investment over the next year that will create around 1900 rolls in cybersecurity and offensive and defensive capabilities. we were helping ukraine prior to the invasion in relation to this, we want to make sure that we remain at the cutting edge because it is about protecting our energy networks, communications networks, critical infrastructure in a wage of ways -- range of ways. >> you did not mention china. what is happening to improve relations with china on that front? how will the growth picture look if relations were to improve? >> we can see a strong evident from trade with china. there are more assertive in relation to national security, china is standing in terms of confidence around the world.

the position that they are taking in areas that undermine the sovereignty of other nations or threaten operations through the south china to the -- see remain of deep concern. we have differences there and we will continue to do that in response to all of the threats that we see. we welcome the opportunity for dialogue which china would say for a long period of time we viewed these trade sanctions against australia as unfair and unjustified good we are not going to give ground to demand that they give to coercion that they apply, we want to see a peaceful and prosperous region and or with all of our partners through the qualities and willing to talk to china and engage in ways that can reduce some of the aggressions or tensions that have been elevated due to their actions. >> thank you so much for joining us.

this is an election budget, the election date has not been called but it has to happen before may 21st. back to you. haidi: you are watching daybreak asia, let us give you a look at the market. we have seen the budget delivered, meeting expectations, the markets had already said that some of the measures are looking at alleviating pressures on how it comes to rising consumer prices. a little bit of an upside, this other trading session, we are on track for a seventh straight day of gains when it comes to stocks here in australia and we are seeing the trading at the highest level since early january read we are watching the 10 year yield as well, give us that we did have another segment of the u.s. treasury curve and burning? >> we are watching treasury

futures right now, the trading session given that we have the to go the inverting briefly for the first time since 2019 and this follows the inverting yesterday for the first time since 2006. all this coming at a time or are seeing u.s. stocks gaining around a fourth session in new york, futures are under a little bit of pressure in the early session in asia. we are seeing a rebound to $106 a barrel after it fell in the new york session. given the expectations, we could see a cease-fire of those ukraine negotiations. haidi: that adds to the cautious optimism, china since it will cut back on some military operations near the capital of kyiv -- russia says it will cut back on some military operations near the capital of kyiv. president biden is taking a wait and see approach. >> i do not read anything into

it until i see what their actions are. we are going to continue to keep strong sanctions and keep providing the ukrainian military with their capacity to defend themselves. we are going to continue to keep a close eye and what is going on. haidi: let us get more from the political news director. some magic implications -- some implications there. are there concerns that this maneuver may be a tactical one from russia? >> there were tops that optimism , the markets responded optimistically but -- there was optimism, the markets responded optimistically but there is movement that occurred in those talks that a simple today. they loved the table with a possible pathway for the russian president and the ukrainian president to meet.

russia said it was cutting back operations in kyiv. they have been installed there, it does not appear to be a real strategic move. it is not built to be a concession. they have left with no talk about withdrawal, deadline for cease-fire, and no real movement by russia to try and help with that humanitarian pathway for refugees. they are continuing their operations in other parts of the country and in kyiv they have cut back some there. that was stalled anyway. commitment to try to keep talking, but beyond that little of significance. shery: no wonder president biden seemed pretty skeptical there. >> i think his secretary said it even better, he said and there is a lot of talk from russia, talk is one thing, action will be another. i am waiting on the latter. at this point, the fact that

they can even agree, they can even agree to meet, shows you that there is a lot to do. the fact that they are talking in and of itself did tear the equity and oil -- cheer the equity and oil prices up. shery: the market was all about the yield curve and version, perhaps a classic signal of impending recessions, the benchmark of the 10 year bond yield deepened concerns about the impact of the aggressive rate hike land. kathleen hays joins us. what is the inversion telling us. >> if it goes back to inversion and gets more inversion between the two year note and the 10 year bond yield, the odds of a recession move higher. here is the link between recession and inverted yield curve, historically. you see the curve inverted in

death of 89, it takes a couple of years off and then there is a lag in 90 and 91. april 2000 and version followed by the 2001 recession and november 2000 six inversion as you work your way to the right, two years ahead, even though there has not been a recession since 1950, it was not proceeded by a yield curve. there have been injustices -- instances where the yield curve happened and there was not a recession. there is some hope. why are people so worried? the fed has signaled aggressive rate hikes, market surprising in at least 200 basis points of rate hikes in march. through december this would imply six more rate hikes and at least 150 point rate hike.

that is why people are concerned, especially after bill dudley wrote another opinion piece for bill burck opinion saying that recession is in evitable. the fed has to move quickly. the consumer demand is strong but the people who are worried about this figure that if that is the case, if the fed is going to have to move that quickly it is creating a strong risk of recession. the yield curve is reflecting it. haidi: we are talking about what the government in japan could do , they are battling to get the yen and cap the 10 year yield. >> they have signed up for at least three days in a row of bond purchases and what we are seeing so far is that it seems like they presented -- prevented a yield from topping 2.25%.

we are hearing now that officials like the finance minister saying that they need to check. i think it was a 10:00 hour hong kong time, talking to reporters sitting -- saying that the government has to see if the weaker yen is affecting the economy. the vice minister for international affairs, this is his job now and what he says is the boj and the government are communicating on a daily basis, making delicate decisions in a difficult environment. earlier we have spoken with the treasury undersecretary for international affairs about exchange rates, they are sending the signal that they are concerned. this is the beginning of more jawboning's. -- job owning.

