♪

haidi: good morning and welcome to "daybreak: australia." i am haidi stroud-watts in sydney. we are counting down to asia's major market opens. shery: good evening from bloomberg's world headquarters in new york, i am shery ahn. was higher in new york as megacap driver rebound. the 10 year treasury yield briefly above 3% for the first time in more than a decade. haidi: russia sending more oil to asia as tensions heightened. shery: and we are speaking live with world bank president david malpass about inflation, debt distress, and the impact on the global economy. u.s. futures extending gains in the early asian session. this of course after the s&p 500 moved higher in the session after, losing a 1% in the morning session. we had a rebound when it came to the tech giants. banks rose ahead of the fomc

decision expected on wednesday. we have the weakening coming through in the afternoon that actually led to oil gaining ground in the u.s. session, and in the asian session we are seeing it above $85 a barrel level. but we are very much focused on what treasuries are doing because the selloff continues. the 10-year yield suppressing 3.5% for the first time since 2011. . the main selling pressure coming on the shorter end, given the jumbo rate hike expectations. the 2-year yield also reaching to year highs. the 2's and 30's inverted, the lowest since 2000. haidi: it is really interesting. we see the window of opportunity opening up for bargain hunters looking for more risk. we have not seen them show up so

far, but the stronger lead somewhat from the u.s. session could help. . the msci freshly -- the msci asia pacific has fallen. it could ease the downward pressure when it comes to asian currencies. and asian currency-denominated equities as well. in sydney, 0.8% in the future session higher, suggesting an early gain of 0.7%. the aussie dollar at six seven cents per dollar. but we are watching the aussie qb peg, it is up 0.5%. kiwi stocks trading modestly in positive territory. and we are seeing the downside pressure on the yen continuing to be abated. shery: we are heading towards the boj rate decision and others around the world. we saw a rebound in the u.s.

session, but it seems that equity valuations not to mention the risk continues. strategists from morgan stanley and goldman sachs saying that headwinds of affordability are building, and increasing pressure on corporate margins. and inflation pressures continue. although we have seen in u.s. inflation estimates moderate, they are still at record highs, this at a time when the s&p 500 has lost 19% from its recent peak. haidi: and we have been talking about how it has been only home largely in emerging markets -- oddly calm largely in emerging markets, but we are seeing this indication of outflows in emerging market etfs. . the worries when it comes to china's outlook, property markets, and the impact of the fed tightening is starting to weigh here. the eme to have has seen withdrawals of $1.2 billion in september. investors looking to the fed and also worried about the china

lockdowns. we will see if we see a recovery after the cash exodus, but certainly, it is a period when we have seen and inflow of $18 million, but the reversal of fortunes when it comes to this particular emerging market fund. shery: the hang seng china enterprise index is very close to bear market territory. the u.s. session will give us an indication of where we are headed in china. ed ludlow joins me here in the new york studio. it seems to be all about the fed right now. ed: yes. we started the week brightly, but that had been the worst week for the s&p 500 since january. even megacaps were caught up in the anxiety about the fed. pricing in a 75 basis points move, but the discussion around 100 basis points is on the table. in tech and equity markets, you'd are discounting the

present value of the markets. you can see some of the pain that last -- some of the pain last week was from apple and google. they have strong balance sheets. why are they going down when they are often seen as and defensive stocks? they were caught up in the setting. they were rebounding monday. but we still saw pain in crypto. this is a global story, it's not just the fed that has a meeting and decision this week, global banks around the world also have a decision. shery: we are talking almost 20, right? ed: in the crypto market, there is definitely some central-bank anxiety out there beyond what we see in other risk assets like the equity market. in the u.s. 10 year, 3.5%. first time since 2011. i think we are at the highest on the two-year curve since 2007.

so we are embracing. haidi: we will quiz you on all 20 of them. just you wait. [laughs] ed ludlow there in the studio with shery. let's get more from bloomberg's jack pitcher. what is the reason we have seen credit largely holding up better than equities? jack: a couple of questions for -- a couple of reasons for credit outperformance illustrate. a lot of it has to do with that leg higher in treasury yields. robert hurt -- u.s. high-grade bonds hit higher highs since 2005. think pension funds who are trying to walk in funding, or foreign buyers from europe or japan who are looking for much higher yield in the u.s. than their home base. he also had higher corporate supply last week than what companies were expecting. a lot of companies that had money to borrow canceled them after treasuries went up that fast.

