haidi: welcome to dale but -- daybreak australia. treasury yields surged multiyear highs and u.s. stocks fell after a number of major banks followed the fed in raising rates. as korea looks to expand global innovation, the head of a top tech university. >> a quick check on wall street. we have u.s. futures coming online. this was a downbeat session. declining for a third straight day. investors are starting to heed the message that jay powell is

serious about bringing down inflation. the gravitational pull toward the long end of the curve. the recession fears coming into the market and that is being reflected in the oil market. how that is setting us up for the asian trading session, we have new zealand stocks coming online to the downside. new zealand shut today for a public holiday. another wild session and the currencies market. the swiss franc is one of the ones we have been watching. it's incredible these days that even a 75 basis point move from a central bank can beat disappointing to investors. haidi: there's a huge amount of risk in terms of the strategy that japan is taking. >> we had really seen warning

signs of this coming through over the last two weeks. the first sign a subscription of one-sided moves. the move out of line with the mental that it became this more explicit threat. we saw that in the first intervention in around 20 years. it did look like perhaps authorities were wanting to stem the selling pressure as we go into a long weekend. as i said, japan shut today. still, as you say pretty risky move. it cannot sustainably move the market on its own. take a look at this terminal chart. the widening interest-rate gap, that is really what is pushing dollar-yen higher.

it's hard to see that changing anytime soon. shery: it's down to that policy diversions. haidi: the u.s. trading day, we have the latest central-bank action and the markets continue to percolate through all of that. our global macro strategist and policy editor are here with us. when it comes to the overnight session, is there a sense -- or is the market still yearning to see the upside? quarks the fed still wants to see the upside. there's a new phrase going around the street it's called hawkish this. traders believe that we have reached the pinnacle of the fed's hawkish event and while jay powell will continue to push the hawkish mantra, the data will continue to suggest that

they have reached the pinnacle and it's time to turn if not pause in the coming months. demand commodities housing, everything look at is starting to come down. i would also argue that the 2% number is something that he just invented and 3.5% inflation is not a terrible thing. haidi: we have a few of the other 20 central banks making their decisions this week. >> what was interesting today was the bank of england. it came close to doing a 75 basis point rate hike. it did a hike of 50 basis points. as you can see, there inflation rate through the roof. over 9% is the driving force.

the vote on this was three for 75 to five for 50 and one person for 25. i want to read you something from their policy statement today. it echoes exactly what was said in a previous meeting. they are ready to do more. the committee will respond forcefully as necessary. there is a hawkish one, there is one tilting in that direction. we can start with bank indonesia making a bigger than expected

rate hike to 4.25% it's the biggest since june 2018. the head of the bank of indonesia, they want to get to 2-4% inflation i next year. the bank of philippines if the basis points ready much as expected. vietnam 100 basis points was there increased. they have to support week currency. just enough to give their inflation rate a bit of a kick. the bank of japan everybody said they would, we don't need to move stimulus yet. the decision really belongs to the government the definite

historic land marking overnight. this is an outlier. the second and third largest economies in the world, the only ones that are on this rate hike path. >> when it comes to this reconversion's of bearish forces for the treasury market, how have we seen the hike in recessionary risks being played out? >> what we saw today was quite the opposite. we heard jay powell speak yesterday about the terminal rate being 4.5% for the next three years, there wasn't much of a reaction. it happened today. we saw tens and 30's coming in high.

in looking forward, will fixed income traders stop? will they buy the rhetoric that it's going to be -- or will they keep fighting the fed which they have been and keep the curves inverted? not so much for the recession, everyone looks at that as a recessionary indicator. we don't think inflation is going to stay this high and we're thinking a good have to pause sooner rather than later. the short end of the curve is going to have to come down. >> kathleen, i love this idea hearing all the more positive take on this which is hawkish this.

we've been mulling over the big changes for the dot plot. does it feel like hawkish is to you? >> i think the peak hawkish this concept that traders are talking about could be looked at differently. what the fed has done a couple of things number one jay powell said they are going to do what they need to do to halt inflation and start bringing it down. if you look at the dot plot, it shows there going to pause. if you want to say they're not going to hike rates the beginning of next year, you are pretty much wrong. depending on what inflation does, it's possible by the end of the year, they will have rates high enough, the funds rate above the rate of inflation which is what everybody says you have to do to have enough tightness to bring down inflation. of course at some day are going to pause.

