♪ good morning. welcome today broke australia. where counting down to asia's major market opens. >> good morning. the fed tightening begins. the central bank is raising rates by .25% and signaling further height. that hikes. >> wall street reacts to the s&p

500 sing the biggest today rally since april 2015. president biden ramps up a military aid to ukraine sending drones and thousand of antiaircraft and antitank missiles to fight russia's invasion. we are seeing u.s. futures gaining ground. two tents of 1% at the moment after the s&p 500 rallied, the biggest two day rally since 2020. that's interesting because we saw a tumble as much as 3% in the new york session after we saw the fed signaling more rates to come. chair powell talked about how strong the economy was. it helps that we saw chinese abr getting ground. shows up more than 30% after beijing said they would support the economy, the markets. we are seeing crude at the moment in the asian section -- session rebounding. we saw a little decoy -- decline

in the new york session. libya is asking a black -- asking opec-plus to increase supply. it was all about the treasury space. we saw yields job and the curve flattening, talking about the 530 really dropping to the lowest level since 2018. >> we are seeing asian equity futures sword. -- soaring. it feels like fed chair struck the balance reassuring on the outlook for the economy. this is what we are seeing when it comes to new zealand. trading is underway. the economy bounced in the fourth quarter according to the latest numbers in the final three months of 2021 from the contraction and lockdown in auckland. gdp is rising 3% from the third quarter. we are seeing upside sentiment when it comes to equities

trading. the 10 year yield is steady. sidney futures are pointing to a strong start to the open this thursday. this is a session we will be watching when it comes to australian bonds given they have tended to follow the price moves we have seen in treasury. when it comes to the rest of the space we are watching in asia with the lower dollar we are seeing the yen hitting a six year low on the back of the fed move. we are continuing to watch the impact on asian effects today as well as overall equity sentiment. >> it is interesting to see weakness in the japanese yen given haven demand and of the war in ukraine. this is interesting given policy divergence with the fed. we are expecting all meetings to bring great heights. jim bullard dissented in favor of a 50 basis point hike instead of the 25 basis points we saw.

the brazil target rate at the moment is what we are expecting now. inflation is raging not only here in the u.s. but also in brazil. we are seeing prices gained annually by more than 10%. the expectation is at the brazil central bank will hike rates by 11 -- i hundred basis points, 11.75%. they are late in announcing that decision. >> we are continuing to watch how other central banks around the world are watching the fed and reacting on their own to domestic inflation expectations. i thought it was really interesting that we are seeing this kind of recession infused psyche dominate or at least in the background when it comes to trading expectations. that was not present at all today in the market reactions. in the past few weeks and months there are concerns about oil prices, the ongoing war in ukraine, as well as

this market that are worried about overtime today. >> the federal reserve decision lived up to expectations that it would shift. there are plans to raise rates at every meeting for the rest of the year. kathleen hays is here with more. what stood out to you. >> we are looking at how aggressive the fed is. the most aggressive rate high school forecast from wall street. jay powell admitted that with perfect hindsight we could have admitted we are getting it wrong. they know what they have gotten it wrong. let's go to the dots. seven rate hikes this year. that will take the key rate up to 1.875%.

jim bullard dissented. i guess he is open to that as well. 2023, four more rate hikes. the consensus peaks at 2.75%. the neutral right from the fed is 2.4%. people say traditionally when you get the key right above the neutral right you are setting the stage for recession. jay powell says, look, we will do whatever to curb inflation that yes he did also open the door to a 50 basis point rate hike let's listen. >> every meeting is alive reading. we will be looking at evolving conditions. if we conclude it would be appropriate to move more quickly to remove accommodation, then, we will do so. i cannot be specific about it

but that is certainly a possibility as we go through the year. >> a lot of questions that the press conference, a lot of questions after the press conference and it is the meeting. look at these forecast. look at gdp and unemployment. the fed it does see rate hike slowing down gdp somewhat over the next three years. unemployment stays the same. jay powell says that the economy is strong. there is a lot of unfilled positions. he thinks they can keep doing this and not because of the recession that so many fear. i think it is interesting, heidi, on your comment about how well stocks reacted. some of the commentary i saw said it is was because jay powell played out the wrist ever set ash the risk of recession and investors like that. he said balance sheet reduction could come as early as may. that is when we see the yield curve flattening, close to inverting. again, they will not stop. they know they have it wrong so

