haidi: good morning and welcome to daybreak australia. we are counting down to asia's major market opens. shery: the top stories this hour

-- the fed in focus as asia starts its trading week with a 75 basis point rate hike on cards. investors looking ahead to a raft of key central-bank decisions around the world. do one million people are said to emerge from lockdown. oz minerals is set to be seeking a potential sale of 6.5 lien dollars of -- as bhp pursues it deal. u.s. futures muted at the open after the s&p 500 has seen its worst week since june. very volatile trading on friday due to the triple expiration of options. futures under pressure right now, the worst week since january for those big tech names. but we did see some dip buying in the final hours of the friday session for some of those tech giants. but the treasury selloff

continues because we are seeing not only treasury markets but globally as well, treasury yield continuing to climb with a two-year yield at the highest level in 15 years ahead of the fomc decision this week. we are watching what oil prices are doing at the moment. perhaps a little more upside as we've seen a third consecutive weeks -- week of decline. really concerns oversupply and this is about inflationary pressures as well. when it comes to main street numbers, the expectations seem to be coming down. we are talking about university of michigan consumer sentiment numbers. actually coming in lower than expected. we continue to watch where

inflation prices are going up globally. and where prices go will make a key difference. haidi: the risk of a policy this triggering asian markets going into the season as well. what is keeping japanese markets from trading today. very limp start to the start of trading. about .2% after that fall for three days. not exactly giving a strong lead to asian training. -- asian trading. a mixed look at the u.s. dollar as -- as traders are looking at rough going. kiwi stocks about .2%, a -- japan's cpi as well as the bank

of japan meeting holding steady. not a lot for policymakers at this point. when it comes to what we are talking about and the focus for global markets, it is what the fed does this week. the market seems to think it's a good middle ground because we did see a smaller loop on the table, inflation, supply-side issues thinking there is a good economic situation. a little risky given recession risks also on the table. shery: will we see those expectations for fed rate cuts in 2023 lowering global bond yields? that's not really what the fed wants to see when you have china and europe going down at the same time but it's not only about the central bank in the u.s. this week, it's about

globally. the philippines, indonesia, taiwan all expected to raise rates and you have europe and the bank of england also expected to hike rates. we are expecting some holdouts and not surprisingly, the boj among them. let's bring in kathleen hays and garfield reynolds. we were talking about a potentially smaller than 70 point -- 75 point basic -- basis rate hike and what would a 100 point hike mean? kathleen: they thought they could do a 50 point basic that -- basis hike. 75 seems like the safest bet, but before i tell you why the reasons on both sides, i will tell you at the end so we can run through the reasons. there's an idea if we do a

hundred basis points, they will start talking about rate cuts next year and this could mean financial conditions and that's what they -- not what they want to do. etsy opposite of what they are signaling. if you want to keep things tight, you have to keep bond yields high. all of these things could work against that. on the other hand, one of the number one reasons i'm hearing why they could and should do something more aggressive is either that or restore their credibility. now it is terrible, so that's the number one thing on the list. consumers are still spending, so you've got to move because good times at the economy hard because they can afford it. now it opens the door to a smaller hike in november. they need to cut inflation

expectations and this would send a strong signal. at the last meeting at the press conference, jay powell was asked, they did a 75 basis point hike and he was asked about a bigger hike and he said they would not hesitate to make a larger move if we were to conclude it was appropriate. that was a strong leaving the door open. the chart you just showed, a lot of the big firms have been raising the terminal rate. goldman just raised theirs from 375 24 and a quarter. they've all been behind the curve and are catching up with the fed at that's why the dots are going to be so important. it is those dots telling us what they are going to expect and how high interest rates are going to go. that's going to be a big deal on wednesday as well. haidi: it's not just the fed but it is a key focus.

we've got so many other central banks this week, the pboc expected to continue holding in southeast asia. over in switzerland, a decision there as well. how is this setting up going into the start of the trading week? we still have japan on holiday today. garfield: it is a nervous set up because there are all of these central banks expected to hike as part of the steepest end broadus cycle we've seen in a generation. in asia, asia has a couple of particular pressure points and one as japan. the reason the again is close to the 24 year low that it hit and not that far away from going to the lowest since the early 1990's.

