♪ >> we are cutting down to asia's major market open. >> i'm kathleen hays in new york and welcome to daybreak asia. our top stories this hour, following wall street higher while the treasury selloff deepens. investors react to increasingly hawkish signals from fed officials. investigators revealed chinese to pilots failed to respond to radio calls before their boeing 737 crashed at almost the speed

of sound. and investors promised a restructuring plan. urging them not to take aggressive action. >> let's get the start of trading here. we are looking like that selloff with rate markets to continue. we see that 10 year yield in australia. this comes up a little bit, but certainly pretty close to 2.8% is what we are seeing. it is a pretty tepid start in sydney where we are watching whether we can replicate some of those gains. we did hear from the finance minister earlier today, saying that they do expect to see a

downside impact from monetary policy on businesses as well as futures looking mildly positive at the moment. >> let's take a look at some of the u.s. markets. the u.s. 10 year treasury bond future, the price actually lower again following through from the drop in price and a big increase that you saw across the curve today. the yield will be higher and the s&p 500 futures were up for five out of six sessions. the momentum seems to be carrying over in terms of sentiment as asia trade continues. we will see how much of a boost that gets. we will see there is another strong move after the nasdaq dragon index had a job, one of the gainers.

no wonder we see nasdaq continuing to climb. new york crude rising. the three-day gain halted earlier today. there is a whole question about the eu and the meeting this week. are they going to talk about banning imports? will they do something? >> when it comes to the global bond short end of that curve. let's bring in our correspondent reynolds. i will start off with you. how long are we going to see this divergence? what are we seeing in the bond market? at what point is was it -- is it priced and what the fed said it could do. >> the problem with the fed is if the key -- the problem is if

the fed keeps on talking about a potential 50 basis point rate hike. to some extent, i think bonds will continue to slide as long as we continue to get the pressure. at the moment, we have pricing about 70% to 80% chance in may. so until we get those basis points priced in, i think that we will see bonds continuing to be under pressure. perhaps the move that we have recently is about to fade out. that pressure for high-yield will sustain. >> as a market was just closing today, the terminal that caught my eye was stocks as the inflation hedge. the new narrative to explain how people can keep buying stocks when yields are rising and threatens to be so aggressive. how widespread is that?

how much does that account for recently? >> it is a theory gaining traction. stocks are linked to companies had prices can be adjusted. you can go to any store and notice prices are increasing. and more than that, there is overall optimism because there are higher wages and also around the world. this is despite them being hawkish on monday. >> in the latest on the markets as we get into the sydney open. they build roughly a ¥1 trillion or 8 billion u.s. dollar plant in japan.

this is 8 billion u.s. dollars for advanced products. this is what they see is booming demand. the company is hoping to finish that in japan next year. and of course, that is part of the domestic plans to shore up domestic manufacturing and the supply chain. putting that factory on the same site. let's get you to vonnie quinn in new york. >> the u.s. and european allies are expected to launch new measures against russia. his national security advisor jake sullivan says along with fresh sanctions, they will also use steps to crackdown. president biden will attend an emergency nato summit, g7

meeting, and meeting of the european council. going to jail for nine years of alleged fraud and contempt of court. the best form of support for political prisoners is action against what he called war criminals and putin's regime. the nine year jail sentence will be added to the 2.5 years he is currently serving. the pilots of the chinese eastern plane did not respond to air-traffic controllers after going to a nosedive on monday. investigators is too early to pinpoint the cause of the disaster. thousands of domestic flights were canceled tuesday across china is authorities ordered a sweeping air safety review. chinese health officials set up two to three makeshift hospitals to treat covid infections. this after china says milder

cases going to isolation. several have already been built or are under construction. it global news 24 hours a day on air and on uber take powered by more than when he 700 journalists and analysts in more than 120 countries. -- more than 2700 journalists and analysts in more than 120 countries. >> up next, announcements of a historic selloff and treasuries after more hawkish tones from jay powell. we talked about trading strategies. this is bloomberg. ♪

>> bloomberg has the fed covered all week. today, mary daly.

>> it is part of our policy. >> than additional fed president interviews thursday on bloomberg. >> fed president james bullard says u.s. monetary policy needs to be tightened quickly to keep inflation under control. he spoke excessively with michael mckee. >> faster is better, and i think the 1994 tightening cycle or removal of accommodation cycle is probably the best analogy here. that one was quite successful. the fed moved 300 basis points in a single year. then made some adjustments afterwards in 1995. the result was hitting the inflation target over the next 10 years. the economy boomed in the second half of the 1990's.

we move the policy rate up discreetly. i think 50 basis point moves will definitely be in the mix. and definitely get to a level that we can be neutral. and then from there, we can decide if we want to be restrictive and put further downward pressure on inflation. right now, if the wrong place to be given where inflation is. >> the markets are now pricing and 50 for may 4. the fed doesn't like the surprise of the markets. should we assume that is what you're going to do? >> i'm just one person on the committee. i don't know where the rest of the committee will be. the chair has to manage that process. i thought it was a good speech yesterday that laid out the situation and we will see where we are.

>> the economic data has been closely watched. but from what you're saying, it doesn't sound like it really matters between now and may. inflation is too high of those of the only two considerations. >> that is the big picture. i think it's right that we don't really need a lot more data here. you never know in this world. my feeling on that is that we can't wait for that to get resolved. certainly, geopolitical tensions even if the war ended tomorrow, the tensions will last for a long time. i think the best contribution we can make is to get our house in order and make sure the u.s. economy is doing as well as we can achieve. that will be the best that we can do to contribute to the global situation.

quickset -- >> without going r-star on everybody, neutral is a moving target. people think of different levels. one analyst some that the policy as the fed is going to keep hiking until something breaks. is that the best way to think about it? >> that's not a good way to think about it. we are going to go to neutral which is the place where we are not putting upward pressure on inflation. we have headline cpi close to 8% and probably more to come in the inflation reports ahead. so we want to get to neutral so that we are not putting upward pressure. and probably get to a restrictive policy where we are putting some downward pressure. history tells us that the faster we move to that situation, the better chance we will have of moving inflation back to target in getting a boom in the u.s. economy. >> what is neutral to you?

