by 2023 as they inched towards tapering.

haidi: wall street reacts to a more hawkish fed. a mixed started trading day. >> china steps of its intervention in the market, the move threatens to undermine president xi's pledge to make -- to give markets better freedom. you can see, the s&p 500 ended down by about 0.5%. it was down 1% after jay powell said you have to take those dot plots with a grain of salt. stocks recovered some of those losses but bonds did not recover much of their decline in price. last week, the 10-year down to 1.42%, quite a rebound. how much further will bond yields have to go? for the dollar, up nearly 1%. this is the best closing gain in a year.

oil, a little lower. in part because of the worry of the fed tightening, but not hit very hard because there is news of growing inventories. the oil market has a bit of reprieve. haidi: the fed, addicting two rate increases by the end of 2023 as the economy recovers. projections showing 13 out of 18 officials favoring that, up from seven in march. jerome powell also confirmed policymakers have begun talking about talking about tapering. >> the federal open market committee kept interest rates near zero and maintained our asset purchases. the housing sector is strong and business investment is increasing. shift in demand can be large and rapid and bottlenecks, hiring

difficulties, and other constraints could continue to limit how quickly supply can adjust. raising the possibility that inflation could be higher and more persistent than we expect. if you look at the timeframe and think two years out, we are going to be looking at a strong labor market. it is not a time to recharge conclusions about the labor market, about inflation. we need to see what data and be patient. >> let's bring in someone who can discuss this with us from experience, bill dudley. the markets did react. the fed did give us some less dovish message. how hawkish is this message? william: i think you are getting more confident about the economic outlook as they see the economy reopening and pandemic

cases start to proceed. i think it is about -- start to recede. if you look at their forecast, it did not change much. i think it is more confidence that they are making progress towards their goal. what they think they are going to do in 2023, i agree with chairman powell, i would not put a lot of weight on that. the outlook is very uncertain. yes, the markets are reacting to the fact that the fed may go faster, but there is a lot of uncertainty. we don't have a lot of experience with how the economy likely emerges from a pandemic. >> he almost answered a question about -- can we assume that since each of the statement about the pandemic being on the economy, those words out, that you are no longer going to see

such a negative weight on the economy? it is not just that they are more confident, is the economy has changed. another thing that changed was the moves in the darts. we can show you how many people, 11 out of 18 see two rate hikes in 2023 and the number of people who are looking for rate hikes next year is up to seven. it was four just three months ago. william: the economy is doing better and they are more confident that this is going to continue. that said, this is pretty far out and lots of things can change. i always thought the economy would come bouncing back more rapidly than people anticipated in the fed's slowness to respond i think was not completely appropriate. they were doing it in part

because they wanted to keep the maximum amount of stimulus. we got a tightening in monetary policy in terms of financial conditions. people think the fed is going to go sooner, than that weighs on the bond market, the stock market, and financial conditions are tighter. haidi: i wanted take you to our next chart which shows the looseness of financial conditions. before today, the loosest since the 1990's. the market sentiment part of this equation, is the fed talking about this? trying to manage expectations so there is not a taper tantrum? william: they are trying to manage expectations about when they start to phase down the pace of asset purchases. that is why they are talking about talking about tapering as opposed to starting to implement change in the policy. i think over the remainder of the year, they are going to inch

closer to beginning the tapering process, probably starts late this year or early 2022. haidi: at the same time, we see distortions on the front end of money markets, awash with cash. is this a bigger concern, returning to some normality? or is the debate over whether inflation is transitory or not? william: in terms of the short end of the yield curve, what we have seen downward pressure on is short-term bates, caused by -- short-term rates. the fed responded to that today by making two technical adjustments, raising the rate that they pay on over reverse rp's and reversing the beta that they pay on reserves by five basis points. that is designed to put a firmer floor to keep the federal funds rate more in the middle of the

zero 25 basis points range. in terms of inflation. while a lot of the factors are going to be transitory, i don't think used car prices are going to keep rising. as we see supply chains start to respond to the increase in prices, you will probably see some prices that are going up rapidly now start to turn down. i agree that the worst inflation news that we are going to see in the near term is sort of right now and six months from now, i would expect inflation to be a bit lower. the key issue is how much we use the excess capacity in the labor markets and that is where the fed and other will are confused because on one hand, you see seven point 6 million people unemployed relative to february 2020 -- 7.6 million people unemployed relative to february 2020.