it's because the bank of japan is still sticking to the idea that the inflation it is seeing is transitory and it's not enough to get into its target range. it's going to stick with positive interest rates, buying bonds, and that contradiction is at the heart of their policy with the rest of the world which is why the yen has dropped so far and they have resorted to rumbling about how we will do whatever is necessary and effectively putting training decks on notice that they might step into the markets themselves which has helped in the pullback. but if the fed 75 basis points, it may be tough for the yen. a move by 100 basis points could send the yen on toward 150 which some people are saying that's a

line the boj would not be happy with the yen crossing and that is the limit for their easing. the other thing going on for asia is in china. china is in the opposite camp because its economy is struggling and it has been trying to ease policies. it has been trying to restrain the yuan from going to week, especially against the u.s. dollar. it does not want to have the disruptive input of a freefalling currency that it has had some experience with in the past. those issues are weighing on asian markets, especially the larger, developed asian markets, you think about places like us you and new zealand where there central bank has been raising rates for the rba is expected to raise rates again next month.

they have been under particular pressure because at the same time these issues in china and also in japan are helping to weigh down growth. haidi: garfield reynolds putting it into context. chengdu emerge from its citywide lockdown. a brooding -- a bruising ordeal they had to deal with earlier this year. chinese leaders embolden to consider pushing with covid zero even with half the party congress next month. >> the speculation is after the presidents defying third straight term, policies would be eased in china. however many will point to the relative success of the lockdown

as compared to what happened in shanghai as a reason to continue forward. they went into lockdown on september 1 and came out of lockdown today. it's just under three weeks where shanghai lasted two months. the reasoning is local authorities will be saying we locked down much sooner than the shanghai lockdown and that's why we got a hold of the outbreak much sooner. if you are hoping for china to ease covid zero, this might be more evidence not to do that because according to chinese 30's -- chinese authorities, it is working. 21 million people have had to deal with heat waves, forest fires, droughts, power outages and a 6.8 magnitude earthquake in the last few weeks while also being in lockdown. it has been a tough go. hong kong is another story. perhaps going in the opposite

direction. we hear from the oriental daily newspaper that authorities here could announce as early as this week plans to eliminate hotel quarantine for inbound travelers. the chief executive has already lowered did down to three days plus four days home surveillance if you want to call it that, home monitoring. this report is saying because there is this upcoming bankers summit the first week of november followed immediately by the big rugby seven tournament, many people who would be coming from outside of hong kong simply will not if there are still three-day hotel quarantines. that could be announced as early as this week but there's still lots of debate among health officials. some saying hong kong is way too slow to be opening up while health secretary is saying we need to take this more seriously

than the flu. haidi: stephen engle with the latest on the covid restrictions across china. let's get over to vonnie quinn for the first word headlines. vonnie: president biden says he has warned xi jinping it would be a gigantic mistake to violate sanctions imposed on russia. according to an interview on 60 minutes, biden said u.s. investment in china is at stake but there is no sign beijing has provided weapons for russia's invasion of ukraine. it echoes the readout of the call between the two leaders in march. millions of residents are being urged to evacuate as a super typhoon heads toward southwestern japan. heavy rains and strong winds are battering the prefecture. more than 110,000 homes have lost power with flights being canceled to and from okinawa. the typhoon is packing winds of up to 250 miles per hour.

pakistan facing a list of fresh floods and authorities worried about flooding rivers in parts of neighboring india. evacuations are underway to avoid further loss of property and lives. flooding has killed more than 1500 people and cost $30 billion of damage. the finer of -- founder of luna tweeted he is not on the run and is cooperating with agencies. it came hours after singapore police said he was no longer in the country. they are facing arrest for violating capital markets law filing be collapse of the crypto ecosystem. prosecutors say he is on the run and is not cooperating. world leaders gathered in london for the funeral of queen elizabeth the second. the services are expected to bring the city to a standstill

