haidi: a very good morning and welcome to "bloomberg daybreak: australia." shery: good evening from new york. the top stories this hour.

the u.s. said to have warned allies russia may have targeted cities beyond kiev. haidi: australia preparing for a tourist boom. shery: hong kong considering stricter social distancing restrictions. haidi: we do have breaking news. pmi numbers out of australia. we have been looking at the strength of the recovery given expectations are that we will see a bumpy ride when it comes to recovery across tourism and services as well as manufacturing after the patching is of the lockdowns. the pmi coming in for services at 56.4 for february. we are seeing marginal improvement over the median term.

look at -- let's look at asian markets. the reopening of australian boarders after two years of being closed to international tourism. we see how the scene is being set at the airport for arrivals. new zealand trading down by about 0.1 percent. sydney futures looking negative at 0.7% lower. he continued to weigh the geopolitical risks over an encounter between ukraine and russia and the threat of military action boosting havens like sovereign bonds. we are seeing demand on the short end for treasuries being tested with a flood of supplies. we will be watching corresponding bond markets in asia. shery: we have breaking news out of indonesia. we are hearing from the indonesian central bank that they may start next year to sell government bonds that they bought as part of the $58

trillion debt monetization that supported stimulus spending during the pandemic. this is coming from the governor who was speaking to bloomberg saying it is in talks with india and elsewhere that it may start selling bonds in the burden sharing program. they will allow yield flexibility. they are seeing the rupee staying supported on exports and attractive yields. and they are in talks with south korea for local currency settlement deals. this as the central bank could be selling bonds or circulating them through their reverse repo. this as they bought those bonds as part of the 58 billion dollars debt monetization. take a listen to what the governor had to say on this subject. >> if in the future the supply

of government bond is compared to the demand [indiscernible] because supply will be coming from the government. if the supply is [indiscernible] . i think that will be a positive future. shery: you can hear more of that exclusive conversation coming up at half past this hour. the conversation happened right after the's finance ministers and central bank governors meeting. a key focus was the inflationary pressure around the world. we do have another u.s. inflation engage in focus this week. we are talking about the personal consumption expected to -- expenditure price and dax. -- price index.

leaning towards more expectations that the fed will have to tighten faster. ap morgan over the weekend saying the fed is likely to raise rates by 25 basis points in nine consecutive meetings. haidi: we may not be in the clear when it comes to volatility in u.s. rates. we saw a revival of haven demand on the back of the geopolitical concerns between russia and ukraine. take a look at this, shorter-term rates. the historic volatility gap. it is reached the highs we have not seen since the global financial crisis. the volatility for short-term securities declined but it still remains well above the gap. a lot of analysts saying this raises more uncertainty to come around policy rates. it is a crazy time and there is probably a lot of repricing to

come yet. shery: and we are seeing repricing in the chinese property sector. the cash crunch is there. it was surprising and shocking for the markets to see that general properties has become the latest developer to warn it may not meet its obligations which is an extreme about-face. only seven weeks ago, we thought it was a rare beacon of strength in the real estate industry and this sudden sliding to distress giving investors more anxiety than ever. haidi: as you say, a reminder that we still need to be watchful when it comes to the property sector. also watching our top story. the u.s. warning russia may target multiple cities in ukraine and not just kiev. this comes after the president convened a national security council meeting over the weekend

talking about the latest developments. russia saying joint military -- the troops will remain in belarus and definitely adding more cause for concern. we know leaders last week were dubious about the claims from moscow that they were pulling back on their military presence. this is clearly not happening. shery: let's discuss this with our editor joining us from washington. washington will be watching out this week. >> we have not seen a lot that would lower tensions. we know the tensions are followed closely by markets. the situation as of right now is these drills involving belarus and russia jointly have raised alarm in europe as well as from antony blinken who said it fits with the assessment that vladimir putin has made a

