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

stocks trading weak, 75 basis point rate hike for a third straight meeting. we are watching the yen hedging on the rebound of the currency ahead of the boj's policy meeting on thursday and 21 million people in the chinese city of chengdu are said to emerge from lockdown but testing requirements will remain. shery: perhaps that giving a boost to oil prices, we had seen three weeks of decline for wti. we are seeing a bit of a rebound beyond the $85 a barrel level. s&p 500 coming from its worst week since june, a lot of volatility on the friday session . nasdaq 100 also seeing its worst week since january. we had dipped buying toward the end of the friday session with giants like intel but we continue to see downside pressure. we watch treasury yields, two

year yield continuous at the highest level in years. it is not just the treasury yield, it is the global bond selloff given the expectations of not only the fomc but likes of boe and taiwan, philippines, so many other economies including indonesia, am i missing some of them? haidi: i think switzerland, rba minutes as well, those of the major ones. a lot of risk for investors to contend with. it does look like asian investors are not getting a great and up from the u.s., it is a negative read for the start of trading. most of them were position for the fomc. treating as japan closed, so thin on the ground when it comes to forex trading. you can markets will be closed to observe the funeral of queen elizabeth. u.k. futures, flat, down .2 of

1%. a little bit of a move when it comes to the australian tenure, he restarts holding at .25 of 1%. -- given the news chengdu will be emerging from the lockdown much sooner than what we saw with shanghai. good news in particular as we saw the golden dragon china index down last week by 4%. we see a rebound with positive covid news today. let's get more when it comes to the broader outlook, let's bring in kathleen hays and garfield rental -- reynolds. markets seem to think 75 is not too hot and not too cold goldilocks point. kathleen: it is a large rate hike. it will be the third one in a

row if they do it, but 50 basis points seems like something that is in the rearview mirror at least for now. inflation is high, it has not broken. the fed has made it very clear they are concerned about the inflation rate, so the debate is 75 and 50. the totality of the data, that is powell's words. labor market, still has it. on the hotness of inflation that would argue for at least 75. the reason why this 75 cap things is the reason -- one reason to do it is why they should do it if you do anything bigger you will get people worried about recession, they will start talking about rate cuts next year, financial conditions will ease, bond yields will rise again. it is going against the grain of what you need to do. if you look at the arguments people are making for 100, i would say at the top of the list

is you have got to restore your credibility. inflation was not was not transitory, now it is terrible. this will people realize you are serious about this fight, he will not give it too soon and get ahead of inflation. stamp on it hard while you still have the strength. maybe then you can open the door to smaller november rate hikes because you start to get it under control. you might impress the public that you are cutting inflation expectations, and a lot of people would say gradualism is not cutting it, your inflation rate is too high. jay powell opened the door to a 100 basis point hike in july. he was asked the question and when he was asked about doing something bigger, here is what he said. he noted that i say we would not hesitate to make an even larger move than we did today if the committee were to conclude that is appropriate. do they think it is appropriate? we are not sure.

it has left the door open to the latest data. latest data is hot, strong on inflation, strong on the labor market. people are going to be interested in the dots. they revised their forecast for where they think interest rates will go. wall street firms have been raising their terminal rate from 3.75 to 4.25. shery: and of course the uncertainty over how hawkish the fed will be as sent asian stocks done for five consecutive weeks in a week so busy with so many central-bank decisions. what will be driving investors this week? garfield what we --garfield: what we know about central banks and divergence from japan and the pboc and everyone else, especially the fed. the fed matters a lot more than

all the others. if it was to go 50 or go 100 that would have a big impact. the very uncertainty that adds to the anxiety. we are very likely to get the boj sticking with its ultra easy policy. that will keep pressure on the yen and through that again on the yuan, and the pressure on the yuan will keep the pboc nervous. stimulus it is willing to pushing you to the economy when china's economy is struggling. the news from chengdu is a potential big positive. they have ended up reversing so there is going to be plenty of nervousness about china if not a huge part of reasons to buy equities except the idea that they are cheap.

the problem is with central-bank delivering rate hikes, they are cheap for a reason and there are not too many signs the reasonable go away soon. haidi: probably also not coming away soon is downside pressure on the yen. what are we expecting from the boj outside of a policy change, which we know is not going to happen? garfield: focus on whether there are any hints if they would at some stage look toward an exit or tweak to what yield curve control would look like. it was acknowledged that at some stage policy will have to change. when you change this policy, how do that without creating turmoil? they would like to discuss that sort of thing, what it would

take for them to think inflation is not transitory, because we have some level of inflation in japan. all of that would rebound onto markets. there are plenty of investors link to short the yen. are we going to see those investors pile in more or pullback? how will that impact the yen in particular? one obvious scenario is a hawkish fed goes 100 basis point and the end goes to 45, then we get a replay of the turmoil we saw in june. shery: garfield reynolds and kathleen hays with our top stories. one other factor supporting markets could be the reopening of china. chengdu is set to ease lockdowns.