i think once they get to the point where they have achieved what they consider -- they're going to pause. talking about cutting rates, that is way far ahead of the game. >> the aftermath of the fed hangover credit coming up, we are going to stick with central banks with an exclusive conversation. that is in our china open show. let's get to su keenan. >> we start with u.s. secretary of state antony blinken. he is said to meet friday with the chinese foreign minister on the sidelines of the u.n. general assembly. the meeting comes with the u.s. rallying international support for crane after vladimir putin's

military escalation. he said china would maintain an objective and just position on the war. south korea's president has been overheard appearing to insult american lawmakers. this after a brief meeting in new york with president biden. he is heard saying to his foreign minister what an embarrassment for joe biden if these idiots refused to grant it in congress. he said his comments were unofficial and unverified. iranian state tv says at least 17 people have been killed in protest following the death of a woman in police custody. she died after being arrested by the so-called morality police for allegedly breaking dress codes. it has triggered the most

widespread unrest in nearly three years. protest have been reported in the capital and dozens of towns and cities. japan will abolish many coveted border controls starting october 11. in a move to revive the tourism industry. the prime minister said individual visitors would be allowed to enter with visa waivers reinstated and daily cap on arrivals removed. the visitor numbers reached a record of a most 32 million in 2019. >> from october 11, japan will relax border control measures to be on par with the u.s.. as well as resume visa free travel and individual travel. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700

journalists and analysts in over 120 countries. this is bloomberg. haidi: still ahead, a special conversation on south korea's resurgent innovation space. before that, we will be speaking microstrategy. this is bloomberg. ♪

fixed income is looking like a more reasonable bet. let's bring in our guest who is the head of global fixed income at global spring investments. before we get to your calls, in the meetings you are having, what are you most worried about? >> number one, rates inflation outlook, they are in terms of recession and expectation, those are the kinds of questions we are getting at the moment. >> how are you managing a path out of that volatility? it does feel at the moment that it starting to become more relevant in the folio. >> we came from low yield or negative yield environment for the last few years. if you look at investment grade

now, look in the u.s., you are getting yields over 5% same in the u.k.. if you look at euro investment grade, you are heading toward 4%. these are starting to get interesting because we have this on the right side and some move on the credit side as well. >> on the european side things are looking oversold. >> you are starting to get some levels that are worth looking at. >> what was your take away from the fed and how they tried to set expectations? >> their serious. i think that's really the message that they tried to get across this time. they have been hiking at pretty high steps.

have indicated there is more to come and that is priced into the curve. that is the message they want to get across. what's interesting this time is that they are looking to weaken the economy, that's their objective. i want to tame inflation. they are conscious that the risk of recession is there. that's a risk they are willing to take at this point. >> even was 75 basis points this week, that only takes them to neutral. going forward, you're going to see a significant tightening in financial conditions. where do you see the fractions and opportunities? >> the markets are priced in some of the hikes that are coming. that's the interesting side. what is interesting to look at is that you are starting to see economic effects. that the fed is looking to achieve. if you look at the housing market in the u.s. and some of the activity there, and the reduction of activity, that is what they want to see.

they need to tighten financial conditions. we need to see that reflected in the economy. they're looking for impact inflation going forward. are they good value at the moment? >> we have had a fair amount of issuance in that space. it has come with interesting premium and interesting spreads. as you say, in the right rate environment, good for banks particularly on the european side. they have had a tough time in a low yield environment. it's better for them from a fundamental perspective. >> was going to come out of the recession, how does that distort markets particularly when you look at strength on households

and consumers how that's going to impact across the earnings curve? >> different -- are in different situations. in the u.s., very strong consumer and that's what the fed is looking to deal with. in europe, we are not quite in the same situation because we are seeing more acutely the inflation on the energy side. we have seen is governments on the european side trying to kick the can down the road or at least into 2023. with some of the actions -- that should make the environment something that consumers can deal with a little more easily. >> do you see more big magnitude moves for the boe? >> boe is in a tricky situation. it has to deal with the currency, so the reaction on