decision to invade ukraine possibly within days. we need to remember that russia has consistently said it does not plan an invasion and has accused the u.s. of hysteria. we also had an account from the ukrainian minister saying the risk or the reat of something immant in the next few days may be overblown. you have to parse all of this and see that right now, also with a national security council meeting of the biden administration, there really is a lot to go on in terms of either up or down in terms of the tensions. haidi: we know that the u.s. has put -- this denial of service attacks on ukrainian banks. did the secretary of state say there could be an allied response to that? >> he did. he said the u.s., its allies and

as partners are looking at what kind of response that might call for. he said that russia, as far as the u.s. is concerned, russia -- it has fingered russia for being behind that and that is the first time we have heard him say that this could call for a response. the u.s. has been saying that for some time that any response to a russian act will be partial. at the same time, blinken rejected something the ukrainian president was calling for which was to start imposing sanctions on russia immediately right now ahead of any invasion whether it happens or not. lincoln sa that -- antony blinken said that is not the u.s. position.

that was a slight divergence between the u.s. and ukraine. haidi: tony, our editor with the latest developments as they come to us. let's turn to some of the other major developments. australia reopening its borders to double vaccinated visitors. the government is considering target restrictions in hong kong. paul allen is at the airport. so much optimism for the return of tourism and a revival for the hospitality sector. paul: that is right. it has been a little over 700 days since australia closed its borders to the world and today, they are open again. mood was upbeat. the first travelers arriving from los angeles. they were given miniature jars of vegemite and soft toys as well. the trade minister was here to

greet travelers and was in a very boy into mood. >> it is huge for australia. 600 60,000 people employed in our tourism industry, it is been a very difficult to years. we have reopened fully to the rest of the world and it is great news ended is great to see the excitement. i think it all bodes well for our tourism industry rebounding very strongly. paul: the minister and i discussed a number of other issues as well including some of the challenges. attracting tourist back to australia whether or not they can arrive here with certainty and weather conditions will change again. the minister said he was optimistic about that because of australia's high vaccination rates. and the tourism industry has been in mothballs for two years, trying to get workers back. and trying used to be

australia's largest tourism market that relations between australia and china have changed. those are some of the challenges the industry faces a happy day as the australian border friendly reopens. shery: and a different picture when it comes to hong kong. we are seeing elderly patients lying on gurneys in the streets. what is the latest? stephen: i cannot emphasize how opposite the situation is in hong kong to what is happening in the sydney airport. temperatures have dropped. down jackets have come on and patients lined up on gurneys outside of the hospitals have been moved indoors because the temperatures have dropped, at least right now, to about seven degrees celsius which is 44 degrees fahrenheit but feels much colder. it has been raining steadily for three straight days amid this surge in cases.

6000 again on sunday. the second day and a row with more than 6000. the government is not giving preliminary positive numbers because it was kind of misleading because of the backlog in testing. they cannot test as many people as they want to on a daily basis. the numbers are getting a bit skewed. the number of confirmed positives was 6067 on sunday and only 12 were imported. mostly local infections. 10 people in critical condition. most of the patients are fairly asymptomatic or mostly mild. but under zero covid policy, they must be isolated and there is a massive shortage of isolated -- isolation units. carrie lam was out on sunday saying and thanking the central government for sending a mainland team to start construction of some additional 10,000 isolation units.

including at the terminal. there are also hotels being opened up as well as public housing and sports grounds to be used for isolation units. this government is sticking to its zero covid policy despite the fact that the health care system has been overwhelmed. sophia chen, the health secretary here was quoted sunday morning saying essentially there is no room for a relaxing social distancing measures right now. this comes at a time as well, we heard on friday, at the leadership vote, the election committee was to meet in march to choose a new executive to confirm carrie lam for a second term or find a new leader. that has been delayed by more than a month because the top priority, as carrie lam said, and she is heating the instructions of president xi, tackling the covid virus must be priority number one with no distraction. shery: stephen engle with this

in hong kong as well as paul allen joining us from sydney airport. don't miss some big guests. regina ip speaks to us about the city plan to invoke some mask mandate. and a high profile names from australia, the minister for trade and tourism says reopening the international airport is huge but an industry group ceo says it may take years for the tourism sector to recover. let's take a quick look at what is happening on wall street. we could see some downside pressure on asian markets today following the lead from wall street on friday when stocks dropped. the s&p 500 turning positive. the nasdaq composite tumbling with that bearish signal while ten-year yields. treasuries reasserting the haven