and what will be the biggest one-day policing operation in london's history. a moment of silence was held for the only monarch most have ever known. you can see special coverage here on bloomberg tv as the service gets underway. it is due to begin at 11 a.m. london time. 6 a.m. if you are watching in new york. 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 vonnie quinn. this is bloomberg. haidi: still ahead, the president -- joins us to talk about the fed and the outlook of the dollar. coming up, they are looking for a 4% peak -- this is bloomberg. ♪

haidi: let's take a look at the week of head -- a number of rate decisions do on wednesday. the fed on track for another jump of 75 basis points to crimp the demand and ensure americans they will be reducing inflation back down to 2%. delayed by the queen's passing, the bank of england is expected to raise rates by for the basis points. the bank of japan is expected to leave rates unchanged. other major central-bank decisions include sweden, the bank of taiwan and the philippines central bank as well as bank indonesia. shery: our next guest is changing his call from a 3.5% peak to 4%, saying the fed needs to raise rates by a whopping 125 basis points to regain credibility, but there is zero chance of that happening.

always good to see you. this is the first time you are calling a 4% peak. >> i have been calling for 350 which has been out of consensus for a while. we are just five basis points this evening. i think we are headed well over 350 and i think 4%. then i have to talk in terms of whether it's going to go further up than that. the fed needs to be ahead of the curve. it needs to regain credibility which was severely lost by calling transitory inflation and making a huge mistake in 2021. so when you've made such a serious mistake, you need to overdo on the others.

that's where my 100 when he five basis points comes from. shery: we've seen the global bond reaction and how they have fallen into the bear market with that hike of 400 basis points. globally in g10 banks. but let me get back to that whopping 125 basis point for the fed. some investors think even doing 100 basis points is you will start speculating about when the fed needs to cut rates which will ease financial conditions down the line. >> the reason there would be such speculation is because chairman powell and his party have even rise to that speculation. the way to put this to rest is to say we are going to raise it 125 points today and then follow up and say we are going to keep hiking until inflation comes down again. but the fed doesn't do that. it doesn't give a strong

statement and is generally wishy-washy. it's concerned about market stability. it's concerned about not too much pain in the market. you cannot make mixed statements like that. you have to come out all in favor of bringing down inflation. if they do that, the bond market will no longer anticipate rate cuts in 2023. that is something of the fed's own doing rather than a mistake by the markets. haidi: the credibility issue for the fed has been ongoing. why do you think there still a risk of being at the mercy of financial markets? >> they are at the risk that the markets don't believe the fed is going to stay tight. they have seen a significant power bill in december of 2018 and in 2019 when the chairman

just completely gave up on his threat of increasing interest rates and instead cut rates during the year. so, the markets have not had any instance in which they can go with the fed and have confidence. look at something else -- he waited until october to say inflation is no longer transitory. now that we have decided inflation is going to be sustained, does he increase interest rates in october or november? does he start quantitative tightening? no. it's further postponed by several months, during which the fed is purchasing treasuries and mortgage backed securities. that detracts from the fed's credibility. that is why he has to fight hard, make a big move on wednesday to gain credibility,

otherwise the markets will be leading him and he will continue to be a follower during the months to come. haidi: the fed is just one piece of this confluence of risk. do you think the supply side is more an issue or the risk of demand destruction is a bigger risk with the pursuance of covid zero? >> great questions. supply-side is an issue. you have supply bottlenecks which are continuing. you could have energy related issues which could come up if russia decides to cut off natural gas supplies completely or increases prices. you have the lockdowns in china which are considered to be an inflationary sector. you have all of these ahead. the fed cannot do anything about the supply side, therefore he has to work even harder on the demand side in order to bring

demand and supply into equilibrium. shery: but the concern right now is if the fed really goes tightening all-out we could see this global synchronized slowdown. does that worry you? >> that is going to be a global synchronized slowdown but there's nothing we can do about it. there's so much excess of monetary and fiscal excess over the last two or three years. yes, covid was a huge problem, but the central banks went haywire in terms of responding to it. once you do that and you have that much excess liquidity in the market, you have to take it back in a hurry if you are going to come back against stability. i think it is certainly will and there's no escaping it. shery: really good to have you in the new york studio. this is bloomberg. ♪