21 million residents will be allowed to resume aspects of normal life. a managing editor for asian business joins us now. there was a concern this could be under there very long lockdown like we saw in shanghai. what is different this time? >> they lockdown sooner than they did in shanghai. that meant this being a 2.5 lockdown rather than a two month one. a lot of issues around food shortages, medicine, which led to unrest and protest. they did not want that sort of thing so close to the communist party congress in mid-october. this will probably serve to reinforce xi and china's commitment to the covid zero strategy. just because chengdu is exiting does not mean we will not see lockdown in another city,

another mega city as well. china has lockdown more cities this year than at any time during the pandemic. this description will continue even if they are getting better at it. haidi: in terms of what we expect from hong kong is there a glimmer of hope? >> some interesting reporting over the weekend that potentially they are putting trials out there, a couple of newspapers saying they are looking at removing hotel quarantine entirely and replacing it with 87 day at home monitoring period. one newspaper said this could come as soon as this week, and we had the health secretary floating this possibility of no quarantine at all as well over the weekend. that said, what it will probably

be replaced with or what you will still have left is a testing in terms of before you leave, when you arrive in hong kong, which will still put it at a disadvantage to other parts of the world. shery: emma o'brien there, let's get to vonnie quinn. vonnie: president biden said he warned trent's xi jinping it would be a gigantic mistake to violate sentence imposed on russia. according to experts from an interview, biden said u.s. -- in china is at stake. there is no sign beijing is provided weapons to moscow. it echoes a readout of a cooling between the two leaders emerge. millions of president -- residents are being urged to evacuate as a super typhoon hagibis word japan. heavy rain and winds are already

bettering the region. more than 110,000 homes have been -- have less power with flights being canceled to and from okinawa. typhoon is pecking winds of -- packing winds of up to 250 kilometers per hour. pakistan -- evacuations are underway to of heard -- to avoid further loss of property and lives. recent flooding is killed more than 1500 people at a cost $30 billion worth of damage. the founder of luna and tara -- terra says he is not on the run. that we came hours after singapore believed he was no longer in the country. he and five others are facing arrest following the collapse of this crypto ecosystem. prosecutors in seoul said quan

is on the run and not cooperating. world leaders have gathered in london for the funeral of queen elizabeth the second. the service is expected to bring the city to a standstill. on sunday night the u.k. held a moment of silence for the only monarch most of ever known. the funeral will mark the end of 10 days of national mourning. you can see special coverage as the service gets underway due to begin at 11:00 a.m. london time. 6:00 a.m. if you were watching a new york. 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: still ahead we will explore esg interesting with a columbia university professor who sees a lot more potential in the japanese markets. up next we will talk strategy with steve cochran of moody's

analytics. this is bloomberg. ♪

haidi: let's of the week ahead,

a big week for central banks globally, a number of decisions do. on wednesday the federal reserve looking untracked or another jumbo increase on interest rates and looking to decrease demand to ensure inflation will come back to 2%. the bank of england is expected to raise basis points by 50 points on thursday. on thursday bank of japan expected to leave rates unchanged. other major decisions includes sweden, thailand, philippines, and indonesia. shery: our next guest says the fomc will make a 75 basis point hike that is. let's bring in steve cochrane and moody's analytics. why not 100 or even more? we had our guest earlier saying the fed needed to hike by 125 basis point in order to regain credibility. >> 125 basis points sounds

awfully high particularly due to the fact that the fed has already been early aggressive with a couple of 75 basis point hikes over the last few months. it seems to meet 75 basis points is consistent with that pathway. not 50, but 75 basis points given the high inflation to read we got last week. inflation is not under control, topline inflation grows on month-to-month. core inflation was up by an even faster rate, so that is the big concern right now. 75 basis points gets the fed where it wants to go and gives it some flexibility in november and december and going into early 2023 as well. shery: to be fair someone was telling us there is zero chance

of 125 basis points at this meeting. the other side of the equation, we are expecting other central banks except the bank of japan to do move. let's talk about with the boj can do when you have such yen weakness. >> boj is in a difficult spot right now, but it is clear boj is not going to move. they have made it very clear in the past that there will not be any interest rate normalization until there is some wage growth and some in proved domestic demand. there has been no wage growth in years in japan, and almost all of the inflation is coming from external supply-side forces. the bank of japan is going to stick to its guns, keep at their near zero rate and about fiscal policy to provide some support to the economy while inflation

is at its current rate, 2.9%. there is a proposal out right now from the prime minister to provide subsidies to lower income households to help improve spending at the lower income level, but i just do not think there is much the boj can do at the moment to do anything else. haidi: how beneficial is further yen weakness when it comes to trading pairs? we are talking about a 13 year high when it comes to trading against the won and the yuan. >> the weak yen is a big concern. if nothing else that adds to inflation woes in japan. again, at the moment i do not think the boj is it a position to do anything to work on