currency overnight we are heading to levels we have not seen in a while. also in the u.k., we need to get a bit more color in terms of what the government is going to do from a fiscal perspective. are they looking to be very generous, we need to see how generous and how that's going to play out. boe, likely to see more out of the bank of england. we'll have to see and they will adapt also to the new government. this is only just coming. >> a little bit of delay over the past few weeks. great to have you here. you can get a roundup of the stories you need to know to get your day going on daybreak. subscribers can get it on the terminal. this is bloomberg. ♪

>> ceos of the largest u.s. banks have wrapped up a second day of testimony in congress. talking about overdraft fees and network scams moving toward reduced emissions. what jumped out at you and -- and what was a myriad of issues covered? >> one certainty that was going to come of these hearings was that overdraft fees were going to be a contentious and significant part of it. you may recall that jamie dimon of jp morgan, he was last year called by elizabeth warren the star of the overdraft show. they had come under huge amount of political scrutiny and pressure.

the bank ceos at the hearings took a lot of heat over these again. they were asked if they would commit to eliminate these fees. bank of america, wells fargo, jp morgan all declined to do that. they did tout how they have limited some of the fees and adjusted the policies and they offer products without fees. jamie dimon argues that consumers want choices and other u.s. customers about 23% decide to opt into the products. >> also quite surprising in terms of the narrative around fraud and risk on payment networks which have of course become so popular in recent years. >> a very popular payment network a lot of heat from lawmakers. six of the seven banks there, they own and operate this network. lawmakers pressed them about reports of scams and fraud on

the network. elizabeth warren again, she called it unsafe. she said banks off it but when customers are defrauded, there's not much they can do. in response, they said the fraudulent transactions are a tiny fraction. they are improving guardrails. it was a surprising -- and the hearings today this network. >> some of the takeaways from those banking hearings. let's get you a check of the latest is this flash headlines. credit suisse has denied plans to leave the u.s. market. a story says credit suisse -- it is undergoing its second restructuring in over a year but any report that it is leaving the u.s. market is categorically false. softbank group has slashed the

valuation of a hotel system. sources tell us they have cut the rate of value to $2.7 million. they're investigating cyberattack. names, addresses, and email addresses may have been included.

there is skepticism over how long the advance in japanese currency can hold. this doesn't change the fundamentals of why we see we as in the yen in the first place. >> there is still a gap between the u.s. and japan but the question is whether the boj would be able to execute this wish of the ministry of finance. in terms of a level of coordination, it appears that the bank of japan acted unilaterally. did have the fed in the u.s. and the ecb say they didn't plan even though the u.s. -- unless you have a coordinated action like with the euro at the turn-of-the-century with the fed and ecb, it is likely to have limited firepower. you still want to put this move yesterday and it to focus.

if you bring up this terminal chart, you can see the intervention is extremely rare. the last time that officials intervened was back at the height of the asian financial crisis to try to stem the weakness that we have in the yen at that point. the interventions over the past few decades have been about curbing the strength. you can see this? we don't know how much was sold yesterday or bought rather but we will know at the end of the month. haidi: i've heard this is just a band-aid fix at best. >> that's a view that is coming across from a lot of strategist analyst out there. ing is one of them saying they were surprised at the intervention that they come through yesterday. they weren't sure what drove it. japan did have -- either pan had washington's blessing or they were looking to flex their muscle overriding the g20

mandate of flexible interest rates -- exchange rates. they said they wanted to break the cycle of the yen weakening. the question is how long that can be sustained. as we discussed ongoing yield gap. they do say that investors will think twice about buying the yen above 145 and if we look at this terminal chart, we can see that the yen could retreat back into the volatile 140-145 range. >> look at -- focusing on the yen but also lots of different issues for a number of different currencies in the face of the relentless dollar strength. look at trading when it comes to dollar china. the decades hi yuan rate. we see one trading near the week end the trading limit after the news that the fed -- when it