>> on the funds rate, i have 2% because my r-star is lower than others. i'm willing to go to zero r-star. that's lower than other estimates out there. so i would be 200 basis on the feng shui. that i would want to go to 300 to be mildly restrictive. that will help us turn inflation around. and hopefully get some moderation inflation from other sources. >> james bullard speaking excessively with michael mckee. traders have become too optimistic about growth and geopolitics. joining us is the ceo and founder of s gmc capital. great to have you with us. let's start off with this really interesting comment from mohamed el-erian, certainly an expert on how bond markets and those intersect.

investing over the next 12 months, i would reduce equities at this point. i would take some money off the table. i think that is a wonderful opportunity to come out. >> is he right that this is a good exit ramp? it would work hard to be impacting the economy over the next 12 months here? >> the recent rally in global equity gives you a wonderful opportunity to take some risk. and that is exactly what we have been doing. as these valuations seem a little bit skewed on the downside, and obviously geopolitical tensions are there in the worry for that to escalate is there. it will continue to play a role in equity markets. with respect to the fed cost future, it seems like the market is not really believing what

powell has been saving. that they will hike as many times as he said and as aggressively as he said. after the recent rally, now is a good time to take some risk off. and if there should be a correction, have the risk back. >> brazen or naive, it's certainly a predominant class of investors looking at equities and stocks as an inflation hedge. >> what we're seeing here, it does not make sense. so continue having that exposure is going to continue moving well. whether your cybersecurity, renewable energy, semiconductors, all of those things will continue doing well going forward. this is time to take some profits and equities do have had

with respect to inflation worries. some of the commodities and precious metals, in general, you will get the higher number with respect inflation going forward and it is priced in now. >> what you just said, does that mostly apply to investing in u.s. stocks, europeans talks? what do you think of chinese stocks right now? >> chinese stocks, if you look at relative and absolute valuation, they are incredibly attractive as of now. for a reason, the headlines have a lot of political risk. if you have a longer term view and it would mean anything into years to three years. and what we have been doing is we have been gradually adding to the chinese equities. the only focus on the big tech

names, look at what will be some of the future domestic winners. we will see u.s. markets declining and we won't see europe rally. the full correlation is quite high. a china is a little bit different because the underperformance we have seen is striking compared to the numbers. and they could actually be the ones becoming a little bit correlated going forward. >> mentioned sector growth, cybersecurity's, are there any other calls like that? i assume you are not keen on energy or consumer discretion. do you think these things have a trajectory that it is more independent of the business cycle? it is more independent with what is going on with the war in ukraine, etc.?

>> you are absolutely correct. you have to look at relative valuation and future growth expectations for the industry. consumer discretionary means quite a lot, but there has been a decent run in energy at these numbers. oil is not going to go down. it will remain a little bit higher. that's probably not where you want to allocate additional funds as of now. we're talking about currency and energy has a different thing. also the future of health care will remain one of the big things going forward which will mean retracting quite a lot of demand. >> moving some of your money into the saper -- safer parts of the investment universe. let's get a roundup of the stories you need to know to get your day going.

today's edition of daybreak, subscribers, go to dayb . it news on the industries and assets you really care about. this is bloomberg. ♪

>> a quick check of the business flash headlines. investors on track to provide an additional restructuring proposal by the end of july. they urge creditors to be patient and not take aggressive action so that it is a perceived plan. they have gotten in touch with 89 institutions and individual investors about the situation. they struggle to meet production forecasts due to a shortage of semiconductors.

the carmaker now expects marginal growth in deliveries this year. after previously saying volumes would rise. nvidia has told investors it is focused on maintaining growth with new products rather than embarking on more ingressive stark -- aggressive stock buyback plans. the priority is used cash to expand the business. investors had been eyeing more buybacks after nvidia walked away with a $40 billion plan to acquire arms. >> china has ordered a sweeping two weeks safety review of its commercial aviation industry in the wake of the china eastern crash on monday. authorities have revealed that the pilots of the doomed aircraft did not respond to multiple calls from air traffic controllers as the plane went into nosedive. the latest is our chief asia correspondent stephen engle.

are we getting more clarity on the circumstances that led to this crash? >> where learning the circumstances. we are not learning the cause. it would take quite some time in the aircraft is essentially obliterated. and at those speeds, we are hearing that aircraft as it went into the steep nosedive. the plane is traveling more than 640 miles per hour. at 966 kilometers an hour. the higher up you go, it is 663

miles per hour speed of sound at 35,000 feet. this plane was traveling at 29,000 feet in 595 miles per hour at cruising speed. and suddenly went into a nosedive according to the data. that tells us it does not give us an answer because i have my sources north of seattle. i have sources about how this could be the cause and a completely intact aircraft to put into a straight down vertical nosedive. they are very odd circumstances. experts are confused and baffled by the cause of this.

china is ramping up safety procedures. there is a training pilot in this particular crash, many thousands of flights were canceled. >> a story that gets more interesting by the moment. thank you so much. doing a great job. chief asia correspondent stephen engle joining us north of seattle, washington. they continue to climb, that u.s. futures are showing that there are prices continuing to fall and continuing to rise. and a new zealand, we have seen a jump in yields as the price falls. we have new zealand also lower. it looks like read for the jgb

in japan as well. china is taking extreme measures to avoid covid restrictions. you want to hear all about

>> this is daybreak: asia. st. louis fed president jim bullard says he has monetary policy tightening quickly to ease inflation pressures. he reiterated his call for rates to rise above 3% this year. >> what you have to do is move the policy rate up discreetly a fair amount, not to be dude -- too disruptive. 50 basis point moves would be in

the mix. and then get to a level that we can be neutral on. from there, we can decide if we want to be restrictive and put further downward pressure. we are putting upward pressure on inflation. it's the wrong place to be, given where inflation is. vonnie: myanmar government -- the foreign ministry has denied engaging in any genocidal actions. the u.s. has determined that myanmar's military killed more than 9000 -- and forced others to flee to neighboring bangladesh in 2016. mckenzie scott has donated 430 $6 million to habitat for humanity as the housing crisis across the u.s. intensifies. it's the biggest known gift to date for the philanthropist. she decided to give away most of her fortune.