shifting that trend at the moment. haidi: china is the other big unknown. we have the lifting of the quarantine and lockdown in chengdu. what are your expectations and terms of what the covid zero situation looks like after the party congress given it will be the main determinant in how well the economy can recover? >> the lifting of the lockdown in chengdu is good news. that will go a long way to help improve stability in the economy and perhaps get growth rates to improve in the fourth quarter. i still do not see any clear signals coming from policymakers that this targeted covid lockdown policy will change at the end of this year are going into early next year. there are issues that still need

to be solved. there are parts of the population, particularly the elderly population where the vaccination rate is quite low, and we know that trend a vaccine is not as effective as other vaccines used elsewhere in the world. the public health system in china is not geared up, the capacity is not ready to deal with any large surge in serious covid cases. these are all parts of the puzzle that have to be put together before there can be any shift in terms of targeted covid zero policy. i would not be an inquiry to see any significant change in the policy this year or next year. shery: let me turn to southeast asia, surprisingly i have seen a lot of optimism about some of

these economies, including indonesia where we are expecting a rate hike in the philippines, cpi numbers out of malaysia and singapore this week as well. what are you watching? >> the southeast asian economy is doing pretty good given the inflation it is seen in southeast asia at the moment. southeast asia was a little bit late in terms of opening up and getting their domestic economies up and running again, and we are seeing that both in indonesia and the philippines. you mentioned the economies are opening up, domestic spending is improving, and in the philippines at least there is a good chance that fiscal policy will provide support with murder spending on infrastructure and education and health care and such. i think the outlooks are pretty good for both countries. i do think central banks will be willing to raise rates in order

to manage the currency and to manage inflation. haidi: always great to chat with you, steve cochrane. get a roundup of the stories we need to know in today's edition of daybreak. terminal subscribers can find that at tv or in the bloomberg anywhere app. customize your settings you get the news on the industries and assets that you care about. this is bloomberg. ♪

shery: a company is looking to raise as much is $9.4 billion offering its iconic porsche brand. it is said to be europe's largest and more that it take -- than a decade. the offer period will start on

tuesday with trading plan to begin on september 29. the clean energy arm of a billion or -- group is setting up a tech hub in colorado. it will create hundreds of local jobs to create green hydrogen and technology. shery: coming up, we will take a look at the trading week i for asian currency. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. ™

>> really the trade we should start looking at is in terms of u.s. treasury rates. >> it would be a good time to put in a shot to treasury bond yields. >> the best rate at the moment is asian bonds. >> the fed is committed so you

see sterling moving toward parity and the months ahead. >> the region is the largest in financial rates. >> we do not think the fed will go to 100 but the fact that the market was backing away from the updated comfort was premature on the others. >> that does keep the u.s. dollar supported at least until the end of the year. haidi: tb guest discussing the best rates ahead of the fomc meeting and you have been covering so much given by the signals of the guild curve into. it looks like the latest investors surveyed, the results show that they expect deeper into version two, of the u.s. yield curve, it is the classic bond market indicator of an upcoming recession. perhaps that is what is being heralded. when it comes to trade, 25% of

respondents are going shorter treasuries 22% are staying longer treasuries and some are staying out of that bed. 61% are betting on it deeper into version between the two year and 10 year yield ahead of the fomc. the maximum yield yawned 58 basis points, a majority at 62%. shery: take a look at breaking news we have at the moment, president biden now speaking in an interview saying u.s. forces would defend taiwan from a potential attack from china speaking in interview with the u.s. media, saying u.s. forces would defend taiwan from a china attack. we have seen the president talking to this in the past. there are questions about whether this would be military aid or aid similar to the one provided for ukraine.

right now what we are hearing is u.s. forces would defend taiwan from a china attack. in that conversation he is talking broadly about the economy, saying the u.s. will get control of the inflation, he predict a soft landing for the economy. he is talking about ukraine and how it is defeating russia but not yet winning. he will make reelection decisions after november. larry summers says the american economy as a substantial problem with underlying inflation in it exclusive conversation with bloomberg. summers addressed the latest cpi reading and talk to forecast cementing the odds of another big hike the fed. >> for me, they were unwelcome but not wholly unexpected. the right reading of the data all along has been that headline

inflation fluctuates substantially, but we have a significant underlying inflation problem, and that is what that for inflation or rate where the month was faster than the quarter or the quarter was faster than the half-year, the half-year was faster than the year and the year was faster than last year, that is what it showed, and the month was close to 7% court rate. we have -- core rate. we have a substantial underlying inflation problem. another way to see that is the median inflation is higher than it has been at any time since we started collecting the data. another way to see that is we are seeing substantial inflation in the housing components of the index, which we know avenue very substantial persistence. yet another way to see that is in the data from the atlanta fed

