shery: you are watching daybreak asia.

>> we are counting down to asia's major market open. haidi: asian investors breaking for volatility as of the dollar climbs to a new record, the hawkish central bank has sentiments. the pound continues to slide, the bank of england and the u.k. delays as at the terminal is triggered on tax cut. the dollar strength in oil, keeping up with a short-lived rally. shery: we are seeing prices in the asian session under pressure and below the $77 a barrel level, we see recession fears and a hawkish fed. that is being felt across markets. the index is at the lowest level in 8 months. u.s. futures doing better, the futures fell.

not reassuring investors. we have the fed officials coming out with more hawkish rhetoric. treasury yields continue to rally. the 10-year yield are at the highest level since 2010. the two year yield is rising for the longest on record. a strong dollar on the other side of the break. a weak pound which continues to be under pressure and with recession fears being heightened , given the plans in the u.k. as well. annabelle: in the early asian session, certainly, investors are rattled by the doe yesterday. they are not committing to any sort of emergency action. they are underwhelming investors. two of asia's biggest currencies

are at risk along with a king dollar. we are talking about the offshore yuan and the yen. you can see the yuan is outside the target range for the onshore currency. it tops the range of what the pboc sees for the currency. traders do see fashion do not see in it let up in the dollar strength. the yen back at the level before the boj intervened. the bank of australia, look at how they have opened in the country. also the 10-year yield is jumping as well. basically, tracking those moves we saw in treasury. as strategists are saying there is an appreciation that the fed

will need to raise rates and that is what investors are picking up on -- are picking up on and reflecting market fears. a mixed open. keeley stocks are -- kiwi stocks are open. shery: our next guest says we have moved into a new regime or good news is bad news and bad news. let us bring in daniel gerard, it is good to have you with us. the pivot is dead. how have central banks put themselves in a corner right now? daniel: that is right. what surprised me the most is nest egg in market this long to come around to this. we have been in the bad news -- the good news is bad news.

the problem is the economy has been quite strong. it is difficult to impact the economy with higher rates when people do not need money as much. everybody has refinanced and duration is longer. we were nowhere near a pivot before. when bad news is bad news, the rate side is about multiples. then you also have this earnings story, earnings have been resilient. as we get more bad news, that will hit the earnings growth and the potential margins. there is not a lot of good stories to find out here. in a relative world we had to do our best. u.s. dollar looks like the asset to hold right now. shery: you say that the u.s. dollar is your best friend at this point which i guess makes everything worse? we heard how this could actually squeeze corporate profits as

well. >> that is right and it is also as you said in the beginning, it is putting global central banks in the quarter as well. we are saying what is happening. they have to be in this match game here. they need to protect their currencies to some degree and fight inflation. they need to not get behind the fed, stop capital outflows. they need to protect growth and that is an increasingly difficult thing to do. we saw the first country that would break would be an emerging market when we saw a fiscal policy that was geared to protect growth. i am surprised and many was surprised it was the u.k., and evolved market that broke ranks with their central bank. i think it is a harbinger of what is to come. people expected from -- expect from dm, not emerging markets.

it is oftentimes populist governments that can hold on here. haidi: when it comes to the opportunities, you are hitching to the strength of the dollar, what about the components of inflation that are likely to stay uneasy? are you looking at housing and energy? >> i think the world has gotten too negative on the energy complex. i get the argument that demand is slowing, we will likely see some supply overhang, especially in a slowing world. it is overdone. i do not see -- a lot of the oil production that has come to the surface, the predrilled oil drill, the oil wells that are being finished off and exports from the strategic reserve, they are way above historical norms right now.

this is an area where if we start to see some supply pullback, actually, the u.s. economy that is not in dire straits as many believe, we do not see a lot of bad news in the data. it is only expectation all data. -- expectational data. energy remains quite profitable and we will see what happens with bargains. with housing, rates are not going to really reverse. we have had a some of the biggest rate corrections we have seen in mortgages in decades. the housing market remains extremely strong. the amount of inventory that is being sold is historically very strong. that is just in inventory. that plays into owner's equivalent rent. i think areas like canada or

australia, they may see some softness in housing which plays into countries like the u.s., housing in most areas will remain quite strong for a while. haidi: born pullback is almost 25%. this year is likely to be the year to forget if anyone has been managing money in bond markets. take a look at this chart, we look at 60-40, the return of this trade. at what point do we see these portfolio strategies come back? for a while we were talking about bonds becoming relevant and useful again in a portfolio? daniel: i thought bonds were the riskiest asset in multi-asset portfolios. earnings have actually held up and there is diversity in earnings within the stock portion. rates are almost guaranteed across the board to move higher. i think the danger here is we think it is done.