habitat for humanity says the gift will help address historic inequities in homeownership rates in the area. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. haidi: traders in china are camping out in their offices to avoid covid restrictions. for more on the countries virus situation, let's bring in our bloomberg editor for asia global business, emma o'brien. sleeping bags in the office. instant noodles at the ready just in case everything gets locked down while you're at work. emma: shanghai is taking a different approach to some cities in china. other places we've seen wholesale lockdowns. we are not seeing that in shanghai. one of china's biggest cities. a real financial gateway. they are being more targeted,

locking down individual buildings or areas of neighborhoods. that's why you are seeing the situation with the traders in the sleeping bags. they may get caught up in one of these mass testing initiatives. if they do, they want to be there, next to their terminals,. they need to be all hands on deck. kathleen: china is saying, we have to start building 60 makeshift tops but also. -- makeshift hospitals. it's highly transmissible. it may be far less fear yellen. it looks like china is behind the curve when it comes to having enough hospitals to treat the pandemic when it's really raging. emma: yeah. they are laying the groundwork for an anticipated uptick in cases, whether that comes from the current wave or down the

track as china starts to normalize a little bit and allow a little bit more covid to come in as they reopen. we are hearing that that's going to happen anytime soon. what they've done is ease their guidelines so that people aren't going to the hospital if they have covid. they are going to be going to these makeshift hospitals or isolation centers. it's like what they erected in wuhan at the start of the pandemic. almost shipping container style buildings where people are isolated when they have covid. china still has that policy of isolating everybody regardless of their symptoms that has the infection. kathleen: that was bloomberg's managing editor for asia global business, emma o'brien. evergrande has assured investors that it's on track to provide creditors with a preliminary restructuring plan by the end of july. the developer urging patients

tuesday evening. yvonne man has more. what kind of answers did investors get from the company? avon: they tried to reassure the growing concerns among them after they delayed the results. the stock suspended as of monday. there were questions. if you can't deliver when it comes to publishing their earnings, is there a delay in the restructuring process? the call seems to reassure investors that that is still on course at the moment. the promise they made in january to deliver in six months, this proposal, is still on course. they said they are exchanging views with off store institutions and individual investors. they have about 22 points and offshore debt including 3.3 billion part of project financing.

there's a lot of questions. there's a lot of questions on how investors can gauge how much liquidity is remaining for evergrande. if that's the case, can they deliver on home projects and paying their bondholders? haidi: evergrande property services unit investigating how to billion dollars were used for pledge guarantees. yvonne: this is a very interesting development. the property services unit was seen as the strong part of the group. and then you have this headline of an unreported $2.1 billion seized by these banks. that basically wipes out most of its cash holdings. late june, it stood around $2.2 billion in cash. this could just be in evergrande specific story.

bloomberg intelligence saying that this is a signal of the hidden risks out there when it comes to these property management units. there's not much sensing around these entities. they may share the same management team as well which creates conflict of interest. for evergrande, they said they are looking into this matter and investigating but they call it a major incident. haidi: yvonne mayor -- yvonne man there. more on china's troubled property sector and the implications for broader what it markets. -- credit markets. this is bloomberg. ♪

haidi: the bond selloff continues in the asian session following a renewed bout of selling for treasuries, albeit it was a calmer session overall. short data treasury debt hurtling towards the worst quarterly performance since 1984. traders are still scrambling to reprice fed expectations. a lot more fed speak throughout the coming days. 10 year yields leading. we are seeing 10 year bond yields in australia leaving the advance as well. there are after session highs

that had jumped around seven basis points at the start of trading. new zealand is also seeing a little bit of repricing there. we will be watching jgb's continuing to see that divergence between fed expectations and a boj that isn't very close to tightening monetary policy or anything akin to that, even with some elevated inflation readings. kathleen: there you go. let's look at the treasury. spread between chinese and u.s. benchmark, the smallest in three years. what a trend that is. chinese bonds have been back in

policy easing which leads us to our next guest. andrew collier, global source partners analyst. this expectation that the pboc is going to start easing come if you cuts, some fiscal stimulus and all that. that has really seemed to slow down. does it slow down this case for the expectations of bond investors? andrew: yes. [no audio] kathleen: i guess we are going to have to reconnect our zoom. are you there? andrew: i'm sorry. kathleen: there you go. keep going. start over. andrew: basically came out with very positive statements about liquidity and monetary stimulus. the market took that on board. we haven't seen a lot of results from that. i've seen some credit going to small businesses which is something the government has been pushing for a while. we've seen a little bit of fiscal stimulus and also a lot of the stimulus has come through what i call proxy shadow banks,

the asset management companies and trusts and other things like that. it's not part of the central government. a big flood of cash from beijing in terms of the waking system. we've been talking about that for years and we've yet to see it. the deleveraging campaign is quite serious. kathle do you expect that to stay that way for a while? how do we look back at that terminal, showing how that spread -- they are not offering much now. u.s. bonds rise so much. we know that at some point, there are fears that that is going to slow down the u.s. economy in that could bring yields down. how do you decide where to put money in these markets? andrew: a lot of the gains in china have been because of the booming property market. i have friends who said, i could get a guaranteed 6% in china. i said, guaranteed by who?

she seems comfortable with that. a lot of that is because of the property market doing well. sales have been down 20% in the first two months of the year. that game is playing out. china may be struggling with capital flight although they've been pretty good at clamping down at that. a lot of the opportunities and china are going to start dissipating. the bigger question is whether the impact on the overall economic growth is serious. the evergrande situation is fascinating. essentially, the banks have taken $2 billion for themselves. they claim it's for third-party guarantees which may be true. a lot of shadow banking. in terms of the power-play going on between the scrabble for cash and the property markets, you have the local governments, you have the banks, you have the people trying to buy apartments. it's quite a difficult situation right now.