status over taking the appeal of riskier assets. even wti posting its first weekly slide in two months. let's get over to vonnie quinn with the first word headlines. >> china securities regulators vowing to do more to contain -- in a statement, the securities regulatory commission highlighted plans to examine bond issuance, registration systems and open up further to foreign investment. china could see another record year of bond defaults driven by the ongoing debt crisis in the property sector. beijing winter olympics have ended with a record number of medals for china. it bags 50 metals including nine gold drinking third behind norway and germany and one place ahead of the u.s. the games attracted a huge

number of television viewers domestically but they could go down as the least watched olympics and history due to a drop off in the international audience. efforts to revive the iranian nuclear deal are still bogged down in differences. and with the german chancellor warning that the time to save the accord is now more than ever. shery: the white house says the russian invasion of ukraine could be imminent. we will discuss false flag fury. and the playbook to combat inflation. we will discuss that and forecasting errors by central banks and wall street. this is bloomberg. ♪

haidi: here are the key events

we are watching. in the u.k., the prime minister is expected to end the last of the pandemic restrictions. on the economic front, requisitions in south korea and australia are due. the be ok will likely hold a further after last month's hike. hong kong will deliver an nul budget this week. shery: a major one on the earnings agenda for those in hong kong. asian receipt will report on tuesday with details about its ongoing restructuring. any comments on how business is holding up in hong kong, it's biggest market will be closely monitored. and alibaba delivering its results on thursday. bloomberg intelligence is forecasting lower targets. in the u.s., macy's, home depot

and lowe's will all report. the fed can expect to see the key metric excelled right to a fresh four decade high on friday. the price index is -- the price index jumped 6% last month. let's bring in our next guest who says there is no playbook to combat inflation and this is the largest forecasting error by central banks and wall street. joining us now is daniel siluk, managing director of kapstream capital. good to have you with us. the expectation is that the supply chain issues will resolve and we will have higher base effects on constraining inflationary pressure. what is the problem right now? daniel: thank you for having me. inflation has been one of the biggest forecasting messes by

wall street economists and by central banks throughout 2021. in europe, it was eight out of 10 inflation prints were above forecast. central bankers and economists did not really plan for the wake of the fiscal stimulus. at the end of the day, there was an ongoing demand. that was the case when it came to goods throughout that post-covid period. the supply chain constraints added to those inflationary pressures and as you said, they will abate as the year progresses but now, some of those inflationary factors have become more ingrained. with tight labor markets and wage pressure increasing, that will see ongoing pressure to underlying inflation.

and the components of inflation continue to climb. they continue to increase on a year on year basis. they have not yet begun to turn lower. we see ongoing high inflation prints for the rest of the year. shery: which is why you have central banks asking and the expectation that the fed may hike rates more aggressively. what are the factors markets have to watch out for when it comes to what could cause more volatility and how do you hedge that? daniel: the volatility will because by the uncertainty from central banks and terms of their response. it was only six or eight months ago that the fed was not even talking about talking about

tapering and now all of a sudden they are about to embark on a right tightening cycle. in the 2015 through 2018 period, the balance sheet unwind again 12 or 14 months ahead of the rate hike. the uncertainty now is how aggressive will the fed be in the next tightening? if they go too quickly they risk a more significant slow down and potentially even a recession. if they do not go quickly enough, inflation remains elevated. haidi: are the geopolitical concerns the biggest uncertainty at the moment or is there another element central banks should be looking more closely at? daniel: i think the geopolitical risks as we have learned through time, they tend to come and go. over the last few weeks, they

have been paramount on investors' minds. it is the central bank hawkish in us that has caused concern. i would not say the russia-ukraine conflict is a main concern of central bankers but for markets, the entire situation -- biden has told us he does not believe vladimir putin when he says he is withdrawing troops. putin says he stands ready to act. haidi: daniel -- daniel siluk, thank you for joining us. 20 more ahead. this is bloomberg. ♪

>> let's take a look at asian

markets. we are into more volatility if you take a look at the havens we saw late last week. this is what we see when it comes to start of trading. we are off the session lows for new zealand. still looking like a peppered start to trading in sydney. at xfinity, we live and work in the same neighborhood as you. we're always working to keep you connected to what you love. and now, we're working to bring you the next generation of wifi. it's ultra-fast. faster than a gig.