that is where the fed has a lot of uncertainty about how much slack is there in the labor market. kathleen: i want to come back to this point that from march to june, this is a big shift for the fed in terms of how they expect cuts, how many. inflation expectations. let's look at a chart. the new york fed, it shows that one-year inflation expectations jumped to 4% but what is most interesting is three years out -- and we know these can change -- we will have 3.5% inflation. you can argue about the numbers but it is clear, there is something happening here. is that another reason why fed officials are saying, maybe we have to move things up? william: they want inflation expectations to be anchored around 2%. if you go back a year or two, inflation expectations were below that. we saw a rise in recent months

in terms of households surveyed but also looking at nominal securities and tips. chairman powell addressed that today, he said inflation expectations have moved up but up to a level that the fed is more comfortable with. the fed feels they have made progress making inflation expectations anchored around 2%. do they keep going up from here? the federal reserve starts to get concerned. kathleen: what is the biggest risk in the fed's policy? is it that they move to slow -- too slow and have to move too hard to stop it? william: i think the risk is they are moving too slow because they said they are not going to start to tighten monetary policy until there are three conditions met.

that is pretty late in the game to be starting to raise short-term interest rates. haidi: bill dudley, former new york fed president, thank you for joining us. we will have more analysis i had -- ahead. we will also be assessing the market impact. following the fed, other central banks are in the spotlight. we have seen different adjustments recently. >> this morning, publishing it's finalized adequacy requirements, reiterating that bank capital english as will be facing a seven-year period starting from next july. a little change in qe dollar holdings in the wake of the fed. given the hawkish tilt that reese, brazil central bank

hiking rates as expected. briefly climbing to the strongest level in a year. the bcb seeing 75 basis of tightening in august. indonesia, likely to hold a rates for a fourth straight month. taiwan dollar on the other hand, facing more upside pressure, trading at a 24 year high. now, switching out the board, the fed's hawkish lien does make it easier for the pboc to curb the yuan. we see a four potentially put in place for the greenback which may cool commodity prices. i want to pull up this chart.

u.s. yield jumping with that dollar, flattening the yield curve, the highest level in over the year. when you take a historical view, pushing out to about five years, you see that standard deviation move up 1.5 times, so that impact not being seen in the two year rate. kathleen: i guess that impact could have hit you hard. let's get to vonnie quinn now. vonnie: president biden says he confronted president putin about human rights violations at their summit, including the case of opposition leader alexei navalny. joe biden also one preaching against cyberattacks, identifying 16 types of infrastructure that should be off limits. the leaders agreed to work together to reduce the threat of nuclear war and agreed to cooperate on iran and arctic activities. china has set up a campaign to write in commodity prices and reduce speculation. sources say they are limiting

exposure to commodity markets. authorities announced that they will soon release [inaudible] including copper there, -- including copper, other him and him, and zinc. japan developed list the coronavirus -- measures will stay in place in seven of the nine regions including the capital and osaka. the decision comes weeks before tokyo is set to hold the olympics they would -- olympics. singapore facing an increase in infections even as vaccines pick up pace. i thought is found 19 new community cases -- authorities found 19 new community cases.

global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: still ahead, rba governor as an update with his last speech before july's policy meeting. we'll also be getting new zealand gdp numbers. next, president biden and putin paper over their differences. this is bloomberg. ♪

>> i did what i came to do. identify areas of practical work our countries can do to advance our mutual interests and benefit

the world. two, communicate directly that the united states will respond to actions that impair our vital interests or those of our allies. three, to lay out our priorities and values, so he heard straight from me. >> with regards to the return of the ambassadors to their workplaces, return of the american ambassador to moscow and our ambassador to washington , we agreed that they would return. as for the timeline, it is a technicality. >> president biden and putin speaking after their meeting in geneva. president biden says he confronted putin about human rights violations, also giving a

warning on cyberattacks theoretic the leaders did -- cyberattacks. maria, expectations were managed going into this meeting, but there were some issues that were addressed. >> that is a good point, because the expectations that went into this were very low. both countries said that relationship, when you look at the diplomatic ties between russia and the united states, this is the worst is the cold war. coming out of that meeting, the two did say, we had a frank, open discussion. there are areas in which we can work together. there was no escalation. that is probably good enough. we were not expecting a breakthrough. you have to factor that these are two geopolitical agents that are so different in so many ways , in such political ways. it was hard to see a major breakthrough happening but there