haidi: at the same time, the broader macro risks, are we returning to the old local government financing, building up debt to get over this slow down hump to achieve that 5.5%? is it different this time? andrew: it is similar but smaller in scope. beijing has spent 10 years trying to clampdown on debt and they've been pretty successful. the deleveraging campaign against property is significant. seeing a buildup and local debt. i'm seeing a buildup with these shadow banks piling on debt. the local governments are really starting to lay off people, they are starting to be unable to pay salaries. it's getting difficult for them. beijing is saying, you have to figure this out. you cashed in on the property markets and now you have to figure it out. theyon't know what to do. it's a real deleveraging problem at the local level.

kathleen: do we see -- haidi: do we see a return to some of the problematic balance sheets for the banks? andrew: the banks can sustain a fairly significant problem. property is a big part of their portfolio. it's not the overwhelming majority of it. they have that huge deposit that gives them a huge advantage. that is certainly why the banks were able to clawback $2 billion from evergrande. at the end of the day, beijing is looking at competing factions. property developers, homeowners, local governments, banks. they are saying, sank the bank -- save the banks. i think that the banks are being backstopped because they are the backstop of the whole system. haidi: you wrote the book when it comes to shadow banking in china. does this prove that the closed-circuit system of the banks being able to shift things around on their balance sheets,

does it work? [laughter] andrew: it doesn't work in the sense that they are not doing big stimulus and propping up the market. they are being very strict about that. it doesn't work in the sense that after a decade of trying to control shadow banking and doing a pretty good job, we discover that the developers have been leveraging up using shadow banking products. they are telling people, whoever you are, if you have money, we will guarantee it. these transactions are turning out to be off the books, off the balance sheets of these developers. it's unfortunate that the cbrc and the pboc weren't able to spot this and clampdown on it until now. kathleen: coming back to the slow pace of the pboc cutting rates and the government spending more money. is it because you think that

they are seeing an economy that is not going to grow as fast as it did. it's basically doing ok. are they concerned? that could start gyrating the yen in a way that they are concerned about. what you think is happening and what happens next? andrew: yes. it comes at an awkward time. there's is a limited opportunity for people to move their money offshore. it's not that easy to get it on shore. at the end of the day, they want social and financial stability. if they have a massive crash like the united states did, that could threaten the future of the communist party. he's determined to be named in the position for life. what they are doing is trying to say, we'd rather have a managed crash or downturn that a

property crash which is what they were flirting with before. they've been pretty strict about that. haidi: it always comes down to that closed capital account. doesn't it? always great to have you with us. coming up, as the japanese yen slides, the boj shores up the economy with fresh economist. this is bloomberg. ♪

haidi: take a look at the yen which continued to trade near six-year low against the greenback. we are watching the january to -- 2016 low. that 2015 november low as well as the june 2015 low. we are looking at the three major forces driving that downside in the yen. the u.s. and japan, rising oil prices, safe haven demand. the demand hasn't played out when you're talking about the yen versus demand for the dollar. those factors are still very much at play here. let's get a look at how much further this goes. david senate seat joins us now. when you take a look at those drivers and how high dollar yen go, what are you seeing?

david: the key at the moment is interest rate differentials. such a hawk us -- the spread keeps going. the key the market is looking for is about 125. it's not going to happen overnight certainly. that was the high in 2015. corona started commenting on the yen weakness and it was maybe overdone. they decided to test that. equities don't selloff. if they start a selloff, some action comes into play. kathleen: at the last meeting, the bank of japan made it really clear that they aren't going to do anything to change monetary policy. not going to lean tighter.

verbal intervention? what do you expect, if anything, to stop the fall? it's not like the old days when kuroda would say, this helps our exports. david: it's interesting. if you look at last week when the bank of japan had its meeting, the comments from proto were like, yen weakness is ok as long as it's in line with fundamentals. what is fundamentals? that can be vaguely interpreted. the key thing is the speed of the decline. the beginning of this month, it was trading under 115. what you could see is that this has become too one-sided, too volatile. they won't wanted to we cannot to -- we can at two fast of apace. they will want to try to control the pace.

you could expect verbal intervention from the government or from the bank of japan. kathleen: sounds like the olden days. new have to step in and do or say something. david finnerty. let's get a quick check of the latest business flash headlines. interest from industry players including china's midea group and u.s. giant otis. other likely bidders include cohen. we are told the elevator business could catch about $4 billion in a sale. a 40% jump in fourth-quarter profits, beating s debates. sales increased 21%. the company boosted holiday season marketing. the world's number three fard from -- smartphone maker will

buy back $1.3 million of its own shares. shares rose for six straight sessions and the company officially opened its plant outside of berlin. it has capacity to make electric suvs with an ion sphere. >> this is a great day for the factory. i would like to thank everyone who helped. thank you very much. really made a very big difference. to the community, tesla will make sure that this is a gem stone for the area, for germany, for europe, and for the world. kathleen: lg energy solution has won a package for its $1.7 billion plane to expansion in michigan. the battery maker will get

incentives and a 20 year tax break worth more than 130 million according to a public memo. lg is planning to build several new facilities to boost the plants capacity. haidi: let's take a look at how the asian stocks are shaping up. we are seeing the return of sentiment in asia, continuing into the trading day. sitting stocks going up for a second straight session. tech stocks. tech leading by 3.251%. real estate and financials. we are seeing energy giving back about half a percent in some of those gains. this despite wti hitting $113 and brent just strike of $120 overnight. we continue to see selloffs continue. bond yields in asia are rising along with stocks. also watching weakness in the yen as well. ozzie yen is an interesting

point of risk sentiment, reaching the highest point sin 2015. we have the market open in tokyo almost upon us. this is bloomberg. ♪