far and need to get it right. >> kathleen hays there with a wrap up of said action overnight. president biden is wrapping up u.s. military aid to help the ukraine sendoff ukraine's attack. -- fend off russia's attack following an emotional plea from ukraine's president volodymyr zelensky. >> 20 million rounds in total. this will include drones that demonstrate our commitment to sending our most cutting edge systems to ukraine for defense. >> let's get more direction from our political news director. what was the main takeaway. we heard the president calling president putin a war criminal. >> these were emotional speeches. first from ukrainian president zelensky on the screen before

members of congress from both chambers wearing sort of military fatigues. he looked tired and spoke very emotionally about the u.s. and expressed gratitude to the u.s., specifically, president biden for helping. he said more was needed. he asked for more weaponry, more sanctions against russia and he asked for a no-fly zone. several hours later president biden gave him some of that in an emotional speech which he called -- in which he called a vladimir putin war criminal. the white house has been criminal -careful up until now to not use those terms. so this was a departure, and escalation in rhetoric. the president basically said he was willing to go for $800 million into weaponry including

the drones. he listed the drones, a list of things without much collaboration. he made it clear that the u.s. will stand by ukraine. he did not talk about the no-fly zone. >> let's turn to chinese stocks. roaring back in one session with the golden dragon sword. beijing routed to keep its stock market stable. and to property developers. let's bring in our chief rates correspondence garfield reynolds. garfield, i wonder how much or how long this rally can actually go good to doing with new listings from u.s. exchanges. >> yesterday's rally was another classic state induced search for china.

it reminded me of what happened back in 2020 when china pivoted to endorsing buying as many stocks as possible that step -- set off a huge rally. chinese stocks were close to the shanghai 3000 that started the rally. it seems like there may be levels at which china's government is a bit uncomfortable. the rally probably has perhaps some momentum. got up by a numbers recently. presumably, a bunch of positions , people rushing to get in. that is likely to calm down soon. you might feel that that is it. in fact, there are a great

attempt for the downside and upside's given u.s. china relations and stock market listing fan -- listings and china's own covid difficulties that continue to grow. >> we saw such a positive reaction when it comes to stock from jay powell seemingly trading that -- treading that very fine line. where do we expect asian markets to head from here? could it be more volatility. >> the volatility is likely to be stocks to the upside. such a strong message from wall street. initially we would expect strong gains. that might be tempered a little bit by some of the big moves boast up and down from u.s. markets. it is -- both up and down from u.s. markets. it is kind of hard to ignore the sense of relief coming from u.s. stocks and u.s. futures helps.

there might also be part of what could have driven the rally at a u.s. equities and could drive some rallies in asia stocks was the fed led to further declines for barns. so bonds kept falling. people were taking money out of bonds and putting it into stocks. that is one strategy probably being pursued especially after stocks have fallen quite a bit themselves. bonds are almost certain to keep going down no matter what. stocks could come back depending maybe on what happens in ukraine and other factors. stocks perhaps less dangerous at the moment that bonds. -- than bonds. >> vonnie quinn it has our first word headlines. -- vonnie quinn has our first word headlines. a strong earthquake shocked

fukushima japan. 7.3 magnitude hit late wednesday killing one person and injuring dozens. a bullet train derailed in the region. no injuries has been reported there. the infected area was devastated by the earthquake and tsunami in 2011 that left 60,000 people dead. japan will revoke the most favored trade status for russia stripping it of basic wto rights. private -- the prime minister called russia's aggression inhumane. japan plans to freeze the assets of more russian oligarchs. a united nations tribunal ordered russia to defend -- suspend operations in ukraine. it is unlikely to carry real-world ramifications yet. the court found ukraine has a