, which i think is probably the best wage indicator on those who are switching jobs, which show where the market really is unlike those who are staying on jobs, which is running at a percent or more. -- 8 % or more. we have a substantial inflation problem that does not come out without very substantial monetary policy adjustment, and the market is waking up to that fact and is now building in substantially more monetary policy adjustments than it was with the terminal fed funds rate up now at 4.5%. if you think back, david, it has been an extraordinary journey. it was only 15 months ago that the fed was saying that the rate was going to be zero in mid

2023, and now it is saying that that rate is going to approach 4.5%. the idea that would change financial conditions can hardly be a very surprising one. >> let's pick up on that point. as far as you see it what would you project the so-called terminal rate be? we have bloomberg saying 5%, deutsche bank says 5%. >> that would not surprise me. at 4.50 there is more realistic in market pricing than several months ago. i feel like they would end up above 4.5% than below 4.5%, and it would not surprise me if the rate has to get above five -- %5 -- 5% if we are in a determined

way going to contain and control inflation. whether the fed is going to stay the course and do what is necessary to contain inflation, we are going to have to see how that plays down the road. rick, a former fed governor, had a very strong op-ed early this week making a point that i have made a number of times, that even paul volcker had a kind of false start on inflation containment where he brought down rates in response to bad economic statistics in the spring of 1980, which then had to be reversed and forced us to have even higher rates than we otherwise would have had to have in the early 1980's.

it is not going to be easy to do what is necessary. haidi: the former treasury secretary terry summers speaking exclusively with david westin. a surging dollar has inverse relationship with the rest of us gets making it the only possible hedge for the year. let's bring in annabelle to talk to dr. the implications with asian fx. we have key rate decisions this week including the bank of japan. how do we see that playing out with again? annabelle: -- the yen? annabelle: it is one of the key rate decision this week but we also have to see what the fed does on wednesday. perhaps we could see a 100 basis point move, but the biggest piece of information could be where they see rates going, fomc officials. if the number is higher, that could be something that drives

the dollar higher. the difference in yields between the u.s. and japan is driving the yen weaker. we saw it at that 145 level. in terms of what we see in japan, when we have the ministry of financing they could step into markets to shore up the currency, we had the boj, the expectation they would keep policy settings unchanged also stepping in to keep bond purchases low to drive fields lower. we saw at record purchases last week on wednesday and thursday. there are contradictions in what we are seeing domestically between u.s. and japan. could be a message sending out that, yes, we can still keep pushing the currency lower as long as we do not go too fast. will that be 150? that is what we see in our survey. shery: not only the u.s. is

hiking, we have central banks across asia hiking this week as well. annabelle: this is a major week for central-bank action asia. it boj expected to stay on hold, but we have rate decisions coming from india -- indonesia, philippines, taiwan is well. when you look at the weaker currencies asia, these are some of the central banks that have been having to deal with that, because the stronger dollar is continuing to weigh on these currencies and prompting policymakers to brace for further pressure. if you look at some of the action we saw, the thai bond sliding to its lowest since 2006. haidi: turn's economy in focus as always, lpr announcements? would are we looking at? >> -- annabelle: no will changes on

tuesday. expecting pboc to keep the facility at 2.75%. we did see that seven basis point in august. we are seeing pressure building and on the pboc to did value -- devalue the yuan pointing up vulnerability intended to a heavy private debt loan and declining real estate market does increase the risk the pboc will allow the yuan to weaken. haidi: annabelle droulers and hong kong, let's get you to vonnie quinn. vonnie: chengdu is said to exit lockdown, 21 million people will be allowed to leave their homes for the first time since the beginning of september. residents will need to be tested once a week for the virus and we need a negative result from within the last 72 hours to enter public venues and take

public transportation. at least 27 people have been killed after a bus crash on the highway in a chinese province. local media reports the vehicle at a been used to carry people to covid quarantine festivities. incidents have been going viral domestically and of triggered anger toward authorities. hong kong is said to enter plans and its hotel currency -- quarantine for travelers. there will be required to undergo seven days of monitoring at home. the city has been under pressure from business leaders to ease restrictions. iran's supreme leader in public just hours after a report that said he was in the hospital after falling ill. he addressed a crowd at a religious ceremony according to his website. an agency published photos showing him standing at a mess. last week the new york times reported he had canceled all

appearances 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: we are back to the breaking news we had earlier, president biden underscoring america's commitment to taiwan in an interview with cbs saying u.s. military forces will defend taiwan if there was an unprecedented attack. let's get more from alex wayne. i remember just a few months back president biden had to walk back similar comments. is this any different from what he said in the past? >> this is a pattern with the president. he has said this before that the u.s. would defend taiwan, and then the white house walks back his remarks. the president has never really backtracked on his pledge that

u.s. forces would engage in a conflict over taiwan. tonight, he was unambiguous about it. in this program, 60 minutes, he was asked twice about whether u.s. forces would be involved in a war over taiwan, and he said both times, yes. 60 minutes and bloomberg move -- news have asked if there is a change in the one china policy and they said it stands. this is clearly a warning of the president to china that if they make an actual move on taiwan they can expect to be in a war with u.s. forces. haidi: the white house says there is no change to the policy. is there domestic support particularly going in to