was no escalation and i guess for the u.s. allegation, that is good enough. we did get something concrete on paper, both sides agreeing to reinstate their ambassadors. that is normally seen as a sign of goodwill in the political circles. that could ease some tensions. >> what does putin get out of this? maria: it is a good question. after his conference, in which he took every question, this is a press conference that went on for so long, he did say, everything we are accused of, the united states does it too. their problem is they are the ones for beating tension and russia is not to blame. having said that, he did get two hours on the global stage. this is him putting forward his line. some would say it is propaganda but even if on that side, it

went well for putin, russia is a country that is isolated from the global stage. we have seen an economic decline in the russian economy. kathleen: thank you so much. up next, our interview with imf manager, working on the resilience instability trust. this is bloomberg. ♪

haidi: the international monetary fund hope to finalize plans for a trust redirecting the reserves to vulnerable countries. that -- >> one of the things we have

done early in this crisis is to recognize that the reserve requirements have gone up and the covid crisis has pushed countries to exhaust the limited reserves they count on. when your economy shakes by 10%, at the same time you have to increase spending because of the pandemic, that pretty deep into your reserves into a dangerous level. we had the agreement to have $650 billion allocation. it is going to be in place by mid august. it would help all countries, but it is most valuable for countries with limited reserves and in vulnerable positions. we also recognize that because

of our structure, the advanced economies are getting a higher share of this reserve. the emerging markets are getting a smaller share, about 40% of this allocation. an obvious question is, can we do something to redirect from countries that are getting it but don't need it to countries that need more help? i am very pleased that we had the g7 coming up with support for about $100 billion, redirected from countries with strong positions to those that need help, and moreover, that

there is openness in our membership, that we would expand the series of this on concession of terms from low income countries to a broader group of low, middle income countries, and important for the members of the panel to countries that are more vulnerable to climate shocks. i expect that in the next month, we will be working relentlessly on creating what we call resilience and sustainability trust, the exact name to be defined. what is the idea here? do you have funding that goes to build resilience at a time when shocks are coming more frequently and they are more severe. >> that was kristalina

georgieva. kathleen: don't miss a big interview in acr's, aco discusses the consumption recovery in china and abroad. haidi: let's take a look at the day i head for australia and new zealand. a forum today in two hours. meanwhile, australia seems to be among nations that will default on the sovereign debt by 2050 if i'm a change is not addressed. in new zealand, awaiting those gdp numbers. we will be breaking those numbers live to you. we have lots more ahead. this is bloomberg. ♪

♪ ♪ look, if your wireless carrier was a guy you'd leave him tomorrow. not very flexible. not great at saving. you deserve better... xfinity mobile. now they have unlimited for just $30 a month... $30. and they're number one in customer satisfaction. his number... delete it. i'm deleting it. so, break free from the big three. xfinity internet customers, switch to xfinity mobile and get unlimited with 5g included for $30 on the nations fastest, most reliable network.

>> the 10-year treasury yield climbed to the highest in more than a week after federal reserve policymakers surprise markets and signaled two quarter-point rate hikes by the end of 2023. let's get more on this and other market reactions with bloomberg's market reporter. bonds and stocks moved i wonder if, on the one hand, they said the fed is telling us -- but in their heart of hearts, they say things are picking up and they should be moving and that's one reason why they did not have a

more negative reaction. >> this is a moment i think the market has been anticipating for so long that eventually, there is going to be some sort of taper tantrum at some level. if we compare this to 2013 when the chairman rattled the markets, you have to admit, we have been having anticipation for about a year now. back then, you did not have that much time to foresee this move coming so that could be one explanation on the street of why this reaction was not as bad as we were thinking but this is just one day, one afternoon. the market reaction could still get worse depending on how it is interpreted tomorrow. haidi: i suppose you could take this with a little bit of comfort that may be market is psychologically getting ready for the return to normalization. take a look at financial market emissions and you imagine the fed is wanting to address that.