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kathleen: welcome to daybreak asia. i'm kathleen hays. haidi: i'm haidi stroud-watts. asian markets have just open for trade. apex stocks set to fall while the treasuries selloff deepens. inflation hedge. investors revealed china failed to respond to radio calls for a boeing 737 crash at the speed of

sound. evergrande promises investors a restructuring plan by august, urging them not to take aggressive action. kathleen: let's take a look at the asian market open. starting with japan. right out of the gate, this will be the seventh day of gains for the nikkei as it continues, up 1.5%. you know this is probably gaining some steam from the s&p 500 rallying for five out of six days. the nasdaq in the u.s., nearly 2%. the topics gaining 1.25%. looks like the yen continues to weaken. 121.27 now. one to 1.14 was the january 2016 low. it keeps getting lower and lower and inching towards a 2015 low. so far, investors are shrugging this off.

you can see the 10 year ggp, the price now suggesting that we are going to see a little bit higher, pushing up towards the yield. investors are looking at 0.23. the last time the jgb yield hit that, the boj came in and bought a bunch. let's look at the kospi now and see how this is playing through in korea. not quite as robust as japan but again of nearly 1% if you want a positive spin on the kospi. it was higher yesterday after institutional buyers stepped in and did some buying. the cossack looking good. china dragon index in new york. there's a lot of interest now in tech despite the fed having a very hawkish rate hike past. -- past. 1.214.60. the dollar continues to strengthen and the one is

getting weaker today. the dollar strength is not surprising given what the fed has been saying. the korean bonds coming down a little bit. the price suggesting that the yield will be increasing. haidi: we are all family here. you were talking earlier about the renewed pressure that we saw in the previous session when it comes to bond markets. it was a calm or session but we continue to see that play out when it comes to asian rates, trading as well this morning. we are seeing a little bit further upside when we see the resumption of equities trading. the s&p 500 making the bulk of the losses from the january selloff. s&p futures at the moment looking to the upside. crude is giving back some of those gains from overnight. we were trading as high as 113 bucks per barrel but we are

seeing crude edge lower ahead of what's going to be a flurry of high-level diplomatic activity and we could see fresh curves on russia. that would affect energy as well. we are seeing in australia when it comes to the equity session, some of these energy names giving back against of the last couple days and profit-taking when it comes to that. taking a look at the aussie 10 year yield as well. that selloff playing off across australian in kiwi bonds this morning and watching aussie dollar and again which is seeing a lot of strength. that's at the highest point since 2015. that tells us something about risk sentiment. just the incredible weakness that we are seeing in the dollar as well. breaking news. new covid cases, 981 local cases from march 22. this is a record number for us. china is taking a lot of action when it comes to mass testing and shanghai.

there's concerns about residential and office lockdowns. we've also really seen the urging of provinces and china to set up at least two to three makeshift hospitals to deal with covert outbreaks and the explosive spread that we are seeing across the country. we heard that the northern chinese steel hub is under a temporary covid lockdown as well. a break out of cases there. kathleen: let's bring in homin lee. i want to key off of what the markets are doing. we are seeing equities in asia seeming to hold up pretty well and even move higher the last couple of days. yields are rising following the path of the u.s. bond market. of course, the bond market is in the path of jay powell painting a hawkish picture.

as you try to figure out what you're doing and what you will continue to do, how do you put this together? homin: well, it's true that due to the speeches from jay powell and the message from my friends, there's a bit of a rotation between asset classes going on right now. on top of that, since last week, we've gotten more positive signals from ukraine and russia as well as china's macro policy. these things are coming together with a bit of extra putsch -- push from dollar-yen. that's generally good news for the risk appetite of the market. these things are supporting the equity market sentiment a little bit. from our perspective, the risk is in the medium-term. related to this is -- to the

supply shy -- side shock. it hasn't gone away yet. we are still coping with that. we would be a bit more patient about the market in the medium-term. think about looking through the recent rally. what's clear is that, just like the past geopolitical crisis, equity markets tend to be a bit more resilient. for the bond market, the dynamic points to some cyclical risk. in the very near term, it makes sense for the investors to stay in the short duration side. as well as be very selective in what kind of risk they play in the bond market. kathleen: one of the things that have come to life, tech, big tech got hit pretty hard in the

last couple months. the last week or so, we are seeing chinese big tech doing better. we are seeing it in other nations as well. the china dragon index, the u.s. tech. how far do you think this rebound in tech stocks will go? that's our question of the day. homin: of course. it's a good question for everyone. this is mostly a relief rally. it's important that we have some sort of resolution on the conflict in ukraine which has implications for inflation trajectory and monetary policy. this risk has not gone away completely yet. there's a bit of correlation between the tech sector and different countries right now. obviously, china was something that was dragging down the entire region.

now with this more encouraging signal from beijing regarding the listing rules and discussions with the u.s. authorities of the audit requirements, it's giving -- it's creating the sense that maybe it's close to the bottom. this is a sector that has been beaten down the last 12 months. it makes sense that on the signal, the sector rebounds and brings the other tech names a little bit together. haidi: what are you using as inflation hedges within the portfolio? homin: we are using some commodity exposure as a hedge for equity portfolios, broader financial portfolios. within the equity bucket, we are trying to diversify further

geographically. in addition to keeping some existing exposures to the main market, we are using markets such as the u.k. and australia, which have performed pretty well this year, a bit of valuation advantage. they are positioning in the commodity market cycle. these are the markets we also tend to use. a bit of diversification within the equity market, equity portion of the portfolios. haidi: always great to have you with us. let's get you to vonnie quinn with the first word headlines. vonnie: thank you. the u.s. and its european allies are expect it to announce new measures against russia during president biden's visit. jake sullivan says that along with rest sanctions, they will

introduce efforts to crack down on the invasion. biden will attend an emergency nato summit and a session of the european council. russian opposition figure alexi navalny is calling on people to oppose vladimir putin after he was sentenced to nine years for fraud and contempt of court. in a series of tweets, he said the best form of support for political prisoners is not sympathy but action against what he calls the war criminals. his new jail sentence will be added to the 2.5 years he's currently serving. officials say the pilot of a china plane did not responsible spoke calls from air traffic controllers after tipping into a note -- nosedive and crashing. it's too early to pinpoint the cause of the disaster which is believed to have killed all 132 people on board. thousands of domestic flights were canceled across china as authorities order sweeping air

safety reviews. chinese health officials say every -- treat covid infections. china updated its corroded fire ants treatment guidelines. it sends milder cases to isolation facilities. 33 makeshift hospitals have been built or are under construction. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. haidi: let's take a look at the downside when it comes to the yen. dollar-yen has been trading at that six-year low. looking at a number of key levels that could be reached from here. we see the expectations of growing to virgins and monetary policy. we have that element of rising energy costs as well as a little bit of safe haven demand playing out when it comes to yen.

