>> a very good morning u.s. stocks bonds gyrate as investors respond to a growing list of inflation to the war in ukraine. haidi: u.s. stocks are gyrating

amid the signs of strategic splits emerging. nato allies discussing potential peace deals between moscow and kyiv. shery: president biden unveils a 5.8 trillion dollar budget plan designed to appease moderate democrats. australia gets the relief in its annual spending plan. u.s. futures coming online very muted after we saw another session of gains for the s&p 500. it was mckay caps amtek leading the gains. we have the dollar index at a one-week high given the safe haven demand. not to mention the markets took a hit earlier given the reports we had seen. the ukrainian negotiators showing symptoms of poisoning after meeting in kyiv. we did have wti falling in the asian session. continuing the fall from the new york session.

we have continuing -- we have been continuing to see the demand concerns given the lockdown in china. take a look at the treasury space. the 10 year yield down to .45% level. we have seen one key part of the curve. it was a brief inversion in the morning but you can see the recession fears being played out in the bond space. this continues to be watched as we are now trying to price in the expectations of faster, more big rate hikes coming from the federal deserve given these inflationary concerns could this coming at a time when we rca those inflationary concerns being felt across the market. haidi: and certainly in australia that is going to be a big theme as we go into federal budget day.

inflationary concerns and the cost of living arising is going to be a main theme we expect the government to hit. will be watching for the consumer names that tend to enough it. -- tend to benefit. continuing to watch extended bond selloff with that inversion we saw in the u.s. the 10 year yield sitting above 2.8%. in new zealand, the equity session is looking flat in the early part of trading. we continue to watch the dollar yen as a big market story tumbling to the seven year low. seeing the increased divergence between fed policy and the boj. the boj stepping in when it comes to maintaining yield control. we are expecting that again today and that could caus escals to downside in the yen p that

was the weakest against the dollar since august 2015. the plunge was the most outside since march 2020. we are talking about this kind of acceleration that has gone on for a month. we are not seeing the correlation between support for equities any japan as a result of the weaker yen. that relationship seems to have broken down over the last five years. we could see some support when it comes to japanese exporters. it seems that the upside list to equity sentiment is not playing out anymore. it will be interesting to see whether the government might start dropping if we see a further slide. shery: i was surprised they stepped in to try to tempt on the 10 year yield given that there could be concerns about the yen weakening further. perhaps because they have a different inflationary environment. not like in the u.s. where we

have inflation at the highest since the 1980's and that would be pressured even further given we may have more fiscal stimulus measures. president biden unveiling the 5.8 trillion dollar budget request that emphasized additional funding for police and veterans. this will be heavily rewritten in congress but it is a messaging device at a time of the sample just go fed president was saying that u.s. consumer prices have surged more than in other developed economies because of massive government support. haidi: we continue to watch these ongoing developments when it comes to the were in ukraine. we are expecting more negotiations and talks. we also heard from an earlier report that there was a suspected case of poisoning in some of these earlier talks. ukrainian negotiators as well as a russian billionaire who is one

of the sanctioned billionaires trying to sell chelsea football club. he reports saying he as well as ukrainian negotiators suffered a suspected poisoning incident after holding meetings in kyiv. this was part of talks to end the war in ukraine. abramovich has been involved as unofficial mediator to broker a peace deal since the invasion. we have seen sanctions since. we are hearing everyone involved in the suspected poisoning has thankfully recovered. shery: we have a little bit more when it comes to president biden's comment that russian president put in cannot -- russian president putin cannot remain in power. his comments are raising scrutiny on his handling of the war in ukraine as the president proposes this key $5.8 trillion budget that includes tax hikes on the rich. let's bring in our washington

correspondent. over the weekend, it was damage control. no we have more reaction to the comments -- now we have more reaction to the comments. >> you can call it damage control both the president said himself today he was not walking anything back. i think you wanted people to better understand his intentions. he was not stating a change of policy but you have to think about some of the language the president has used the last couple of days. before that speech, he called vladimir putin a butcher. he also said he is a war criminal. he has called him a pariah. and of those names would be anyone you would think would deserve to run their own country. he did not really say anything differently than he has been. the way he said this, the way he chose those words, the known nine words we have been talking about for two days gave some people a feeling he might have met more than he did. haidi: we also had the white