we are not going to think about even widening the ban on yield curve control, there is a sense of why traders and investors keep testing and pushing the yen lower as the fed starts raising rates. if the dollar keeps strengthening, this is the difficult position that the doj is in now. haidi: take a look at the japanese yen, we are seeing a bit more downside in the session around the seven year low against the u.s. dollar. we got the relief from the concern, we are seeing qe stocks gaining for a second session. the energy sector and materials are down the 10 year yield retreating in the new york session. >> philadelphia fed president says the half-point increase in

may could be warranted if near-term data shows more pressure. parker confirmed he seems -- sees more rate hikes. he says he is worried that inflation expectations could become on death -- unmoored. additional booster doses of covid-19 vaccine, the latest approval will make millions more people eligible for the shot. concerned gross bought a new wave of infections. pfizer and moderna are also working on omicron-specific booster's. unraveling why the jet crashed earlier this month, the national transportation safety board says that technical advisors and boeing will be knowing.

the jet did a nose dive, killing all people on board. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. haidi: we discussed the impact of russia and ukraine peace talks energy stocks. the risks of recession, while global markets can support higher rates. this is bloomberg. ♪

haidi: our top story, the last few days seem to be the yield curve and version. 530's and burning for the first time since 2006. i have to say it was a brief inversion and then it bounced right back.

shery: this signaling the bond market fears of arrest session coming soon despite the fact that the -- of a recession coming soon despite the fact that the inversions have happened temporarily. that not necessarily mean immediate recession and an immediate economic concern. jerome powell was explaining that he is watching more treasury yields to 18 months and we are not seeing warning signs on that part as of yet. haidi: yields will keep rising until there are definitive -- there are signs of inflation. -- recession. another segment of the yield curve inverting, how much attention are you paying as an

indicator and are you concerned we are not seeing signs of stress apart -- across equity markets and not just bond markets. >> it has been a predictor in the past or at least an indicator that a recession is coming. i do not think that tells you anything new. we knew we were a late cycle, it takes anywhere from 18-20 four months to move into our session. -- into a recession. we are looking quite a ways out until potentially we are going to enter into a recession. what i think is more critical is looking at why the yield curve is inverting and some of the big julie aires around this curve and versa versus prior periods -- some peculiarities around

this curve and previous periods. haidi: in this environment, before we get to the situation where inflation peaks or potentially as we have these inflationary risks flashing, what are your preferred locations at this point? >> i think you can invest in equities and pockets of the risk market by moving up in quality is incredibly important, particularly as you move late cycle. you do not want to be in the highflying no visibility for earnings growth companies, you want to be in companies that have high free cash flow generation that has balance sheets and are able to withstand periods of economic weakness. given where we are in terms of the rita cycle and where inflation is, i think it makes sense to layer it into commodity hedges or exposure into your portfolio.

whether that is to equities by owning materials in mining companies or energy companies or through fx by commodity oriented. shery: we have heard from bank of america that they liked u.s. large caps given the earnings outlooks, corporate outlooks, what do you think? >> i think that is the best place to be right now. owning u.s. large over all other regions, small-cap will continue to be the advantage because -- disadvantaged because of cost pressures. they're able to withstand higher costs. one of the things of conflicting markets is corporate. shery: can you also count emerging markets currencies that are exporting a lot of commodity? >> there are certain currencies that are export oriented that are close to the end of the rate hiking cycle and offer good value here.

on the flipside to that, i think em importers on the fx side would be looking to trade against the large commodity exporters. shery: good to have you back, coming up next, hackers is still about $600 million from a blockchain network. this is bloomberg. ♪

haidi: we are cracking the font of the global supply chain crunch. the largest u.s. maker of memory chips warns of the return of lockdowns in china represent a risk for the electronic supply chain. a revenue forecast that defied the risk to supply chains and

said the war in ukraine will push the manufacturing costs higher. an early indicator that the global chip crunch may be coming to an end. our analysts noted that the supply of a certain type of water has caught up with demand. if that continues to shrink the chip shortage could ease significantly. shortages in some connectors could persist in 2023. china's lockdowns are costing at least 46 billion dollars a month according to an estimate by an as -- academic study. trucks crisscrossed china and halted movements with economic activity. 3.1% of gdp is lost due to those restrictions. shery: let us look at the big picture for the global supply chains, it is compiled by our colleagues shows that global supply strains that started easing our worsening again, that

is amid headwinds from the were in ukraine and china's covid lockdowns. taking higher across the u.s., u.k., and europe. bloomberg terminal users can read more about the stories in supply lines. haidi: now to the latest on one of the biggest crypto heists to date. hackers still around $600 million from a blockchain system connected to the popular infinity online game. shery: a breach that happened five days ago. >> ether coins and usd tokens or taken on march 23. it is tied to a popular game, it is important to explain the game a little bit to understand what happened here. acxiom infinity that allows many on the either blockchain, particularly in venezuelan and

the philippines to actually earn cooker currencies. players can battle, collect, breed, and even earn depending on the game that they play tokens and they can be converted up for other networks through what is called a bridge. it is the bridge, the blockchain of the supports acxiom infinity says was hacked. it was a software structure and there in lies the rub, there are questions about how these software bridges are monitored. the hackers still around $600 million -- stole around $600 million. it showed what vulnerability these bridges provide because they are rife with problems, the computer code on the bridges is not audited and that is what secured experts say creates vulnerabilities and what many were not aware of even in the computer industry is that there are thousands of such software

bridges and they are used to move about hundreds of millions of dollars of crypto. there will be a lot more focus on this in the future. haidi: while we are watching the inversion of the yield curve, we are watching the yen and stocks, bitcoin has been on a stealth rally. what are we looking for next? >> many believe because of the games we have seen there is room to run, some are warning about ebola as drop into the--warning about it as it drops. if you look at portfolios where even 1% exposure to bitcoin, it clearly outshines this -- outsize is the performance and that has caused many on wall street just in the past week to become a bit more fond of cryptocurrency.

