are watching daybreak asia live

from new york, sydney, and hong kong counting down to asia's major market opens. the bank of japan, willett joined global peers? asia said to extend the global stock selloff after fears of recession sink u.s. markets. traders gaining at the front end of the curve. u.s. officials working to arrange a call between president biden and xi jinping as tensions remain high. u.s. futures rebounding after the s&p 500 plunged. j.p. morgan is saying now that the s&p 500 implies an 85% chance of a recession in the

u.s.. nasdaq 100 stocks also fallen more than 4%. we are watching the treasury space very closely because the selloff we saw earlier is completely reversing course and is a two year yield is falling close to a 3% level while the 10 year yield falling. wti gaining ground in the new york session. a little pressure in the asian session. remember, you also had other daughter falling by -- dollar falling by the most since march, 2020. the other side of the dollar's european currencies. central banks across europe are starting to tighten as well. the swiss franc is seeing its best rally since 2015 after that rate hike by the swiss bank, the first one in 15 years. the british pound is also supported given that the boe

raised rates the fifth consecutive time the hero -- consecutive time. it is not surprising people are thinking perhaps the bank of japan will move as well. >> turning up the heat on governor kuroda and his colleagues at the bank of japan. it is decision day. money markets are suggesting the bank will be either forced to tweak its policy or abandon it. now the focus on the right differential we are seeing between the u.s. and japan, ahead of that we are seeing the yen trading against the greenback. we saw a bit of a pullback in the greenback the previous session. bond yields weaker. treasury yields declined further in the past session. that is playing into the a ussie land kiwi space.

agency bank is -- a-z bank is expecting a 50 basis point hike from the bank of austria in july and august. we are looking pretty risk off to end the week. particularly, what we are seeing reflected in sydney and new zealand trading. in japan this weekend there has been a equities. it was indicating a drop of 3% at the open but globally, we are looking at one of the worst weeks of stocks in 20 -- since 2020. >> all of this aggressive central-bank action is fueling recession fears. let's get more insight into what to expect from the big bank of america -- bank of japan decision later.

mark cranfield and kathleen hayes, really the post fed relief rally was just a blip. >> exactly. traders are looking more closely and they realize that 75 basis points is not a dovish response to what is going on in the world. especially as jerome powell said there would be more to come, at least another 50 or 75 at the next meeting. so, that's not dovish. then take into account the g 10 world also. the swiss national bank surprised. there is a lot of pressure on the bank of japan. it will be difficult for the european central bank to not respond with aggressive rate hikes after the swiss move and that just leaves the bank of japan. that makes the press conference the most interesting point today, not so much the statement

itself but what governor kuroda has to say when he meets the press later today. if there is a chance for him to prepare the world, it will be in that hour he spends with the press. >> in california mark was talking about the central-bank preempting the ecb move. we have the doe moving as well -- boe moving as well but only 25 basis point in a world where people are talking jumbo hikes. >> well, they have a bit of a conundrum. they did vote to raise their key rate by 25 basis points. 6-3 was the vote, but three dissented because they were in favor of a 50 basis point hike that they did not get. the boe was the first central bank to start raising rates out of the pandemic. now they have slowed down a bit. let's look at japan. some people are trying to make connections between other

central banks and governor kuroda's conundrum. that is, the yen is at a two year low. it could go further. the bank of japan is having to up purchases of bonds. a big driver lately is the federal reserve 75 basis point rate hike and the promise to do more. markets are pricing in different things from bond purchases, currency markets, to many different bets here. if you look at the expectation. because markets expect that governor -- governor kuroda will go along. just last week a survey of economists saw 44 out of 45 saying no change. governor kuroda speaking department saying he still thinks the economy is good. it is a post-pandemic recovery. what will they do? there are market signs they could do something.

beyond that, what you have to realize is the -- what the bank of japan does will be very influenced by conversations that may be happening behind the scenes in the government. now, no matter how much governor kuroda is protesting now and know how -- no matter how many bonds the bank of japan is buying in july of 2018 they were buying lots of bonds and that was the meeting the bank of japan it doubled the range for yield curve control. it is also true that every four months, every four meetings, excuse me, there are eight meetings every year and only

four contained a monetary policy report and they can change their forecast. listen to the press conference. this is where we will get the guidance to see if governor kuroda is in anyway softening his stance. >> one week volatility for the young at the highest for 2020. we will get turbulence either way area ray -- either way. ray was saying we see haven demand given inflationary views. what are you seeing? >> particularly on rate differentials with the u.s. treasury curve steepening in terms of yields, that's obviously exacerbating the problem between low yields in japan and the rest of the world pushing dollars/en up. now you -- dollars/yen up. now you can throw in the euro,

the swiss franc, the pound. we have had an increase in the boe, the swiss bank, and probably the ecb to come. japanese authorities could become more aggressive, but, what we have seen in the japanese bond market at the moment is traders think there is a chance for changes. they are seeing the fed, the rba, even the ecb pushed into a corner by what is happening with stagflation in the outside world and now the bank of japan is the next on the ropes. we will not see this go away. no wonder we have 30% volatility today in the japanese yen. for the next few weeks, until the july meeting, a big one,

japanese assets are in for a big couple weeks and the yen is in the middle of that. >> mark cranfield and kathleen hays. we now get to sue keenan. >> ecb president christina guard says -- christine laguard told euro area finance ministers that a new investment is intended to prevent economic pressures. the ecb is set to embark on its first interest rate hike in more than a decade. u.s. officials are working on arranging a call between president biden and china's xi jinping as soon as july. there are no details on what has been revealed on what washington wants to focus on in the dialogue. the war in ukraine, taiwan, and

human rights are among the sore points in the u.s./china relationship. the two leaders last smoke -- spoke in march via video call. national security advisor jake sullivan says the u.s. will offer a global infrastructure initiative to counter china's international ambitions, particularly in the indo pacific. sullivan says it will provide an alternative to the investment that beijing officers -- offers covering both physical and digital infrastructure. the european commission recommends ukraine and moldova began to -- granted candidate status for the eu, a symbolic status in the lengthy process to join the block. germany's olaf scholz, france's emmanuel macron and italy's mario draghi supported ukraine's membership bid during their trip to kyiv.

bloomberg quick take powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan and this is bloomberg. >> it has been almost 40 years since of the world made its first hiv diagnosis. the head of the aids organization speaks to us in our world a quality statement. our next guest is expecting 50 basis point increases at each of the next two said meetings. that discussion is next. this is bloomberg.