election? is there broader support for this level of firmness for the president? >> that is a great question, and i do not know the answer. there are certainly people in congress, including republicans, who have uploaded the president for being more clear than his predecessors of how the u.s. would respond to a chinese attack on taiwan. i am just speculating, but there is probably a degree of war weariness in the united states after two decades of involvement in foreign wars, and i doubt the american people are eager to get into a war with china over taiwan. nobody wants that, including the president. this is a ratcheting up of tensions. i would expect a furious response from beijing this morning over these remarks in the 60 minutes interview. haidi: alex wayne with the

latest with the u.s. president vowing u.s. forces could be sent to defend taiwan in the event of a china attack. coming up next, a return of 2% on average, our next guest is still bullish on them. this is bloomberg. ♪

haidi: time for japan ahead on "daybreak: asia." residents are being urged to evacuate after a typhoon heads for the prefecture. a powerful earthquake strikes in taiwan, plus a newspaper as revealed the approval rating for prime minister kishida's cabinet is at 29%, the lowest level since he took office. interest in sustainable investment in japan as been waning recently with esg industries underperforming. -2% on a month on average this year. a professor at the university focuses on esg and serves as a board member of an esg group. it is fair to point out many

outperformed the likes of larger sovereign linked esg funds for example. broadly speaking, how do you assess the appetite for esg investing in the community at the moment? >> i expect a huge appetite for esg investing. the heartbreaking situation in pakistan and drought and not only the wildfires in europe but also the united states and asia. a lot of people see the climate risk is real. they see the opportunity in esg investing. haidi: where do you see the points of difference in terms of how esg investing is conducted in japan versus other major markets like the u.s. and europe? >> based on my research of 35,

united states, japan and the rest of asia, there are no differences in terms of esg investing. what esg investors do is to identify financial and nonfinancial factors such as esg investing and make integrated decisions. shery: what is your outlook in the long-term and short-term or esg investing given all of the challenges that the trend has faced recently? >> usually investors have to invest in companies that have higher corporate value or higher corporate cash flow. these should be determined by financial and nonfinancial factors. effectors like energy price play a bigger role in evaluations the investors should invest in

accordance with it. however, the climate risk is getting more real and we need to work together to mitigate it. i expect regulatory changes to come also. shery: despite climate risks we have seen greenwashing trends around the world. what is the stated this in japan, and what can be done on the ground to avoid it? >> some green financing clearly intends to create a climate impact. if such investment is going to be used not as intended that will be a problem. what we generally do is to accept the climate development

target before financing. then we should monitor the progress. the world bank group and ifc are doing it. it already exists in the world. shery: good to have you with us, professor at columbia university. watch this conversation and other past interviews from our japan ahead segment on tv go. dive into securities or bloomberg functions that we took about. become part of the conversation by sending us instant messages during their shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

haidi: a check of headlines, a property manager development is planning to raise as much as 70 or 84 million dollars three hong kong ibo. it has attracted investors including two who have agreed to purchase as much as $280 million shares. it is set to start trading on september 29. a company is hiring content reviewers to check that research

published in chinese is free of any sensitivities. the financial times reports viewers check for the language, tone and content is appropriate and ideas to regulatory guidelines-- adheres to regulatory guidelines. they have hired one and hong kong and in singapore. shery: we are watching trading opens in australia and korea. japan is on the way -- away on holiday. a mining society it says protest improve art disrupting the processing of copper at mines that represent 30% of the country's production. sk innovation and lg energy under watch, reportedly meeting with executives of battery suppliers to explore ways to respond to the united states and they should reduction act. -- united states inflation reduction act. coming up how best to navigate

market volatility ahead of all of those central-bank decisions. our guest suggests defensive positioning and diversified portfolios. the risks and opportunities in chinese markets, our guest sees a focus on stability ahead of the party congress. market opens in seoul next. this is bloomberg. ♪

pst. girl. you can do better. at least with your big-name wireless carrier. with xfinity mobile you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill over t-mobile, at&t, and verizon. wow. i can do better! yes you can! i can do better, too! now you really can do better! switch to the fastest mobile service - xfinity mobile. now with the best price on two lines of unlimited. just $30 a line.