that preaching 120 against the dollar earlier on in the week. we are seeing pairs look -- looking pretty interesting as well. ozzie yen reaching the highest point since 2015, giving us a sense of the kind of cheer when it comes to risk assets. we've seen u.s. equities very defiantly strong in the face of rising treasury yields. ozzie yen jumping 8% in this month alone. it's on track for the best month in more than a decade. also looking at euro-yen as well, trading at 133.66. kathleen: we just spoke to one of our fx strategists and he's talking about the boj having to come out with verbal intervention. still ahead, we speak about spac listing planes in new york. the chairman and ceo joins us later this hour. president joe biden and his european allies are set to meet in brussels thursday when new

sanctions against russia are set to be announced. all the details just ahead. this is bloomberg. ♪

kathleen: let's check in on futures in europe. we've seen a lot of green on the screen and asian markets so far. picking up stock market momentum from the u.s.. the s&p 500 close higher for the fifth day of six. you can see that it looks like european stock futures are also opening to the upside. of course, european stocks advanced to their highest level in a month as financial sectors outperform. even after chair powell's aggressive rate hike comments. the deal is that maybe europe is looking better for stocks if the fed is going to be so aggressive. european stocks have been erasing losses fueled by russia's invasion of ukraine. there's optimism now about peace stocks. valuations will drop. we will hear more now about the

upcoming talks. joe biden going to brussels on thursday. u.s. and european allies are expected to announce new measures against russia during president biden's visit this week. let's bring in bloomberg reporter bruce einhorn. bruce, there's only so much optimism in the media coverage. are we going to get anything big that's really going to move the dial for ukraine in these meetings? bruce: well, i think the short answer is no, we are not going to get anything back. it's unclear what we are going to get in terms of new sanctions. it's likely that we will see some sort of announcement about russian oil and gas sales to europe. jake sullivan said that there will be an announcement of joint action on what he called enhancing european energy security. reducing europe's dependence on

russian gas. we also expect that there will be news about efforts to prevent invasion of sanctions come a discussion of russian cyberattacks, possible russian use of weapons of mass destruction and what nato allies would do in response to that. also, we expect that president biden will talk with the allies leaders about china, his call with president she last friday. and the upcoming meeting between eu leaders and china is scheduled for april 1. haidi: you mentioned that call. have we seen any more gestures or overtures from beijing since that call? bruce: well, china has long insisted that any suggestion that is providing military assistance to russia is what it

calls disinformation. the biden ministration has said that it doesn't see any chinese resistance to russia militarily since that call between the two presidents. of course, china says that it never intended to do that. china has also insisted that it's continuing to have normal relations and economic business relationships with russia. that suggestions that it condemn russia's invasion of ukraine are, in the words of the chinese ambassador, naive. china has also continued to seek to blame the united states for this situation. the china daily just yesterday said, u.s. and its allies are escalating conflict because they've made ukraine a proxy in their competition with russia.

the chinese government has also pledged humanitarian assistance to ukraine. the amounts that that -- that they announced is $1.57 million. not a lot of money for the world's second-largest economy. haidi: bruce einhorn there with the latest. coming up next, evergrande asking for patience from investors as the world's most indebted developer is says it's on track. we get the details ahead. this is bloomberg. ♪

haidi: let's take a look at some japanese chipmakers on the move. we had that announcement earlier

to build a ¥1 trillion flash chip plant in japan. part of its domestic push to try to shore up domestic manufacturing as well as ease some of the strains on the supply chain. disco corporation up by 23%. of course, watching toshiba, up by 2%. the unit putting the factory on the same side as the gig economy facility. they will start construction in april, hoping to finish sometime in the next year as well. kathleen: quite a move. let's move on to evergrande now. another big story surfacing. it ensures investors it's on track to provide creditors with a restructuring plan by the end of july. urging patients during a call

with investors tuesday evening. let's get details now from china credit editor rebecca june wilkins who's been following this story very closely for some time. what can you tell us about the investor call? rebecca: there wasn't much fresh information on the call. it was aimed at reassuring them that they are on track. they are going to make these deadlines that they set out for themselves for the per luminary restructuring proposal. they asked creditors not to take aggressive action in the meantime so they could proceed with their holistic plan to treat all creditors fairly. stressing how many institutions individual investors that it's been in touch with since. so much news yesterday about the property services unit, the suspension of trade plus the delayed result. there was some discussion about evergrande reiterating its

investigation of the pledge deposit that we've seen emerge when it came to light during the auditing of the results in the property services unit. haidi: if they can't actually get the results published on time, do we question whether this proposal is going to be imminent? rebecca: i think when it comes to that, evergrande is actually just one of several property firms that are saying they cannot deliver their audits on time. it doesn't make a unique -- they are saying similar things. it's to be expected to some extent that we are going to see these types of delays. there has been such a dramatic reversal of property firms. all this is clear. auditors are increasingly under the spotlight.

they signed off on what looked like healthy balance sheets last year. now potentially revealing that there was a lot of undisclosed debt that's going to come to light. there's a lot of focus on what those revealed. i think evergrande saying that they are moving to complete those results is seen as possible. resume trading of the shares as well. it's probably not going to directly delay the restructuring proposal. certainly there's a lot of interest in what's going to be revealed, particularly when it comes to the deposits that were used by the property services group. haidi: china credit editor there. coming up next, potential covid lockdowns in shanghai forcing some traders to camp out at their offices.