goldman announced they will have their first over-the-counter crypto options trading, you have boutique firms taking it even bigger, offering spot trading on wayne's. also, a lot warmer to crypto than in the past. haidi: stay with crypto news, we are hearing that a crypto executive christine brown is leaving to start a new crypto startup according to this report, the top -- the executive at robinhood is leaving after nearly five years with the brokerage app company according to people familiar with the situation. this is according to reporting on the block, they joined the company from google in 2017, the chief operating officer for crypto and according to this story, she is starting a crypto start although the entity of the startup is not immediately known. let us get a quick check on the

latest business flash headlines. that bank of china reported the biggest profit increase in a decade, a build up in bad loans also eased. and it can come jumped around for percent. chinese distortion face also reported it will percent jump in income, that beats average estimates. two more megabanks report today. top estimates as the economic slowdown and intensifying competition with its rival, bytedance cells jumped to 35% for the month of november to almost $4 billion. monthly active users grew by 21% and money climbed as well. australia has done an election budget, the government is try to shore up support ahead of the may election. a lot more to come, this is bloomberg. ♪

>> this is daybreak: asia. president biden has not yet been convinced that russia's announcements to scale back military operations will lead to a shift in the war. he said he is waiting to see what russia offers. president biden: i had a meeting with the heads of state of our allies and nato, france, germany, u.s. and great britain.

there seems to be a consensus of, let's just see what they have to offer. >> russia promises to cut back military operations near kyiv after discussions in turkey. moscow -- moscow's announcement is being set with -- met with caution as president biden takes a let's wait and see approach. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: we have breaking news.

we hear the bank of japan will carry out additional schedules and increase the amounts of purchases of japanese government bonds. they have aggressively continued to ease monetary policy to cap yields. we hear the additional outright purchases will be for three to five years jgb's. this comes at a time when we see the 10 year yield a very close to the upper level of tolerance for the boj and the six year high. we see the boj continuing an additional outright purchase of jgb and increasing the amount of purchases to be offered. they will be buying ¥600 billion .

they are offering to buy this additional jgb's. japanese yen holding steady around 120 three level against the u.s. dollar -- 123 level against the u.s. dollar. now we have these additional offers. haidi: needing to do that given inflation has not been a big issue when it comes to the boj but in australia, prices are rising. the government has announced a series of spending measures to help. the prime minister back in contention ahead of the may election. paul is in canberra. paul: the deficit was more

narrow than expected. 58 billion u.s. dollars and the portion of gdp low compared to others in g20 nations. that gives the government room in terms of easing the cost of living pressures. there will be a one-off payment for low income earners and a tax offset within six months and relieving some pressure australians are feeling at the gas pump. earlier i spoke with the shadow treasurer, the opposition labor party at this could be australia's next treasurer. i asked if his party would support the one-off measures. >> wages are falling in the country and the cost of living is going through the roof.

australians are falling further behind and we will not stay in the way of relief for them, even if presented by the government as a short-term fix. we want to provide that relief and also want a plan for the future, and that is what is missing. paul: providing support without stoking inflation. how do you do it? >> you have to be attentive to what is else is happening in the budget and economy. it is possible to invest in the drivers of growth without adding to inflation measures. beyond support and the parliament we need a plan to grow the economy without stoking inflation that punishes so many. the plan is a combination of things. make sure the recovery works for everyone. in areas we need training because of's -- because of staff

shortages. get people's power bills down. we have a policy. we need a larger workforce. childcare is a large part of that some people can work more. we want to modernize the digital economy by modernizing digital capacity and we want to invest in the care of economy so we can have a future in australia recognizing the severe pressure put on our supply chains. we increase capacity with the economy and get it growing without stoking inflation. paul: we have a budget deficit. when do you forecast a return to service? >> there is no forecast for a's -- for a return to surplus for the next 10 years. we have $1 trillion in debt and not enough to show for it. we need to make the spending in

the budget focused on quality, not just quantity. there was a modest improvement in the budget. that is important. commodity prices are part of that. but we still have debt around 80 billion dollars for this year and $1 trillion in debt. people understand we need to borrow sometimes but we need to borrow for productive purposes and i am not sure the government has been. paul: will reconciliation with china be needed? >> we need a productive relationship. it has gotten more complex and difficult to manage. china has become more assertive and aggressive in the region and that has economic consequences. there should be a bipartisanship when it comes to managing that relationship. there is a lot at stake. it is a massive export market for us. so we need to manage that relationship carefully and in

the interest of our exporters and employers. shery: coming up, $100 oil is not entirely justified and that only demand disruption will stop prices from moving higher, according to one. this is bloomberg. ♪

shery: russia's military pledge to scale back operations around kyiv has been met with skepticism. some say it is a tactical move. others say the offer comes as no surprise. >> so far the only thing we have heard is the russians diminish attack to the north of the country but it is not a surprise. they have failed miserably in terms of achieving their objective there. they said they would like to intensify and concentrate efforts in the donbass region. so this is not much news. it is perplexing that markets are reacting to it so strongly. >> if it is not real progress,

do you anticipate real progress can be made when the negotiators meet again or when there is a meeting ultimately between zelenskyy and prudent? -- and put 10 -- putin? >> the only thing that will bring them to the negotiating table is ukraine success on the battlefield and further economic pressure on the regime. those of the two things that will drive home the message that the war effort cannot be sustained and it needs to be diminished and ended. that is what will drive home the message that peace negotiations are important. >> hard to be optimistic. how far apart are the two sides at this point?