kris: we were also talking about things like the labor market, things like commodity inflation, surging prices, even the fact that we are expecting to have those massive fiscal stimulus checks really spent by the end of summer so it's not just a matter of -- there are a lot of factors that were really kind of baked into the market, this idea that it's going to end up really slowing down that momentum that we saw, the speculation that will eventually slow down. the fed is really just adding to that narrative. a lot of what we saw in the last 1.5 years, we don't need it. the economy is finally catching up to what the market has been pricing in. haidi: our bloomberg markets reporter. let's get you the first word news with vonnie quinn. vonnie: janet yellen has argued before a senate panel that if

congress were to pass a capital gains tax hike on april 20 21, that would not count as a retroactive increase. president biden's proposals raise the cat rate -- cash rate in april. -- likely to be a source of tension as the issue was debated in congress. japan will reportedly lift the coronavirus state of emergency in tokyo when it expires on june 20. it may keep alcohol restrictions in place in restaurants in the capital. the state broadcaster says japan may issue vaccine passports from july. the decision to lift the state of emergency will come five weeks before tokyo is set to host the delayed olympics. saudi arabia says it will not abandon its cautious approach to opec-plus oil output, stressing the market is not "out of the woods."

the cartel i -- boost supplies. the saudi energy minister says what many see as his approach is paying off and proven correct, about $70 a barrel. the u.s. justice department is suing a proposed $30 billion acquisition of its rival. the government argues that a merger between two of the world's largest insurance brokers could eliminate competition, raise prices, and hamper innovation. it marks the first lawsuit to stop a merger under the biden administration. shares of both companies slumped on the news. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi. haidi: china is resorting to increasingly forceful measures to contain risks to the financial system. these are moves that threaten to

undermine xi jinping's plan to give markets greater freedom. for more, let's bring in tom mackenzie in beijing. this is the fine line that beijing policymakers continue to have to walk. tom: indeed. what we are seeing, wherever you look, you are seeing officials and regulators stepping into curve or affect price changes. you don't have to look very far. you can go online. they are censoring any searches for reptile exchange. they have considered capping the price of coal and the most recent development was to reduce their exposure to commodities. the list goes on. domestic banks told to hold more foreign currencies. brokers banned from publishing any reports with bullish targets for equity indexes. what it all points to is a visceral concern here in china right now about financial risk and a lot of that is tied to what is happening outside and beyond china's borders where

officials have said that the easy policy of many central banks has led to an influenza chinese assets and created some of these double risks and this is where the concern lies. the problem is of course that it undermines, as you say, that push for xi jinping and his officials to liberalize the markets and caused increases at the chances of moral hazard. it does nothing to address moral hazard. kathleen: there's some regulators around the world who envy china's ability to do this to their markets. more specifically with commodities prices, this is a very important part of the chinese economy. what are some of the specific steps being taken there? tom: i touched on this call from the regulators yesterday. quite an eye opener to reduce their exposure to commodities, but arguably, more surprising was the announcement that china, after many years of not doing so, will be releasing some of its secretive metals reserves onto the markets to pressure

prices lower. they have not done that for years and what that underscores is their concern that the rally that we signed terms of the commodity prices, particularly industrial metals, will feed into higher consumer prices. they don't want to see that passed on. cpi at below 2%, that is what they want to see for 2021, but they are clearly still concerned about the run-up in commodity prices given the action that we saw yesterday. haidi: we had eco-data out yesterday as well. does it show acm of stability in the recovery? tom: to some extent. retail sales, industrial production, investment, all came in below the numbers we saw in april, but if you compound it over two years, that strips out the distortions we saw last year and you actually saw industrial production and retail sales improve and increase. industrial production, that

continues. retail sales, still not back to pre-pandemic levels, and that is important. a big focus on what is happening with the chinese consumer. expensive retail goods are still being snapped up by china's consumer. that is still an area that is missing out. in terms of what the implications are the pboc, standard chartered, and others, is that the central bank will continue to tread a very fine line. they don't want to undermine what is looking like relatively stable recovery but with some concerns still around the consumer. haidi: tom mackenzie in beijing. speaking of china, we are looking at that space race as wild. you are looking at live pictures of the archer ceremony for the three chinese astronauts taking off for a three month mission on china's new space station, the longest new crude mission to date for china. the satellite launch center is

where they are heading. they will be the first crew to set foot in the space station launched earlier this year and we are looking at those three astronauts who will be in orbit for a period of three months. china is aiming to complete in orbit construction of the space station and the national space laboratory by 2022. the announcement of course has been hugely exciting, kathleen, in terms of national pride and the excitement over the chinese space program. kathleen: quite a day. howard marks is eyeing downtrodden debt in emerging markets as an investment opportunity, including in china. the firm's cofounder said it's time to take on risk. he spoke to bloomberg about where he is buying and telling. >> you look at where we were 15 months ago, it was a disaster. but potential to get worse, and now, we are in very good shape

and all our markets and the economy are very strong so you sure cannot say they got it wrong. you know, should they continue to stimulate and make credit easily available? or is there a threat of overheating and inflation? this is the key question today and it is unanswerable. nobody knows the answer to these questions. i have a lot of respect for the fed. obviously, they are more concerned with undershooting on strengthening the economy than they are with overshooting and creating long-term inflation. and that's why i say that the merits are quite balanced, but you know, again, i am in a neutral stance and i'm going to stay there. >> and yet there are a lot of funds, pensions and others, that are looking for extreme returns of 8% had i call that extreme.