i you >> serious about 2% inflation

they will have to crack the u.s. economy hard. then, the recovery before you see a bottom. that's a long process. in the end, we can choose to sustain asset prices lower than today. >> inflation is out of control. we knew that would be the case. the fed has very little control

over that and they are doing the best they can. maybe a little too little and a little too late. but now they seem to be doing the best they can and their tools are limited given the package. >> one thing people are not prepared for his interest rates resetting meaningfully higher. we have gotten so used to feasting on ultralow interest rates. i do not think that people realize where equities will trade in a resetting market where risk-free rates are 4% or 5%. >> all of this anxiety is really feeding the markets now. you can see futures to the downside with the afx 200 down 2% when it comes to futures training -- trading. we are at the lowest for -- since december of 2020 for australian stocks . kiwi stocks reversing the gains of the last session and nikkei

futures down 2.5%. a big one today is what the bank of japan does. the expectation was no change but currency option traders are betting that the bank of japan may need to capitulate given the rate hike in europe and with the federal reserve. u.s. futures higher by .2 percent after the s&p 500 tumbled more than 3% in the new york session. our next guest says the data is indicating a relatively mild and short-lived recession here in u.s.. with us now is paul chryst or head of global market strategy at wells fargo investment. paul, good to have you with us. when will the economy be most vulnerable to this slow down, given that we can no longer count on a said put? >> thank you, shery. the economy is weakening gradually for the moment, but there is a buffer being worn down and that buffer is

liquidity. as liquidity is worn down probably later this summer and this fall we will observe more notable signs of weakness. we are seeing some in housing and some softening in labor market and consumer activity. that will get more dominant as the summer progresses. >> do you get defensive on those sectors given that mortgage rates are soaring, not to mention, things are getting expensive for consumers. ? >> absolutely they are getting expensive. we have been in a quality orientation for sometime. we went over weight u.s. versus europe versus emerging markets sometime ago. we are gradually rotating more towards defensives. we still like information technology. we like health care we like energy. that is that inflation hedges there. all three of these have good cash flow, good balance sheets, and good, organic revenue for

the future. >> what do you like in terms of energy and how you get that exposure? >> so, there are a number of ways to get exposure. we are talking ordinary equities, ets. -- etfs. broader commodity exposure beyond equity, some people like gold or precious metals. we think the broad basket of commodities here is where you want to be. if you will strategic or long-term allocation to agriculture, base metals, precious metal, and of course, energy. >> long-term investors versus shorter-term technical investors, what are the different opportunities you would be looking for in the market with all of the concerns about the shrinkage of liquidity and recessionary woes? >> both have an opportunity to take advantage of quality, we think. practically, yes, check the box.

also, long-term investors willing to be patient. that is something long-term investors forget in a market like this where you are in a bear market already. the patient. your objectives are in the future. take the opportunity to incrementally put cash to work and there is a lot of cash in the u.s.. long-term bonds mature, take that cash and move it into short-term, medium-term investment grade as well as potentially some equities i mentioned. be careful here. be patient. you can do it. for the short term investor, be patient, focus on quality, and build up defensive. s. they have been underweight for a long time. build some gradually. >> you trade in europe at all given big rate hikes across the continent and in the potential that that might really actually

moves them into recessionary territory for most of those economies? >> yes, we think there is too much hair on the european question. the war, energy. we are concerned about the natural gas picture. russian national gas exports are claiming technical issues but there is question about that. there is real voter ability in europe. they are more exposed to a slowing chinese economy through exports. we have been underweight europe and japan as much as we could the last two years. that's been one of our better calls. >> bonds are getting again in a balanced portfolio. what is your view when it comes to sovereigns? >> we excluded sovereigns on a strategic basis a few years ago, international sovereigns, just because the yields have been so low. yes, yields are starting to come back a little bit, but, the

yield of differential still strongly favors the u.s.. with the dollar so strong, the u.s. -- euro is looking for parity and the yen is the weakest in the longtime -- in a long time. we think we will stick with the u.s.. the emerging market exposure. excuse me for interrupting. >> always great to have you paul christopher head of global market strategy at the wells fargo investment institute. get a roundup of the central bank action that has dominated all week and will continue with the bank of japan. this is bloomberg.

now what your heart is >> u.s. g

500 basis points in the first since 2020. this chart on the bloomberg shows the vix high-yield indicators flashing concern that the fed will hike into a u.s. recession. the yield highest since april 2020. the bond market is starting to come to rid the -- the realization. a 72% assertion chart for the start of 2024. deutsche bank saying the default rate could hit 10.3% come 2024. the increase in risk is adding to what has been a greasy year. benchmark junk-bond indexes are down more than 12%. we are seeing a new level of anxiety upon this asset class. >> we have been watching the bond space.

some stories we are watching today. in japan, the big story the closely watched bank of japan decision that the bank of japan will join peers like the swiss national bank. the approval rating for the cabinet has dropped below 50%. responders disapprove of government response to rising prices. tokyo moves to expand recognition of the lgbtq community, passing a bill to introduce same-sex partnerships in the capital. japan is the only g7 nation that does not give same-sex couples the right to marry or enter civil unions. in south korea, the weekly economic assessment. the government downgraded its growth forecast to less then the central bank outlook while raising the inflation estimate.

south korea will extended trading hours to 2:00 a.m. local time, part of a plan to eventually allow the on chart market to trade around-the-clock. the nikkei report saying that samsung electronics is requesting some suppliers postpone or cut component shipments until the end of july on inflation concerns and growing inventory. >> we continue to watch the bank of japan struggling to convince markets that its monetary policy is sustainable. we saw shock from the swiss national bank, giving currency options traders more conviction that the bank of japan will be forced to join to close the new differential gap that has been driving pressure on the yen. this is bloomberg. this is bloomberg. -hi, i'm smokey bear and i made an assistant to help you out. because only you can prevent wildfires. -hey assistant smokey bear, call me papa bear

because i'm "grrr-illing" up dinner. haha, do you get it? -yes. good job. -so, what should i do with all of these coals? -don't just toss them out. put them in a metal container because those embers can start a wildfire. -i understand, the stakes are high. assistant smokey vo: ha-ha, ha-ha. -see, smokey think's im funny!