house budget. what are they proposing or what are they anticipating when it comes to the inflation scenario? >> this budget was put together as the white house always does each year, this started to go into the works in november. that is when they capture the numbers they are going to be using for projections. it is saying they did not factor in any of the increases in inflation since november. we all know there has been a significant increase particularly in energy prices. this is already raising an eyebrow in the u.s. and capitol hill because the numbers are as it arrives already dated it is $5.8 trillion and there is a component that has some familiarity because it came from the build back better plan the president tried to get past last year. that is a proposed 20% minimum

tax on income and unrealized gains. there is not likely enough support to pass that on capitol hill so it is interesting to see it come back into the budget plan released today. haidi: joe mathieu with the latest. at his federal budget day in australia appear the government is said to offer sweeteners ahead of a expected federal election as well as to highlight the strength and resilience. it's get more from paul allen who has been covering this. what are we expecting given we know the government is trailing in the polls? >> normally in situation like this, you would see a lot of spending to the situation is not quite like that. there has already been 300 billion spent in the past two years with the pandemic. we have record low cash rate.

we have prices rising to the government as reluctant to throw more money into the situation. we have a few announcements so far. a one-off cost-of-living pavement. and when off relief for the fuel. other spending on health and transport and tourism and things of that like unemployment very low heading toward a three handle. we have soaring commodities prices. the exports price is likely to help along the bottom line in australia. the one thing the government wants to see, wage price increases, that is beyond their control at this moment should shery: paul allen joining us from sin a let's turn to the japanese yen making news at a seven year low as the bank of japan continues to ease monetary policy. for the first time, the boj is offering to buy an unlimited amount of bonds for three straight days. this coming at a time and we continue to see these rate

differentials with the federal reserve. not to mention a key part of the curve has inverted for the first time since 2006. let's cross to garfield reynolds. can we expect to continue to see this yen weakness as it seems it has broken down its correlation to also perhaps a boost to the jet equities -- the japanese equity space? >> it is a difficult situation for the yen a difficult conundrum for japan's government and central-bank. what is going on here is the extreme divergence between what the boj wants to do and what most of the rest of the central bank wants to do. with the boj being forced to pile in to hold zero point 25% cap on 10 year yield, that puts enormous pressure on the yen.

does he choose one or the other? at the moment, he is feeling like he has to choose the 0.25% level. there is an analog with what happened in australia in october when the rba ended up abandoning its yield curve control. i don't know we can expect him to do that. that sort of puts the yen's fate into the hands of the global bond market. if treasuries stay quiet, there will be a less impact, less attention on what the boj does. if treasury yields are picking up and the boj is happy to step in more forcefully if it ends up in the same as it did yesterday, not announcing just one but two unlimited fixed operations, if the yield breaks above 0.265%, that is going to put more pressure on the again and we are in a situation where japan's fiscal year ends on thursday

peered at the moment, a lot of the investors don't want to put any positions on because they don't want to risk an impact on their year end rebalancing should the profit -- on their year end rebalancing. that creates a bit of of the gym and the peten -- bit of a vacuum and to defend the yield target, the boj be willing to temporarily sacrifice the yen and see it past the 12586 level that stands at the weakest in a very long time and the weakest the yen has gotten to during his tenure. haidi: we were looking at the breakdown or the lack of support japanese equities have gotten from a weaker yen. what has changed and do we expect there to be any benefit when it comes to weak currency? >> the impact of a weaker yen

should help japan inc. so to speak. the pandemic and the trade wars have to some extent degraded that link between exporters and a weaker yen being good for japan but it is still there even if the tie is not strong. the yen has gone down so rapidly there is no real impact on anything real in the corporate space. what there is impact on is on sentiment. having your currencies so were or drop this far this fast creates a level of uncertainty about consumers and investors and executives don't feel comfortable with. haidi: there could be more to come.