the commission of lower demand plus high supply has kept it steady despite the equity selloff. shery: the last little bit more about the companies that were actually looking to sell investment-grade, but they are still down. right now the environment is not conducive to more, it seems. jack: it is not. september is usually one of the busiest months of the year for borrowing and a lot of companies have a lot of borrowing down in the first two weeks of september. i think wall street was calling for $40 million of new investment-grade nonsales last week and they only got $17 billion. the inflation print on tuesday and the treasury after that really threw everything off. a lot of companies who were considering borrowing, work suddenly looking at much higher costs and opted to hold off. haidi: this doesn't seem that the great environment when you are trying to offload junk bonds, particularly when it is the biggest of the year.

is there a sense of rushing because the backdrop could actually get worse? jack: there is. the deals that you see in the market, several of them are buyout financing. these are deals banks know that they have to do to get done. the funding is already there. some of those i think have been accelerated and pushed forward into the first two days of this week. there is definitely a fear that if there is a fed surprise on wednesday, 100 basis points, this market that is already hard to borrow in could get much more difficult under bad place to get stuck holding this that. they are already offering very high yields on some of these deals they are trying to push right now, up in the double-digit yield range. shery: bloomberg's jack pitcher with everything to do with the credit market. another volatile day for oil trading. russia is likely to flood asia with more supply as your ramps up on sanctions. su keenan has more. looks like a russian fuel oil is heading to the middle east and

asia? su: those two reasons already, according to statistics that bloomberg has reviewed, have already picked up on their imports from russia. this all has to do with the e.u. starting to step up restrictions and planning to impose sanctions, a ban on russian oil by year-end. both regions have been getting greater shares of russia's shipments since the war broke out, and data from the s&p global commodities highlights how the e.u. sanctions are really during this huge shift. morgan stanley notes china and india, though, saw a 54 percent combined increase in the last month in russian oil products that they are taking. one way that the russian products are being shipped to asia under the radar is through these large shipping hub, where there is a lot of redistribution. some of the russian blends mixed

with other products and relabeled. that is a lot of what is going on. this is a shift that will be closely watched in the months to come. meanwhile, we are seeing volatility in oil prices, we mentioned at the top of the show that the latest u.s. and london trading saw double-check i crude and brent crude deep earlier in the -- we saw the wti crude and brent crude dip earlier in the session. but it recovered as the dollar recovered. the dollar has been a big driver as of late. there are a lot of potential headwinds coming because of the hint of non-actually of more supply. u.s. announced it would offer 10 million more barrels from its strategic petroleum reserve's in september. and we are hearing from the uae that they are planning to boost output by as much as 5 million extra barrels in 2025, so 5 million extra barrels a day is a

sizable increase. so, the supply and demand equation tilts yet again. back to you. haidi: bloomberg su keenan there. let's get you to vonnie quinn with the first word headlines. vonnie: thanks and good morning. hong kong's top market regular is talking about turning back senior staff who have been working abroad. sources say concern is growing over prolonged absences of licensed managers at the investment firms and brokerages overseas. the pressure comes as the city seeks to resurrect its status as a global financial center. ukraine is again calling on western governments for more weapons, as it presses ahead with its counteroffensive against russian forces. foreign minister dmytro kuleba told bloomberg that ukraine wants to add to its territorial gains and deny russia any strategic advantage. he is in new york for the at noon meeting of the u.n. general

assembly. >> sometimes i am being asked whether there is enough weapons that you have received. i always say that i will be able to say it was enough only after ukraine wins. until then, we will be asking for more. vonnie: typhoon nanmadol is expected to dump as much as 400 millimeters of rain on parts of southern japan on tuesday, as people return to work after the holiday weekend. a flood warning is in place for tokyo and in neighboring prefecture. the storm lifted through the southwest island of kyushu monday, killing at least two people and leaving 70 others injured. queen elizabeth ii has been buried next to her husband following a funeral with more than 2000 global leaders and dignitaries at westminster abbey. crowds thronged the streets to catch a glimpse of the cortege. the funeral was described by government officials as one of the biggest international events that the u.k. has ever held. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more

than 120 countries. i am vonnie quinn. this is bloomberg. haidi: still ahead, world bank president david malpass joins us to discuss the outlook of the global economy and the prospects of recession. next, why the recent pullback may not continue much longer will we get closer to the june lows. this is bloomberg. ♪