♪

haidi: you are watching daybreak asia and it is boj decision day. economists see the bank staying on hold policy settings, but a growing camp sees the bank is being forced to do something with its program on yield control. we are checking the yen crossing, weaker, the euro yen following -- falling below the key 140 level. the pound in swiss franc, moves by their central banks. the governor is under a lot of pressure. the most recent survey from a local paper in japan, take a look, nearly 60% of people saying koroda is unfit for the job. if we see shock policy shift, in our bloomberg survey, we could see a loss of more than 200

billion dollars on the boj's bond holdings if it loses control of the curve. that is i hypothetical, of course, but we do see a shift upward of 100 basis points. still growing signs in the markets that the boj will be forced to make some changes. we are seeing that across markets in the moves we saw this week in jgb futures, swaps trading, options markets in the corporate debt space. haidi: one high-profile investor is not planning on a capitulation, saying rates will not be raised. greg jensen discussed his outlook for the boj with bloomberg. >> it is a very difficult situation. all central banks are in a difficult situation. boj is in a unique one, trying to hold control of markets they can't hold, and if you look at conditions in japan, they have

the ammunition to do this if they choose. they can print money to buy the bonds. speculators are small relative to the boj power. inflation in japan is still low. they definitely have a different set of conditions that if you think about the u.s. or europe. and i think the central bank is intending to do it and that they are unlikely to be forced out by speculators. this is not a currency thing where you run out of dollars. they have plenty of yen to maintain the interest rate they want. the question is, will inflation turn enough to change be a -- change boj policy and a significant way? there are different views on that. i personally am concerned that global inflation will creep into japan and doj will be forced to move, what i'm pretty confident they will be moving on their own timeline and want be believed. and they will have plenty of firepower. >> in terms of positioning at

bridgewater, sounds like you still have an active space on this. are you positioned for such a move? are you shortchanging yen? give me a sense of timeline you are thinking about and how you will position around that? >> i want to get into our positions. i think there are bigger things in the world to be position for, the fact the markets haven't come to grips with the economic slowdown we are about to get and how difficult it is going to be, and that this liquidity haul continues, investors are going to have to buy different kinds of assets and that problem is probably the biggest macro thing. in terms of japan, we want to be balanced into two situations. they might feel the need to break the jgb pack, and that has a certain set of reactions. if they don't break it and print money in order to sustain it, you will have a different set of

reactions. we try to create a balanced portfolio to those two things. there is a pressure on demand, to hold interest rates way lower than markets around the world, which has one set of results and another set of results as they give up and let rates go. so, you could have a balanced of things that could do will given those pressure. that is how we try to structure in japan. shery: greg janssen speaking with bloomberg's guy johnson to eat options traders are betting bank of japan will join global peers with a monetary policy surprise. let's get more from bloomberg's senior assets and rates reporter ruth carson. not surprising these bets are getting bigger, given the chart on the bloomberg showing how difficult it has become for boj to cap the 10-year yield to around 25 basis points. what are we seeing in terms of

what this could mean for the japanese yen? ruth: absolutely, and as the chart shows, the bank overnight piling pressure on the boj. demand for options traders to hedge on the yen reached the highest in over two years yesterday. that is an indication that yen could really rally from here if the boj does indeed price markets friday. there is growing speculation that kuroda and the bank of japan will send yields higher with control policy. everyone is bracing for the surprise that may no longer be a surprise because they have priced it into markets. shery: senior fx and right reporter ruth carson. let's get you to su keenan with first word headlines. su: the biggest rally in years against the year in the u.s.

dollar after the swiss central bank unexpectedly hike rates 50 basis points. the currency had its against advance against the dollar in almost seven years. at the euro dropped the most against the frank since the brexit referendum. the rally continues even after the snb. the benchmark lending rate was hiked 25 basis points here, 1.25%. the bank also sent it strongest signal yet that it is in for larger moves to trade at the same prices. a forecast of weakening inflation slightly above 11%, and it is expected the economy will be on track. the time on central bank has raised its benchmark interest rates by 12.5 basis points and reduced liquidity and the banking system. the hike was lower than expected

, investors worried about inflation without hurting the economy. most economists surveyed by bloomberg expected a 25 basis move. tokyo lawmakers have passed a bill to introduce a same-sex partnership system throughout the japanese capital. this will make it easier for couples to access services, but does not grant the same rights as full, legal marriage. polls show the japanese public largely supports marriage equality, but japan is the only g7 nation that does not give same-sex couples the right of marriage or civil union. 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'm su keenan. this is bloomberg. ♪ haidi: u.s. officials are said to be working to arrange another call between joe biden and xi jinping is tensions remain high over ukraine and taiwan. let's bring in chief north asia

correspondent stephen engle in hong kong. as the call going to happen, and when? -- is the call going to happen, and when? stephen: president biden ward you jinping there would be consequences if he supports vladimir putin's war in ukraine. then, tensions, u.s. officials warning that the chinese have been warning them in private conversations that the taiwan strait is not international waters. the u.s. practices freedom of navigation in the south china sea and through the taiwan straits. that is a potential sticking point. human rights is an issue. lots to discuss. these two gentlemen have not

talked since march 18. this is what u.s. ambassador to china nicholas berg overnight had to say about the urgency, if you will, or prospect of a conversation between biden and xi. we want stability in the relationship with china and that takes connecting. intense lummis he is how he described the talks to make a xi -biden call happen. nicholas burns also speaking thursday in washington essentially said he expects china's covid zero policy to extend into early 2023. he talked extensively about american businesses' investment hesitancy because of covid direction in china, hesitancy to invest in china at this time. so, any call this summer between biden and xi would follow up what we saw this week between national security and china's

top diplomat. they had extensive talks in luxembourg, perhaps as a precursor to biden and xi discussions. jake sullivan added that when he was in luxembourg, he said next week at the g7 summit in germany, i believe the leaders meet you 26, june 27, that joe biden will launch a global infrastructure initiative from the u.s. to counter what the chinese have know -- chinese have done through infrastructure through the once highly touted belt and road initiative. shery: stephen engle, chief north asia correspondent. coming up, questions about why donations from the lgbtq plus community -- now. this is bloomberg. ♪