garfield reynolds here in said name should we have breaking news when it comes to the unity proposal. infrastructure partners having joined hr morrison. unity is getting a five aussie dollar cash proposal from the group consortium. generally the same as the previous proposal that had been received. they are saying there has been significant progress when it comes to due diligence and engagement with lenders. there is nothing to indicate a binding package would not hear released -- would not be reached. let's get you over to vonnie quinn. vonnie: u.k. police may find at least 20 government officials close to the prime minister who broke local lockdown rules this follows investigations into reports of officials holding parties when public health restrictions prohibited most

gatherings. the penalties could come as soon as tuesday peered the prime minister has said he was assured no worlds were broken. north korea looks set to detonate its first nuclear bomb in four years. workers have been observed taking a new passageway where pyongyang conducted all six of its previous tests. south korean media say a test could come next month pin further penalties from the unit nations would require the support of russia and china. a u.s. judge says it is likely former president donald trump committed crimes and a relation to the capitol riot last year with hundreds of his supporters disrupted 2020 election certification proceedings. under the rule come in mills between trump and his lawyer are required to be turned over to the january 6 congressional committee. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

shery: still ahead, goldman's chief economist for australia shares his take on the upcoming budget announcement and why he is expecting two back-to-back rate hikes from the rba. plus, the head of defines etf tells us why exchange traded funds could be said to shine after reaching near historic lows. this is bloomberg. ♪

shery: a global bond around has been in focus with a surge in yields peered stocks have held firm due to the continued strength in big tech. that has strategists saying there is no need to fret about u.s. treasury curve inversions yet as we see the nasdaq 100 index following the yields higher. let's bring in our next guest who says we are likely at a tradable bottom. the ceo and cio defiance -- of defiance etf's. what is your time horizon if we do jump in the markets right now for us to see some good returns? >> thanks for having me. i'm looking to invest in some of the names you mentioned, particularly the cap tech names.

for the next six to nine months. the nasdaq was about 20% off of high time highs if not more for a couple of days. the biggest increase since the heat of the financial crisis. i think those tech names, high-quality, strong balance sheet, participating in the future of technology have a way to run. not only to where they were but beyond. shery: what is it mean now that we have a resurgence of covid in china -- what does it mean now that we have a resurgence of covid in china? >> you have to factor in that perhaps further -- shery: it seems we have lost her at the moment. in the meantime, we are going to try to establish the connection back. a ceo has been fired amid the spat over fuel prices.

brazil has struggled with the rising inflation because of fuel prices. president bolsonaro is headed to an election in october. now we are hearing the biggest oil company in brazil, the ceo has been fired amid this not over fuel prices. -- this spat over fuel prices pin we are now seeing some confirmation on this news. it will have plenty more as we have seen that stock over the past five days gaining ground. this is bloomberg. ♪

shery: we have more breaking news on the brazil oil company petrobras. we are hearing the government has appointed -- for the board.

this following the sacking of the ceo given that they continue to have a spat over fuel prices. we continue to see inflationary pressures given the rising oil prices. we know at this point adriano pires is a well-known energy consultant. he has been appointed as the petrobras ceo. this after sacking the former ceo who was in the spot for about a year. pires is the president of the brazilian center for infrastructure. here is a quick check of the headlines. pressure on the russian giant to find new suppliers. a company has not been able to get stock from queens land

alumina. credit suisse has stopped pursuing new business in russia and it is cutting exposure according to an internal memo. the swiss bank is helping clients exit holdings and is moving staff away. the bank was asked about u.s. lawmakers -- asked by u.s. lawmakers about sanctions compliance. apple looks set to snap its longest winning streak this year. following a nikkei report the company is cutting production of the iphone se by 20%. the manufacturing cut comes on signs give you sumer manufacturing -- on signs consumer manufacturing demand is being hurt by rising inflation. haidi: let's take a look ahead. it is budget day in australia.

the government is expected to offer sweeteners. this in a bid to boost prospects in upcoming elections. the country's unemployment rate falls to the lowest since august of 1974. wages are jumping to the highest in a decade. the reserve bank of new zealand says there has been an improvement of governance and a and z banks. shery: we are seeing here with stocks gaining a 10th of 1%, reversing some of the losses we saw in the previous session. sidney futures pointing higher. this as we had five sessions of gains already. the aussie dollar has held strong in the past week. nikkei futures, s&p futures all under pressure. the nikkei had the worst day in the last two weeks and it is not

help by the japanese yen being at the weakest level in seven years or so against the u.s. dollar. we have plenty more to come. this is bloomberg. ♪

haidi: you're watching daybreak australia. let's check in on the bond action. we see the global bond rout continuing to be extended. the inversion of the yield and it comes to treasury stoking further concern we might be on the precipice of a stoking of a recession. we are talking about the steepest global bond rout of the modern era. we are seeing the three year sitting above 2.3%. the 10 year yield above 2.8%.