>> we have the all important fed meeting. >> the fed has a lot of work ahead of itself, as do other central banks. >> the focus on inflation. >> the u.s. inflation number was horrific. >> the hard-core cpr number we'll on tuesday at -- >> at puts the fed into overdrive. >> credibility is based on that fact alone. >> they are feeling their way to how far they have to raise. >> they are talking as if they are margaret thatcher. > 100 basis points is still on the table. >> the overdrive, sooner or later they will make a policy mistake. >> i see inflation as the boogeyman, and stagflation as

the grim reaper here. shery: our next guest thanks u.s. markets will remain rangebound until the next consumer price index releases. let's bring in eva ados, strategist and coo of er shares. how much is already priced in, and what can we expect in the next consumer price index release? >> i think the debate shifts from the september meeting to the november meeting. 75 basis points is now a foregone conclusion in september, but the debate for something below 75 basis points november is getting much stronger. by then we will have higher levels of unemployment, inflation will hopefully come down further, and also we will have a continuous gdp decline which will push, having pressure

on not overdoing it. so the fed has to be careful to not overdo it, and by november, that will become more and more evident. shery: we are hearing from more wall street strategists warning of a potential strategy risk and not to mention equity valuations getting stretched as well. when looking into where we are in u.s. markets right now, what worries you the most, going into this federal open market committee and the other central bank decisions that we are awaiting? eva: we are very concerned about the possibility of a light recession. we think the likelihood is getting more and more possible. so unfortunately we see a continuous decrease in the gdp, an increase in unemployment, and we are seeing the contagion from europe touching the u.s. a very significant percentage of u.s. companies' revenues is based on europe, so we have to

start factoring that in. that will be mitigated by the low levels of unemployment. even if unemployment rises -- we are now 3.7%, 2% below historical levels. not many people are factoring in the 75 million baby boomers who are retiring at the rate of 2-3,000,000 a year, and that will help mitigate the risk of having a very high unemployment number. we think it is more likely to have a mild recession rather than a major recession, but the possibility of recession is getting more and more likely. haidi: when you look at the plethora of risks, and the fact that we are seeing a handful of asset types, energy for example was the theme, volatility in strategies at the moment. how are you trading?

eva: we think the market will trade within a tight range of 5% to 10%. in q3 the markets will continue to be very choppy. that being said, the next catalyst that we are watching is on october 13. that is before the next fed meeting in november. we think that by then, it will be more obvious that the fed is getting things under control, and that inflation is coming down. that will be the next catalyst to push the markets higher by year end. however, we are seeing choppiness in the next couple of weeks. haidi: when you see the surge in traditional energy at the moment, and ongoing energy crisis globally, particularly in europe, do you see that as having a long-term impact? and if so, how, when it comes to opportunities in the greek -- green transition? eva: it will definitely have a big impact. we are seeing industrials suffering with those ramifications. gm and ford down.

>> so that will continue to have an impact. when energy of course is benefiting, but i think energy has had its run. i don't see a lot of room from here on to go. and i think that the best strategy for investors is to either bet on short-term treasuries, or have a conservative allocation in the markets and increase that as we are heading towards the year-end. shery: we have seen a bit of a rebound when it came to energy prices as well, given that the dollar weakened slightly towards the end of the session. i wonder what your expectations are for the greenback, given of course that we not only have the fomc rate decisions, but all of these other global central bank decisions, and we continue to see pressure, especially on em currencies. eva: what we have now is a global malaise. first the u.s. is seen as a safe haven, or safer.