haidi: u.s. dollar trading slightly higher against most bears -- pairs. aussie dollar holding steady at 67, early under the 68 annual. kiwi dollars seeing stability in the early part of the session. the yen becoming the worst performing currency this year. bank of japan, no policy rate change expected but other

shery: -- vonnie: you're watching "bloomberg daybreak: australia." chengdu is said to exit lucked out. it's 21 million people will be allowed to leave their homes and resume aspects of normal life the first time since the

beginning of september. residents will need to be tested once a week for the virus and will need a negative result within the last 72 hours to enter public venues. at least 27 people have been killed when a bus crashed to the highway in a chinese province. local media reports at the vehicle had been used to ferry people to: bit festivities. it has triggered anger both toward authorities and toward the system. hong kong is reportedly planning to end quarantine for hotel travelers. the announcement could come as soon as this week with arrivals required to undergo seven days of self-monitoring at home. the city as been under increasing pressure from business leaders to ease restrictions. iran's supreme leader has appeared in public just hours

after reports that he was in the hospital. he addressed a crowd at a religious ceremony according to his website. an agency published photos showing him standing and reading with a mess. last week the new york times reported he had canceled all meetings and was in the hospital due to illness. 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 am vonnie quinn. this is bloomberg. shery: goldman sachs has its growth forecast for the u.s. economy next year. let's bring in annabelle. whether they saying? annabelle: this came up friday in the u.s., what they are doing is cutting their growth forecast for next year. it previously was a 1.5% growth, that has been lowered to 1.1%. this year they are keeping projections unchanged. it comes down to two factors,

the higher rate path combining with timing we are seeing in financial conditions because they had been looser for many months of the year. the fed rate hike this year, they are saying that terminal rate forecast of 4% and 4.5%, slightly below the consensus but it does imply it is below potential growth trajectory. they think it is necessary to curb inflation fears. haidi: ing with the no doubt in terms of what it is expecting from the fed. annabelle: this came out this hour. it is a response to what we see forming in the market consensus that there was a chance he could build around 20% of it 100 basis point move from the fed given we had the hot inflation point coming through in the last reading. what they are saying is in line with the most economists out there at eight three-quarter

basis point move, the third consecutive when we have seen. they say a 100 basis point move is a risk, but inflation expectations, corporate price plans look less threatening in the growth outlook is still uncertain. haidi: annabelle with a look at what trading houses are expecting. the fed is on track to raise rates by 75 basis points for a third consecutive meeting. let's bring it jason, president of economics. it is an interesting space, because 75 is seen as the middle ground. is that your view? >> this week we are likely to see 75 basis points. i think that ppi report, wholesale inflation showed easing in the headline and core inflation. they are high but using a little bit. i think 75 basis points, if we

would see something more than that we would hear before the blackout period from the fed. we could see the next two meetings this year, we are likely to see either 50 or 75 basis points those meetings as well. haidi: trading when it comes to the u.s. dollar, as the greenback fully embraced or priced and expectations from the fed at this point? >> they have priced in the 75 basis point rate hike. what they have not priced in is what the fomc member forecasts, the. lot will show -- dot plot will show. the biggest piece of information we get this week will be what to the fed members themselves expect for end of year interest rates were not just the end of 2022, but where do they see them at the end of 2023.

those numbers are likely to be higher than they were in june. that could be a surprise, that could send the dollar higher. shery: what are your expectations of where rates will be in 2023? some people factoring in potential cuts by that time. >> by the end of next year, we could start to see some cutting but by the end of next year we could still be at 4%, which means we will go above that this year. we could still be raising rates in q1. for growth we expect negative gdp next year, -1 or -1.5, and this year we expect 1.5 on the positive side. shery: a big factor is been the price of oil, which has been on the decline for the past three weeks. that correlation with energy

stocks has not held. what is going on in that sector? >> there are a few pieces, one is the oil price, which is actually been declining since mid june. we have seen the price of oil coming down but still elevated. these are not cheap prices for oil. the thing we are seeing on the corporate side is there is a very high price of natural gas. although it has come down in the last trading sessions, we have seen u.s. natural gas trading above $10. we could see double-digit natural gas prices this fall and winter based on concerns about the war on ukraine, global lng supplies, russian gas in europe. those present risks to natural gas prices. if you are producing both oil and gas, not only are you still at relatively high oil prices