♪ haidi: australia on the cusp of elimination of hiv transmission. the new government is committed to a bipartisan task force focused on the challenge and restoration of funding to groups like the one hour next guest leads. the ceo of the australian federation of aids organizations , darryl o'donnell, joined us in

sydney. prep has been a game changer in this. darryl: it really has, prep has had condoms and other forms of intervention. but when you add this once-a-day prevention pill to the mix, we are seeing very rapid the clients in hiv infections. haidi: and that is a public health triumph for the community and outreach. but we know during the pandemic, the lockdowns and versions of resources for r and d has come at the expense of a lot of groups. darryl: covid has affected us all in different ways. but around the world, many countries have gone backwards in their hiv responses to the covid pandemic. people have not been able to leave their homes to go to health services or clinics. that is true here in australia. i think the real lesson is that,

not to take for granted the progress we have made. it is possible for us to go backwards. in australia, we are poised, if we take the opportunity, to end this epidemic. and we can do that by 2030, and i think before that, if we decide that we are going to commit the funding, the resources, and make the efforts to do so. haidi: is any public health priority for the new government? darryl: we haven't really good relationship with the new government, as we did with the coalition government before. the new man is sending a strong signal to us that he wants to get the job done. he is going to put in place a task force to troubleshoot and remove bottlenecks that are holding back progress. i think the opportunity is there. but it does require investment. it is not enough for us to want anything to happen. we have to put the resources in, make sure there are people able to get the job done. shery: what has that been like,

commensurate -- financial commitments and funding? darryl: we have a very important down payment. the new labor government committed to restoring funding to my organization and other organizations like us. but if there is more needed, not just funding for people on the fund line -- frontline, health care workers and outreach workers, it is also to remove barriers. in australia, we charge a payment for people with hiv to access their medication. but that medication actually keeps all australians safe from hiv and prevents further infection. like other infectious diseases, our view is, we shouldn't be asking people to pay for something that benefits others. shery: what are you seeing in terms of the culture around hiv now, the stigma or discrimination that comes with it? darryl: there is still stigma around hiv.

but it has eased over the course of the pandemic. it is a practical problem, beth and that -- stigma as a practical problem and holds people back from active -- from asking for hiv tests. it is still there and still needs a lot of work, but it has ramped up in other forms as well. we are shy as a society around basic issues of sexual behavior. a lot of work to be done. haidi: it is an interesting balance between privacy, and the inflection points that i am thinking of, and the blood drive issue, where you have a stigma against not just a gay man, but trends women, non-binary people, when there is a shortage of supplies. darryl: the situation with rebel

wilson is global news. i think the message is, no one should be forced to be public about their sexuality before they are ready. i think that message has been sent very loud and clear. but there is a broader conversation about the public interest and we have to be very careful that things the public is interested in aren't necessarily in the public interest for publication. and blood, i know there is progress in the u.s., the u.k. and canada many countries leica -- and canada, many countries like australia. particularly for younger people, young gay and bisexual men, this is unexpected. they might not have amended the blood crises of the 1980's. people feel hurt and axle good. so, there is a lot more to do to

mixer we are not excluding people needlessly. haidi: [inaudible] when it comes to getting rid of the band? darryl: no. our first priority has to be blood safety. at some point come all of us in the community may be in an emergency and need access to blood and all of us deserve to expect to be safe. we have to be very careful, very conservative that blood is safe infections. but we don't want to exclude people needless nate -- exclude people needlessly and i think the donation band for three months is conservative -- i think the donation ban in australia for three months is conservative. haidi: thank you. at tv , you can dive into

the bloomberg enjoyed the conversation and send instant messages during our show. this is for bloomberg subscribers only. this is bloomberg. ♪

♪ shery: breaking news out of shanghai -- we are hearing they found no new covid covid cases outside quarantine for june 16.

they have added four local cases though and shanghai's expected to conduct mass testing every weekend until the end of july after emerging from the lockdown this month. again, no new covid cases outside quarantine in shanghai. haidi: and we know that lockdown to curb the situation has been weighing on consumer demand and this will be key -- china's number two online retailer expecting consumer spending will take months to recover even after major cities lift covid lockdowns. the ceo says sales have not rebounded in june. virus respect ends, affecting spending behavior. jd retailers still feels confident because of this year's shopping festivals. >> the impact on covid-stricken cities is larger and we are seeing no rapid recovery at the end of this weigh -- and -- at

the end of this wave, which is very worrying to us. haidi: elon musk holds his first meeting with twitter staff and says people should be able to tweet outrageous things. shery: look at crypto assets. we are looking at the japanese board. bitcoin -- then you go. around $20,000. we are headed down toward the $20,000 level as we see significant pressure on crypto assets, concerns about the stability of defi at the end of easy money with aggressive tightening happening around the world by central banks. we are watching the $20,000 level very closely. the fact we are seeing a long losing streak on back to 2010, as well. now, japanese assets, awaiting the boj decision, expected to

stand pat at the time when the japanese yen continues to weaken against the u.s. dollar. we saw two sessions of gains and safe haven moves and bets that the doj could capitulate and surprise markets. but the level we are watching, one have a 35.59 that was reached earlier this week, a 24-year low against the u.s. dollar. nikkei futures are pointing down. we had a bad session on wall street, u.s. stocks tumbling to the lowest since december 2020. we are watching the 10-year jgb yield closely because it is altered do with capping the 10-year yield and how much pressure on the japanese yen. with the weakness of the japanese yen and perhaps reopening of orders, i am looking forward to visiting in japan. and if we were still in hong kong and earning hong kong dollars, we would be trading at around the highest levels against the yen since 2002, and would have an even better

shopping spree. haidi: we would have that group to her package booked to tokyo. a lot of analysts are saying it is a shame japan can't take full advantage of the appeal of the weakened yen, even if there are restrictions and it is not easy to go into japan, even with loosening of restrictions, for individual tourists coming is still very, very hard. but we are seeing a lot of people in hong kong trading hong kong dollars for the yen in preparation because they want to go to tokyo and spend that money. speaking to one currency exchange in hong kong, they say that since the selloff, they have had 300 customers every day buying again, compared to less than a dozen previous to the global selloff. and a lot of them are buying between $100,000 and $500,000 hong kong for yen, compared to less than $20,000 hong kong previously. shery: every central-bank

decision is so exciting. years back, the boj would do nothing and we would be bored. it now, exciting because we are seeing yield curve control really shaky. because with this huge, global bond selloff, we are always touching the upper limits. so, will the boj do something? tweak policy or price to the upside? a halloween treat going years back. that is the key question. coming up, we discussed this, olivier d'assier of contee go gives us a rundown on the message to investors and jacob cooke breaks down consumer demand expectations for china's upcoming shopping festival. the market opens in sydney, seoul tokyo are next. this is bloomberg. ♪ -- sydney, solon tokyo are next.