>> this is daybreak asia. we are counting down to asia's major market opens. we have the federal reserve decisions right here.

a 75 basis point hike there. we had the legs of the doj, taiwan, philippines, boe and i am missing many others. course switzerland i think is the one. so much across the board for investors to digest. 75 basis points seems to be where markets are settled at. quite that will lead to that rate differential. we saw a little bit of upside after interventions. right now, we are standing right there. this is really unchanged in the early trading session.

we have three weeks of decline. some of those reopens are happening in china. the korean one has been very closely watched. we are below that 1400 level against the u.s. dollar. rate differentials, perhaps the capital outflows of these asian markets. >> take a look at how things are shaping up. in australia. pretty slow going comes to that staggered start to trading. the biggest downside when it

comes to utilities as well as financials as well. as they wait for australian equities to come online, we are watching that tenure yelled. that positioning is pretty well in place when it comes to expectations. the aussie dollar has been seen a little bit of strength today. >> a big week for central banks. let's go through them. also on thursday, the bank of

japan expecting to leave rates unchanged. >> a pretty light week. there was even more amid the ongoing volatility. let's have him take us through here. this is nowhere to hide in the markets. corporate bonds are down. what you're seeing with the positive traits would be the u.s. dollar and the upside when it comes to the energy and lung volatility. what are you doing within your portfolio trying to hedge this risk? >> people at the end of the year

, they have to play a little bit of that defense. the fed has turned relatively hawkish a few weeks ago. there is a bit of remaining to be about the labor market strength they are dealing with. now we think in the fourth quarter, the u.s. labor market appeared to visibly weaken. the path of least regret still entailed significant hikes from here. investors will have to -- from our perspective --

making some equity markets which is. we remain defensive. >> japan is a potential outperform if we stretch out 2023. can you tell us about when it comes to the growth and inflation outlook we continue to see with that policy and growth diversions? >> japan is a very unique story. the other developed markers have gone for the reopening prices. japan is a bit different. the country has a whole -- as a whole has been in a fitting. there is a more stable long-term

outlook. going forward in 2023, we think the reopening will continue to boost the economy. and policy support so far will begin to pay up. there will be japanese inflation staying above 2% target. chris the central bank will probably have to think about adjusting the policy at some point. >> how much more policy support are we from china? we have the pbmc's longtime

rates. we had a significantly week you on. it has been very weak against the japanese yen and the korean one as well. what does the other for the economy and the market look like for china? >> for the chinese economy, we think that the weaker you on is a bit supported. in the sense that you're creating a bit of flexibility, that will support the chinese economy a bit.

authorities have the zero covid policy. they are trying to offset the negative impacts. they have been quite supportive. what matters is the reopening process. that is something we look for in 2023. >> is that the reopening according to the southeast asian economies? this is one of the countries where we will see a rate hike expected including the philippines as well. >> absolutely. especially for indonesia. the reopening process has been a huge boost and in the case of

indonesia, the commodities market has provided support. the philippines -- the market perception to the new account has been pretty positive. it is a bit more fragile than the southeastern economies. so far, market perception has been positive. we are more neutral going forward. >> good to have you with us. let's get to vonnie quinn for the first word headlines. >> president bynum said they would defend taiwan if there was

an unprecedented attack. but he made the comments in the 60 minutes program so he distanced himself from the issue of whether or not taiwan should be -- he also says he has warned xi jinping they should not violate sanctions imposed on russia. he said u.s. investment in china is -- the statement echoes the u.s. rita in march. the chinese mega-city here is said to exit lockdowns. they will be able to leave their homes for the first time since the beginning of september. residents will need to be tested once a week for the virus and we will need a negative result to

take public transport. hong kong is set to reveal plans for travelers. it could come as soon as this week with arrivals about to go under -- undergo several days here. there has been increasing pressure from business leaders. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> let's look at one of the big movers. they are said to be seeking 10 billion aussie dollars with an upside of about 4%. that would be pushing the offer to around 30 australian dollars as they try to pick up these assets to help with the shift to clean energy that has been

driving so much of that demand of pricing at the moment. we are watching that upside. look at asian defense stocks as well. u.s. forces will defend taiwan if they -- they are expected to see more of a move today. we are seeing aerospace up by 2%. just some of those names we are watching. quite a few names listed in taiwan as well. >> will have macro strategy for china. >> they are said to exit their lockdown with 21 million residents set to leave their home starting monday. this is bloomberg. ♪

>> look out asian markets are trading at the moment. we are seeing a little bit of strength against the u.s. dollar. the bmj is expected to maintain

yield curve settings. we are also watching the cosby -- cosby -- kospi. kiwi stocks are up .1%. we are watching the latest on the chinese covid restrictions. this mega-city is set to exit lockdown. the residence will be able to resume most aspects of normal life. the senior editor executive joins us now with the latest. how is this lockdown different from what we saw in shanghai? >> there was a chance earlier that this lockdown could have been an example of how covid zero is not working but instead,

2.5 weeks after the city lockdown, that compared to 2.5 months in shanghai, there were the supplies. this has been an example of how covid zero can work. it was business as a way to save people's lives and not be too much of a strain on the economy. >> does that mean we should not be expecting any change to that policy? >> president xi jinping has said many times that covid zero has been the best policy china could opt for. it is the best thing china could do. weeks back -- we expect president xi to secure a third term in office.