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>> i've proven that you can have the venn diagram of exceptional talent that is more than 70% diverse. >> there's a lot of contract work that they do that could be a black-owned business and we put that into our contracts to try to get those second tears build up. >> if you want people to be consumers of your product and visit your location, you have to be thoughtful about policies that you may be silent about. >> when you talk about the

things that hold us back, that hold marginalized communities back, it's a gravity. those three pillars are disproportionate access to education, health care medicine, and representation. >> they are going to include limits. >> it's easy to assume that they are comfortable with the world they are in, that they are not as ambitious. that's not a safe assumption. kathleen: those were some of the speakers at the bloomberg equality summit. let's move on to saint fluid fed president saying that u.s. policy needs to be tightened quickly. he spoke exclusively with bloomberg. >> faster is better and i think the 1994 tightening cycle or removal of a combination cycle is probably the best analogy here. that one was quite successful. the fed moved 300 basis points

in a single year. and then made some adjustments afterwards in 1995. the result was that we had our 2% inflation target over the next 10 years. the economy boomed in the second half of the 1990's. this is a situation that's like that. came out of the pandemic, got surprised by inflation. know what you have to do is move the policy rate up discreetly a fair amount, not to be too disruptive. a 50 basis point move would definitely be in the mix. and then get to a level where we can be neutral. from there, we can decide if we want to be restrictive and put further downward pressure on inflation. right now, we are putting upward pressure on inflation. it's the wrong place to be, given where inflation is. >> the markets, whether you look at swaps or futures, our pricing and 50 for may 4. the fed doesn't like that. should we assume that that is what you're going to do? >> i'm just one person on the

committee. i don't know where the rest of the committee will be. the chair has to manage that process. i thought that was a good speech yesterday and that laid out the situation. we will see where we are when we get to may 4. >> the economic data has been closely watched. from what you're saying, it doesn't sound like it really matters between now and may. that we are too low in terms of the fed funds rate and inflation is too high and those are the only two considerations. >> that's the big picture. i think that's right. we don't need a lot more data here. you never know in this world, in this business. we've got geopolitical risk at their. we can't wait for that to get resolved. this could go on for a very long time. certainly, geopolitical tensions , even if the war ended

tomorrow, the tensions would last for a long time. the best contribution we can make is to get our house in order and make sure that the u.s. economy is doing as well as we can achieve. that will be the best we can do to contribute to the global situation. >> without blowing all r-star on everybody, the idea of neutral is a moving target. different people think of different levels. one analyst summed up your policy right now as, the fed is going to keep hiking until something breaks. is that the best way to think about it? >> that's not a good way to think about it. we are going to go to neutral which is the place were not putting upward pressure on inflation. headline cpi close to 8% here. more to come in the inflation reports ahead. we want to get to neutral so that were not putting upward pressure and get to a

restrictive policy so we are putting some downward pressure. history tells us that the faster we moved to that situation, the better chance we will have of moving inflation back to target and getting a boom in the u.s. economy. >> what is neutral to you? >> on the funds rate, i have 2%. that's because my r-star is lower than others. i'm willing to go with a zero r-star. that's lower than other estimates that are out there. 200 basis points on the front trade. i would want to go to 300 this year to get mildly restrictive. that will help us turn inflation around. hopefully we will also get some moderation of inflation from other sources. haidi: james bullard speaking exclusively with bloomberg's michael mckee. let's get you to vonnie quinn with the first word headlines. vonnie: the u.s. and its european allies are expected to announce new measures against russia during president biden's

visit to brussels. jake sullivan says that along with fresh sanctions, they will ensure efforts to crack down on invasions. biden will attend an emergency nato summit in the session of the european council. russian opposition figures calling on people to oppose lot in your prudent after he was sentenced to nine years after -- for alleged fraud. he said the best form of support for political prisoners is action against war criminals. his nine year jail sentence will be added to the years he's currently serving. the myanmar government declared to commit genocide. it's foreign ministry has denied engaging in any genocidal actions, citing the remarks are politically motivated. myanmar's military killed more than 9000 people enforce more

than 800,000 others to flee to neighboring bangladesh. mckenzie scott has donated 430 $6 million to habitat for humanity as the housing crisis intensifies. it's the biggest known gift for the philanthropist. she's pledged to give away most of her fortune. habitat for humanity says the gift will help address historic inequities in homeownership rates in the area. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. this is bloomberg. haidi: take a look at the rally that we've seen extended in the asian session. really picking up pace. bond yields taking up. the threat of recession or over tightening really being front and center for bond investors. equity investors really embracing risk at the moment. the nikkei up by 2%.

we are watching games when it comes to chipmakers as we heard from an a billion-dollar investment in a new plant in japan. the kospi up by over 1%. we are seeing more modest gains. some of the big energy gainers are giving back the rally that we've seen earlier in the week. crude ticking lower ahead of the big end of the week action. under round of sanctions on russia. new zealand is the laggard. we've heard from the finance minister saying there's a downside risk of tight monetary policy on households. it's a robust session for equities and risk at the moment. kathleen: it sure is. you can feel it coming out of the stock trading in the u.s.. it's really something. let's look at something else that's going to be really something. french fashion companies join us

to discuss plans to list in the u.s.. this is bloomberg. ♪

haidi:haidi: traders in china camping out in their offices in order to avoid covid restrictions. let's bring in bloomberg's managing editor emma o'brien. let's start out with the latest in shanghai. a second day of record cases. speaking to colleagues and friends on the ground, they are having trouble being able to leave their compound to get basic supplies. they are really tightening these restrictions now. emma: they are doing something interesting in shanghai. i think they are heating the president's order last week to kick the economy when prosecuting this covid zero strategy. they are being very selective with the lockdowns and mass testing efforts that they do. that's resulting in it being quite specific and almost ad hoc. you are seeing certain areas or even specific buildings locked

down rather than the entire city which would be a huge undertaking in a place like shanghai. that's why you have traders and others sleeping in their offices just in case they get caught up in a mass testing lockdown. they could still be there to trade volatile in the markets. haidi: -- kathleen: anticipation of a shift in strategy, leading to more cases. is this a positive sign that china is excepting the covid zero isn't going to work and now you have to start dealing with the move from what we hope is a shift from pandemic to endemic? emma: the official rhetoric is very much voted -- covid zero in zero-tolerance for infection. you are still seeing lockdowns coming down. the fifth in about 10 days in a

city near beijing overnight. i do think that the order for every province to build two or three isolation facilities is laying the groundwork for a rise in cases which could come just from omicron which is circulating in china right now. it could also come from a slight reopening, opening the door to normalization in china more than two years into the pandemic. kathleen: managing editor for asia global business emma o'brien. now a quick check of the latest business flash headlines. $8 billion for its most advanced product. they are putting the factory on the same side as another facility in the northeastern part of japan's main island. construction will start in early april and finish sometime next year.