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♪ shery: this is "bloomberg daybreak: asia," counting down to asia's major market opens. boj day is here. the 10-year yield pumping to the highest since 2016. can the central bank afford to do nothing? that is the question, especially after rate hikes from the swiss central bank and boe. haidi: 75 basis points by the fed, surprise from the snb, a fixed rate hike from the bank of england. wouldn't it be great if we ended with a surprise from governor kuroda. >> what a surprise that would be. economists aren't expecting any changes from the center by come but the money markets are. we will be watching the opening of treasuries and a couple of

minutes there. we are seeing yields continue to move lower at the start of trade. a selloff in the previous session in bonds because of recession fears. nikkei, 1.7 percent of the downside. recession is going to be dominating sentiment in the world -- in this part of the world today. all the moves in the japan 10-year bond space, and decline since 2016, in futures trading. the yen is looking weaker at of the decision today where we have some expecting change in the yield curve control and others expecting no change at all. going to the board for a check on the open in korea. we had the market reflecting losses that we saw in nasdaq in the u.s. tech space overnight. the kospi, low, losing in the past eight of the nine sessions here. pressure also expected in the

yuan this morning, weaker and leading asian fx to the downside. in australia, the asx 200 starting on the downside, but we are seeing yields move in the opposite direction that but we are seeing in the global bond markets. you can see the difference we are seeing with kiwi bonds, and at these two typically move in tandem. it will have to catch up during the session. haidi: as central bank around the world opt for jumbo rate hikes despite hot markets, we are seeing markets betting that the bank of japan starts taking steps as well. bloomberg economics and policy editor kathleen hays is here. some traders suggest governor kuroda will give in to pressure, but others say he won't when it comes to the need for easy monetary policy with the sustainability wage growth and inflation rise. you have been watching the boj,

what are you watching today? kathleen: certainly the initial statement. and the press conference today. we know that governor kuroda is going to get some great questions. we are going to learn more about his thinking on what has changed and what hasn't. but you have to realize, in japan now, there is pushback against inflation, against the yen following. this is not something the people of japan like. a news service data survey of readers -- they question about the boj and the governor. nearly two thirds set governor kuroda is unfit and 77% said remarks where he said japanese people are getting hit by price increases, those are inappropriate and he apologized twice in the parliament over those remarks. this is a big deal and traders are increasing that's and many

markets that after the fed went 75 basis points higher, the swiss national bank with a 50 basis points rate hike and shirley governor kuroda will be moved because the more policy to verges and the last they move, more bonds are going to have to sell to keep the 10-year jgb in the 0.25% range. this is what they are expecting, but economists last week, only one out of the five thought they would make a change. governor kuroda said on monday that he still sees the need for extraordinary stimulus. this is not the kind of meeting where they make a tweak. they do it every three months, january, april, july and october. this is june. another reason. one more thing, in july 2018, there was a lot of pressure, same thing, because bond traders were pushing on the upper edge of the range and governor kuroda cap pushing back. it turned out they were buying all these bonds but were

finalizing their plans to make a tweak where they would double the size of the range. it was a meeting with monetary policy. i don't know that it matters. if kuroda goes ahead, this is going to be a very significant move because it is not typical. shery: getting so excited on boj day these days. our global economic and policy editor kathleen hays. our next guest says the message is clear, central banks are not coming to the rescue. capitol -- olivier d'assier joins us now. given what we are seeing in the yield space at what we are seeing with the japanese yen the chart, will the boj cave to market forces if 10-year yields continue pushing upper limits? what are you expecting today? olivier: most economists have said they want do anything for the reasons you listed, provide

apparently he is the only central banker who hasn't gotten the memo about inflation and the impact on consumers. the japanese economy is still dominated by consumer spending and unless you get tourists to come this summer, you are going to rely on domestic consumption, and that is weakening now. they are getting hurt. survey numbers show that people are hurt and angry right now. for him, the best thing to do was raise rate -- would be to raise rates right now. that he has covered. all the other central banks have done it, so he has covered for that. shery: and central banks are not coming to help we have seen massive rate hikes across europe as well as expectations the ecb will have to move more. will valuations have to come down with earnings downgrades, given the situation we are in and the slowdown in several look,'s that we can expect?

-- in several economies that we can expect? olivier: we have seen a switch and what investors care about. until wednesday, they word most about the fact central banks were behind the curve on inflation worries. i think now, they got the message from central-bank that they are on it, that they were wrong, they are on it now and are going to raise rates aggressively to tackle that. now, let's look at how the economy is going to be able to sustain inflation. valuations are still high, higher than long-term medians. we are getting anecdotal evidence from big companies that we didn't expect you are giving no guidance for the year, so we know that earnings up to come down and valuations have to come down. the focus now is how far down to we have to revise these valuations? we are also getting into summer,

which is lower volume usually but on a newsday, and overreacting market and this is good to be the first summer without massive stimulus, monetary and fiscal stimulus, to keep us up. i think a lot of investors are worried about going away on vacation with positions right now because a lot could go wrong during the summer while they are away. haidi: olivier, we are getting breaking headlines from the japanese finance minister, minister suzuki, speaking in tokyo and concerns about the weakness in the yen, it is of concern, it is desirable for 4x to reflect fundamental moves and they will continue to closely cooperate with the bank of japan when it comes to the finance ministry. how can investors use the theme of volatility and wickedness to

their advantage? olivier: if you look at the break-evens on the forex for these companies, it is 110, 1 hundred 12, those companies do ok. we are at one out of 34. we are way over that now, so there is plenty of room to cut back here, because you are way above the break-even of most companies. and the break-even right now doesn't matter. what matters is supply chain issues. can you get enough of your consumer goods out? can you send them out? do you have people to buy? can you get tourists to come to japan this summer? because if goods are not sold, you don't get the earnings. it is still a question about whether the yen is go to trickle into the earnings of japanese companies. it is not at all clear. haidi: this is a largely missed

opportunity on the weakness of the end and tourism impact at this point. one other thing you are watching, it deals with immediate distress in the market, concerns over inflation, geopolitics, recession fears and perhaps we have stopped talking about it as much, that is the climate transition. is that something you think markets of stop pricing in, but the risk is rising? olivier: definitely. we see that happening in the u.s. we have had a couple of flareups, a couple of blackouts with wind providers who read in debt providers who ran into trouble. california's on some kind of water restrictions. everyone is saying the summer is going to be hotter than usual, less rain than usual, so severe drought is hitting a lot of the southwest and western u.s. and europe. extreme weather events are to be expected this summer, again, and

this will highlight the fact that most of the infrastructure for electricity grid providers needs tons of investment, especially in the u.s. and all the readiness reports that they claim are concerning are based on 20, 30-year average numbers, which none of that incorporates climate change data, which we know is already here. i think the weather is going to affect a lot of the mood in the markets, especially a thin volume market this summer. watch out for that as well. haidi: aipac applied's olivier d'assier, thank you. let's get back to hong kong for asian tech moves earlier in the session. >> quite a slump at the start of trade for some of the biggest names in the asia-pacific tech index. the reason for that, the

significant drop in the nasdaq in the previous lesson, down 4%. texas back to a level we last saw in november 2020. tech is very rate sensitive and sensitive to recession risks and that is dominating this morning alongside with central banks. switching now to check it going-linked stocks. these are companies that either operate exchanges or have stakes in such companies. bitcoin now approaching $20,000, a selloff of 25% just this week alone and it could trigger a further round if we reach that level. shery: let's turn to su keenan with first word headlines. su: we stuck with the biggest rally in years against the euro and u.s. rally after the swiss national bank unexpectedly hiked rates 50 basis points. the currency had its biggest event against the dollar since

2016. the rally continues even after the snb vowed to and excessive moves. u.s. vice president mike pence, and the mob that stormed the u.s. capitol, reportedly brushed away by his security team end according to an informant by the fbi, they would have attacked him. that are the -- those of the latest findings of the january 6 congressional panel i panel investigating the insurrection. bloomberg has learned u.s. officials are working to arrange a call between president biden and china's president xi jinping. it could come as soon as july. washington wants to focus on new dialogue with were in ukraine, taiwan, and human rights,

sensitive issues in the u.s.-china relationship the two leaders last spoke in march via video call. president biden's national security advisor jake sullivan, watching global infrastructure -- launching global infrastructure initiatives to counter china's global ambitions, especially in the indo pacific. it will cover physical and digital infrastructure. 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'm su keenan. this is bloomberg. ♪ shery: still ahead, with a shopping festival ready to kick off in china, jacob cooke gives us his take on the impact on global supply chains.

this is bloomberg. ♪

♪ haidi: take a look at the early

part of the trading session in asia. getting into the bank of japan decision. bearishness in the markets on recession fears, fears of tightening by global central banks really taking hold. nikkei down by 2% already, the cost be down 1.5%, moves from the fed, the sixth consent and now looking at head to the bank of japan. some expectations in money markets that the boj will be forced to capitulate. the yen trading at 132 levels. you expect either way with the decision by the boj, we will see turbulence going in another direction. and plied volatility at its highest since 2020. we are hearing comments from the japanese finance ministry, finance ministers suzuki saying

there are specific methods of policy that are left to the bank of japan that governor kuroda says he will consistently continue policy. that is a hint as to whether we will see continuity is the name of the game today or rather they will take steps to curb controls. interesting given we are hearing from the finance minister now saying he believes boj will act according to their joint statement. shery: we have been speculating when it comes to currency option traders and the boj might need to capitulate given the huge rise in global yields. right now, the 10-year yield at the highest's 16. what will happen to yield curve control? can they keep those yields cap? minister suzuki perhaps giving us a hint that the boj wants to keep the policies that they have in place right now. haidi: are we reading too much

into it? regardless, a very exciting meeting. we are poised for signs of change. bridgewater associates is not in for recapitulation and says the boj is likely to raise rates as investors bet it will join peers at central banks around the world. he discusses his predictions for the bank of japan with bloomberg. >> the boj is in a unique situation they are holding a peg the markets don't think they can hold. if you look at conditions in japan, they have the ammunition to do this if they choose to. they can print money to buy those bonds. speculators are small relative to boj firepower. inflation in japan is still low. they have a different set of conditions than the u.s. or europe. and i think the central bank is intending to do it and that they

are unlikely to be forced out speculators. this is not a currency panic where you run out of dollars bid they have plenty of yen to maintain the interest rate they want. the question is, will inflation turn enough to change boj policy in a significant way? that is a real debate. a lot of people have different views. i personally am concerned that global inflation will creep into japan and the boj will be forced to move, but i am confident they will move on their own timeline and have 20 firepower. >> in terms of positioning at bridgewater, are you still having active debates on this? have you positioned for such a move? are you short jgb's yet? given the big meeting tomorrow, give me a sense of the timeline you are thinking about and how you position around that? >> i will get into our positioning. the big things in the world to

be position for is the fact the market hasn't come to grips on how deep a slowdown we are going to get and how deep it will be is the liquidity hold continues and that the private sector is going to have to sell assets to buy different assets at the is probably the biggest macro thing going on. in japan, we want to be balanced to these two situations. they might feel the need to break the jgb peg, and that has a certain set of reactions. and if they don't, and they print money to sustain the peg, you will have a different set of reactions. we try to create a balance between those two things. pressure on japan could eke out in terms of holding the rates way lower than market interest rates around the world, which as another set of results if they give up and let rates go. so, if you have a balanced mix of those things, you can do well given that pressure and that is

how we try to structure in japan. haidi: bridgewater co-cio greg jensen speaking with bloomberg's guy johnson. take a look at futures, given inflation fears, finishing at the lowest level since 2021. entering bear market. swiss shares lowest since december 2020. we continue to see broad pressure froth european equities as we see europe step up monetary tightening policy and a surprise swiss rate hike not to mention bl we hiking for the fifth consecutive session. shery: u.s. officials are said to be working to arrange another call between joe biden and xi jinping as tensions remain high over ukraine and taiwan. for more, let's bring in chief north asia correspondent stephen engle in hong kong. when was the last time they actually talk?

was it a few months back? stephen: march 18, they had a videoconference live, biden warned xi there would be consequences if beijing supported vladimir putin's war in ukraine. there was obvious tension there. there has always been tension around taiwan. the taiwan issue has been amped up, biden in the region last month meeting with south korea and the japanese and participating in a meeting with australia and japan and india, the quads meeting, and i want was a topic. and government officials from the united states told bloomberg news that increasingly, the chinese are asserting that the taiwan strait is not a national waters. that is alarming to u.s. officials, because that is a potential flashpoint with the u.s. navy practicing freedom of navigation rights in international waters in the straits of taiwan as well as the south china sea.

lost to talk about. u.s. officials continually talk about establishing guardrails on the u.s.-china relationship, so any tension that does bubble up does not get out of control and create chaos. the conversation, if it happens in july and august between biden and xi, would be good for smoothing out differences and daring grievances. they are not likely to meet in person. if i look at the calendar, the first chance i see they could meet in person would be in november, and i bet it would be after the party congress. we don't have those dates, but aipec is in thailand in november and the g20 is in bali in november, so there could be a face-to-face but before that, perhaps over videoconference. haidi: stephen engle come our chief north asia correspondent i head of what would be a crucial

meeting. a lot more to, on daybreak asia. this is bloomberg. ♪

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♪ shery: breaking news out of singapore -- nominal domestic export numbers, upside and a beat of estimates and growth from the previous month of may. the year on your number is lost .4%, much higher than expected, seven and a half percent growth and double the pace of acceleration on growth gains for experts europe -- exports year on year from the previous month. month-to-month numbers, rebounding from a contraction of the previous month and talking about a gain of 3.2% for experts month on month. electronics exports is a big 1, 12 .9% gain for the month of may. singapore is an open economy, they depend a lot on exports. but that export number had been easing for the previous three

months, so a little bit of a rebound for the month of may. now, watching the markets, we continue to look to the boj meeting. >> it is definitely the big watch for us this morning. indications from the japanese government that the boj could leave policy settings unchanged. we headlines from the finance minister earlier saying they are concerned about we is on the yen and the impact on the economy but still, the boj has been conducting operations to maintain yield-curve control and expect governor kuroda will continue this policy. of the back of that, the yen strength slightly, and is now resumed name -- resuming the weakening trend. the dollar because a risk aversion in the markets, snapping duties of losses to also trade higher. japanese bonds in focus, the 10-year yield reaching the upper end of the target range this orting.

will this force the boj to change policy? capital markets are pointing out that we have seen this happen many times before, the top end of the band being tested and still no change of policy settings. japan stocks significantly lower. looking at the board, bond markets and the rest of the region, a focus on the difference between the aussie and 10-year yield, aussie bonds lower this morning, we had that jobs report yesterday, certainly being reflected in trading this morning. haidi: let's get to su keenan in new york with first word headlines. su: the bank of england raises interest rates for a fifth straight meeting, the highest since 2009. the benchmark lending rate was hiked 25 basis points to 1.25%. the boe also sent a strong signal it is prepared to make larger moves to rain and prices,

peak inflation forecast raised slightly to about 11% and expecting the economy to contract in the current quarter. taiwan, the central bank has raised its benchmark interest rate by 12.5 basis points and reduced liquidity in the banking system. the hike smaller than expected, policymakers thinking they can rein in inflation without moving the economy. most economists expected a 25 basis point move. sources cite the european commission plans to recommend that ukraine and moldova be granted candidacies to join the european union. they would follow i like the process to join the block. eu leaders are set to discuss it next week in brussels. the leaders of germany, france and italy have endorsed ukraine's membership.

soviet lawmakers have passed a bill to introduce a same-sex -- japanese lawmakers have passed a bill to introduce a same-sex partnership law that does not grant the same rights as full legal marriage. both show the public largely supports marriage equality but japan is the only g7 nation that does not give same-sex couples the right to marriage or civil union. 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'm su keenan. this is bloomberg. ♪ shery: china will get fresh insight into how its covid zero policy is affecting consumers with the midyear shopping festival opening for business saturday. the number-two online retail expects recovery to take months even after lockdowns are lifted. the jd retail ceo spoke to

bloomberg. >> we believe the sixth 18 -- 618 shopping festival sales this year will be better than last year. as you know, the china economy is under pressure after waves of outbreaks that caused so much uncertainty to the economy. in the second quarter, the central government and companies including jd were under huge pressure. the outbreak this year massively hit overall consumption. from the second quarter, we have not seen a recovery in consumption yet. >> the impact of the virus, the virus prevention measures, has been very large. >> the impact for covid stricken cities is obviously larger and we are seeing no rapid recovery at the end of this wave, which is very worrying. we are glad to see growth in the tier five and tier six cities is better that in the tier one and

tier two cities. >> you haven't seen a rapid recovery of consumption. >> there has been a consumption recovery and shanghai, for example, a lot of refrigerators and refrigerator storage units as people have fears and want to stock up on necessities. but we would say compensation consumption is better than revenge consumption. >> is this a temporary situation or do you think it will last for some time? >> it could last longer because the outbreak this year has really impacted the economy and people's income, which is different from the outbreak in 2020. the outbreak this year completely cut off our supply chains, international and domestic. this has impacted people's incomes and it will probably take longer to recover. >> do you expect these problems to be reflected in second-quarter results? >> yes.

it is actually already reflected. we have seen it in april. our warehouses were all shut down in some areas. >> there is talk that jd and dada are working together to deliver services to some cities in china. can you tell us? >> jd increased investment in dada the first half of the year, it is a company held by jd as we are complementary in certain areas. >> is jd.com working with dada on delivery? >> we have explored the business other competitors are delivering. dada has strong delivery and other competitors are guessing whether we will do this. we did consider it, as for whether we will start, it depends on our capacity and talent team. >> the regulatory climate and

china has changed a great deal. what is the biggest impact on your business? >> china is more sensitive to regulation. but our understanding of regulation might be different from the market. people only see the regulation last year but don't see how the environment was for the internet industry in 2012 and 2013. it is easy to have a stuck comparison between a relaxed and they tighter regulatory environment. after measures put in place the last two years, we will see a signal from the internet or technology industries where the feeling is, where the ruling is and where the red line is. haidi: that was our guest speaking with bloomberg's executive editor in china. china's sixth 18 -- 618 shopping

festival will be a big test of consumer sentiment. jacob cooke joins us, great to have you with us. as we see shanghai emerge from wholesale lockdowns, we see targeted lockdowns, mass testing and uncertainty that must be weighing on consumer sentiment. jacob: it certainly is. we were expecting this to be the biggest shopping event globally the first half of the year. but we are not expecting that 30% average year-over-year growth we have seen in the past 10 years. as well as other sectors, we are not fully out of lockdown yet. we are probably 96% in terms of supply chain and deliveries. but there is still pullback in buildings in tier one and we are

not at the point of revenge spending yet. if you look at 2020, there was massive growth. and we were clearly out of the pandemic-related lockdown. we are at the point now where we are still seeing restrictions in tier one and we are expecting to beat last year, but not 30% level we have seen in previous years. haidi: it is not so much revenge spending as people buying necessities, as a guest was saying earlier. is this sense of having to live with the covid normal son dario, is this 20 impact consumption trends -- is this going to impact consumption trends? jacob: we have definitely seen it across all consumption platforms. he talked about refrigerators. there are increased sales across platforms this year.