we have 1.5% yields on 10 year treasuries. how much does that amp up the threat as we go forward in this nirvana period for credit, as many people say it is, given the fact that people are shooting for something that really is not that attainable without taking more extreme risk? >> you are exactly right. the biggest challenge today is how to get good returns in a low return world. let's treasuries -- with cash at zero and treasuries yielding one to two and high-yield bonds yielding four, and stocks expected to return, 74 lucky, where do you get seven or eight? many of my clients, u.s. clients, need 72 make them work and it's very challenging and you cannot get seven today safely and reliably and doing

the things that you always used to do. so you have to push out on the risk curve and pushing to unfamiliar market sectors, but certainly, there are risks in doing so. >> what are some of the best risk-adjusted return possibilities when you start pushing out into risk? howard: i think that private markets are usually less sufficiently priced. that is to say, they have deviations of price from value. usually, more so than the public markets so you want to go with the private market and then except you have liquidity. real estate, structured credit, complex instruments, instruments that are not homogeneous but that you have manager risks because you need somebody to help you make the sections and you have to get that right. no, you want to look at the

things that are downtrodden, the things that did not old their own last year and suffered from the pandemic. you want to get the ones of those that will recover, not the ones that will not. you want to look into the emerging markets and maybe china , certainly, and the foreign markets in general, but you need expertise to do that. and by the way, we don't think that the rest of the world economies are necessarily as strong as ours, so these are off the beaten path locations where you might get some better risk-adjusted returns but there are risks involved. haidi: that was howard marks, co-chair and co-founder, speaking to lisa. we have lots more to come on "daybreak australia." this is bloomberg. ♪

haidi: we do have new zealand first quarter gdp coming in -- a solid beat at two point 4%. expectations were for .9% on a quarter on quarter seasonally adjusted basis, 1.6%. .5% consensus out of the economists we surveyed.

in the main monetary policy statement, we had seen a prediction for a technical recession but it looks like that has been avoided with some buffer to come. there are expectations from bloomberg economics at the partial recovery that we saw -- that we have started to see after the surprise contraction of the fourth quarter of 2020 -- the question of course is whether that necessarily translates to inflationary pressures and a change in policy. in australia, phil lowe is set to address an audience in queensland in a little under two hours time. this is the last public appearance before that july board meeting. that's pull all of this together. paul joins us now. there's so much kind of, you know, synchronicity between what's going on in new zealand and australia. we see these pretty robust recoveries. things are chugging along. how sustainable is that until vaccines are properly rolled out and borders can reopen for both countries?

paul: we think that will be one of the major challenges for both countries, of course. the gdp numbers for q1 surprised significantly to the upside. new zealand had a fallen gdp in the fourth quarter of last year. around the turn of the year, we have seen a big weight on economic activity from the lack of international tourists that were arriving but in that country, we think housing prices are rising rapidly and that's feeding through to a positive wealth effect, proving somewhat of an asset on population growth and international tourists. the economic indicators in australia are across the board very strong right now but we think australia is going to hit some decent headwinds into the second half of next year and the major headwind we have in mind is simply that population growth has stalled. with the border close, we have not got the migraines coming through, the tourists,

international students coming to australia. we are getting this really big -- from fiscal transfers, very low interest rates, arriving housing market, but that uses in the second half for australia in particular. the headwinds will become more apparent the sooner we will out the vaccine, the sooner we are able to reopen the border. that will be a gradual process even once vaccine is rolled out because the strategy we adopted for the virus means that there is no tolerance in australia or new zealand for even a small number of cases and that will make opening their border actually really quite challenging i think. haidi: i want to get more on the movement of people in just a moment but i'm curious, given that we had a more hawkish than expected said overnight, we are seeing potentially those growth differentials, yield differentials, and maybe a return of the u.s. dollar. does that make the job of phil lowe a little bit easier? paul: it certainly does pay at