how big is the gap between russia and ukraine? >> certain issues in which a compromise is close or realistic. when it comes to neutrality status, there is a way to reach compromise, perhaps. other things like demilitarization, whatever that means. we can give them those so they can portray a victory at home if they need to. and the compromise is realistic. with territorial integrity, we are not giving up our land or people. >> that raises the question of crimea and donbass. in these negotiations with russia, how much of what russia says can be taken at face value?

how do you close the gap and the trust gap? >> it is hard to do. we have been observing this regime for more than 20 years and they have consistently lied and manipulated. we heard there were no russian troops in crimea and suddenly there was a victorious crusade. we heard there was no were imminent, that this was just a military exercise and western hysteria and then look what happened. so now they are saying they are interested in peace but we cannot be optimistic. we have to take what they say with a grain of salt. the only thing to change the situation is our victory on the battlefield and further economic pressure on russia so they cannot fund the war. that is what will change the situation. shery: of course those concerns

have sent commodity prices higher. oil prices above $100 a barrel since russia invaded but it is not just oil. every sector of the commodity space gaining ground for a second month, grain, metal, but the energy sector really seeing those gains. we had some pressure on oil prices in the new york session given expectation there could potentially be a cease-fire but they failed to reach an agreement and now we see the asian session back in the round of $106 per barrel level. our next guest has raised that short-term estimate to $110 per barrel and long-term $75 per barrel. it is good to have you with us, neil.

i think i got your long-term forecast wrong. give us your reasoning and prosper -- prospects. >> fundamentally the russian invasion raised the premium for particularly oil and as a result we see higher oil prices near term to $110 brent. long-term we look at $75 a barrel, up from $65 a barrel. so higher prices as a result of the conflict. shery: have you factored in the lockdowns in china? >> yes. china is seeing a number of rolling lockdowns. if you look at the downturn there is a 10% reduction in road

traffic and 25% reduction in air travel. so it is reducing demand but not like in 2020. china's largest refiner signaled to percent to 3% growth this year -- 2% to 3% growth this year. haidi: domestic oil fields in china, have they reached -- in terms of what they spent and what they are getting back? >> they have some of the highest cost oil fields in the world. it is still profitable but the ability of china to go into domestic crude production is

relative. what they could do best is keep production stable at these levels and avoid a significant decline. these higher prices will encourage some additional investment but we do not think there is any real way china can grow oil production materially. haidi: we are talking about the role of u.s. shall at these levels. does this play a big part in the u.s. government and revise the tension in needing to produce more domestic oil and have independence? >> absolutely. we expect over one million barrels of u.s. oil production growth, maybe 1.5 million barrels per day. as russia reduces exports, the rest of it needs to be balanced by opec and they still have 3

million barrels of spare capacity but at the end of the year that should fall to less than 2%. industry at a 10 year low. we have an industry reluctant given the risks to supporting long-duration oil assets are not combines into a perfect storm for oil prices which i think will move higher in the short-term. haidi: always great to have you with us, neil. we are counting down to the start of trade in tokyo and these are some stories we are watching. japan, expanding the copper trading farm aid europe and -- arm in europe. and perhaps higher prices for

consumers. sony is rolling out a new gaming subscription service in june. kim jong-un is claiming of testing a new missile last week was a lie. the rocket was first launched in 2017. samsung is boosting credit program in india to drive sales. and there is a shareholders meeting ahead with those hosting gatherings. shery: look at how bond futures in japan are trading along with japanese yen. boj offering additional outright purchases for three to five and five to 10 year gdp's in arch -- in march. given that we see additional

bond buying from the boj, the 10 year futures are jumping 35 tics or so at the moment. this as we see additional weakness on the japanese yen. we already had aggressive monetary easing from japan, pledging a limited amounts of 10 year bonds and that had weakened the japanese yen. the finance ministers signaled's concerns over the slide in the japanese yen but it is not sustained and we still are holding at the weakest level in seven years against the u.s. dollar and the move is exacerbated by the more boj buying. there is plenty more to come on

daybreak asia. this is bloomberg. ♪

shery: breaking news out of japan. we are getting the retail numbers month on month. 8% for february. a bigger contraction than expected. 90% of the japanese economy has

virus restrictions. the year and year number is still contraction, 8%. both numbers easing from the previous month. haidi: and the latest out of shanghai, additional 5982 local covid cases tuesday. another record high. yesterday we saw 4500. as we see cases come in and the next hour it could be a new record high. shanghai is going through a partial lockdown and people are not allowed to leave their homes and told to stay inside their homes and compounds. all residents in the financial hub and shanghai stock exchange

location are confined to their homes. let's get the latest headlines. [indiscernible] the deal rallies the company at $15 billion including debt. it still requires approval from shareholders and u.k. courts. we work has moved to replace their former ceo with a member from softbank while also choosing a chairperson. he joins other appointees from the company on the board. he has been with them since 2015. lululemon shares are surging hours after they delivered a sales forecast that beat estimates. revenue was up 23%.

shery: plenty of stock to watch at the opening of tokyo and seoul. nintendo will delay the legend of zelda sequel to next year. sony is planning a new gaming subscription service and chipmakers might get a boost after macron gave a strong forecast for the court quarter -- for the current quarter. this will be an exciting opening. the japanese yen continues to fall. this is bloomberg. ♪