that is where we see the dollar rise. but we shouldn't disregard the fact that it is a global malaise and there is a contagion from one market to the other. very few bright spots when it comes to sectors, geographies, very few bright spots. i think investors need to be very careful on where they are allocating money. one market that is kind of the bright spot is india. it is one of the few markets that has been flat year to date, because they have benefited so much from oil trading because they are buying russian oil, refining it, and selling it to europe. so this is a market that will outperform the rest. it is really hard for foreign investors, though, to get in due to the revelatory concerns. haidi: always great to have you with us, ever are dose, ceo and chief investment strategist at ershares. you can get around more of the

stories you need to know to get your day going with today's edition of "daybreak" on dayb . . you can customize the settings so you get only the news on the industries and assets that matter to you. this is bloomberg. ♪

shery: here is a quick check of the latest business flash headlines. ford tumbled in late trading after warning that supply costs running one billion dollars above expectations in the current quarter. they order maker reaffirmed full-year guidance but the inventory of have completed vehicles will remain elevated. one company is said to be in talks with cornerstone investors about 300 within dollars in shares in its hong kong ipo.

sources say the chinese ev maker could raise $1 billion in the listing. leapmotor focuses on the high-end e.v. market. south korean prosecutors have asked interpol for help in arresting two on from terraform labs he is. blamed for a $16 billion cryptocurrency wipeout. interpol typically issues a written notice seeking assistance from law enforcement glibly to make an arrest. it can take up to a week before a notice is haidi: issued. haidi: let's look at australia and new zealand. the rba released meetings of the september policy meeting, the central bank increasing the cash rate by 50 basis points at its october meeting. governor lowe's parliamentary testimony saying that he is worried about inflation expectations getting away from him. and a spanish newspaper reports that mccurry is thinking

about selling a 20% stake in its spanish oil company. shery: take a look at crypto at the moment, we are seeing a bit of upside -- seeing downside for bitcoin. [laughs] it 3-month low and below the 20,000 a level. ethereum is rebounding after attaching a two-month low after the merge. we had seen the hype unwinding now that the merge is done. it is about monetary tightening around the world. three days of central bank decisions expected to deliver interest rate hikes adding up to more than 500 basis points combined. not a lot of change in the monetary policy in china, though, we are looking ahead to the lpr. millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line.

there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save by talking to our helpful switch squad at your local xfinity store today.

>> kathleen: welcome back, i am kathleen hays. we would like to welcome our bloomberg radio listeners. the world bank is warning the

global economy says a recession next year caused by policy tightening that could prove inadequate to temper inflation. we are joined by david malpass, president of the world bank. we are happy you could join us in studio. it is always a treat to have someone here. you seem to be arguing a recession may be in the cards given there is this broad central bank consensus that they have to keep hiking rates because inflation is so high. do you think, and with the fed considering maybe set -- maybe 75 basis points, can central banks take the needed steps without disrupting not just the global economy but particularly the developing economies? david: it is hard to do. inflation is a real problem. i'm not saying it is easy. but i think the central banks have more tools than just the interest rate hikes. one way for the government and the central banks to go is to focus more on production. how do you get more things out in the economy?

that makes -- it means you will not have to do as many rate hikes. kathleen: how will you make that work? you need to bring down inflation right now. you are going to see the economy getting hit hard. investing money to make the economy more productive plays out not over weeks, not over months, but over years. david: it is true. investors look ahead. if you can create the right environment, there will be a positive response from markets. you will see bond yields that would go down even as equities went up in price. that would be a stabilization signal for markets. but that takes more production, and the systems that can produce more. and i think the central banks themselves can use regulatory policy, and also their bond policies better to encourage supply. central banks have fallen into

this idea that they only affect demand. but in reality, the financial systems and the central banks have a massive impact on supply and investment. kathleen: you are making an interesting argument that there is a misallocation of capital. we need to have more capital out in the world for it to go to emerging markets, small businesses, etc. you seem to be saying that for example, the fed should not just slow -- let the bonds roll out faster, they should be selling bonds, the ecd should be selling bonds. what do you mean by that, and wouldn't that be disruptive to bond markets and disruptive to the economy? david: the bond markets will say that at first. but at some point, you have to have more capital outside the bond market. that makes them more credit where they. you might see a situation where the yield curve is higher, but the risk curve is better than it is right now. that would be the goal of having