toshibas elevator business is attracting interest from industry players. sources say other likely bidders include: as well as germany's elevator company. the business could fetch about $4 billion in sale. the market cap above the $1 trillion mark after shares rose for a sixth straight session in the company officially opened its plant outside berlin. the facility will boost capacity to make electric suvs. haidi: a group which owns a french fashion brand is planning to float in new york by a blank check company. the transaction giving the company and enterprise value of $1.5 billion. a sign of confidence for the luxury industry. joining us now is the chairman and ceo.

so wonderful to have you with us. when it comes to choosing the location for this listing, how did you come to the conclusion of going to new york? why not hong kong or paris? >> this is a really exciting moment for us. going public becomes a natural step. global luxury industry has been very resilient even during the pandemic. why new york? new york is the financial hub and one of the fashion capitals. we see a lot of potential in our group in north america and asia. only 14% of the revenue is coming out of asia. the rest of the 86% of the

revenue is coming from europe, including u.s. north america. we have a strong commitment in keeping our business in north america including the retail footprint and the online business. we feel very excited. it's very important. we share a lot of insights of consumer sentiment. the stock exchange is natural for us for the whole transaction. haidi: we saw goldman sachs downgrade its outlook when it comes to the luxury sector. a lot of that was due to the covid restrictions and the closed borders that we see for china which remains the biggest market. can you tell us about the impact of covid-19 on your brand in china?

do you expect to see that revenge drafting that we saw after the markets came out of the first round of lockdowns? joann: sure. china is a small portion of the business. only 14% is coming from china. now we are developing a footprint in china. because of the restrictions on traveling, a lot of people have been shopping domestically. that's why we also tried to keep open in asia. we wanted to explore more digitalization through online or e-commerce channels. that's important as well. this not only happened in china. it's also happening in the other asian markets like japan. we have a very unique strategic

alliance group including japan. they are helping us to explore retail and a lot of wholesale japan. the same for north america. kathleen: this transactional value is about $1.5 billion. you are raising $544 million. what are you going to do with it? where do you see the best opportunities? ? specifically acquisitions? ? what are you going to do? joann: sure. we will use part of the proceeds to invest into our corporate full folio. a lot of things. we have to include our operational capabilities. we are still screening new oppositions.

including support of a growing brand which has included digitalization capabilities, technology, or sustainable supply chains. kathleen: even for retailers, luxury retailers, in some ways this is a tough time. how many years ago now that barney's went bankrupt? they've expanded in new york in japan. if you can't give us any names, any kind of retailer, any part of the world. rather than doing an imprimatur -- incubator, where can you pick up good bargains? joann: retail stores have a very rigid footprint. we are still a young group. like four years old.

we still have a lot of room to open. those are low hanging fruit for us. for japan, we are going to open more stores. after several years of coming back to the market. it's still a very good location for us to really grab the low hanging fruit. kathleen: how much -- haidi: how much exposure do you have to the russian market? joann: we don't have retail or online business in russia. haidi: so that's not a big loss? joann: we won't. we don't have retail stores or online business in russia.

kathleen: knowing that, there's a question about your creative director. if he's going to stay on and more broadly, the markets keep changing. people talk about affordable luxury. there generational changes. are you going to have different kinds of brands for these different groups? where do you think your sweet spot is right now? joann: creativity is also the most core value of a luxury brand. the format keeps evolving. sometimes we have a big name for one big brand. sometimes we have genius programs, several designers adding a lot of units. to incubate young talent is our key task.

we have a creator lab with more than 10 young people registered in the lab. we are collaborating with them. in shanghai, we have a virtual lab. yeah. kathleen: quick follow-up. is bruno going to stay on? joann: yeah. he keeps check on our young generation. kathleen: thank you so much. plenty more to come on daybreak asia. this is bloomberg. ♪

kathleen: this is a grim milestone. a significant milestone for the global bond market. bond losses deepening to 11% from a 2021 hi. that's the most on record. these losses across global bond markets marking that milestone. central banks including the fed looking to tighten policy to combat surging inflation. the bloomberg global aggregate index is what you are watching at the moment. corporate debt is down 11%.

this is the biggest fall from a pecan data stretching back to 1990. it surpasses the 10.8% drawdown that we saw through the financial crisis in 2008. we saw the fed rate hiking by 25 basis points. chair powell saying that it's prepared to go another half a percentage point at the next meeting if needed. all this weighing on the potential for return on debt. we are seeing those losses deepening to 11%, the most on record. kathleen: at some point, maybe there's a buying opportunity. with the bond market losing, stock investors are picking up. we are seeing quite a rally. look at the nikkei, up for the seventh straight session. it's having quite a good day there. the topics is also higher, led by electronics and others. the kospi up nearly 1%.

the s&p asx 200 up higher. that's the smallest gain in new zealand. the s&p 500 moving higher. everybody was some momentum. that's it from daybreak asia. market coverage continues. china open, bloomberg market coming up. this is bloomberg. ♪

>> what has made them so successful is the incredible talent behind this team. to be one of the great is going to require sacrifice. i'm obsessed with how we acquire the talent. >> ken griffith was a computer nerd back in the 1980's before anyone had heard of such a thing. being a computer nerd turned out to be a pretty great place to be in life.