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shery: welcome to daybreak asia from new york. haidi: asia's major markets have just open for trade. stocks are set for a boost even with recession warning signals. signs of a de-escalation in the war. ukraine's capital is still under threat even as russia promises to pull back operations from

kyiv. and china's bank earnings season is underway. we look at results from some of the biggest lender's. shery: we are talking about the japanese yen which continues getting weaker towards the seven year low against the u.s. dollar. the nikkei rose in the previous session but today the big news was the boj coming out and offering additional outright purchases of jgb's and that will -- and what that will do to the japanese yen. and with these additional purchases, what happens to the jgb yield. we have seen the 10 year yields continuing to surpass the level of tolerance when it comes to the boj at around a six year high. and then we see a tumble with

additional purchases offered by the boj. so we will continue to watch the bond futures space because we already heard that we could see by am back of futures given the latest move by the boj in the 10 year and other sectors. the kospi come up losses in the previous session but now a rebound of 6/10 of 1%. we continue to watch the korean won, now strengthening against the u.s. dollar. we have seen fundus slows as we head toward the end of the quarter and exporters are making currency exchange moves. haidi: let's look at the aussie trading session. the news here is the reaction to the federal budget delivered overnight. mostly met expectations in terms

of having a lot of cash incentives when it comes to alleviating cost pressures on households going into the may election. discretionary stocks, even with the tax cut we see energy down by one quarter of 1% but this is the seventh straight day of gains with sydney stocks. one of the best performers in the asia-pacific as we see soaring commodities. the aussie dollar, seeing strength across the aussie and kiwi on the back of the commodity story and u.s. dollar hovering in the early asian session around a three week low. 10 year yield, a bit of stability, coming down a little but still above 2.8% as traders continue talking about the

inversion of another segment of the treasury cooler -- treasury curve and what it bodes for risk sentiments and recessionary fees. the equities rally continues to be robust and the tenure yelled is holding steady -- 10 year yield is holding steady. shery: boj boosted plan purchases of debt and added longer 10 years. kathleen hays is here with more. i want to show the viewers the chart i had at the top of the show because i was wondering if it was correct because the line plunged down and we are talking about the boj doubling down on capping the yields. >> this is day three and they are not giving up. they said they would conduct potentially unlimited bond buying operations for several days in a row when they are

trying to drive home the message . we are not going to let the 10 year yield bond go above a ceiling, even though traders say they will have to because the fed is raising rates and the boj has to adjust policy sooner or later. for now, they are holding back. the markets will wait to see what happens. you can see quite a move and it is still interesting to note this is affecting the japanese yen, now slightly below. we will have to wait and see if they bring in comments from the finance ministry.

the boj is maintaining their aggressive stimulus. the finance minister said the government needs to check if this is harming japan's economy. then the vice minister of international affairs said he spoke with his u.s. treasury counter part and the boj on finance ministry communicate daily and make decisions in a difficult environment. they are important branches getting together. the yen seems more behaved than the last couple days but when you talk about speaking with your u.s. counterpart, it seems to me, they used to make the

calls and get the signals and they want investors and traders to know they are watching this. i do not know if they will take action. i do not think so, but we will see. haidi: a lot happening with japanese markets. richard, we have a preoccupation, the treasury curve segment inverting. the volatility we continue to see in japan with the yen and jgb's. if we get a cease-fire, does it remove some of the worry about recession or a policy misstep? >> i think we are already seeing some kind of movement come back. easing in oil, easing in some

stress and tension but it looks to me in terms of ukraine that no one is going to believe vladimir putin. they have believed him when he said he wasn't going to invade, they're not going to believe him at all when he says he will pull back. so there is a wait-and-see. with the relaxation of tension is a case. but we are in a major transition. not only with ukraine, but with economies. bonds markets falling, what is happening in japan. big moves in the regular financial markets. i think they will probably come through and be the things talked about in the second quarter. haidi: one of the things we are

seeing is the breakdown of correlation between growth and bond yields. how long do we see the rally into growth rotation sustained and is it unusual that as we have rising yields we see the correlation turning positive? >> we are looking at two different things. in finance they like looking at relationships and how things correlated in the past. it's always difficult to say this time it's different. but to a certain extent it is. some of these companies are extremely large now and can resist a lot of the traditional features we see in financial markets before. so i think the correlations we see at the moment would probably not be surprising to see them diverge because we are in

transition. i was looking at chaos theory recently. my personal feeling is probably for the next quarter or two, equities will stay strong. but it is based on the fact that bonds do not completely fall out of bed because if they do, all bets are off. shery: what is the logic behind with the boj is doing now? we have seen significant pressure on the japanese yen already and now they keep aggressively easing. we have additional purchases at the moment. what will it do to the overall picture? >> i think we are all scratching our heads. it's the kind of thing you might say if it's not broken, don't fix it. there is a policy decision not to have the yields raise too

high. but look at it was -- but look at what is happening around the world. positive bond rates in europe. it will happen and it seems to me a little bit of the king canute story in terms of them trying to do something to fight the tide when maybe they shouldn't and all they are doing is a little thing like my golf swing. i think one thing and it goes another. so they might end up in a situation where they are going to have to defend and that is just free money for traders. it doesn't seem sustainable. shery: especially when it does not seem to be helping to boost the equity markets. the correlation between weaker yen and stronger stock market seems to have broken down during the pandemic in japan. >> right.

but i think we are getting to a situation where maybe some of these old relationships that held for so long are may be breaking down. we have had along the time of extremely low interest rates and these things will confuse the issue. i think the japanese market has not done badly. along with other equity markets in a situation that is basically the four horsemen of the apocalypse. the equity markets have held up pretty well. shery: richard, thank you. we have an update when it comes to the russian aluminum giant producer, saying they might face difficulties in the supply of equipment and they cannot estimate sanction impacts at the

moment. they are evaluating the effects given how badly they have been hit by sanctions imposed by our allies given the russian invasion of ukraine. haidi: one big move to the downside in tokyo sessions, nintendo stock falling after they announced they will delay the launch of the legend of zelda sequel until 2023. they announced this on twitter. they planned to launch it this year and it had already been pushed back. it has been one of the biggest catalysts to the downside of nintendo given the lack of competition but now pushing back zelda come up continuing to

double their outlook -- dull their outlook. >> russia says they will pull back their attack from steve. -- from steve -- kyiv. the announcement is being met with caution with president biden taking a wait and see approach. >> [inaudible] an election must be held by may 21. u.s. investigators could head to china to help unravel why a boeing 730 jet crashed this month.