a growth oriented monetary policy. i think even more powerful is on the fiscal policy side. the governments are borrowing so much that it means there is not enough capital left in the productive sides of the economy around the world. shery: sher -- this is shery. not just focusing on reducing consumption, how in-line are fiscal authorities as well with monetary policy makers? david: that is exactly right. we know government spending, it is hard to make it as efficient and effective and well allocated as private sector spending. then is the basis of the market system. right now, what we know is a huge amount of the world's capital is being allocated by governments. that can help explain why median incomes have not been rising. it puts a burden -- except for

the highest income sides of the economy to benefit from bonds, everyone else really benefits from jobs, from new companies, from start from getting their first job. we need to draw those people into the economy in order to produce more. haidi: it is haidi chiming in from cindy. i want to throw this a quick chart showing the global growth tracker fell to zero for the month. we know the risk of recession is looming large for the u.k., for the u.s. historically, we would have seen growth out of china coming to the risk. how much downside is there from the chinese slowdown, particularly when it comes to emerging nations that typically would have benefited from that chinese growth engine? david: this is very interesting. europe is facing a problem -- the reason, they were very dependent on energy from russia. natural gas, oil, and coal.

as that is reduced, it creates higher prices, inflation, rate hikes, and mutt is a complicated makes. -- and that is a complicated mix. china was a countercyclical, meaning they would cut interest rates, they would increase their government spending, and they are doing less of that this time. they had a contraction in the second quarter, the quarter over quarter growth was negative. going into the party congress, they have been less eager to really stimulate this time. that may be good for their economy and good for the long run, that it means for the world, you have the number two economy that is not really jumping forward. that puts more burden on the u.s. the u.s. is a big strong economy. it can handle it, if it really started producing more. kathleen: another threat to the

developing world is aggressive fed rate hikes are making the dollar even stronger. that increases the risk of capital outflows. do you see specific countries that are most at risk into sliding into financial crisis? it is this a kind of thing that you think could spread? this could become more of a global financial phenomena? david: i'm worried about the weaker countries because the bond market cuts them off, and the investment that kept people from keeping their money from international reserves, the country's reserves, and move it out. we have seen a decline in international reserves. that is a very real risk. as the u.s., as the rates rise, it leaves others behind. i think the u.s. has to do what is right for the u.s. i just think there are more tools that could be used they on

the rate hikes. and the countries themselves have to do more to make their currencies -- i favor everyone trying to achieve strong and stable currencies. that is what is best for growth. and that could be done better. a lot of countries are intervening. but they are sterilizing the intervention, so they are neutralizing what you do in the currency. that is a challenge. i think it could be done better on that score. shery: in the last couple of weeks, we have seen a raft of pledges when it comes to bailouts from the imf and china, forgiving loans as well. how much progress are we seeing on debt relief, and should more be done, especially from countries that can do it like china? david: this is important. for some countries, the debt is unsustainable. this -- the quicker you can move to a restructuring, the sooner the country can get back on its feet. that should be the goal. sri lanka is in that situation.

and others. we are working closely with the imf where china is one of the cochairs of the creditors committee. i am hoping that there can be progress. the fed gets into several steps in order to get to the actual debt restructuring. in the countries new to move quickly. i hope the creditors will help them do that, recognizing -- and i say this with china -- that it is in their interest to have a stronger developing world, because they are selling a lot of things to that world. i think they could do better and move more quickly on that. private sector creditors as well are dragging their feet. . and it would be better for everyone to get on with it and get the restructurings going. haidi: on the topic of debt relief, for ukraine, does the world bank need to be playing a more prominent role? given their does not seem to be a clear path toward repaying that debt?

does the funding need to come from grants rather than loans? david: yeah. i'm sorry, ukraine, right? clearly, it is in a war, a very difficult war, it has a lot of debt. they are paying at steps to reduce that debt. they are working with the private sector, individual bond issuer -- issuances. i think grants are very important. europe has put money, the u.s. has put a lot of grants funding in. the world bank has stepped up in march and april with large packages. i think there is more work to be done for ukraine, and i would like to see an early debt restructuring. that would help people see light at the end of the tunnel. kathleen: right next to ukraine, europe, and europe's energy problem, which you say is

immense. you have noted that it spills over. not -- everything. you also say the u.s. is one of the few countries in the world to increase supply of oil, increase output, and yet,, the biden team is not doing it. is this the time for global leaders to say, we've got grain energy objectives, but we have to put that to the side for one moment, and turned to the world's intense need get more energy now to help solve these imbalances? david: i don't know that you have to say put something aside. what we can recognize is that unless there is more supply of cleaner energy, for example, natural gas, better than some of the alternatives, the world will turn to dirtier sources of energy. that is already happening heavily in europe with reopening the coal-fired power plant and buying coal from around the

world. you are getting more production of coal, which not only is carbon intended, but it often has air pollution qualities within it as well. i think -- i did see the united arab emirate saying today it could increase its production. that's good. the u.s. is a big producer, so it is able to do that. i think now is timely. prices are high. that energy can be used, very importantly, by the world to feed people. canada also is a big potential source of energy and could be doing more in that regard. natural gas goes straight into fertilizer, which goes straight into crops. there has got to be in people's minds, this connection that if you are going in that direction, you are helping key people. kathleen: certainly for policymakers and you at the world bank.

many thanks to david malpass, president of the world bank. haidi: china is expected to keep its key loan prime rates unchanged on tuesday, as better than expected data from august allows for a pause in easy. the chinese economy is no way out of the woods yet. most economists expect easing to resume in the fourth quarter. . for more, let's bring in stephen engle in hong kong with the latest. we were talking to david malpass. he said in previous recessions, global slowdowns, you see that from the pboc. the stimulus undergrowth that comes from china. there seems to be less of that this time around. is there more to come? stephen: a fascinating conversation with mr. malpass, commenting on china as being in past down cycles and engines of growth. china is deleveraging in the property sector, so they don't necessarily want to ease too quickly. they did cut their loan, there

one-year loan prime rate for the second time in august, following the worse than expected july eco-data. but the numbers did improve in august, albeit on the back of heavy stimulus from beijing and subsidies for the retail space in ev's and the like, and the automobile space, and power consumption was up because of the heat wave. there was some bright spots, but not really shining bright. it is still a weak economy right now. but what we are expecting from most economists surveyed by bloomberg is that at least right now, they are going to pause. because the pboc did a september operations study on its medium-term lending facility, and that essentially will mean the loan prime rates, the one year and the five-year, which is tied closely to mortgages, will likely hold firm. most 15 -- most economists surveyed expected the one-year loan primate to hold steady

after the cut we saw. the five-year loan prime rate was cut by 16 basis points. mode -- both of those likely to be held firm in this september operation. however, all of those economists we did survey expect in the fourth quarter that using will continue, because there is still lots of weakness. in particular, covid zero costs are skyrocketing, housing woes are continuing, and we are seeing slowing exports and a weaker chinese outlook for this year. shery: even before the covid zero policies, and all of the economic challenges this has brought, we have seen these local governments saddled with debt across china. how bad is the fiscal situation right now? stephen: i think just about every single province and municipality in china, excluding shanghai, and the first seven months of this year are operating in a deficit. they have to pay for the covid

zero testing as you see here. they have to pay for these restrictions. and the government is being extremely taxed right now. it is draining local government coffers. we are hearing anecdotally, as well as some profits and's -- provinces in the north, talking about severe operating constraints right now. people are not getting bonuses, they are not getting subsidies, so their incomes are being squeezed. as well as even the test operators across china that are running covid zero testing. they are claiming they are not necessarily being paid, because local governments are having their finances squeezed. here is one statistic. government report on provincial financing last month for the first six months of the year showed finances at almost half of its 60 county local governments are so tight, they are exposed to operational risks.