right to not be subjected to military operations by the ukrainian federation. -- the russian federation. if moscow does not abide by the order the un's top force has the right to revoke its security council. global news on air and on bloomberg quicktake. i'm vonnie quinn. this is bloomberg. >> breaking news out of brazil. the central bank is raising the key interest rates 11.7 5%, a hike of 100 basis points. this comes as brazil contents with annual inflation of more than 10%. last week we saw raising diesel costs by as much as 25%. we continue to see not only brazil but global inflation continuing. this would be the central bank, the first one to actually raise rates following the federal reserve hiking by 25 basis points. >> coming up on daybreak

australia we talk investment strategy with bmo family office and get perspective on the rebound in chinese stocks and how long it can last. up next, we discussed the fed outlook. why he believes our guitar overestimating the numbers of rate hikes this year. this is bloomberg.

>> our top stories today. the federal reserve hiked rates for the first time since 2018. let's bring in our editor kathleen hays standing by with our next guest.

>> head of global policy at hyder sandler joining us from washington dc. it's great to have you. as we start i want to point out to our audience you are that of the division of monetary services fed board of governors in washington. you lead the team that wrote the policy statement that helped formulate policy. you know what this is like. about as aggressive a rate hike as you can said. what is the message to you? >> i did not leave the whole division. but yes, i was involved in a to the financial crisis. i think today was an interesting day. i think for the fed to go out there and signal that they are essentially willing to go with

this concept of neutral, willing to roll the dice inprobably, onl

as alan greenspan very different from ben bernanke and janet yellen, very in touch with the way the political wind is blowing. i think eventually of the economy slows enough and in the labor market becomes a political

issue the economy changes as well. >> brazil bank is signaling another 100 rate hike in their next meeting. in their economy growth has taken a hit. are there any lessons we should be taking from economies that have hiked faster than the central bank in the u.s. or the ecb? >> yes. precisely what you are hinting at. hiking fast certainly helps bring down inflation but the downside is that helps bring down growth as well. be careful. i think at the end of the day the reason i think the fed will raise rates less than the market expects is because the dual mandate that has balanced inflation and growth. and we'll try to do so by doing more tolerant with respect to

inflation to not risk rolling over the economy. >> said chair powell was asked about balance sheet production a couple times that is numbers. -- a couple times at the conference. he said we will potentially be seeing it as early as may, looking close to inverting. is this a signal the fed will be looking to move towards quantitative tightening in order to balance the bond market and not let that happen or what happened anyway if they are so aggressive on rate hikes? >> well, it will happen anyway. the curve continues to flatten. i mean i think the idea that using quantitative tightening to deepen the curve is dubious, i would say. i think the fed knows that. the fact is that the qt, you stopped reinvestment securities across the curve, not just the long end. the effect on rates happens across the curve.

i would say the curve keeps flattening. >> piper sandler head of global policy we appreciate your time. there's a lot more to come on daybreak australia. this is bloomberg.

>> currency of the bond markets setting up for the agent -- asian market reaction to fed news overnight. this is what we are seeing what it does when it comes to made players, kiwi and aussie dollars. we will have further losses when it comes to the aussie. over 32 u.s. census morning area -- 36 this morning. we are seeing australia working

to drop. -- started to drop. the curve is flattening. we are seeing kiwi notes declining. the deficit is the widest if you're a small business, there are lots of choices when it comes to your internet and technology needs. but when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose fiber solutions with speeds up to 10 gigs to the most small businesses. that's virtually everywhere we serve. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™. 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. supersonic wifi. only from xfinity.

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largely abandoned monetary orthodoxy and it is trying to be too vut in holland -- too cute as to how it is managing this. >> these rate hikes will have no effect on the rate -- real economy at all, i do not buy that. >> they are trying to bring inflation down but it is fanciful to think you can do that without rate hikes bleeding into unemployment. i think we will have to see

higher unemployment. >> inflation will gradually moderate in the back half of the year. that does create a real challenge for the fed. >> some guests on bloomberg tv earlier were discussing the impact of fed rate hikes. we are seeing u.s. futures paring back earlier gains we saw at the open after we saw stocks finishing your session highs. the s&p 500 posted its biggest today rally since april of 2020. of course we are seeing nasdaq is also muted. treasury futures are not doing much. we are seeing treasury yields jumping with the curve flattening. five 30's reaching the flattest level since 2018. we have the bloomberg dollar index gaining ground. also adding to that sentiment in the market in the new york