[inaudible] all 132 people on board were killed. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: still ahead, bank of china reports their biggest profit increase in almost a decade. we get the outlook. the u.s. remain skeptical of russia's promises to scale back military operations in ukraine. we will have the latest. this is bloomberg. ♪

>> we do not have concrete proof of the peace yet. >> i do not think this is a major surprise for the bond market. >> when the peace deal is struck we still have a lot of deflation to do with an monetary tightening to deal with. >> the focus will shift back to central bank hawkish notice.

>>'s perspective -- it is perplexing that the markets are reacting as strongly as they are. >> we need sustainable peace, not provisional peace. >> it will be a long path that is uneven and bumpy. >> it will take a long time to force out what each side can accept. haidi: some of our guests reacting to developments in ukraine. shery: russia announcing they will cut back military operations near the capital of kyiv. clara, this is optimism but there has been no cease-fire after a month of firing -- fighting. was it -- what is russia's strategy? >> things have not turned out the way russia expected.

it's not surprising to see some pulling back. the question is if we will see development on the ground and what happens after that. we have to be cautious at this point. there is no guarantee this is anything but a tactical pullback. haidi: you have written about this recently. what does past experience tell us about the russia playbook? there are many parallels. >> for those of us who covered chechen wars, there were distinct parallels. we argued that we saw the initial part of the conflict, we saw vladimir putin repeating a lot of mistakes they made in the first chechen war. a lot of hubris. we are concerned it might turn

to the tactics of the second war, much more methodical, carpet bombing, terrorizing the local populations, which we already see hints of in ukraine. shery: is there a positive that they might be scaling down their ambitions in ukraine? >> it remains to be seen if that is the case. or if this is just tactical. if this is actual scaling back, yes. but i just think of that russia is creating options for itself. shery: up next, signs are starting to show how international pressure is affecting russia's energy industry. the details ahead. this is bloomberg. ♪

haidi: oil prices are rebounding as traders reassess the russian promises to scale back military operations in kyiv. losses in new york to 8% in the past sessions. let's bring in david stringer. it is hard to tell if this is going to be a true de-escalation for the war but what are markets trying to way at the moment? >> just as clara was saying, i think investors will be pretty cautious and not rush to

judgment on the impact of what we have seen in terms of potential de-escalation of the war in ukraine but in the oil market what we see is oil dropping 8% in the past two session and giving -- given signs of optimism, signs of trading rising back to $105 per barrel. there is the sense we might see some easing in volatility but there is the potential that fuel demand could be curbed significantly if lockdowns in china are expanded or extended. shery: there are so many factors, including ukraine and the lockdown. another opec-plus meeting this week. how relevant are they?

>> absolutely. and what we have heard from opec-plus so far in expectations is that when they meet, they expect to stick to the plan, a relatively modest increase in output. some opec members have found it difficult to follow through on increases so there are questions around that. also we heard from the energy minister of the uae who suggests if the market is in balance then going forward opec-plus has to think harder on decisions on further increases. shery: we have a quick check of the headlines. cost estimates and the economic slowdown of china.

sales jumped and active numbers grew to 21%. better than expected. government grants and tax subsidies helped the tech giant narrow their net loss. an upbeat forecast for the largest u.s. maker of memory chips. sales came in above the estimate and data center sales grew more than 60% in the last quarter and automakers set a record. coming up, bank of china posts their biggest profit jump in a decade and two more mainland megabanks are reporting today. we will take a look at them next. this is bloomberg. ♪

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>> president biden is not yet convinced that russia will scale back military around kyiv, leading to. a fundamental shift in the war. . biden says. he is waiting to see what russia offers after its talks with ukraine. >> i had a meeting with the heads of state of four allies in nato, friends, germany -- france, the u.s., and great

britain, and there seems to be a consensus, to see what they have to offer. >> philadelphia says a half-point hike in may could be warranted, as near-term data shows more price pressures. they confirm six more rate rises this year. parker says he is worried inflation expectations could become unwarranted. second boasters of covid-19 vaccines from moderna and pfizer biontech pair with the latest approval will make millions more be eligible for the shots, as concern rose about a new wave of infections. pfizer and moderna are also working on omicron-specific boosters. $600 million connected to the online game. thieves took ether tokens,

the stolen funds reportedly want to cryptocurrency exchanges -- went to crypto currency exchanges and one of the biggest -- in one of the biggest global hacks to date. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg.. >> let's get you a check of the markets. we are seeing a mixed session as investors continue to assess the situation when it comes to a cease-fire, talks and negotiations between russia and ukraine. also watching the energy story, as we continue to see more upside for oil trading in asia after losing it percent over the past few trading sessions. the nikkei 225 is softer at the moment. the bank of japan, saying it will buy more bonds that even plans at once is regular operation, they seem to be aimed at curbing anymore pressure on government bond yields. we have the issue of the yen as well despite government intervention this would. we are seeing that have a

percent there. we see the impact of the budget skewed toward alleviating inflation pressures. we are seeing consumer discretionary, one of the big leaders here in sydney. >> as we had to the china markets open, we are watching those earnings out fast and thinking china. the bank of china, seeing the biggest profit rise decade as lending momentum recovered in the second year of the pandemic. let's get results from the topic. what do banks have to keep in mind when it comes to the policy direction and china and fed rate hikes? how does that affect your positioning in the stocks? >> thank you for the question. the rate hiking has very limited impact in china banks.