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>> bloomberg technology with emily chang. >> you're watching daybreak australia. u.k. prime minister boris johnson still intends to end permitting virus restrictions. johnson said it was time to cease state mandates pledging to lay out a plan this week for so-called living with covid. that is despite opposition from some public health experts as the u.k. continues to see tens of thousands of infections per day. johnson's comments come thousands of out -- ottawa police clearing the

center of a weeklong blockade that paralyzed the capitals downtown. people were arrested as police intensified their actions. deploying pepper spray, batons and mounted unions to remove demonstrators paid the operation has not been completed with some protesters remain encamped in downtown streets. hong kong is considering stricter social distancing measures to stem and a splitting covid outbreak straining hospitals. measures could include random checks on vaccination status as well as further limits to dining and restaurants. hong kong reported more than 6000 infections for a second day on sunday as a team of medical experts arrived to build quarantine facilities. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg haidi: get

back to one of our top stories. the crisis over ukraine. joe biden says he is convinced vladimir putin is planning an attack. >> as of this moment, i am convinced he has made the decision. haidi: our next guest is concerned russia may be using a false flag operation as a pretext to invading ukraine. turning us now is the senior lecturer at the university of sydney. always great to have you with us. how do you decipher what is going on on both sides at the moment? >> certainly as we see the tension over the past week and months, we are reaching this fever pitch state and really we are at a pinnacle of the crisis. we have heard from u.s. president biden that the intelligence community has now basically come to a conclusion that vladimir putin has decided

to launch an invasion into ukraine. the question is whether vladimir putin will follow up on this and make this come true or whether we will see some sort of last-minute diplomatic turnaround. obviously the situation on the ground is very grim. we have to understand that already we have seen the escalation in terms of the military ramp-up as well as exchange of fire in the east of ukraine. certainly all of the signs of russian buildup of troops around ukrainian borders are pointing to further deterioration of the security over there. haidi: the diplomatic efforts continue owing into this week. can they make any difference?

>> we can hope some of these talks that have been announced and alluded to primarily between the u.s. secretary of state blinken and his russian counterpart are going to keep -- there other efforts on the part of various european states and powers. clearly what we are seeing at this point is the various blavatnik efforts have not really managed to get through any sort of breakthrough for the various grievances. particularly on russia's front and on their part certainly when

it comes to the current security architecture in europe as well as the long-standing issues russia has had with alliances such as nato with the u.s. standing in the shery: world. give us some context in this -- in the world. shery: give us some context. who is doing it better at this point? >> what we have seen what has been really interesting has been a change on the part of the u.s. administration and the european partners and allies as well to expose basically what has been the russian modus operandi. we have not seen this in previous instances. we have seen a lot of these details in terms of intelligence reports cap obviously at the highest levels of government and to those that are to such information.

what we have seen on russia's part has certainly been a concerted effort over the past months to try to depict this sort of picture on the ground where he centrally the -- where essentially there is a lot of information on what is going on. we have seen some of these reports around mass graves being found. accusations of mass atrocities, crimes against humanity and similar so much so that russia has put together a report for the united nations and for the security council to discuss this. and all the evidence we have heard so far are contract -- are contradictory to intelligence we are seeing. shery: so how do cyber warfare

fit into this broader rivalry between the two sides, especially given the reports last week of a cyber attack on ukraine and potentially an allied response? >> that is a great question and this is all part of the hybrid warfare efforts that have been part and parcel of this conflict that we have to be reminded, it has gone on for the past eight years since 2014 and obviously what triggered it was the revolution in ukraine. this is nothing new. this is part of the operations that russia and its clients in east of ukraine have been waging. and again, this information warfare is also part of the hybrid warfare. on the cyber front, what we are seeing is very much a kind of we