similar muted moves when it comes to trading in the kiwi session. we have heard from gilles henderson saying we have seen the selloff when it comes to australian bonds. the global inflation scare looks overdone. these levels are promising higher return. that could entice buyers back into the market to we are seeing the aussie dollar a little softer than we have seen the past few weeks just under the 75 u.s. sent level. the greenback has been so strong and just really very close to reaching a year to date high at the moment. australia's government will be offering sweeteners highlighting the strong outlook for the nation's economy to be delivered on tuesday evening. josh freudenberg needs to soothe widespread inflation concerns without dropping too much extra cash into an economy that is

already showing signs of running extra hot. this is the thing. if you are traveling in the polls, a government would usually slash out when it comes to a pre-election budget. they cannot really do that given how much spending has come on the back of the past few years with the pandemic. what are your expectations? >> good morning and thanks for having me on. it is a delicate balance. the government does have some headroom to move because we have seen a much stronger than expected improvement in the labor market and high commodity prices pin tax receipts will be stronger. the question is what to they do with them? in prior years, we would have expected them to recycle the receipts back into the local economy targeting households in a big way and particular a head of an election. this time around, i think it is a little different because the budget is clearly coming from a

much weaker starting point with budget deficits near $100 billion. the government is seeking to campaign on being an economic responsible manager. a slew of more policies, some cash handouts to those on low income. we are not expecting any major new macro policies. the windfall of the better-than-expected economic outcome to mostly be banked in be reflected in an improvement of the finances over the coming years. haidi: when it comes to the broad economic outlook, you have the labor market going gangbusters at the moment. wage inflation is expected to follow as the missing puzzle piece. does that mean the rba is running the risk of being behind

the curve? >> you're right the labor market on a lot of measures is running gangbusters the important caveat is wage growth it still subdued. we are in different scenario to the u.s. where there is an outright overheating. in austria, wage growth is a little over 2%. we have not had normal levels for the best part of a decade. we do think wages are rising and will get back to more normal levels over the course of this year. because it is more of a gradual adjustment and that is partly a reflection of their being an institutional framework, because it is a more gradual adjustment, there is not the urgency of the rba to get rates higher in the same way we are seeing in the u.s. and other parts of the world. there is always some risk behind

the curve. we do think they will have more time up their sleeve before they start to normalize policy in australia. shery: what is the difference for the labor market in australia compared to the u.s. and other developed economies? >> we get asked that. there are a few things. i would say the most important one is the enterprise bargaining agreement system. the agreements tend to cover 30 to 40% of the employees in the workforce. and around 90% in the public sector. the agreements tend to run for three years. in any given quarter, only a small share of stock of total agreements will come up for renegotiation. as a result of that framework, it takes some time and it needs the labor market to be tight for some time for the

agreements to reach the high rank. there were some other things going on that are quite different to the u.s. the magnitude of the stimulus and the competition of the stimulus was more inflationary by design. i would say it is the single most important factor in differentiating australia and the u.s. shery: are we expecting any major new policy commitments from the government on the spending side of things? >> there are always surprises on budget night so we will have to wait and see. the bottom line is no. nothing major that will have a major macro impact over the next year or so. we will see some announcements on the infrastructure side of things, high-speed train announcements are always popular at this stage of the election cycle. we know there have been leaks around a concession to the fuel site to provide some easing in

petrol prices for households and some cash handouts for pensioners on the lowest income. presumably there will be a surprise tonight. we are not expecting major new economic reforms or policies. the thrust of the will be a shift in the narrative to fiscal repair and economic responsibility with a hat tip to cost-of-living pressures. shery: good to have you with us again. chief economist for goldman sachs in australia. let's go back with the ceo and cio of defiance etf's. thank you for hanging around. i know we lost you a while ago when we were talking about the covid makes when it comes to the markets outlook. that may expand on that question because we are seeing new restrictions in china but the reopening trade like travel are doing pretty well.