comes to sterling, we did see that move. with us sterling and u.k. bonds pairing that advance after the hike from the boe. trying to comprehend even that some officials are saying as big a 75 basis points. watching the aussie dollar as well still pretty risk off. when it comes to the dollar, we saw the steadying of the greenback after the japan bank intervention, it had been a volatile session. egypt's central bank has left interest rates unchanged. the finance minister spoke to bloomberg about the decision and the impact on their currency. >> between two points, march

this year. when we finish the financial year in june, it was toward 18.75. we have in our government debt about $83 trillion foreign debt. the change in hard currency will have an impact overall debt. there are 4% is just a reflection of election. without it, it should be 83.2 not 87.2. yes it will impact. >> are using the currency evaluation is on the agenda? >> if i compare june, 18.75 --

now is 19.5. >> the dollar is continuing to rise. that seems to be the consensus trade. >> unfortunately, yes. >> it's fair to assume that the egyptian pound what we can do you agree? >> i'm not sure about it because we have experienced in 2016 when we started the economic reform with imf. it went up to a very high level close to 20 pounds. it was november 2016. the market at that time was one dollar 23. i cannot talk about how the

market will come up at this -- this is a difficult time. [indiscernible] >> that was egypt's finance minister speaking with kriti gupta. >> we start with japanese prime minister who says that his government will act against excessive movement and currency markets stressing the importance of stable exchange rates. he spoke hours after japan intervened for the first time since 1998 to support the yen. the move was prompted by further declines after the boj decided to stick with ultra-loose monetary policy. goldman sachs says it expects

the bank of england to raise its key rate by 75 basis points in november and december. that is after three policymakers called for an increase in a split decision vote. the boe deferred a 50 basis point hike thursday. goldman economist now of -- predict the rate will eventually hit 4.5% up from a previous production of 4%. the world health organization says the covid-19 pandemic is not over yet. just days after president biden declared the end in the u.s.. large vaccination gaps in smaller nations. on thursday, joe biden declared the u.s. and cases and deaths have declined. the world bank president insist he is not a climate change denier. bubbly acknowledging -- publicly

acknowledging that -- is dripping to global warming. he has now told see a -- cnn that it's clear that earning oil, gas, and coal is generating greenhouse gas emissions. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. >> coming up, our roundtable discussion on south korea's push to improve innovation. this is bloomberg.

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about ending border controls. i just saw him earlier today at the united nations were i just came back. japan is one of the station's it

suddenly seeing a robe -- rollback of covid restrictions. china remains a notable holdout. let's bring in stephen engle in hong kong. run us through some of the changes on the way. stephen: this is the big wave that many people who live out here and asia-pacific have what been waiting for. singapore got a head start and they have not necessarily seen the dramatic rise in cases or deaths. hong kong obviously with the news of the last couple of days is that they are going to be opening up more likely. japan was the big news here overnight. we just heard from the prime minister speaking at the new york stock exchange. as just a bullet point snapshot of what is happening. japan, all of these controls are going to end october 11. they had caps on arrivals, test

requirements etc.. that is all going to go away as of october 11. as he said to be pretty much in line with the united states which is open for business. taiwan, a little more cautious. they may scrap their three-day hotel quarantine. they're going to wait another week and analyze their data. they have had a surge of cases as of late. again, none of these economies in north asia want to be left behind. what singapore has done and the rest of the world has done. i will get to hong kong and a second. south korea they will be likely lifting the outdoor mask mandate. it is another step in the relaxation of south korea. look at one big driver of why these governments are doing this all at once. that is the king dollar across asia-pacific. with the exception of course of hong kong. hong kong dollar is pegged to

the u.s. dollar. japanese yen at 142 and change and the south korean you want weakening. they want tourists to comment. in particular, the representative of japan said they want to capitalize on the week yen and have tourists coming. the green is misleading. this is weakness in the currencies against the u.s. dollars that's a big driver why they are doing this now. >> china remaining the last nation standing when it comes to closed borders. stephen engle there with the latest. to get more on the reopening recovery with the national people's congress, a deputy will be joining us live at eight: 10:00 p.m. -- 8:10 p.m. new york time.

coming up next, the implementation of value products. we will get a read on primary pmi's. let's take a look at australia new zealand bonds. we saw a resurgence of the sentiment converging when it comes to the treasury market. you are seeing the downside as well. we did see a great bulk of activity when it comes to surging yields happening across the 10 year and holding across the bulk of the session as well. be sure to tune into bloomberg radio. you can get the in-depth analysis from the daybreak team. we are now broadcasting live from our studio in hong kong. more ahead, this is bloomberg.