could call it textbook sort of play where critical infrastructure and various agencies of the government industries are targeted in an effort to either so confusion or to actually debilitate the critical parts of the government and prevent them from proper functioning. shery: it was good having your insights. the university of sydney senior lecturer on the geopolitical tensions around ukraine. we have seen the market impact evolve especially when it comes to energy pricing. interestingly, not so much when it comes to emerging assets and emerging-market currencies. we have seen the ruble take a hit given all the news around potentially more sanctions and we have seen the ruble lose 3% year-to-date. when it comes to the broader em conflicts of currencies, not

such a big hit chad the gauge at the highest in eight months or so. we continue to see that rally. we have heard from intouch capital markets if we do see an invasion of ukraine, central europeans currencies might take a big hit but we have not seen the huge impact that was expected to haidi: and really interesting to see the leadership that we are seeing from the chinese yuan as well. we saw last week the indian rupee led most asian currencies higher. this as we did at that point get some optimism over u.s. russia talks. even without the geopolitical concerns, we are seeing the yuan strengthening to the highest since 2018. clearly there is the element of the central bank divergence standing independent of all of the geopolitical safe haven aspect of the market pricing we

see otherwise. shery: it has been about moment -- about monetary policy and the global moves. this was a key focus at the g meetings of central bankers and finance ministers. the bank indonesia governor: his global counterparts to coordinate their unwinding of stimulus warning that abrupt and ill communicated tightening could unleash volatility on emerging markets. bloomberg spoke to him and discussed his outlook for the fed as well as factors for adjusting bank indonesia's policy. >> we do understand every central bank -- of the monetary policy needs to be based on the level of information. the fed are doing so. and also, the emerging-market and --

we also see the plan increase. already being priced in by the market. we see the u.s. treasury market. government bond increasing. >> you're keeping to your estimate of 100 basis point hike by the fed to is that right -- the fed. is that right? >> we will listen carefully to what the fed will become. >> the fed has said it is

willing to hike rates as many times as needed to continue inflation. are you ready to hike? >> 3.5%. inflation is still very low because -- the rate is stable. if there is an expectation -- the fundamental of the inflation is muted. >> how much must the rupee had dropp fo indonesia to hike rates -- drop for indonesia tide rates? >> fundamentally, the facts are positive.

[indiscernible] this year we are expecting -1.1 to -1.9. that is reason number one fundamentally. second, we consider the year to be attractive. that is number two. deepening our fx market. last but not least, our commitment to our exchange rate stability.

that is the signal i went to send to you. haidi: the bank indonesia governor. let's take a look at the day ahead for australia. as we have been following, austral he has reopened its international borders to double vaccinated visitors. we'll be bringing our conversation to the trade and tourism ministers in a few minutes. the new south wales train network out of action after a long-running dispute between the state government and rail union flared up. on the corporate front, agl has rejected a multibillion-dollar takeover bid. we will have all the details on that next. this is bloomberg. ♪

shery: time for morning calls ahead of the asian trading day. china tech's latest slump suggests market fear over for beer -- over for the rigell tory is not over. our national strategist analyst says markets are still expecting more regulatory measures to be rolled out this year. may tuan and other names friday show buying the dip on battered chinese tech stocks is still a risky bet. j.p. morgan now sees the fed hiking rates at nine straight meetings to tamp down

inflations. economists forecast the fed to hike rates at approach a neutral stance by early 2023. maybe morgan says the feedback loop may be taking hold between strong growth, cost pressures and private-sector behavior. shery: agl -- haidi: agl energy has rejected a multibillion-dollar takeover from brookfield asset management and mike cannon brookes. the bit of aussie seven dollars materially undervalues the company. let's bring in our 20 reporter. we know markets have been heavy on the activist investment theme even when it comes to climate lately. what happens next? >> that is the big question. as you say, agl has rejected this with no mention of further

engagement with brookfield or ken brooks at this stage. the proposal was pitched at a 4% premium and those premiums don't generally tend to be successful in australia. i think there must have been some level of understanding on the initial approach might not get them across the line. with that in mind, it would not be too surprising to see them come back with a higher offer. i think it has also been written around by some commentators that agl rejecting the so quickly could be a sign there other suitors waiting in the wings. we will need to wait and see on that front. agl is relatively cheap on a historical basis. the stock has been pummeled on the past 12 months on the deteriorating fundamental outlook fred the energy generators in australia. shery: why was the bid made in the first place?