the china pboc is conducting the money trade loosening. will probably see margin expansion due to rate hikes. china banks will probably see margin contraction due to the lower interest rate environment. >> so who is best positioned at this point to whether this out? -- weather this out? >> i would say china merchant bank and the pboc bank -- they have more retail banking. also because they always reported profit growth. so we prefer these banks on a one year view. regarding the short-term, given the sluggish market, we prefer more conservative names, like ecb, china

construction bank. >> has the exposure to developers fully materialized at this point? >> most of the china banks have around 6% to 10% exposure to development loans. to today, the ratio rose quite quickly and the past two years -- in the past two years, around 2%. we expect the ratio to continue to increase for developer loans this year into next year. with large soe's and large developers -- there are regional once, there's a high chance [indiscernible] we do expect npr ratio increase in profit developers.

regarding banks, especially those major listed banks, they only lend the top 20 or 30 developers, in terms of sales. therefore, what most of them should see is relatively stable -- or they are still able to pay the debt, and we don't expect massive defaults for the large developers in the short-term. >> what are the implications of the pulse loan growth, which is so key for these banks? >> actually, covid-19 already impacted -- the covid breakout already impacted loan growth in march. we saw data decline month on month. the key data to watch is whether the retail loans,

no mortgage, the credit card consumption loans can rebound in march and april, in the next two months. if there's no rebound and they continue the left -- the locked down covid-19, it is hard for china to reach the 5.5% gdp growth, given the we consumption. -- weak consumption and week target sales -- weak target sales. >> shujin chen, it was good having you with us. we continue to watch the japanese yen. we have seen the losses earlier in the session. down about a quarter of a percent. now paring back those losses. we had the bank of japan boosting their plan debt buying and adding longer tenure to other operation. for more, we are joined by mark c. what's happening with the japanese yen? we continue to see aggressive easing from the boj. yet the yen seems to have rebounded a little bit. >> yes, it was a very aggressive

move from the bank of japan today. they didn't even wait for the market to be open. they announced they would be purchasing bonds right across the curve, from the short into the long end of the curve. -- short end to the long end of the curve. it was a clear signal to the markets in japan that they want stability in japanese yield. that's helped to build the dollar yen slightly from the lows we saw earlier. part of the story is the fact we had huge volatility earlier in the week. it touched 125. that was probably a bit extreme. you would imagine that they would stay in a bit of a range, as people think more about their grounding procedures. the bank of japan is very committed to keeping interest rates on the low side.

>> yeah, committed to capping the yields. what options are there? if they widen the band around the 10 year, would they have to do an outsize moved to be impactful? >> the bank of japan is usually incremental when it comes to changes, they don't usually make very big jumps from one measure to the next. so no doubt, they will be discussing it carefully. they will be thinking about what they can do, with the yield curve control. which has been in place for quite a while. they have of course adjusted the 10 year yield in the past. there was a time when they were trying to target the 10 year yield, they have gradually been increasing that, it is 0.25%. they do have a meeting coming up in the last week of april. it's possible that the meeting -- the meeting will shifted slightly higher. in the meantime, you can fully expect whatever they feel is

necessary, they will come in and they will defend the curve. because the bank of japan has shown in the past that once they set the boundary in place for a bond yield, they are very determined to to keep their. -- to keep it there. until they are ready to change the inflation forecasts, and maybe there will be some kind of announcement in april. >> it's great that you could join us to give us some context. you can find mark cranfield's commentary on our markets live blog -- he has some of his thoughts on the japanese yan abd the boj's latest action. you can get a market rundown in one click. this is bloomberg. ♪

>> the government has announced a series of spending measures to cushion the impact of rising living costs, and the prime minister adds that he contests the may election. paul, what's been the reaction in terms of market reaction? what was expected? >> yeah, very much in line with expectations. it was a little bit better than expected. -- about 50 billion u.s.

dollars. the fiscal trajectory in australia is a bit better than expected. it looks like the credit rating is it safe as debt continues to grow in australia. we have seen strong commodity prices. particularly iron ore. on the revenue side. it's allowed the government to do a little bit of expanding ahead of the election due to be called on or before may 21st. it will be a one-off payment of $250 for 6 million australians. $420 tax offset -- having of the fuel excise -- to relieve some of the price pressures from what australians are feeling at the pump. i spoke to the finance minister earlier. must listen to what he had to say -- let's listen to what he had to say. >> hi commodity prices helped the budget out in australia. we have been very conservative about our forward projections

and forecasting when it comes to commodity prices. we are forecasting r&r prices -- iron ore prices will trend back down to previous lower levels of prices within the next six months, by september of this year, and if you look at the budget improvements we have demonstrated, over the next two years, commodity prices play a very small role in most of those years. the real dividend is a stronger labor market, stronger business performance overall. it is enabling us. with $100 billion of budget savings. ensuring deficits come lower than previously forecast, half of what was previously forecast in terms of deficits this year of gdp, and that will help to underpin the strength of our aaa credit rating. where only one of nine countries on the world that continue to hold that aaa. >> if oil prices stay high, would you look at pushing out

that reduction in excise beyond six months? >> we have been very clear this is a six-month measure. that is what will be legislated through the parliament. our projections are that we will see stabilization in the oil prices within the timeframe. but it's about making sure that households get the lower prices for a period of time until we see that stabilization. >> one of the missing pieces of the puzzle for the economy and the reserve bank of australia is wages growth. to a large extent, -- large extent, what can you do to promote which is growth in australia? >> making sure that we keep the jobs market as hard as it's been and we drive the jobs growth into the territory that is achieving the 50 year unemployment lows. that will apply further pressure in relation to wages. we can see on the forward estimates, treasuries, that which is growth is expected to run at a 3.5% above inflation in the next financial year --

increasing over the next couple of years to 3.5%. showing growth through that time. >> what's happening to improve relations with china on that front? >> we can still see a strong dividend from trade with china. they are more -- they have a more assertive stance in relation to national security. it had eroded china's stance around the world, what they have taken in a wiz that undermined the sovereignty of other nations or threaten operations through the south china sea, that remains a deep concern to australia. we make sure we invest in the protection of our nation's defenses. we will continue to do that in response to all the threats that we see. we would welcome the opportunity for dialogue with china. we have set that -- we have said that for a long time. we view their trade sanctions against australia as punitive and unjustified. we are not going to give grounds

to the demands they give to coercion that they apply, but certainly we want to see a peaceful and prosperous region. we will work with all of our partners through all the mechanisms to do that and stand willing to talk to china and engage in ways that can reduce some of the aggressions or tensions that have been elevated, due to their actions. >> also included in the budget was $10 billion to improve cybersecurity in australia. it is really hard to not view this budget through the lens of the election. which must be called by the 21st of may. not too far away. not too much spending, in terms of giveaways. the government also strikes a fine balance of helping out the electorate, while not soaking inflation. back to you. >> we do have breaking news out of the philippines -- we have the central bank governor responding to some bloomberg questions. he saying the policy rate may reach 2.5% and 2023, saying the

rate hike will start in the second half but will be data-dependent. he sees the key rate at 2.5% to 2.75% as reasonable. this, as we had the central bank holding the right setting for an 11th straight meeting just last week, at a record low of 2%. this, is the bank is raising its 20 inflation forecasts to 4.3%. of the governor, now saying that the rate may reach 2.75% next year. plenty more to come on "daybreak: asia." this is bloomberg. ♪

>> a quick check of the latest business flash headlines -- nielsen has agreed to a takeover, led by ellie investment management. . the all-cash deal value, at about six and billing dollars, including debt -- $6 billion, including debt, is set to close this year. wework has moved to replace the former coo, while also naming a new ceo as chairman.

they join three other appointees from the company on we work's board. he has been with a conglomerate since 2015. shares, surging, after the company delivered a sales forecast that beat estimates. up 32% at $435 million for the fourth quarter. revenue was also up 23%, rounding out a year where revenue grew 66%, to almost $1 billion. they are evaluating the effects of financial positions moving forward. in the latest earnings statement, the aluminum giant reported that it may face potential difficulties in the face of supply of equipment and may be forced to replay facilities with horrible debt. we are looking ahead to the chinese market open.

>> we have seen unprecedented outflows this month. president xi jinping, now facing more hurdles to win back trust from global investors, amid concerns over his ties with russia and the risk of more crackdowns. sophia acosta joins us now. beijing has not shown that great interest in keeping global investors' trust. what can we expect in terms of challenges to try to win this back? >> that is exactly right. last year was a perfect example of the disconnect between what's coming out of beijing in terms of policy and the communication, or how that is communicated to investors and markets. there was clearly not a priority last year. but it is becoming one this year. that's because china does need stable markets and stable financial systems and the economy, and global investors play a key role in that. because of china's opening up in recent years under xi jinping,

the influence of foreign investors has never been so great. when you see the speed of these financial outflows from china, this is not just offshore markets like hong kong and new york -- it is also mainland china. that is concerning. repairing that trust will take a long time, because of the actions taken last year, on the common prosperity and big tech front. and property developers as well. >> there are worries when it comes to the property developers, not helping sentiment. we are hearing that sunac is possibly facing judgment day. are they working on an extension, could they buy some more time? >> that is the key question. this is one of china's largest developers. it might not be able to meet the deadline for a bond, due this week. that is an onshore bond. so pretty key for chinese

property developers. also, it is not releasing earnings on time. the final day for hong kong to release the reports for last year's tomorrow. -- last year is tomorrow. industry has very -- the industry has very much gone dark. we don't know how much debt these companies have, how much cash they have. individuals are resigning, agencies are pulling out. so that insperity and governance -- so that insperity and governance concern has only gotten more severe -- so that trans-parity and so that transparency and governance concern has gotten more severe. let's see if it does negotiate with creditors on that bond. >> sophia horts e costa there. we have already spoken about the property developers. the big banks will be in focus. ecb, posting strong results.

other banks will be reporting later on wednesday. we are watching to see if that resilience can be continued. also keep an eye on estimates, despite economic slowdowns and intensifying competition and china, with the tiktok owner, bytedance. >> we will continue to watch what the japanese yen is doing. it's reversing those losses that we saw after the boj announced those outright purchases for jgb's. now it's gaining ground against the u.s. dollar, moving away from the seven-year low, against the greenback. this, is we are also seeing the 10 year yield on the jgb reversing those earlier losses. as you can see on this chart, after the boj announced additional outright purchases of jgb's. perhaps we are seeing more stabilization now. our markets coverage continues, as we look ahead to the start of trade and hong kong, shanghai,

and shenzhen. this is bloomberg. ♪

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david: good morning from the asia-pacific. you are watching. the china open. . yvonne: our top stories, stocks rally on the back of the prospect of a de-escalation intentions. russia offering to deescalate military operations near kyiv. but some analysts think the move could just be tactical. the boj