session today was this huge rally we saw in chinese adrs. let's get warning calls now. china's valve to stabilize financial markets might not be enough to put a hold on stocks. we saw the golden valley index rally more than 30%. low columns the chief strategist is now saying a policy bottom could be seen in shares. that is not secured. he said the key takeaway is china will proactively release markets and regulators should ordinate -- coordinate before putting out market moving policies. >> the fed is signaling a much more aggressive forecast for rate hikes ahead. chief economist aviation filled raised his forecast to 100 basis points over the next weeks before the fed will pause and take stocks. he says the increase is justified. stocks look set to extend gains

on the third day in asia. fed chair jay powell is saying the u.s. economy is a strong enough to handle tighter policy. let's get analysis from bmo family office deputy cfo carol five. this idea we see, that recessionary fears fade into the background somewhat, is this do to balanced messaging -- due to balanced messaging from jay powell or are those concerned still there in the market? >> it is important to remember the fed would not have started raising rates of the economy were not strong enough. it is interesting to think back over the language of the last six to 12 months. defendant was focused on -- the fed was focused on bringing the unemployment rate down in price stability meeting the market can handle some of the pressure for

mr. straits. a lot of places -- from interest rates. a lot of places we are seeing inflation that is not transitory, very sticky. you do not pull ridge back, pull wages back. -- ridge back, pull wages back. but the economy seem strong enough to handle it. >> we were talking this morning about whether fed chair powell is pulling a volker. will he a volker? isn't that already in progress? what sort of risk does that pose for the economy? >> interest rates were substantially higher and going higher into double digits. we are coming basically although they rate of zero with an fiscal

-- admits fiscal stimulus in the system. so he has some room to raise rates given how strong the economy is and how flesh investors and citizens are, at least under the u.s. here -- flush investors and citizens are, at least in the u.s.. >> we have that buffer for markets to rally higher from here. >> this is hard to say. there is a lot of stuff going on in the very short run where chairman powell mentioned ukraine with the focus was clearly on inflation and intermediate things. there is a lot that can happen and a lot that got thrown off kilter especially as it relates to commodities, different pricing and supply chains being upset both by the russia and ukraine issue and the chinese shut down so there are a lot of things for the fed to deal with and a lot of things for investors to deal with you -- too. >> what data points are you

looking at the see if inflation is becoming entrenched? >> i think there are many data points. i think the fact that -- it is hard to say it is not entrenched already when you look at wage increases and low unemployment rate. flexibility. people have a rent up there. supply chain issues. there are a lot of places in the system that it will stay entrenched, although, not have the same rate we have seen it pop up. we expect it to level off by the back half of last year and the start -- of this year and the start of next year. >> camera -- carol schleif there. the fed outlook may be getting risk assets a boost. goldeneye partner scott minerd told us the central bank is in an inflation panic and being too cute in how does managing the

situation. >> i would put the fed at a level of panic. that is, every piece of news that comes out, you know, we have this rethinking. the erratic nature of the dot plot. the discussions about shrinking the balance sheet while we will raise rates. we do not even know what the impact of raising rates as yet. i think they are in an inflation panic. they have gone from transitory to, you know, we have to be much more aggressive that we were saying a few weeks ago. >> how do you have a fed put at a time when exactly the turmoil you are seeing in markets is part of the only tool the fed has to dampen inflation? >> lisa, look. inflation is always and everywhere a monetary phenomenon the words of elton raymond. -- milton freeman. we need to control the money supply, the balance sheet.

as we have been talking today, that is not the mindset of the fed. the fed thinks it can control interest rates. somehow, it will manage. so, i think that the fed has largely abandoned monetary orthodoxy. it is trying to be too cute in how it is managing this. ultimately, if we would just stop growing at demanding -- growing the money supply just as we experienced in the 1940's, inflation dropped from 20% to deflation in two years just by not expanding the balance sheet. fed would, you know, be able to bring a market soft landing into place. i think right now by trying to adjust rates and talking about adjusting the balance sheet the fed is likely to create an accident of some kind just like we did in the second half of

2018 when they attempted the exact same thing. >> guggenheim partners chief investment officer scott minerd. a strong earthquake hits northern japan the a bullet train and knocking out power to millions. the latest is coming up. this is bloomberg.