but you are probably at very high natural gas prices. shery: that is being felt across the world where we are seeing fuel prices rising and 10 banks having to act. in effect, dozens of central banks having to raise rates this week already, boj, philippines, taiwan. is there any market in particular you were watching that could have global repercussions? >> well, i think the biggest thing folks are worried about is what is going on in europe and their reliance on russian natural gas for power and heat. we are right now in the month of september, treating october gas at the front of the curve. there i think is concern as we get more into the winter. europe is very exposed to both upside inflation for empower and exposed downside for growth, so they could get the worst of both worlds with a lot more inflation edward's growth. there was a lot of concern about china, as we have seen not just

a manufacturing recession from the chinese manufacturing pmi. there is also concern, what about capital flows that have come out by investors? what happens if third-party sanctions that negatively impact russia, what happens if that happens in china? you seem money coming out of china as well, i am concerned about both china and europe. the u.s. looks very strong even though we do expect weak growth this year and negative growth next year. haidi: always good to have you with us, jason schenker. an update when it comes to the deal, a company as protected cash proposal, aussie per share saying they were unable to recommend that proposal. it requires financiers

agreements and the proposal as a contingent payment attached to it as well. obviously we did see quite a bit of drama when it comes to this deal given that back in july. we had see agreement for dye and udrham -- durham to purchase link. to the tune of $1.7 billion. 81 aussie per share. we have seen a big tumble when it comes to link administration after another regarding the proposed purchasing they would not be approving the deal unless the toronto-based company will take the shortfall in the value of assets to solutions. we continue to watch that deal at that he does get to us. shery: we watch prices around the world, a columbia finance

minister says inflation is making it expensive to raise funds, but his country is looking to raise $1.5 billion from private capital markets this year. in an interview with bloomberg tv he addressed the outlook for columbia's economy. >> i do not think at the same time it is 1998, it was very much an emerging-market crisis. this is a global crisis, both the slow down, particularly the inflation and the increase in the interest rate affecting all very heavily. >> very importantly, sir, i look at the caps, the limitation or price increase. we see it on india and there challenges with rice, here in the united kingdom we see it and others talk about it. given a more global economy, the speed of the information, the transfer of finance, can caps be effective in 2023? >> what we are getting from the

economy is inflation, but particularly the effect it is having on interest rates. both domestic interest rates in columbia as well as the interest rate in global capital markets are very high. of course, inflation is hard to fight due to the international dimensions of inflation. for a specific country, it is very possible to fight that supply inflation. central banks are good at managing man inflation but less at supply inflation. >> there is a great concern when the market hikes rates it will create problems for the rest of the world. i am wondering whether you were taking a look at the dollar market and say we cannot raise money right now at affordable rates. is that your situation as you

look at your financing needs? are private capital markets are expensive for emerging economies today. for the time being our international financing is coming from development banks and official institutions. so far we have not gone this year into private capital markets. we hope to normalize somewhat in the near future, and we will go back to the market. we are expecting to a race 1.5 billion dollars in private capital markets next year. >> what does it mean for things to stabilize? does it mean the fed stops raising rates? does it mean inflation stops accelerating? >> it really means the long-term interest rates of the u.s. start to fall. they were falling actually before the recent announcement of the fed that they would

likely increase interest rates again in the next meeting, but before that they were falling. and also the risk margins for emerging markets were also falling. but the situation has changed again. we hope at one point when the inflation stabilizes in the united states, the interest rates for the u.s., the long-term interest rates start to fall. haidi: that was jose ocampo. a company is set to seek money in a sale as bhb considers raising its details for the miner. this is bloomberg. ♪

shery: take a look at how minis have been trading, traders are looking ahead to chair powell's comments this week as we expect another rate hike. we have seen gold sinking to that two year low despite the fact that we saw a bit of upside in the last session. copper under pressure given the concerns, a gain of .7 of 1%. we are watching the futures market and gas given the ongoing energy crisis in europe. we have been following cattle prices that have come down from