>> good to be back. it goes back to our last conversation and shows us the need for expedia -- expedia did 5g investment. going to the trouble, if you look at hotels, airlines and casinos, southwest airlines, marriott hotels, real caribbean, prior to russia and ukraine conflict, a lot of those names were up eight to 9% versus the s&p which was down about that much. the travel and reopen trade was full on. we had just seen international travel reopen even with covid in the mix. there is so much pent-up demand. consumers have 2.7 trillion on the sidelines in savings. wages are up. i think the world is looking to reopen and get back out there. some of those names will participate. a six to nine months, i would know the surprised if we saw

some stocks -- some pops in those types of stocks. haidi: what we are seeing is the dip buying when it comes to tech. big tech growth stocks as we see those concerns being played out on the bond market. would you be picking up on the big names at what you call this a tradable bottom? >> this is a tradable bottom. i have been picking them up on the way down and most recently still picking them up on the way back up. if you look at some of the stories, apple, strong balance shapes should participation in secular technology. everything from screening consumer discretionary, pers of margin, participation in augmented reality. microsoft come amazon, google. there will be open trade. they are all part of the future of technology.

strong balance sheets, quality technology and i am looking to continue picking up those names at these levels. haidi: great to have you with us. defiance ceo and cio. come up next, the month-long slide in the yen stirring trouble the government might act to support it. more on what could help the philandering yen. this is bloomberg. ♪

shery: time for morning calls ahead of the asia trading day. we have a call from j.p. morgan saying stock investors do not need to worry about the global bond selloff should strategists saying recession do not usually start ahead of curves inverting and the yield -- the lead chyme -- leadtime could be as much as 10 years. so where do you go if you are planning to invest in stocks? japan standing out as the top destination for stocks according to morgan stanley. strategists say that curve and versions are a signal that more defensive style in regions will start to outperform. strategists are equal weight stocks and credit while also underweight government bonds.

haidi: how much lower can begin go? -- can the yen go? we are seeing the dollar-yen trading shy of 124. this is having an effect when it comes to the dollar or the dollar index is -- to the dollar. the dollar index is 0.2 away from reaching a high. the seven year low as we see further boj diversions in policy from an increasingly hawkish fed. seeing aussie yen trading shy of 93 aussie cents. we continue to see this currency trading at the weakest since august 2015. the biggest plunge since march 2020. are we going to see the government potentially try and

do something by jawboning or some other action? shery: even with a plunge, it has been interesting that has not forced the bank of japan to alter its aggressive monetary policy stance even as the federal reserve is set to keep raising rates to kathleen hays is here with more. the boj intervening twice with bond purchases already in the first trading session of the week. can we assume the boj is not backing down anytime soon? kathleen: i think that the sense is it is going to it a lot more than this to get governor kuroda to drop his dance. he said it after the last boj meeting. not going to start removing stimulus even if inflation jumps and only because other central banks are raising rates.

the fed getting ready to raise rates aggressively. that is why we are seeing these moves that were in play already getting more extreme. let's take a look at the yen. down 7% in march. it fell to nearly a seven-year low overnight or yesterday of 125.09. this long-term trend, it has been in place since 1990. technically that is the kind of signal a lot of traders would say butter keep selling yen. what is the boj do? they bought them in the morning session and people did not stop selling. they had to come in later in the day, early afternoon tokyo time. they did come in with a second intervention and it did happen when the 10 year jgb yield was a 0.245 percent -- was at 0.245%

. we see the jgb coming back down a bit. even though the jgb is not saying anything, bloomberg economics points out they are concerned about the decline in the yen. they do realize they're going to have to do something and this is what they are stuck doing. haidi: this idea of maintaining yield curve control while the fed is in this tightening cycle, what happens now? does it continue sliding because it is the damage we are going to see? kathleen: it is interesting because jawboning -- we have not seen this for a long time. there was a time back in the 1980's when central banks did this a lot. if they did not want to come in and buy their currency and sell somebody's outfits or vice versa, they would say things that made people think we better

be careful. they could make me lose some money when i have sold some yen. they might buy some and sell some dollars. another thing people are talking about is the fact that technicals right now make it look like the yen is very oversold. there were some negative seasonals in march. some people think they will get more neutral in april. at mccoury, they are saying they think inevitable he whether it is energy prices and that is what pushes inflation higher, it is going to move higher. maybe on the inflation, the key number, the core come in inflation may have stretched food prices but that is the thing that will force the boj to say we are going to expand the yield curve range. no one is giving at numbers. that is what is going to happen next. it is going to be interesting to