>> you are watching daybreak australia. i'm vonnie quinn with your first word headlines. the federal reserve raises interest rates since the first time since 2018 and a signals hikes at all six remaining meeting this year. that's remaining meetings this year. the fast disinflation in four decades. jim bullard dissented in favor of a half-point hike the first vote against the decision since september of 2020. >> it is clearly time to raise interest rates and begin balance sheet shrinkage. as i look around at the table at today's meeting, i see a committee acutely aware of the need to return the economy to price stability and a determined to use -- determined to use our tools to do exactly that. >> biden says the u.s. will said drones and thousands of antiaircraft and antitank

missiles to ukraine to help the country fend off invading russian forces. the white house is touting $1 billion of security assistance authorized for ukraine in the past week. u.s. it's the largest single donor of aid to the ukraine. ukraine and russia show some progress towards a cease-fire. the kremlin's proposal to become a neutral company --. this by developments, ukrainian officials tempered expectations by pointing to russia's continued attack. china says it will take measures to stabilize financial markets the selloff. in a policy meeting led by the vice premier officials promised to ease their regulatory crackdown. separately, beijing is preparing

to make concessions on auto disclosures to u.s. regulators. global news 24 hours a day on air and on bloomberg quick take powered by more than 2700 journalists and analysts from over 27 countries. this is bloomberg. >> new lows even as we see haven amongst other currencies like the dollar amid the ongoing war in ukraine. the yen is potentially having further room to fall after falling to its lowest level against the dollar in six years. diverging u.s. and japanese monetary policy. the fed is tightening the balance sheet. we saw the yen slipping as much as 7/10 against the dollar to just over 119. the greenback is the weakest since february 2016.

the fed announced it is raising its benchmark rate. the past four more tightening ahead. -- clearing the path for more tightening ahead. the bank of japan is still trying to boost long-term growth output. we have this to contend with. a 7.3 magnitude earthquake striking northern japan in fukushima injuring dozens of people and knocking out several power plants. putting them off-line. our chief correspondent stephen engle has more. what we know? >> it was a 7.3 magnitude, significantly less, i might add, then the fukushima earthquake back in 2011 that killed more than 16,000 people. that new two-year reactor crisis in japan was about nine on the richter scale area this is 7.3. i do not mean to downplay it but of course the parallels and

similarity, especially people living in the fukushima preventers will be -- prefectures would be concerned about a tsunami. authorities have retracted the tsunami alert. the earthquake happened at 11:36 local time last night just before midnight. as of 4:00 a.m. this morning 88 people were injured as well as one death, a man in xoma city in fukushima prefecture reported by nhk. again, there was a small tsunami. but, there has been -- the tsunami alert has been called off according to nhk. nuclear regulators in japan say a fire alarm went off at

fukushima's number one nuclear plant but there was no fire, also, water pump used to cool fuel at the number two plans were also halted before coming back online. tokyo electric power is saying the quake did shift a tank holding treated water but other media has been reporting there are now no abnormalities, no significant punctuations. -- fluctuations. there was a bullet train incident between fukushima and miyagi prefectures. no injuries are reported. just looking through the headlines. i think that is pretty much what we are seeing now. maybe, avoiding a big disaster. but this was fairly large. by japanese standards, probably a medium earthquake was felt quite significantly in tokyo, some 300 kilometers away. >> those videos are giving me

flashback of the 2011 earthquake and tsunami. i remember being in tokyo. one of the reasons we were concerned is because of the fukushima nuclear power plant. what do we know at this point in terms of economic damages? we know enough to city was halted. there was not power in a lot of places. anything that could linger this week? >> i think it will renew, of course, the debate about nuclear power in japan. we will have to see what the new prime minister has to say about that. but, essentially, tokyo electric power is saying that up to 2 million households are building -- h -- households or building didn't lose power before midnight but they have resumed electricity to most of those. the latest report according to nhk, some 40,000 homes or building still without power. this morning i to japan. probably, a very tense evening

in northern japan off of the fukushima and miyagi prefectures awaiting any signal on those potential tsunamis and waiting for the power to come back on. it looks like there are no abnormalities, no fluctuations in power coming back on. a bit of a scare, obviously. >> in 2011 it was also the after, such a big earthquake in themselves that we have to be careful about. stephen engle our chief north asian correspondent with the latest on the earthquake in japan. next, the london metal exchange reopened. nickel trades raising the daily limit to percent. because our head.