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we are seeing the aussie slightly under pressure.

the kiwi steady at the moment. we are watching closely the japanese yen at the 142 level. a little bit of weakness against the u.s. dollar. for the first time since 1998, the fireworks were pretty in the overnight session. translating into the u.s. session as well. >> the question how long can it last? get you a quick check of the latest headlines. -- has agreed to pay for failure to divulge that it had problems with its jetliner. airbus has won a deal to supply jets to a southern airlines unit. the airline will now by series

jets from airbus between 2024 and 2027. boeing's business in china has slowed after the crashes of the max jets. fedex is cutting flights and closing offices. seeking as much as $2.7 billion in savings. fedex planning to raise shipping rates after withdrawing its annual forecast and posting lower-than-expected per the merrie results. in a proposed class action lawsuit in san francisco, they say the company claim the company built a secret workaround to apples 2021 privacy rules and violated state and federal laws limiting unauthorized collection of personal data. shery: here in new york, the

advances of science and technology have announced a new partnership. they will focus on science technology and engineering. let's discuss more about the steps taken to expand korea's innovation environment. joining us is the south korean ministry -- minister of startup. welcome both. is great to see you here new york. let me start with you, you are establishing that new campus with nyu. what drove that initiative? >> important growth engine. [indiscernible]

nyu is strong and science. we believe we can have a partnership with two universities is a perfect marriage. shery: you are trying to bring the two strengths together. you brought a south korean government delegation for this. tell us about the motivation behind that. >> as you know, the u.s. market is the second largest export market to korea. to promote korea's excellent product, i came here with the delegation.

to match the famous investment than to connect. shery: tell us a little bit about what the administration is trying to do with the new president coming in and fostering innovation in a way that is not only restricted to south korea, but you are here because you want to expand that to other countries. >> right. until now, the korean government has eroded accelerator status to be a global venture. until then, most of the unicorn countries it's just a domestic based unicorn. to extend their market, after i became minister, i tried to make a global unicorn. i tried to match with tech like google or microsoft.

i met them and we talk about how to -- accelerating the korean status for the global unicorn. shery: for a long time, you have been trying to help foster start. i know that a lot of your students -- talk to us about the environment right now because the economic challenges are there. there's inflation, funding drying up as well because of tightened the quiddity conditions. how is that affecting the environment? >> korea is in the middle of hard times nowadays as with many countries. housing price, the payment,

everybody is in pain because of repayment to the bank. in korean history, we are used to facing risk and hard times. each time we returned stronger than before. i think the korean people will overcome this hard time without any big problem. shery: how is the government trying to ensure that economic pain can be overcome without big problems? >> many people predicted that -- will be diminished. a good signal is in the last few years, -- in korea there used to be a limit for large companies investment market.

the seven big companies talk to our ministry because it was allowed by our ministry. different from the u.s., we have the government front of funds which is available at disclosure with huge amount. at least for one year, it will not be -- it is not about the money. it is about investment. >> thank you both so much for your time today. i'm sorry we have to cut the interview short, but we are running out of time. we loved having you in the studio in new york and thank you for joining us. thank you -- congratulations on that new campus. >> u.s. futures trading after a

third straight session of losses. markets continue to work out expectations with the fed and the economic outlook. s&p futures looking future -- flat at the moment. we did see tech continued to be sold off. financial stocks as well -- we saw the s&p fall. bonds hitting multiyear highs. dow futures are a little bit up. take a look at the nasdaq. potentially some bargain-hunting when it comes to the nasdaq 100 near 35% cheaper than the peak in 2020. lots to come. this is bloomberg. ♪

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