see when it does happen and what happens in the meantime. haidi: our global economics and policy editor kathleen hays. we have lots more on daybreak. this is bloomberg. ♪

shery: much has been made about the number of bankers leaving hong kong give uncertain covid restrictions but those who

perhaps decided to stay are being rewarded. let's cross over to our chief north asian correspondent. what kind of premiums are we talking about for those who sit tight and ride it out? >> you have the decision in many households in hong kong and that is, should we stay or should we go? those who have left, some of them, might not come back. some might come back to a very different city. it has left a talent shortage in this case in the financial sector. there is the old saying, walking across the street, pay increases. headhunters bloomberg news have talked to said if you go crossed the street to the competitor and you are valued, you could get a 15% increase in your salary. what headhunters are now saying because of the shortage of talent and the uncertain exit strategy on these covid restrictions, we are seeing

upwards of 35% pay increases for retaining or luring people to a competitor. there probably people watching here thinking i should have waited a little longer. if 35% increase is well above what we have been seeing at 15%. the numbers kind of tell the background story. new visas issued to foreign financial service workers felt so 2500 last year. down nearly 50% from 2018. there were protests. there was a pandemic. still, it is a stark number. more than 140 thousand people have departed hong kong this year then have arrived. nearly four times the total for 2021. even the chief executive has talked about there is some fatigue. there is some tolerance for these restrictions and i think that was the message the financial community gave to the chief executive on why she has

relaxed some of these restrictions. if you go and get that 35% pay increase, you could be vulnerable. i've lived in hong kong many times over 31 years and hong kong bounces back quickly. it did in the aftermath of sars and the economy boomed by the end of the year. hsbc has said they are going to start welcoming back 30% of staff to offices. is this a long-term recovery and trend in the right direction? what is that going to mean for those who did get the big pay increases? haidi: speaking of downward pressures, shanghai in day two of the phase of the staggered lockdown. what are we hearing about how the manufacturing base is still operating? > i think they used shenzhen earlier when it went lockdown

for a week in this closed loop scheme where they allow certain key companies and factories to continue to operate through this phase to lockdown. half the city for the next four days are going to be in lockdown. there is lots and lots of manufacturing in and around the outskirts of shanghai including semi conductor any fracturing international. workers are continuing the production of semi conductors. the company that makes iphones in shanghai is said to be operating normally. these closed-loop systems allow workers -- they have to stay on campus. they have to be tested every day. have to abide by their covid restrictions. we sell that yesterday in the financial services industry. people rushing to the office are being called to rush to the

office before the beginning of the lockdown. people no apparently sleeping in the office in sleeping bags. we will see how long that can last. haidi: our chief north asia correspondent. desperate times. let's get you a quick check of the headlines. aig has announced a partnership with blackrock. 60 billion of its global investment portfolio and 90 billion of its retirement portfolio. all of those is pending regulatory approval. filing an ipo for the life and retirement unit. aig will rename the business. while way's net profit -- while -- help cushion the impact of american sanctions. the cfo led the briefing. fronting media for the first time since her release from house arrest in canada. the company is aiming to hire more than 10,000 plus college graduates. sources are telling us a chinese

ship designer is looking to raise three under $40 million to fuel growth. it is among a group of chinese startups china is adding on to become a chip powerhouse and reduce reliance on the u.s. the company says it cannot comment on deal specifics in the middle of fundraising to shery: we do have more when it comes to competing against china. we are hearing the senate has passed the china competition bill. they will start negotiations with the house of representatives and they will be working toward negotiating a compromise legislation should both chambers are backing a $52 billion bill to eight chip manufacturing. that would be in grants and incentives. haidi: federal budget day in australia. these are some of the stocks that could move. we are five minutes away from the start of cash trading. consumer and infrastructure

related stocks usually do move. the government releasing the budget on tuesday evening. that is it for daybreak australia. daybreak: asia is next. this is bloomberg. ♪

♪ >> good morning. we are counting down to asia's major market open. >> welcome to ""bloomberg daybreak: asia". asian stocks are set to benefit from gains on wall street, slumping oil prices and more cease-fire talks between russia and ukraine. >> negotiations with moscow ahead of a two day nato meeting. >>