in terms of appliances, food deliveries are also becoming big ed we are probably not going to see growth in those areas go back to offline. i think behaviors have changed and what we have seen with this pattern in the past couple years is that these sectors remain resilient online. there is definite weakness in terms of travel-related sectors and lecturing with entertainment venues still being down but overall, these areas are probably going to produce numbers that will be higher in aggregate over 2021. shery: do you see a difference in consumption trends that we saw at the beginning of the pandemic versus two years later, when we have some parts reopening and some not reopening on going back to restrictions? jacob: in terms of patterns that we saw, health and wellness has been a theme the past couple years. we have seen growth in home

exercise equipment, apparel isn't down as much as in those first two years. we are still seeing reasonable growth in sectors that are not luxury related. and beauty is about level, and we saw big decreases during the first covid lockdown in that sector. shery: tell us about the rise of social commerce and topic this is in china. jacob: it is certainly getting bigger. one major thing we have seen, alibaba really controlling a large part of the market. now, people are inference -- are influenced by a variety of platforms. redbook is important. increased consumption which is direct to consumer. joyan reporting triple digit increases in their e-commerce.

if we lose the audiences of the big three and now, two of them are offline, we expect that to be spread out broadly amongst the influencers, which is going to help brands by being a lower barrier to entry. you have a lot of bidding that drives up individual slots, there is only so much time on those shows, but that -- but if that spreads out, it is going to be easier for brands to access that type of time as well as opening their own channels to direct communications with consumers. . shery: jacob cooke, wpic marketing and technology ceo, thank you. coming up, a paper loss of $219 billion on bond holdings. next on where traders are placing their bets.

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♪ shery: let's look at the japanese yen, treading at around the 132 level after two sessions of strength and a rise in the

one-month high against the u.s. dollar not to mention a safe haven move and investors betting the boj could potentially capitulate. surprise rate hike in the boe raising rates as well. we are watching the japanese yen, now seeing a little weakness. this follows comments by finance minister suzuki saying the boj is doubling down on its policy stance. let's get more from bloomberg rates reporter ruth carson. perhaps this is an indication governor kuroda will not move today, what are analysts saying? ruth: it is an incredibly mixed bag. the consensus is the boj will continue to hold its policy. but if you look at options markets, people are betting on

the opposite or at least at some point in the near future, the boj will have to raise interest rates. if you look at bond markets, 10-year yields opened this morning at 0.265 percent in early trading, highest since january 2016. and that is way before the boj started its control policy. is the market buying that boj will toe the line today? not necessarily. when it comes to the yen -- haidi: when it comes to the end, it did not take part in this fed xi of relief that we saw in other parts of the market. regardless of which way it goes today, what is ahead?

ruth: it all started with the central bank in switzerland that got the party started yesterday by raising the interest rate unexpectedly. regardless of what happens, expect more volatility. let's put protections in place. and there is growing speculation the boj could abandon at some point, so it is all about bracing for the surprise. fti asset management said if the boj delivers, assets will be slammed. a wild ride is ahead. shery: if we do see the yield curve shifting upwards, any change with the boj losing control of the yield curve? bloomberg calculates now that the central bank would take a $200 billion plus hit just because of how much debt they own. how high are the stakes right now for the central bank?

ruth: incredibly high. and that is what we are seeing in the markets, testing the boj resolve, day after day, minute after minute whether it is on the yen or the jgb cycle or futures. they said we could see a jack-in-the-box being opened on the yen should the gop -- should the central bank, the boj, lose control. a lot is at stake here, one the most liquid currencies in the world being absolutely pummeled. that could affect jgb yields, so all eyes are on the boj. haidi: ruth carson, bloomberg rates reporter, thank you for the context. up next, watching japan, watching china, this index performing the -- outperforming the s&p 500 for a third straight

week. whether the gains can be sustained, next. this is bloomberg. ♪

♪ shery: latest business flash headlines, china's number two online retailer expects consumer spending to take months to recover even after major cities left covid lockdowns. the jd retail ceo says sales

have not rebounded in june, when virus restrictions affected spending behaviors. the jd.com subsidiary is still confident about sales at this year's 618 shopping festival. >> the impact on covid strict in cities is larger -- covid-stricken cities is larger and we are seeing no recovery at the end of this wave. shery: a telephone and telegraph data arm is joining forces with toyota to collect and share data. the ceo says the data will consider mergers and acquisitions to accelerate in overseas markets, he sees ntt spending around $4 billion the next four years. haidi: let's look across asian markets. a big ending to a big week,

overnight, a shock decision from the swiss national bank to hike as well after moves by central banks, boe central bank hike of .75, now looking to the bank of japan were money markets are looking at a potential tweak. volatility in the yen, and the risk off fear of recession selloff most prominently seen across equities in japan. the chinese benchmark index, outperformance in june over the s&p 500 is the largest since 2016. our china market correspondent sofia horta e costa joins us.

sentiment changes when it comes to how investors are viewing china. sofia: this is potentially a delayed trade. covid zero got in the way and the chinese economy is not working as expected per guest, global markets are in turmoil. china, equities have outperformed much of the world last year. the key thing here is that china is the only place where rates are not going up in inflation is not a problem and that is something chinese media and wall street are talking is the one thing that will make chinese markets outperform. this is something people have been saying for months. it did not work before. it is finally working out and the region is, [inaudible]

shery: chinese media reporting there is no need for the pboc to follow with rate hikes despite the weakening yuan. is accommodative policy driving the outlook? >> i was surprised by that commentary. why would china need to hike rates? china should be doing the opposite. cutting interest rates. the concern is outflow of capital will be a problem. shery: sofia horta e costa with the outlook of what to expect when trade starts in hong kong, shanghai and shenzhen. this is bloomberg. ♪