one, a recovering u.s. economy is a global growth locomotive in australia -- and australia is tied into the story through commodities and demand for our products. that is one engine. the other critical one is of course if the fed gets going sooner and the fed -- the fomc looking as though they are suggesting rates will go up in 2023. the u.s. dollar strengthens. if they weaker aussie dollar and makes the rba's job easier to try and get inflation back to target. later on today, we are going to your phone phil lowe and they will be dovish and i think that's going to be -- they will talk about the idea that it will be low for a considerable period of time. the fact that the u.s. is seeing conditions improve more, the fed is talking about rate hikes, this is good for australia. kathleen: what about housing prices? that's a problem for many

countries around the world. the rbnz had to take its big steps, given a knowledge by the government, to take account more of housing prices. it's an issue in australia as well. a lot of people cannot buy homes very easily. paul: this is a challenge of having low interest rates. the rba's approach at least in my view is we need house prices to be rising in order to generate enough momentum in the economy to get inflation to lift back to target. keep in mind, in australia, inflation has been below that for five years and it is well below where it needs to be still, so i think the rba has accepted actually that this is just one of the mechanisms it needs to be working to lifting inflation back to target. over -- it's different. the housing market is even stronger in new zealand, talking about 20% year on your house rise growth and yet as you say, the authorities actually want the rbnz to be more focused on

having sustainability. they now have a new set of tools. we think that they will take more action. kathleen: thank you so much. hsbc chief economist for australia, new zealand, and global commodities, paul. time for global calls. let's get over to sophie kamaruddin in hong kong. sophie: emerging currencies, we have hit record highs. could hit a wall following the fed's hawkish turn that could provide a catalyst for higher u.s. rate in the dollar. john hardy saying the long em trade may be looking overextended. morgan stanley's model indicating a time to turn offensive into cheaper currencies like the korean won. switching out the chart, recommending staying neutral, seeing flattish aggregate returns by year-end, plus cautioning that the em context is looking vulnerable to a turn in dollar shorts. pulling up the board. broad greenback weakness he sees

headwinds from the feds hawkish turn so goldman as well as deutsche bank have abandoned their bullish calls for the euro-dollar, which fell the most since april. kathleen. kathleen: thanks so much. how digital tokens are permeating a world obsessed with authenticity and exclusivity. more on how and fts are the new black, just ahead. -- nft's are the new black, just ahead. this is bloomberg. ♪

haidi: let's get a look at the new frontier for the expanding verse of digital tokens. no other industry is more vested in these ideals in these ideals than the world of action. digital clothing is getting more popular, fetching serious money. let's take a look. i love this story, by the way. paying $5,000, $6,000 for a gucci bag when you can get the real thing for less. why are people doing this? >> a lot of our lives are being lived online. generation z, millennials, and people interested in cryptocurrencies and the blockchain. these offer another investable

asset and it's a chance for self-expression. people can wear things like burning shoes and jackets with levitating collars and things like that. and these are kind of the benefits to owning these things and people want to wear them in the meta-verse, which is where we will live our lives in the near future, which is where our online lives are heading. kathleen: ok, you think that's where our lives are heading. seems to me like some people might be priced out of this meta-verse. what can they actually be used for besides tramping around in the meta-verse? thuy: artifacts offer a physical version of the nft when you buy it so that's an additional incentive. they do a lot of sneakers so it's a unique there are non-nft

digital fashion which don't have prominence, which are cheaper, and they can be used to augment social media, photoshop cool dresses onto you, and other things like that. haidi: we have seen things like the proliferation of virtual change rooms and things like that during the pandemic. how do they monetize this? thuy: gucci had a massive collaboration with roadblocks and they had a bag which sold for $4000, which is, like you mentioned, costs more than the physical copy. a lot of the luxury fashion, they might use this as a form of providence. i think it's easier to prove the authenticity so there's a lot of counter problems, which this kind of can give utility to. haidi: -- kathleen: turvey story. -- thuy ong, terrific story. we are going to wrap up "daybreak australia."

"daybreak asia" is coming up next. we will continue our look at the federal reserve. michelle girard is going to give us her view of how significant the feds move today. it will be right at the top of the show as "daybreak asia" is next. this is bloomberg. ♪

haidi: a very good morning. welcome to "daybreak asia." i am haidi stroud-watts in sydney. sophie: i'm sophie kamaruddin in hong kong. kathleen: good evening from bloomberg's world headquarters in new york. i'm kathleen hays. the fed tightened its timetable. policy makers predict two rate hikes as they inched towards tapering. haidi: