haidi: a very good morning. we are coming down to asia's major market open. shery: welcome to daybreak asia. emmanuel macron to face national is marine le pen for the french presidency. we are live in paris. russia says it has a new military commander in ukraine after what the u.s. calls putin's strategic failure.

china defends its virus control after a swipe from washington as shanghai's covid cases keep setting records. u.s. futures still muted at the open in the early trading session in asia after u.s. stocks fell over 1% last week. we continue to see the fed's hawkish nose felt across the treasury space. treasuries continuing to selloff last week. the yield curve did steepen a little bit. the dollar continuing its strength around the july 2020 high. that has sent the euro down the past seven sessions. we are watching crude prices as they extend the declines after two weeks of losses. given the strategic release of oil not to mention china's covid albert. -- covid's outbreak haidi:. let's take a look at haidi: sydney and broder asia.

futures just shy of half of percent. we have the may 21 election date announced and confirmed over the weekend with six weeks of campaigning to go. the 10 year yield, the bond market again for all the action is. the tenure year australian bond yield top 3% for the first time since july 2015. now a little bit further. 3.01 four p similar treasury yields jumping 32 basis points. traders are piling in amid more expectations of aggressive fed tightening. kiwi stocks losing a little ground. dollar-yen, not much of a move although some key levels we are watching out for given the dollar-yen gains are a bit less steep than what we saw in march. we could see that accelerate a bit more if we see an even further acceleration of the fed tightening expectations. shery: we do have an alert on

the bloomberg for those who follow golf tournaments. shaklee are willing the title. holding off rory mcilroy and cameron smith with a steady final-round. scottie sheffler winning the masters title. there was a lot of anticipation around tyler woods come back. we did not see his performance to win the six green jacket at the masters but this time it was all about scottie sheffler who won his first masters championship had let's return to the french elections because the results from the first round in with incumbent president emmanuel macron surpassing expectations. >> the game is not over and the debate we will have in the coming 15 days will be decisive for a country in europe. all those who did not vote for emmanuel macron should join our

movement. shery: let's bring in our cross asset reporter. micron with a comfortable -- emmanuel macron with a comfortable lead. >> that is what we are hearing. five polls have been aggregated. it shows emmanuel macron in the lead with 28% of the vote followed by marine le pen with 23 to 24% of the vote and the left-wing candidate with around 20%. that was the consensus until two hours ago when a poll showed the difference between second and third place to be tightening. it is not clear cut it will be emmanuel macron against the far right marine le pen. it could be against jones you blumenfeld. they will unequivocally support president macron in the runoff.

another far right candidate unsurprising, he urges the base to align with marine le pen. if it is emmanuel macron against marine le pen, emmanuel macron is showing leads in the polls we have access to so far. haidi: what do we expect from these campaigns over the next two weeks? >> the issues are globalization versus anti-globalization. nationalism versus internationalism. for emmanuel macron to be reelected, it is a continuation of the modus operandi. he wants to increase public sector workers at he was to raise the retirement age to 65 and he wants to change inheritance task -- inheritance tax. for marine le pen, nationalizing the highway, no income tax for individuals under the age of 30. she wants france to pull back from some of its responsibilities in nato.

the key issue is inflation. purchasing power. across the media landscape you are seeing -- forecasting france inflation to be a 3% this year. the overall message from emmanuel macron is he once european sovereignty. shery: is this election so important because we are also amid the war in ukraine? russia now saying it will halt a bond issuance for the rest of this year. how will it be able to finance its expenses? >> mainly rely on money flow from energy resources. there is obviously a future risk

because oriole and dennis embargo is still's -- because oil and gas embargo to haidi: we already see this morning, so much price action when it comes to the 10 year government bond in australia. what kind of signals are we getting to treasuries, from treasuries? is it all still down to the high-end expectations of fester and steepening fed tightening? >> that is what we have been seeing playing out for the last few weeks. the fed's increasingly hawkish stance has spilled over across bond markets. we have also seen the curve steepening again from the inversion we saw over the last couple of weeks. segments of the curve started to flash in the cycle.

now the inversion having happened is the fact it is now keep it -- now steepening. people are fully anticipating this debate to pick up about whether inflation will continue to rise and wither the fed and other banks will quash the recovery. it has been a lot about the french election at the moment. the 10 year yield in france has been moving quite a lot. shery: we solid at the highest in seven years. tell us about the currency move we have seen despite the strength of the dollar recently. >> we have seen the euro as one of the bigger movers. more let's anticipation that emmanuel macron can do well in the runoff. we might see the lead he has over are in le pen more or less

stabilize. that is what markets seem to be reflecting because when you have had the kinds of discussions about separating more from europe you have had from marine le pen, that is not helpful for the bond market. what we have seen in terms of currency is the dollar has been holding up very well because of this flow that we have seen. in australia, that is another question. the aussie dollar has been buoyed by the commodity prices . it has yet to be seen whether the election is going to be feeding into the aussie dollar strength. it seems commodity prices are running the show. haidi: let's get you to vonnie quinn in new york. vonnie: china is defending its

covid zero policy saying it is based on science and is effective. this after the u.s. allowed consular staff to leave shanghai and urged americans to reconsider travel to the country should shanghai reported a record of 25,000 infections on saturday and the city has been in lockdown for more than a week. next any lawmakers are said to vote in the next prime minister after enron, is ousted after a no-confidence vote. a united opposition gathered the votes necessary to remove him from office. parliament will pick his replacement on monday. the imf will hold talks with sri lanka about a possible loan taupe, and economic crisis that spiraled into up little turmoil and protests calling for the president to quit. on friday, the central bank raised interest rates by 700 inflation -- 700 points.

on cbs, -- cited rising energy prices as well as supply chain disruptions. said the u.s. will avoid a recession and inflation will not become embedded in the economy. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: coming up on daybreak: asia, we speak to a former astronaut who was the second ever japanese woman to go to space. how the country's corporations are contributing to the effort. first, why the pandemic will force china into significant fiscal and monetary moves to shore up the economy. we discussed that next.

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>> i think that it will take time because there other things going on in the economy that are adding to price pressures including the commodity price increases and energy increases that are happening. i think inflation will remain above 2% this year and next year. trajectory will be that it will be moving down. shery: inflation remitting front and center this week as the war in ukraine continues to add to price pressures. we will get updated numbers from china and the u.s. where we may see cpi hit a fresh four decade

high ahead of a number said -- a number of central bank decisions. the cost of living a major issue in of the french presidential elections. our next guest says the war in ukraine is or integrate some cracks in asia. -- in ukraine is starting to create some cracks in asia. are you talking mainly about prices with the commodities rise? we have not seen the inflationary pressures in asia. >> we are starting but i think it is going to be -- i don't think we are going to have inflation in china. i don't think we are going to see it this year.

prices will remain high if not higher especially upstream. that is the markets of manufacturers. for others, there may be inflation. i think we are going to see more inflation in countries where there are supply bottlenecks. so, indonesia. i think we are going to see more inflation because food is important in the consumer basket. consumer food prices are nearly half of cpi. shery: going back to china, it seems for beijing the concern seems to be on growth. where we heading given the lockdowns?

>> we are heading south very fast and very unfortunate because the target was overwhelming before covid. it was a high target given the deceleration we have seen in the second half of the year. we have cases today. still not out of the woods. one third of growth for china. on top of that we have 40% of china's gdp in lockdown as we speak. it doesn't seem it is going to last one more week. you cannot bring down those cases so fast. we don't see any signal of policy. we have our own mobility index for china. we say a 50% reduction in mobility and i the first week of april. that equates to at least that second-quarter 1.8%.

imagine just last april, it would be for that quarter 1.8% less growth, which is for the year something -- half a percentage point. half a percentage point or less in the first quarter. that is only if it lasts until april. it is shaving off growth as we speak in china. it is very worrisome. haidi: at the same time you have beneficiaries to all of this chaos. shery: absolutely. australia is the biggest beneficiary in asia. a little bit of two much for the rba. there are a little bit in the situation where the labor market is doing great. we need to see whether as the

rba told as of now they need to see whether inflation will remain above target for a longer timeframe. they want to know whether the windfall if we can call it this remains. we have to increase rates most likely in may. because of the fed. because of the windfall. the rest of the world is worried about growth but not us trillion -- but not australia. haidi: australia is worried about cost-of-living. in particular when it comes to in asia you see the more extreme end of the problem with the likes of pakistan, the economy of sri lanka. is it a year where the emerging theme of political risk as a result of inflationary pressures and defense becomes more apparent? >> absolutely.

we have been talking about this since 2015. sri lanka was in the headlines they received a bilateral loan from china, which helped. it was 400 million at the time. this time around is much worse. since 2015 sri lanka has only been piling more debt. on top of that, cpi inflation. this is the game changer for everybody. australia has just been a company that it is dependent on commodities. pakistan is another example. the imf will be busy. not every country once the imf to be there. either the imf or restructuring. china today is not china in 2015

should china has its own preoccupations. we have seen the overseas lending has clearly shrunk. this country should not be expecting a generous china to come and hand in some money and avoid a problem for a few months or years. we need to restructure debt or and restructure to the imf for some money to restructure the debt to help restructuring the debt. that is where we are for both haidi:. always great to have you with us. you can get a roundup of the stories you need to know to get your monday going. terminal subscribers can get that at dayb . this is bloomberg. ♪

haidi: we are tracking the fallout of the global supply chain crunch. political and financial instability are driving for prices higher but the former head of the un's fao is urging calm. saying the world is in a much better position on food inventories than in 2008. in russia, oil refinery shutdowns are accelerating. 1.6 million barrels of the daily capacity is idle according to

energy assets. streaming storage capacity. much of the world as shunning russian oil. investors have been grappling with losing access to an aluminum play in australia. it does not agree with the takeover. shery: take a look at the commodity space. we are seeing oil extending losses after two weeks of decline. this as we had the release of strategic reserves around the world. not to mention china's virus outbreak. we are seeing wti below $100 a barrel. we continue to see iron ore under pressure. china's covid outbreak. palladium rising after russian refiners suspended from the london market and russia producing 40% of palladium. we are seeing the supply concerns.

grain prices continue to rally food prices rising at the fastest pace. bloomberg commodity index with of the highest level in one week. we will see when it starts trading again this week. bloomberg terminal users can read more about the story at and i trade and no. elon musk wants twitter to offer more perks for users who print -- to play for -- who pay for premium pictures. the new twitter board member says premium users should get zero ads. chinese property developer says it was unable to pay tournament dollars of interest on two dollar bonds by saturday and may miss payments on three others. in february the builder asked bondholders for more time to repay with $1 billion of bonds

set to mature this year. shares in dollar bonds have been plunging. indonesian start up trying go to is set to start trading on the jakarta stock exchange monday. it was formed by the merger of the nation's two most valuable startups. raising 1.1 billion dollars in one of the world's biggest new share sales this year. haidi: let's take a look at treasuries peered futures as well as what we are seeing in terms of price action for australian bonds. it is a situation of what we see with this bond selloff continuing to accelerate on the back of expectations of tighter, faster tightening cycle from the fed. the australian 10 year yield sitting above 15%. after we saw a similar move in

similar maturity treasury. the yield jumped over 30 basis points last week. watching the aussie dollar seeing a little bit of weakness after being the top performerpl: asia. this is bloomberg.

vonnie: this is daybreak: asia. french president emmanuel macron is set to face nationalist rival marine le pen in the final round of the french election. macron won 28% of the voting. pakistani lawmakers are said to vote in their next prime minister after him run, is ousted after a no-confidence vote.

a united opposition block gather the votes necessary to remove him from office. russia will hold auctions for the remainder of 2022. much as finance ministers says moscow is halting all local sales for the remainder of the year. the coast of ensuring government debt signaling a 99% chance of default. russia's invasion extending into a critical time for harvesting. and during the planting of corn and some flowers. -- and sunflowers. ukraine's output could be 30 to 55% lower. global news, 24 hours a day, on air and on quicktake by

bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: chinese defending its zero covid strategy as the u.s. asks americans to reconsider travel to the country to avoid what washington calls the arbitrary enforcement of rules in places like shanghai. let's bring in our chief north asia correspondent. what is the latest on the shanghai lockton? >> shanghai is entering into its third week. they started in the eastern part of the city on march 28. that expanded to april 21 to the western side of the city. record highs again on saturday. the city is still on a citywide lockdown. there are exceptions if up apartment complexes, there were no infections, people can go out on a limited basis. there is frustration growing

with some scattered protests of we need food. we won our freedom and the like. there are 24,943 new cases reported in shanghai alone on saturday out of 26,355 nationwide should shanghai feeling the brunt of it. the tally on saturday is five times the number we saw when the lockdown began. 25,000 now despite the lockdown. we are seeing the u.s. state department issue a statement urging or asking americans to reconsider travel to china. in particular to hotspots like shanghai. what china is sticking to is its zero covid strategy. the foreign affairs spokesperson said we are strongly dissatisfied with and firmly

opposed to the u.s. groundless accusation against china's epidemic response policies. he goes on to say it should be pointed out china's policies are science based and effective. gong show is going to be following in the footsteps of shanghai and launching citywide testing imminently. they are canceling all in class schoolrooms. haidi: in hong kong, looks like new infections or falling. >> we saw 1920 one new cases on sunday. that is the lowest in nearly two months. well-off the peaks we were seeing in march of more than 55,000 a day. there were 65 deaths reported. there is still a health issue but the numbers are considerably down. they go down into the triple digits.

carrie lam will stop giving her daily briefings. a self testing campaign which was voluntary self testing, they found 2202 cases. a fairly low number given what we saw last month. the self testing campaign does not show a significant rise in infections. officials will be more confident to relax those current curbs after the easter holiday. we got indications the city will start a detailed phase doubt of some of the restrictions. that could mount as early as today or this week. haidi: australia will hold a national election on may 21 after a six-week campaign period. we know this was the latest dated could have been held. what are the main issues and

what is the government going to be part our ties in between now and then? >> a six-week campaign. slightly longer than a normal campaign. what the main issues are depends on whether you are the government or put the -- where the opposition. the government wants to highlight economic growth. the lowest unemployment rate since 2008. the australian opposition, the labour party are looking to highlight low wage growth across the country. high cost of living. they are looking to also put his boat on the leadership of scott morrison who they claim has mishandled aspects of the pandemic. shery: not sure how much we can trust polling given what happened in 2019 but what are we expecting this year? >> the one thing you hear if you speak to the government or the labour party is neither of them trust the polls for 2019's massive misfire.

what they are showing is a lead for labor. not an unassailable lead. about 53 to 47 should 53 to the labor opposition. this is a really softly. what you are seeing is the numbers are in labor's favor but not by the amount that a small polling error either way or the tightening in pull would not wipe out and hand to the coalition government. haidi: how optimistic are both major parties given we have also seen this extraordinary rise of the independents? >> there is a lot of caution from both sides. there is a lot of talk about a hung parliament and that is justified given neither party is seeing huge votes. hung parliament's unusual in australia. we are seeing a rise in independents. we are seeing a rise any the

votes for the environmental greens party. which could mean we could see both parties left without enough seats to govern and a government that relies on the support of pro-climate action independence which of scott morrison forms a government could be a big problem for him. shery: coming up next, space cooperation faces a dire future as relations between the west and russia collapse. can japan step in to fill the void? a former astronaut joins to discuss. this is bloomberg. ♪

haidi: japanese markets will open in 20 minutes from now. a look at how these markets will be shaping up. we did see less steep losses when it comes to yen as we saw in the month of april as compared to march where we see the real accelerated decline in the yen on the strength of the dollar. we're starting to see dollar-yen starting to climb up. watching singapore nikkei futures looking like we will see a muted start to training in the cash trading session when the japanese equities come online.

i'm watching for japanese government bonds. we see the accelerated bonsall of continuing. we saw the leadership when it comes to the cash yields reaching 3% in australia for the first time since 2015 sending a message the treasuries that the path ahead to other sovereign bonds. shery: these are some of the stories we are watching and japan. japanese insurance will stop accepting new coverage contract for firms operating in russia. keep an eye on -- about $42 million due to patent infringement relating to a breast cancer treatment. a start up selling a motorbike worth 770 $7,000 is in a talk with the tokyo stock exchange for an upcoming ipo. haidi: the future of the international space station

could be a risk as relations between russia and the west collapse. moscow's propulsion could doom the project if it decides to pull that abruptly peered massive things russia is unlikely to do so just yet. >> even with the terrible things that vladimir putin is putting on the ukrainian people, i expect the professional relationship between astronauts and cosmonauts to continue. haidi: the u.s. and russia could reach a more amicable exit agreement that may set the stage for one of the other runners in japan, canada or europe to play in increased role. -- to play an increased role. let's bring in our next guest. she is also a former astronaut and was the set up an japanese woman to fly into space in.

she cofounded an organization that supports efforts to open spaceports in the country. really great to have you with us. let's get started with these concerns over the iss. these geopolitical tensions creating a lot of uncertainty and stress. what is the opportunity for a country like japan to be more involved? >> i'm glad to be here. international space station is a symbol of international cooperation and japan is a part of it. the japan space policy, we like to continue those professional collaborations because international collaboration is the key for japan. haidi: does that involve more recruitment of japanese astronauts? this will be the first time in

13 years. what are your expectations of that program?? >> japan aerospace exploration agency is hiring a new generation of astronauts for the first time in 13 years. i expect the new generation of astronauts to land on the moon as the artemis program. shery: what about more cooperation with a private sector in japanese countries -- japanese companies? what do expect on that side? >> the vision is to double the space market by 2030. we had more than 50 start up companies in japan.

some automobile companies like toyota, honda and nissan are entering the space interstate. it has been very tiring. shery: we ask all of our guests on japan ahead this question. as you look at what is happening on space exploration, what change does japan need the most right now most urgently? >> japan is more diversity. we live in an era with rapid change. innovation is vital. to stimulate innovation, we need more diversity. i think strategic investments in basic research is very important.

haidi: as the second japanese woman to go into space, what you think are the hurdles to getting more women involved in space programs and what policy initiatives should take place? >> when i visited the international space station in 2010, we had four women and it was the world record of the most women at the same time in space. i'm so under to be a part of it. i think -- i'm so honored to be a part of it. diversity and space sectors is vital because the space exploration role is to connect our daily lives more closely. so that space can be beneficial for all humanity. we need more diversity. shery: what about sustainability in this industry? >> sustainability is the key as

well. on board the iss, we already recycle water and we are working on a space agriculture to make the food supply chain more sustainable in space. shery: it was really good to have you on and get your thoughts. japan's space policy cabinet member. you can get more on this interview from tv available to all bloomberg terminal subscribers. tune in every week to hear of the lead names in japanese business. plenty more ahead. this is bloomberg. ♪

shery: former treasury secretary larry summers says consensus is building toward the u.s. concession with a combination of factors posing a big challenge to the fed with its efforts to reign in prices. he spoke to david westin and of the latest edition of wall street week. >> i think the risks are going way up peered 27.5 percent this year because next year is riskier than this year translates to something getting towards two thirds for a two year period and i would be a

bit above that in my judgment. here is the key fact. we have never had a moment in the united states when inflation was above four and unemployment was below for when we did not have a recession within the next two years. we may pull it off. it is usually important we succeed in pulling it off but the combination of overheating followed by policy delay followed by supply shocks means it is a very difficult set of challenges and recession in the next couple of years is clearly more likely than not. some of the banks are starting to move in that direction. i suspect that is how the consensus will evolve. >> i feel like we are between a rock at a hard place with

inflation on one hand and the recession on the other. we worry about help people who are less fortunate are effective. you have your research paper this week talking about what happens with wage growth. you would like to think when wages grow that helps everybody. not necessarily so. >> here is the fact. if you look at nominal wage growth and growth in worker purchasing power, up to a point, perhaps 4%, 4.5%, they move together. past that point because when inflation is running above 4% you start to have inflation -- serious inflation, things move in the opposite direction and higher wage growth seems to go with lower growth than worker purchasing power. that is why i was so anxious on the show over the last year

about the possibility of overheating labor markets. that is what seems to be materializing with average real wages have been one of their worst performances over the last year that we have seen. haidi: former u.s. treasury secretary larry summers. we do have shanghai reporting 26,087 new covid cases for april 10. that is not quite a record high but close to a high because as we see a city of 25 million people all under some form of isolation or look down, there has been increasing criticism and uncertainty and concern being expressed by people in shanghai. that is in fact a new record for shanghai. 26,087. this as we continue to see the lockdown.

previously announced as staggered or phased lockdown to minimize the impact on gdp but at this point given cases continue to rise, the extension of lockdowns and quarantines across much of the city, we see the entire city of shanghai remaining under lockdown. lots of concerns and complaints about available resources. an ability of people to move around to be able to get those resources as well. let's get you a quick check of the latest business headlines. a japanese drugmaker is stopping clinical trials in russia. that is as the business is included from sanctions are the invasion from ukraine. the nikkei newspaper says it is unclear which trials will be effective but those underway will not be halted. chinese electric carmaker nio says it has delayed delivery as the outbreak in china disrupts

the supply chain should several suppliers remain off-line. nio says it will raise prices on vehicles due to rising material costs reversing a statement last month it does not plan on price hikes. sonic the hedgehog two became the highest grossing kids movie of the pandemic era making an estimated $71 million at north american box offices. it is encouraging signs to theater owners as the film is being seen as a test of whether families will return to cinemas. we are coming down to the start of trading in seoul. tell us about some of the stories we are watching. shery:shery: we are getting the trade numbers for the first 10 days of the month. very exciting when it comes to trade in south korea. this coming after the march numbers showed exports increased

by 18%. ukraine president volodymyr zelenskyy will be delivering a virtual address to south korean lawmakers. we will be watching. the bank of korea planning to sell a number of bonds across different maturities monday. also ticket a pharmaceutical is said to know longe conductr trials in russia. coming up in the next hour, china's inflation numbers are due later on monday. they're expected to remain relatively stable.

ubs says despite mounting inflationary pressures around the world, it remains positive on the overall outlook for commodities this year. the market opens in sydney, seoul and tokyo are next. this is bloomberg. ♪

shery: welcome to "daybreak: asia," i am shery ahn. sophie: i am haidi stroud-watts in sydney. asia's major targets of open for trade. our top stories, week inflation and hawkish fed policy top of mind for investors. the euro gains as emmanuel macron takes a narrow lead in the french presidential runoff against marine le pen. plus, china defends its virus

controls after -- from washington. shanghai's covid cassie's -- covid cases keep setting record. shery: pressure for equity markets after two weeks of losses already. the japanese yen holding steady, we've had six sessions of lawson's against the u.s. -- of losses against the u.s. dollar. we are watching the jgb space as well, most of them rising last week, given the boj purchasing operations. we continue to watch the 10 year yield. we are watching the south korean market as well, this is how they are coming online, if you can switch the board, you can see what the kospi is doing. we have seen data a few minutes ago from exports and imports. exports rising 3% year on year, imports rising 12.8% for the first 10 days of the month, not surprising even the inflated import bill with rising

commodities prices. the korean won about 12 point 29 -- 12.29. weakness as we see a strong u.s. dollar given more hawkish signals from the fed. haidi: yeah, and a brand-new week and with how the market is moving, take a look at australia, the 10 year above 3% for the first time since july 2016, rising following a brutal selloff in u.s. treasuries last week. there are concerns about aggressive fed policies driving the selloff across the short and longer end of the curve. the 10 year yield in australia jumped as much as five basis points, over 3%. three year notes rising to basis points as well. we had a 32 basis points surge in the u.s. 10 year last week. the start of equities trading, a

quiet start. sydney stocks up about 1/10 of 1%. a little leadership when it comes to utilities and materials but not a great deal of reaction after the may 21 election date was announced over the weekend. traders will be paying more attention to the rba, which already signaled a more hawkish turn last week. the u.s. 10 year, looking at futures trading for the 10 and two year, some upside in yields and potentially the 10 year bond about 3% in australia paving the way for what treasuries could be expected to do in the session. s&p futures lackluster. extended declines when it comes to trading in new york crude after a bit of weakness the past few weeks on account of the massive release of strategic reserves. our next guest says commodities are still his preferred asset class be a he is -- asset

class. adrian, great to have you with us. what is your preferred exposure for commodities, are we talking about energy or some thing else in asia? adrian: thank you. i think commodities over all have a strong side in 2022, and the overall outlook for commodities this year remains positive. fed capacity narrowing, markets and deficit. you mentioned them coming down and we think they will have to rebuild. we think the energy sector looks good, industrial metals, supported by the ongoing gdp growth. we have the disruption of the war, which will lead us to a bigger and broader commodity rally overall, and therefore we think the commodity space is

interesting, asset related commodities. and the s&p complex looks interesting. haidi: in terms of some of the risks, we see with some of these economies in southeast asia, pakistan, south asia and sri lanka, the inflationary issues in cost-of-living is now creating political risks as well. is that a risk across asia we should be watching out for? adrian: i think inflation overall, even in the u.s. but particularly in asia, with the situation in ukraine and food price inflation, it is more uphill and political pressure. we have seen the revolution in north africa that has triggered high food price inflation.

it is additional headwinds for financial markets this year. overall, we took a bit of risk off the table, and put the portfolio more into the commodities complex, on the equity side, for instance. shery: when it comes to inflationary pressures, we are seeing asian central banks moving, but it seems like the pboc is going in a complete different direction, given the inflation numbers out today are not expected to be that severe either. where do you find the market opportunities? adrian: china is definitely for us one of the market opportunities, and it bears a lot of risk with the lockdown, growth will be weaker in the rebound. probably weaker than the officials have at 5.5. i think in particular, in china

growth is weak, we have lockdowns and low inflation, so they can do more. we think the pboc has to step up to support the market. shery: going full-circle on your call for a greater gain for commodities, where you stand on the switch to renewables and the green terrence vision -- green transition? is that a space where you could see long-term gains despite the focus on short-term mitigation of rising prices? adrian: absolutely. i think you have to run a strategy worry -- where additional commodities don't need to be replaced in the short-term. we see governments putting out subsidies for traditional commodities. at the same time, we have seen the u.s. and russian oil, the

u.s. wants to reduce dependency on russian gas and there is only one solution. you have to make an energy transition and basically link yourself less to fossil fuels and you have to invest. there are major investments coming. now we will see an acceleration of that. we have the german economic minister coming out, wanting to switch. this is a key investment opportunity for the next 10 years. shery: it was good having you on. ubs global wealth management cio. let's get to vonnie quinn with the first word headlines. vonnie: russia will reportedly hold bond options for the remainder of 2022. according to local media, moscow

is holding local and foreign bond sales for the year, calling borrowing costs cosmic. less wick -- last week, there was a 99% chance of default. china says it's covid policy is effective. they urged americans to reconsider traveling to the country after they called an arbitrary enforcement of restrictions. the city of shanghai has been lockdown for more than a week. pakistani lawmakers are set to vote for the next prime minister after the current prime minister was ousted in a no-confidence vote. the four year run ended when the votes were gathered to remove him from office. parliament will pick a replacement on monday, with opposition -- the opposition leader the front runner. talks are being held with sri

lanka to overcome an economic crisis that spiraled into political turmoil, and calls for the president to quit. the central bank raised interest rates by an unprecedented 700 basis points to cool inflation. 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. i am vonnie quinn. this is bloomberg. haidi: coming up, key inflation numbers out of china on monday. we preview that as covid cases and shanghai hit another record. next, emmanuel macron takes a bigger than expected lead in the first round of french presidential elections, but could struggle to consolidate the final vote. we will be live from paris in just a moment. this is bloomberg. ♪

haidi: let's get to the latest when it comes to -- >> those who did not vote for emmanuel macron should join our movement. >> never lose your faith hundred -- your faith in democracy. >> i'm calling on you to vote for marine le pen. >> the debate we will have in the coming 15 days is decisive for our country and europe. haidi: candidates on the french presidential election. let's get more on the election. tell us about the voting breakdown. we have the euro gaining i guess on relief that we could see a second term from emmanuel macron. laura: estimates overwhelmingly show the second round will be

emmanuel macron against far right candidate marine le pen, corroborated by the official interior ministry numbers. that said, we are seeing a tightening between second and third place, which means the left-wing candidate may still have a chance of making the second round in two weeks time. in terms of endorsements, the last of the center-right candidates, they endorsed emmanuel macron. another far right candidate unsurprisingly wants his days to vote for marine le pen. in terms of what the second round will look like, if it is emmanuel macron against marine le pen, a couple of polls showing emmanuel macron between a 2% and 8% lead. shery: what would a emmanuel macron presidency or marine le pen presidency mean for leadership in europe and the war

in ukraine? laura: this is about the battle between internationalism, which emmanuel macron stands for, and nationalism, which is what marine le pen wants to cepheid emmanuel macron -- wants to see. the central issue in this election is inflation, it is around 4%. for emmanuel macron, it would be a continuation of the status quo. marine le pen has more radical policies of her sleeve and wants france to pull back some operations and nato, remove income tax for individuals under 30, and her party have some harsh policies on immigration, or more harsh than those of emmanuel macron. haidi: markets have been worried about a close contest. what has been the worry about the positioning?

laura: we did see a spike in the euro when it started trading out of sydney. i have been speaking with one analyst who believes the french equity benchmark will over perform this week a's on the first -- based on the first round results. also we should see an easing in french yields which spiked last week on concerns that emmanuel macron might not finish top in the first round. shery: laura wright in paris. the euro pairing back some of those --paring back some of those gains. in the open in the asian session, a little pressure with the msci europe having risen about 1.5%, but the euro stoxx 50 down. this where we had already seen european stocks rallying last week, a lot of bargain-hunting

given we've seen a lot of pressure on european equities, beaten-down stock valuations. banks outperformed last week. we will be watching how markets react to the french election and broader geopolitical tensions in ukraine. president zelenskyy says russian forces will make a big push into the country. >> russian troops will turn to even more large-scale actions in the east of our country. they may use more missiles and air bombs against us. shery: sources say vladimir putin is appointing a new commander delete forces in the war. for more, let's go to our editor. what does this mean for russia's push into ukraine? dan: ultimately they want to consolidate their forces around the east. they suffered a lot of losses in the north and around kyiv.

now they are focusing on making sure they have the eastern part of the country, the donbass region in particular, under their control. we've seen them go after variable -- mariupol. they've appointed a new general in charge of the south and east to consolidate their leadership structure as well. all of this is heading to some sort of victory proclamation that is expected in early may in particular. that's what we are looking at for the moment. haidi: what is the significance of the new commander for russia's military? dan: this is someone who oversaw moscow's forces in syria in 2015 and 2016, fought alongside syrian government troops in a war where the president there

was accused of using chemical weapons against his own people. the fear is he has this history of using those types of weapons in the past, that he could do the same thing in ukraine. shery: -- haidi: our asian government editor there. next, shares for chinese developers seeing their best week since november, but they could come under more pressure after one developer admitted they cannot make bond payments. details ahead. this is bloomberg. ♪

haidi: take a look at this chart showing the global policy diversions at this point, china's new premium over treasuries disappearing with more easing expected, currently standing at just six basis points. u.s. normal yield poised to

overtake china for the first time since 2010. a chinese -- chinese developers having their best year since 2015. but debt worries are far from over. one developer announced over the weekend it is unable to pay interest on two dollar bonds and could miss on three others. let's get more from our editor. what did we hear over the weekend? rebecca: this is the first time they are defaulting on a bond. we saw a really sharp drop-off after it struggled to repay about $1 million. in some ways, not a huge surprise. bonds are trading between $.10 on the dollar and $.30 on the dollar, white high levels of distress. i think the question is also whether it disrupt the water

rally. high-yield bonds have had a furious rally the last couple of weeks. we have heard comments from authorities about possible signs of supporting the economy and financial markets. since then, we've seen very little concrete evidence of what type of plan there is. the rally, there is a question to what extent the rally can be sustained, and whether or not we will finally see it run out of steam. given that we are not yet over the worst and there are many private developers that will continue to struggle to sell their bonds so long as financing channels remain shut. shery: we were hearing last week from pimco that some chinese bonds were too pessimistic. what are analysts saying about the sector? rebecca: i think at this point, that could be a brave point.

more analysts are saying it is up from here. however, citigroup pointed out that the need now, there is a desperate need to have some kind of policy action. they talked about a silver bullet being needed in the second quarter, or else they warn it could be too late, there could be no way to fully resurrects. we have been here before, late last year we had all sorts, ubs and others, calling this way, and then there were fresh record lows. it may be too early to call. haidi: our editor with the latest. a chinese electric carmaker has halted production and delayed

output because of covid restrictions. shanghai is under covid lockdown. nio says it will raise prices on some vehicles because of rising costs, but it doesn't plan price hikes. shery: a company will start trading on monday. goto raised $1.1 billion in one of the world's biggest shares this year. an estimated $70 million in box office was made over the weekend, and encouraging sign for sonic 2 and a test for whether families will return to cinemas. shery: take a look at

cryptocurrencies trading at the moment, bitcoin at one point fell below its 50 day moving average. we have seen the currency trade around 35,000 to 40,000 for much of the year, it peaked at 48000 and late march. we continue to see the spread throughout other crypto assets. this comes as we continue to see concerns over tightening monetary policy around the world, the hawkish fed commentary. this week we have u.s. inflation will numbers, likely -- inflation numbers, likely to come at the fastest rate in 40 years. with these concerns about tightening monetary policy, perhaps not much of the money going around the world, we are seeing a downside when it comes to cryptocurrency with bitcoin falling below a 50 day moving average. coming up, look ahead to chinese

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haidi: looking at the empty streets of shanghai, usually such a cosmopolitan city. more than 26,000 new covid cases reported their. -- there. china's largest documented outbreak extending despite the lockdown in shanghai. 26,087 infections reported on sunday. china is again defending its zero covid strategy as the u.s.

asks americans to reconsider travel to the country to avoid what washington because the arbitrary enforcement of rules in places like shanghai. let's bring out stephen engle. what is the latest we know as we continue to see these fresh new highs for infections in shanghai? stephen: you reported the numbers, 25,000 or so in shanghai alone, most of the new infections in china. wenzhou will also start mass testing of its people. 18 million. they found a few cases. in shanghai over the next couple of weeks, essentially we went from just under 5000 on march 28 at the beginning of the face lockdown of the city to now when he 5000. -- now to 25,000. this despite the city is

entirely in lockdown. infections keep climbing. the state department from the u.s. put out a statement asking americans to reconsider travels to china to avoid hotspots like shanghai, because numbers keep going up, a record high now. we haven't gotten sunday's number but the trend has been going up every day. they talked about, the u.s. state department, talked about the potential of arbitrary enforcement of virus restrictions. the ministry of foreign affairs in beijing shot back against the criticism from the u.s. the spokesperson says we are strongly dissatisfied with and opposed to the u.s.'s groundless accusations about china's response policies, and have lodged solemn representatives with the u.s. side. he says it should be pointed out

that china's policies are science based and effective and we are confident that shanghai and other places in china will prevail over the new wave of the epidemic. speaking of other areas, we are hearing that china's biggest battery maker is implement in a closed loop isolation system for workers so it can keep going in case the city has to be put into lockdown, and avoid disruption for companies like tesla on the outskirts of shanghai. they are implemented -- they are in plummeting that, they have about 50% of the chinese car battery market. i mentioned guangzhou in plummeting mass testing, they're also shutting down schools, in person -- they are implementing mass testing, shutting down schools, in person school.

beijing will start implementing some of its toughest restrictions since a couple of years ago when the pandemic began to essentially stem what they are seeing is spreading to other cities in the omicron wave. shery: -- haidi: stephen engle with the latest on the lockdowns across china. we should get the country reporting cpi data for march in the next hour. our next guest says they will remain mild. it is great to have you with us. is the milder inflation number due to weak demand with the ongoing covid crisis? what are your expectations for what sort of numbers we can expect today? >> thank you. the inflation in march will rise moderately to 1.2% year on year.

we do see the government prices have been cut twice in march, 11% higher compared to february. other consumer prices might -- because of weak consumption demand and households amid the elrick of omicron. -- the outbreak of omicron. shery: what policy moves should we expect, what is the tool of choice for beijing authorities? >> definitely compared to some of the central banks around the globe, like the u.s. fed and ecb, the top mandate for the pboc will be to stabilize

growth. while we expect the cpi inflation to rise, continue to rise a little bit in the coming months because of the higher global oil prices and the potential domestic demand and supply disruptions amid the omicron outbreak, china will likely continue to ease monetary policies. for example, on the policy rate front, on friday the pboc is likely to cut its rate. i think there is a further room for the pboc to further ease.

on the policy rate front -- haidi: sorry, continue. >> the likely policy rate, we also think the pboc will continue to normalize the credit lending for developers and ease -- and use policy tools to increase support in targeted areas. haidi: when we see this unprecedented lockdown that affects so much of gdp, whether you're talking about consumer spending sentiment, manufacturing and supply chain, just about every aspect of the economy, do you think the pboc is behind the curve? >> that is only i think the pboc

disappointed the markets in february and march with a policy rate cut. it disappointed after a strong reading in january. in march, still hovering at a relatively weak level. definitely there is room for the pboc to ramp up policy easing from here and with a faster pace after all of the covid outbreaks in china is pushing downward pressure is on the economy. we see continued contractions in certain sectors, including with

the geopolitical conflict. haidi: we've got that chart, just taking a look at the reserve ratio requirements. column inflation could mean the pboc has a little more flexibility -- calm inflation could mean the pboc has a little more like stability. what targeted measures would be most effective, particularly when it comes to sme's, and do you expect other measures to be part of that, fiscal included? >> sure, apart from the monetary easing measures, they certainly will tackle some of the structural easing measures.

also the manufacturing sector, high-tech areas, and southern sectors impacted by the covid outbreak the most, for example in person services and catering, tourism, etc. those measures could indeed come along in coming months, to support the private sector, which is quite weak. haidi: we appreciate your time. coming up next, hong kong's leading candidate for chief executive has reportedly received enough nominations for the leadership race, one day

after announcing his intention to run. we look at his message to the domestic and international audience. this is bloomberg. ♪ is is bloomberg. ♪

shery: hong kong's leading candidate for the city's top job

has secured enough nominations for the leadership race just one day after kicking off his campaign, according to local media. we have more on this. what is next in the election timeline? >> he is gathering the votes he needs to secure his nomination, he needs 188 votes from the election committee, local media reporting he has 200 votes, and he plans to hand in tomorrow with 500. he has a full schedule going door-to-door with the various political parties in hong kong, so he looks certain to get the support he needs in a resounding way. it is becoming increasingly obvious who beijing once to lead the city, and that is john lee. haidi: he made his first stump speech over the weekend. what was the messaging? jenni: the messaging was quite

vague, but he did say he pledged to maintain hong kong's competitive this as a global business hub, which i think was a welcome message among the business community and wider population. he said his results oriented approach would address the city's long-standing affordable housing problem, which beijing had outlined as a priority for the next leader. the speech was light on specifics, how he would do any of this, so people are eager to see more detailed outlines from john lee on what his leadership would bring. haidi: our china editor. let's get you to vonnie quinn. vonnie: emmanuel macron set to face marine le pen in the final round of the french election. emmanuel macron won around 28% of the voting in the first round, and marine le pen with

24%. the next round will be april 24. the u.k. prime minister has become the first g7 leader to meet his ukrainian counterpart face to face in kyiv. he walked through the capital with volodymyr zelenskyy, pledging aid and other support. they have pledged armored vehicles and missiles to bolster defenses. ukraine could see -- cut in half with russia continuing its invasion. a large area of wheatfields have been occupied. it is predicted u.s. inflation will stay above 2% this year into next year. this amid rising energy and commodity prices.

however it was said inflation will not be embedded in the economy. cryptocurrencies are more popular in countries is seen as corrupt, according to an imf report, used to transfer proceeds from corruption. they say the findings boost the case of more -- the case for more regulations in the industry. 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. i am vonnie quinn. this is bloomberg. haidi: lawmakers in pakistan are set to vote in their next prime minister after the current prime minister was voted out in a no-confidence vote. let's get to our correspondent for more. as we watch these crises in full -- unfold in pakistan and sri lanka, we see some some limbs of

the hope of political stability returning at least a pakistan? enda: good morning. i think that is the key issue, if sharif is elected, pakistan has a government back on track and that is critical for negotiations with external creditors, principally the imf. there is the remainder of a $3 billion loan on the table. currency is at a record low against the dollar. their own holdings affording change reserves at a two-year low number only enough to cover a couple of months of imports. we know inflation is accelerating. the central bank last week raise rates the most since 1996, by 200 basis points. in terms of the economic story in pakistan and currency, creditors have to assume that getting a government in place is

a critical component to the next step, which is securing the imf financing. shery: sharif has a reputation as business friendly. what can we expect? enda: that is an interesting dynamic to come out of this. sharif is seen on paper as a business friendly person and that might suggest he is willing to go with measures and reforms the imf would typically require conditionality of financing. there is a foreign policy aspect. he is expected to tilt the policy -- foreign policy a look more toward the u.s. and europe and away from china, so that will play toward winning the hearts and minds of the imf as well. on paper, it suggests a different approach toward western creditors led by someone like imf, rather than the road pakistan was previously going down. at least for accessing hard currency, the potential election

of sharif suggests pakistan is on the way to negotiate to get money from the imf. haidi: you mentioned the monster move from the shree lincoln -- sri lankan bank. are they going to have fiscal restructuring along with the to fix this mess? enda: there is a lot of commonality with these emerging markets. also idiosyncratic factors. both have to get a political government back on track with stability to win the confidence of outside creditors. that is number one. number two, you mentioned aggressive rate hikes, we are seeing aggressive rate hikes in sri lanka and pakistan. that is showing they are serious about trying to tame inflation and take the steps necessary to win the confidence of overseas investors. i think in both cases there is a long way to go.

once the government is up and running or they show they have a mandate instability, it will be a long road before they secure conditionality in negotiating required by creditors like imf. it will probably require pain by both economies, they are suffering from living costs. stability is the first step but it will be a long road back for both pakistan and sri lanka. shery: in the current -- enda curran there. the pakistan central bank governor will be on bloomberg orchids -- markets later today. more ahead. this is bloomberg. ♪

shery: a quick check of the latest business flash headlines. elon musk wants twitter to offer more perks for users who pay for premium futures. he says subscribers should get an authentication checkmark a different than the check mark used for public figures or official accounts. the new twitter board member says premium users should get --

reportedly trials have stopped in russia by a pharmaceutical country. a nikkei newspaper says it is unclear what trials will be affected, and those already underway will not be halted. a chinese property developer, zhenro, was unable to pay interest on to bonds by saturday and may miss payments on three others. in february, the builder asked for more time to repay about $1 billion of bonds maturing this year. haidi: we are watching markets in hong kong and the mainland, opening in about half an hour. one company offering shares in your listing.

also nio may rise -- may raise prices on vehicles because of material costs. this is what we are watching broadly in markets, look at u.s. futures coming online as we continue to see the back-and-forth when it comes to fed expectations. these are aggressive expectations playing out across bond markets at the moment, the 10 year australian yield jumping above 3% for the first time since 2015. s&p equities futures, some mild downside. taiex also a little weaker. dollar china at 637. if you look at onshore yuan trading, that is essentially evaporating since shanghai went into lockdown. it is the lowest since march 2020. down from a daily average of 30 billion last month.

that is what to watch out for in terms of any pricing moves you might see being impacted. shery: we're also watching what is happening in the crypto currency space, as bitcoin fell below the 50 day moving average, a key technical level. we have seen it trade around 35,000 and 45,000 for much of the year. we saw it peaking in late march at around $48,000, but right now under a lot of pressure, down for the last seven of eight days. we have concerns about tighter monetary policy come a hawkish fed commentary, and not to mention we have the be ok -- bok rate decision as well. haidi: one analyst saying that now that the sugar rush for bitcoin is over, of reality check. that is about it for "daybreak: asia." markets coverage continues, looking ahead to the start of trading. we have china inflation numbers

as shanghai continues to see record covid cases reported, the city remaining essentially entirely under lockdown. stay with us, bloomberg markets: china open is next. this is bloomberg. ♪

♪ david: good monday morning from hong kong. it is 9 a.m. in the city and it is also 9:00 a.m. in beijing and shanghai. welcome to the china i'm david. let's get your top stories today. beijing