>> we might be seeing a change in policy when it comes to the biden administration really trying to defend taiwan from any china ties. quick the state of relations is pretty tense at the moment. these comments from president biden, he has said similar things in the past. the administration has tried to walk that back at times. ambiguous, those comments from president biden are not ambiguous. the u.s. is saying that policy remains unchanged. the u.s. will defend taiwan. more difficulties ahead. >> in terms of beijing's

response, what can we expect? ? like response is some sort of rhetorical answer to what president biden has said. it seems unlikely given that president biden has made similar comments in the past that there would not be any additional escalation from the chinese side. >> take a look at how european features are opening up. the u.k. markets will be closed in observance of the funeral of queen elizabeth. they closed out last week. the boe expected to hide this week. we are seeing a bigger move of 75 basis points. also key will be the economic

agenda for the new trust administration. we will set the tone for how the new government is planning the new prime minister. we are also getting flash pmi's as well as the u.k.. this as they considered raising the offer. this is bloomberg. ♪

>> sources told bloomberg is

thinking about $6.7 billion in a potential sale. >> if it is, it has more around yet. there indicating that changes things. >> where is this price range coming from? >> are pretty high price range. quick the stock is up 66%.

pretty big. it speaks to what could come out of this. this is in the exact same area. it would be an incredible comfort -- incredible combination across the mining and production space. and transporting that metals market. >> what does it mean about the availability they're looking at for the future vision metals? >> an incredible pickup in demand in that space and many have struggled to bring productive opacity.

it will open a lot for bhp. >> that was harry with the latest on oz minerals. here is the check out the latest business/headlines. -- flash headlines. doug stock lower the recent deal. the new proposal was structured as an upfront cash payment. plus, a contingent payment. this property management unit is planning to raise as much as

$784 million, they have attracted six investors including china and singapore. this engine based company is slated to start trading september 29th. it is free of any sensitivity. the financial times reports viewers will check that content is appropriate for regulatory and internal guidelines. they have hired one review in hong kong. they are recruiting more and singapore. this is the focus of a new review. fed officials have been looking

into online banking platforms. the review goes beyond the central bank's regular oversight and it is distinct from its more frequent industrywide survey. >> there is little change after filing for the seventh straight week. this is the tenure at the moment. they are falling just about five basis points. the magnitude, the size, the timing and the impacts on the housing market. cripes we are not seen treasuries given that japan is away on holiday but take a look

at the interest rating at the moment. we are seeing a little bit of an upside. the nasdaq 100 just had its worst week since january. we could see some consolidation. we will discuss that next. this is bloomberg. ♪

>> the trade you should start looking at in terms of the u.s. treasury -- >> we should put into your treasury bond yields. quite the fan is committed.

course we don't think the fed is going to go over. >> that does keep the u.s. dollar supported. >> they will bring had -- bring down skyhigh inflation. more yet to come. >> that is the story. >> inflation has remained stubbornly high. they barely come off the highs in the united states.

they have been tracked by bloomberg. they are expected to see another 500 basis points from the central banks that are meeting some pretty big ones this week. financial conditions have already started to tighten because central banks are tightening and bond yields are

falling. that is what happens when you get 1300 basis points or more in one year. and when you see how that translates, this is what the fed wants to see. they want to see when you move on and look at financial conditions, this is what they want to see. we are also starting to hear some central bankers talk about what is necessary. jay powell was talking about the pain this will involve for small businesses. they were talking about the sacrifice ratio. this is the sign that they will -- they know they will have to push and push.

if they're not going to make the same mistakes as the laws back in the 80's when stocks hydrates to quickly. the big take point is they are moving ahead and they will do what it takes and we can see evidence. maybe they have done a lot more on the table. >> we look at this balancing act , 75 basis points is where we have settled in terms of not triggering the risk of recession. >> i would say 75 basis points. i would take that little bit further, they know it may involve the recession. they are hoping it doesn't. for the fed in particular, they are thinking if they do it quick, maybe they can get a dog. maybe they won't have to have a better recession.

if you do 75 instead of 100, people might start expecting a recession and then they talk about rate cuts next year. this would maybe have bond yields coming down, helping the economy. if you do 100, your credibility needs to be restored. that is a big theme in our big take story today. they need to do it while consumers are still spending money. it opens the door to a small rate hike. jay powell opened the door to an even bigger basis point hike. they said they would move if they had to to the bigger-if conditions show that was necessary.

if the doors open, when would they decide about the totality of data? you get the inflation going, you get them going aggressively enough harder than you have to. 75 is the best for the markets. if there is a chance of anything else, it could be worrisome, especially if they are worried about credibility. >> kathleen is giving us some perspective as always. we are expecting the number of re-decisions in asian as well. let's talk about this when it comes to fx. quite this is coming off of what kathleen was saying.

it could be the 75 basis points. it is the only central bank in the world sticking with negative rates. the differential between the u.s. and japan has been the major driver of yen. we still saw the bank of japan boosting these yields. $9.9 billion worth. one could prompt some sort of intervention.