>> look at this chart. nickel prices tumble by the maximum allowed by the enemy as -- the lme as the market opens in a messy sequence of false starts. see the price action on top. the bottom shows volume 200 and eight loss. -- 208 loss. the daily average the past year is 88 times that. nickel prices are tumbling by

the maximum allotted as the market reopens in london. let's bring in our metals and mining reporter for more details on how this day with and where are we headed ivonne? this was such a chaotic day. >> it really is. thank you for having me. the nickel market basically broke last tuesday in a historic short squeeze. it reopened this morning london time, wednesday. but, when it reopened, it actually reopened in a very messy way because nickel prices tumble by the daily limit set by the enemy, 5%. they actually fell more than 5% when they first reopened, this morning. the lme had to come in and stop

trading because of technical niches that allowed prices to fall back to 5% daily limit so electronic trading was halted for several hours while the nav was working on the issue to solve it. then it reopened. then, when it reopened again, prices, again, fell through the daily limit, 5%. so, it was kind of an embarrassing reopening for the lme nickel trading today. >> we didn't expect that to be volatile at the open. let's get your check. financing the fossil fuel industry. they are warning oil and gas

clients that it is in line with the move towards net zero admissions targets. hsbc remains one of the main funders of big oil and gas helping companies rate -- raise about $62 billion from selling bonds. swedish investment firm qt --eqt agreed to buy barron's private equity asia, financing the deal with 119 -- 190 million new ordinary shares and the remainder in cash taking advantage of its stock performance ipo in 2019. that transaction is that because in the fourth quarter. kid griffin teamed up with the owners of the chicago cubs for a takeover of english soccer's chelsea football club. his latest offer is ahead of friday's deadline. the club is being sold by roman abramovich in the wake of russia's invasion of ukraine and increased scrutiny of ties to

vladimir putin. >> futures trading. u.s. futures are muted, paring back from earlier gain we saw at the open. this after we saw stocks rallying in new york in session highs. the s&p 500 posting the biggest today rally since april, 2020. this is an interesting market move because we have the stock market initially tumbling after the fed signaled more rate hikes. then as chair powell talked about how the economy is strong enough to withstand higher rates , we saw the s&p 500 making a comeback. it does not hurt that we have chinese adrs rallying more than 30% as well. we saw the biggest gain in about two decades or show after beijing promised to ease that regulatory crackdown. we continue to watch for market volatility, especially as we have oil up and down in the last few sessions. i -- here in asia of is above

$86 a barrel after we saw it fall in new york. we heard from libya urging opec-plus to boost supply faster. we also saw possible process that's progress in peace negotiations between russia and ukraine. >> it is really the russia story that will play out when it comes to the asian trading session. we have seen it in the bond space, divergence going into the fed decision. we are seeing both australia and new zealand grinding -- declining after we saw a move in treasuries overnight. we saw aussie bonds drop. three yellow -- three year by seven basis points. tenure a little less. the same for kiwi sovereign bonds pricing in the gdp numbers for the end of last year, a little bit softer than expected. let's take a look at some of the stocks that will be in focus ahead of the open in sydney.

fonterra, almost 7% drop in income for the first half of the year. input cost is increasing. we will be speaking with the ceo. new zealand granted clearance for ampol to acquire shares in energy. daybreak austria is next. this is bloomberg.

haidi: a very good morning. we are counting down to asia's major market open. shery: welcome to daybreak asia. our top stories, the fed lifts rates a quarter-point and signals more hikes to come. this, as it kick starts a campaign to tackle the fastest inflation in four decades. asian stocks set to extend