tell us about the origin of the origin of this deal. >> brookfield and mike cannon brookes are serious players. they are not going to enter a bid like this without having serious intentions of making this into a profitable business. you cannot ignore mike cannon brookes who has been a very strong campaigner for the clean energy transition in australia. you cannot ignore the as a motivation for this. what we can tell, the plan is to bring forward the closure dates of the coal-fired power plants. agl announced a week ago they would bring forward the dates. only by three or four years. that led to the clean energy lobbies. the plan would be for them to close the coal plants a lot sooner. bring in let more renewable generation and in just the plan would be to make a profit cared that cheap wind and solar power.

there is a big? over that -- over whether that business will work. straley has been so strong in taking up rooftop solar. when in three has rooftop panels p that eroded the profitability. if they were to prove successful in taking over the company, they would have a big challenge on their hands to make money out of it. haidi: always great to have you with us. as we have been speaking about australia reopening its orders to double vaccinated visitors after two years of isolation, australia's trade tours in an investment minister spoke with paul allen earlier this -- earlier this morning at city airport pure and he is hopeful the tourism industry can see a quick return to previous levels. >> reopened fully to the rest of the world shared it is great news and it is great to see the excitement. i think it all goes well for

tourism industry rebounding very strongly as we come out of the pandemic >> that is a key question. along do you think it will be before tourism returns to pre-pandemic levels. >> hard to put an exact time. what we will see as it will rebound strongly very quickly. i was in india 10 days ago. it was our fastest growing tourism market as we came into the pandemic. i think we will see it rebound very strongly. new zealand our second-biggest market. we have not lost the friends, families and relatives. that market will rebound strongly. we are seeing great signs out of north america. we will see a strong rebound and $40 million market campaign going on as we speak. if all goes well, a very strong rebound. >> one of the key themes of covid was -- how can travelers yell confident

they are not going to stuck it -- not going to get stuck here? dark i think the way we have dealt with the pandemic, we have 94, 95 percent of the population fully vaccinated. if all goes well for people, having the confidence to be able to come here. you see how we have dealt with the pandemic. we stand up as well as any other country. i think people have seen that while we have an industry that has been -- for the two years -- >> do anticipate they will have trouble getting stuff back? >> we are making sure the industry is safe. rebound is important. as i government, we have invested so much in schools in the last two years to make sure we do have that workforce. one of the key themes about the international tourism market as we get the international students and the working holiday . the backpackers back. they help with our market, our

labor market and tourism industry. it is a win-win once you get your international borders reopen. >> i heard you mention the potential of the indian market. i did not hear you mentioned the chinese market. can string all late -- considering relations between australia and china, what do you expect? >> at the moment, it is not a market that is open to us. once the market is open, i think we will see demand rebound strongly. that marketing has continued on. my hope is we will see a strong rebound. >> we have encouraging news out of western australia finally reopening its internal border on march the third. can you give us a sense on how important it is? >> it is really important.

it is very important for business investment because it made international business -- because international business can continue. for the mining industry, they need workers. they often get workers from around the country. it will make it a lot easier for them should >> a question on the cruise industry. all going well, when can we expect that. >> my hope is in the coming weeks. the federal government needs to work with state and territory governments. if we can get a willing partner from one of the states and territories, we can see it opening very quickly. ♪

haidi: that is just about it for debris go straley appeared we are looking at the downside at about 6/10 of a percent when cash trading begins. this is bloomberg. ♪

haidi: good morning. we are counting down to shery: asia's major market open. shery:welcome to daybreak asia. our top stories this hour. the u.s. warns russia may attack cities beyond the ukrainian capital as moscow sends -- says troops will remain in -- in belarus indefinitely. traders winning feds calls for