>> will follow any other central bank decisions. especially in asia. >> we could see around 500 basis points. policymakers early bracing this. there was verbal intervention from china, south korea, riyadh at some quite drastic levels. the repeat as well.

early decision -- a rate decision will come. >> jay powell will be taking center stage. there is stronger anti-inflation medicine from the fed. they say commodities were ahead of that big unveiling. we did see a third weekly pole. they do say a chunky rate hike is right in the markets. they think the fed could keep a

lid on where prices go. >> let's get to vonnie quinn. >> at least 27 people have been killed after a crash. local media reports they have been used to ferry people. evidence linked to china's coded zero strategy. the founder of luna tokens has tweeted that he is not on the run. they are facing arrests in south korea for violating capital markets law. prosecutors say that they are on the wrong end and not cooperating. iran's leader has appeared in

public after falling ill. the agency published photos here. last week, the new york times reported that they canceled all meetings due to illness. world leaders have gathered in london for -- to mourn queen elizabeth the second. the u.k. held a moment of silence. the funeral will mark the end of 10 days of national mourning. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> we are seeing an economic

rebound in the third quarter. that will be next, this is bloomberg. ♪

>> take a look at how currencies are trading at the moment. we are talking about levels that we have not seen in about 24 years. we are also watching the korean

one -- won at the moment. the aussie holding at a little bit earlier here. the previous he has warned investors not to invest in any particular level. becky, always good to have you with us.

quicktime has a very strong balance of payments. they do not rule out the possibility for the five-year rate to be cut. that is a very strong sign.

they have declined much more than the five year lpr indicated. quick ahead of the party congress, the policy would tend to stabilize things. we should be expecting measures that will be curbing economic recovery as well as very cautious balances for fixing. after the party congress, we are looking at some of the most extreme measures at that stage.

cracks can you tell us more about the expectations of covid zero and what the removal of these measures might be? and how they may be able to encourage demand within the economy? >> i think it is being more and more realized domestically. the vast majority of the population is not ready. the vast majority of the population has never been contacted by covid. even if the authority is looking to partially relax the measures, they would have to do it very slowly. after the party congress, they

are only looking for the removal of the extra measures. sometimes you will be subject to some quarantine requirements. cracks do you expect that some of that positive upside might come back into corporate bonds? >> over the last few months, we have seen ongoing outflows from the market. we are seeing tolerates

appreciably higher. the outflow has been moderated quite substantially. also occasioned by other anecdotal evidence, i have seen more public-sector investors registering the social bond market. they are not going to cut them back to zero because of a number of reasons including vaccine inclusion. the public sector could have started to add some positioning because of the widening use of the cmyk international trade.

we are still looking for a possibility for the inflows to return in the coming couples of quarters -- coming couple of quarters. cracks thank you, becky. let's get your check out the latest business-class headlines. they are looking to raise as much as $9.4 billion. the listings had to be europe's largest in more than a decade. -- listing is said to be europe's largest in more than a decade. minerals are seeking about $6.7 billion in a potential sale as they believe an offer of 30,000 australian dollars will be here. bhp could increase its proposal soon as this month.

fortis q metals group is setting up of here in colorado. they will create hundreds of local jobs to develop green hydrogen technology. they are also considering building manufacturing centers in the u.s.. cracks coming up next, china's heated reality -- >> coming up china's heated rivalry with the u.s.. we will have more on that soon. this is bloomberg. ♪

>> china's rivalry with u.s. over tech supremacy is adding most of the world's second-largest tech stock market. for more, let's bring in sofia. where are we seeing the pressure points? >> we are seeing that in biotech, alleged vehicles. the biden administration is really wrapping up efforts on that front. that started to play out in china's stock market. they are really taking a hit.

i was just checking on my screen. they have approved for more etf's in china's stock market. china and the u.s. are both diverting investments and funds to make them more competitive. it is more a part of the narrative randy kaplan taking place right now. -- around decoupling taking place right now. that is an excellent question. i think investing in china for many has become -- you cannot go there anymore.

it takes a lot of rethinking and paring down your investments. if you do invest in the sectors that the communist party is sending investment to, that is the kind of sector -- that is a strategy that can win. >> some of us will be watching ahead of the opening in hong kong as well as shanghai. we will be watching a number of these defense stocks. that is the pelvic earthquake killing at least one person.

companies impacted by that move macy active movement as well. in hong kong, we can also see more detailed plans to end hotel quarantine. wait until you see some of those retailers and travel stocks there. cracks we have plenty more to come. this is bloomberg. ♪

pst. girl. you can do better. at least with your big-name wireless carrier. with xfinity mobile you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill over t-mobile, at&t, and verizon. wow. i can do better! yes you can! i can do better, too! now you really can do better! switch to the fastest mobile service - xfinity mobile. now with the best price on two lines of unlimited. just $30 a line.

david: good monday morning from hong kong. welcome to "bloomberg markets: china open." yvonne: our top stori