yes, the chinese economy is suffering at the local and national levels. shery: an angle, are cheap asian -- stephen engle, our chief asia correspondent. tune into bloomberg radio to hear more from these big newsmakers, getting analysis from the daybreak team, now broadcasting live from our studio in hong kong. listen through the app, radio plus, or bloombergradio.com. plenty more ahead. stay with us. ♪

at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.

shery: bonds have been outperforming stocks and other assets. some wall street firms wonder how long that can last. let's bring in our guest. what is the outlook? >> this is one of the asset classes that did better than last week. the risk premiums they wanted, around 5% correction. some on wall street, over at j.p. morgan chase, they are looking at what the fed will do this week. not only do we have the rate hike, they really will be indicating any slowdown is around the slowdown. that is another reason barclays says that it is a negative credit, when you have that aggressive hiking cycle. haidi: we are getting multiple

warnings about the u.s. equity valuations in particular. annabelle: yes, this is off the back of the shock read we had from fedex last week. you also had that harder than expected principle. two big sectors. a lot of wall street people are looking at it. it big risk. both i goldman sachs and jp morgan. -- at goldman sachs and jp morgan. the headwinds are now building. that is one of the factors across a lot of different asset classes. pressure on commodity margins as well. these are the bigger backers they are looking at. haidi: let's get to first word news with vonnie quinn. vonnie: the u.s. will release 10 million barrels of reserve. ahead of eight eu ban on those russian oils. they are due by september 27. it will be made no later than

october 7. this comes as global oil prices retreat to levels seen before russia's ukraine invasion. with opec discovering possible production cuts. hurricane fiona is republic. the national hurricane center says catastrophic and life-threatening flooding continues in puerto rico where fiona struck on saturday and sunday. the storm knocked out the island's entire power grid. officials say the damage could top $2 billion. the magnitude 7.5 earthquake has struck southwestern mexico, killing one person and prompting evacuations. the u.s. geological survey tremor hit around 470 kilometers west of mexico city. it was felt after 1:00 p.m., -- where an and you will drill was being held. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700

journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: global leaders and dignitaries from president biden and emperor -- and the emperor of japan have come together in london for the state funeral of queen elizabeth ii. we have more from bloomberg's lizzie borden. >> after years of involvement in its meticulous planning, and the end, queen elizabethii's funeral talked about as much as what was important to her. she wanted to let her people in. this was the first fully televised funeral of a british monarch. just as her coronation almost 70 years ago was the first televised crowning of a british monarch. she wanted to pay tribute to the commonwealth, the procession from westminster abbey to wellington arch was led to the royal canadian. and humbled to the end, she wanted to thank her people. among the 2000 invited guests

including 500 foreign dignitaries from u.s. president biden, to japan's emperor, where the recipients of the victoria and george crawford, the highest honor of queen could bestow. the archbishop had a message for the crowd. those he -- those she served will be loved and remembered, when those who -- a poignant reminder for the congregation of global leaders in moments of war and economic crisis. the late queen is laid to rest in windsor, a place she called home, and from which she took her name, alongside her husband, philip, her sister, and her parents. the small family unit into which she was born, a reminder that she was never destined, to be queen and yet somehow, she died britain's longest reigning monarch. lizzy burden, bloomberg news, westminster.

>> take a look at how these are trading. not a lot of movement when it comes to the aussie and kiwi dollar. this as we had the dollar pretty mixed. we had the key leading the declines or the gains on the others. it little bit of weakness right now while the offshore you want is past that seven level. we continue to see the weakness. we are expecting to see the china yuan.

today, after the pboc did a move this month, but they already cut in august. we are also watching the turkish lira. amidst the wrath of policy decisions from central banks, the turkish central bank is not expecting much change in the rate at 13% after the bank. surprise craig -- surprised rate cut last month. incredible inflation in turkiye. 's president erdogan unorthodox policy continues. that is leading the lira to close to record lows. haidi: coming up in the next hour, volatility will persist. we have more on that shortly. this is bloomberg. ♪

>> from the world of politics to the world of business, balance of power with david westin, news and analysis, insight from the power players weekdays. this is bloomberg.