hyatt demand concerns, key to the commodities space. haidi: let's look at the day ahead for australia and new zealand. rba's and of domestic market says rising interest rates will weigh on property prices, but there is considerable uncertainty about the timing and impact of the housing market. the new zealand central bank governor at a climate conference today, and bloomberg is running oz minerals is seeking $6.7 billion u.s. deal in a potential sale. let's get more on that with bhp in focus with our reporter. is a deal on? >> it well may but it has a while to go. basically until this point oz minerals has shown very little interest in a deal beyond its

interest with its shareholders. if it is of the belief $30 per share price can open the door it make it less something sooner. shery: where is this price change coming from? >> $30 a share is pretty hefty. that is the price bhp seems to believe will open the door. it is a pretty big offer, 66 percent on the undisturbed price before any of this emerged and into percent on their first offer on where the share price has been trading, $25 a share. it does indicate, it says something about what the deal can do for both companies and the proctored -- productivity that can be a lot -- unlocked there. it has been a white elephant for the company. the sharing infrastructure and

really leaning into some of these future facing metals like nickel and copper, there could be a lot more productivity to come out of this. haidi: obviously with that asset prices have been hefty. what is the broader environment looking like? >> it says a lot about the appetite for all of these minerals, copper, nickel, lithium are quite integral to the electric transition and anything we do in terms of greening the economy. just last week ramsey health care told them it is no longer interested in a deal, which was the last megadeal in the region that was still live. if this comes back not quite the $10 billion of ready but just short of that and could be the next megadeal for australia and keep things alive. haidi: henry brompton there with

the latest. let's take a look at out we are trading across bonds in australia and new zealand as we look ahead toward the moc decision. the hike by 75 basis points, middle ground between a smaller sized move as well as an outsize move of 100 basis wins with the fear ofri recession. that is a third consecutive meeting, and we see that move across the curve when it comes to the australia-new zealand bonds opening up, a bit of a move when it comes to the upside for the australia three year end 10 year. so much at stake in terms of tracking where the fomc goes, and headed above 4% is the signal. we are seeing a bit of stability, modest gains when it comes to the aussie dollar but still between 68, with the greenback looking ranger pound. more on bloomberg radio. get in-depth analysis from that

daybreak team. you can listen in on the up -- app. more ahead. this is bloomberg. ♪

haidi: a check of the headlines, a company looking to raise as $9.4 billion from the public offering of its iconic porsche brand. the listing is said to be europe about various -- your's largest and whether they could. it is seeking $75 billion. the offer period will start on tuesday with rating plan to begin on september 29. uh be is considering -- bhp is considering raising its offer for oz minerals. earlier bloomberg was told oz

minerals seeking $6.7 billion of any sale. it is seeking new assets to help with that shifty clean energy. a group is considering a bid for a british port and logistics company. the report said it revived his interest after the canadian owner suspended the business in september. it is likely to be at around $1.1 billion. shery: we have been following the function rich go very closely because we have asian and indian tycoon surpassing jeff bezos for the number two spot among the richest and wealthiest men in the world, a net worth of $147 billion just behind elon musk and overtaking jeff bezos.

he is in everything from airports and data centers, focusing on areas the prime minister narendra modi deems crucial. haidi: so much of it depends on how amazon shares trade from here. we note tech stocks like amazon have taken a hammering. bezos trailing adani, the renewed selloff of the nasdaq hammering as tech stock prices sink. this is the first time anyone from asia as feature this highly in the world's index. it has been for a very long time been dominated by tech entrepreneurs. shery: take a look at how futures are trading, the nasdaq 100's of the worst week since january. the s&p 500 has also seen the worst week since july.

nasdaq futures are down still. haidi: adani, not bad for a college dropout. federal reserve officials back on track to raise interest rates by 70 five basis points. that is where the market expectation is sitting, a third consecutive meeting. we are expecting more on that with moody's analytics. we will take a look at -- commit a professor will be here for that. that is it for "bloomberg daybreak: australia." "daybreak: asia" is next. this is bloomberg. ♪

shery: welcome to "bloomberg daybreak: asia." we are counting down to asia by major market opens. haidi: the fed in