i think there is plenty of downside to go in the bond market. there are some downsides in the equity markets as well. equity earnings are a long way from chris's level collapse. we are going to see some weakness coming along. i think that the fixed income and the credit will actually continue to be some of the bigger draws on portfolios here. equities probably, as relative better toys especially if you can find some inflation sensitivity as well as some anti-cyclical growth like health care as well as some of the consumer staples given in pairs, protected growth stories with global brands and margin production as well. shery: you mentioned crisis level collapses. i want to ask about where you

are expecting to see that in the currency space? we see downside risk across asian currencies, the yuan getting past seven and with the japanese yen with authorities coming in as well. daniel: the yuan is getting close to its bottom. if you were to stay stronger against the dollar, it would be way too strong versus its trading partners. i think that is part of the issue. we have to manage the trading basket. the dollar which is the strongest thing out here, it is skewing what looks like a bit more currency crisis in asia. we will certainly see more downsides in some of the developed markets currencies because they strength of the dollar too. i do not think the pound is done

correcting. i do not think the euro is done correcting. i think the yen is staying week, i do not think they might is staying week as well. it has become an exporter with favorable terms. i do not know how else better to say it but this is a dollar store and will remain a dollars story for quite some time. -- dollars story and it will remain a dollar story for quite some time. haidi: let us get you to vonnie quinn with the first word. >> the president says more rate hikes are needed to stamp out high inflation. speaking in boston, they did not specify how much more tightening was needed but they want to see inflation pool before concluding it has peaked. projections say that investors -- officials plan to see inflation hit 4.3.

>> last week we took another decisive action to remove monetary policy accommodations. we rose the funds rates by 75 basis points. we are continuing to reduce assets off of our balance sheet which also reduces accommodation. >> they expect global economic growth to slow next year, citing the war in ukraine. the organization cut is global growth forecast from his projection. it slashed the forecast for most of the g20 with indonesia having a moderately higher outlook. >> our forecast is a challenging one because we are cutting a significant slowdown. the united states going in 0.5% next year. your area going to 3.2%. a slowdown in china this year and next year, recovering a

little bit. globally we are talking about a significant slowdown. >> vladimir putin has granted citizenship to edward snowden, the whistleblower has been living in russia for nine years. he obtained permanent residency in 2020. he elite classified documents that showed how the u.s. and british governments monitored citizens not suspected of a crime. the biden administration and tiktok i come to an agreement that would allow the app to continue operating. there is a concern that the chinese ownership over the company could be a security threat. it would allow the platform to continue operating in the u.s. with additional restrictions on how american users are stored. 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. shery: as the pound continues

its slide against the dollar, our next guest things an intervention is unlikely. because of tells us why a little later. attack on commodities as the dollar rally ways on everything from copper to wheat. we have more, this is bloomberg. ♪

shery: rising concerns about global recession commodities on a downward ride. a key gauge for raw material fell to the lowest in eight months. su keenan joins us, king dollar is not helping. >> almost every major currency has a lot to do with the pound decline, many investors view the dollar as a safe haven. it has dropped into the bloomberg. the key gauge of raw material prices shows that it felt to an eight month low. it erased all of the gains from march when russia invaded ukraine and graded concerns

about supply disruptions on these raw materials. as i look for metals is pretty dim even though -- the outlook for metals is pretty dim even though supply is low. the concern is the price for many of these metals concerning the price of the dollar. copper slipping to the lowest since july, we are seeing gold in the green. gold has been extending is a declined fall into the lowest since 2020. you can see copper has been viewed as a proxy of global growth. that is a negative right now. back on the gold chart, you can see how it has fallen into a bear market. 20% below its record high back in 2020. we are more likely to be on a roller coaster ride, even though it also tends to do well in recessionary times. the fact you have the rally in

global bond yields and the strong dollar is going to keep it on a very rough ride. haidi: the rough right continues for oil as well? >> oil, we are starting to see in asian trading, it is up by a panic. that is after a dramatic drop over the last couple of days in new york, trading for west texas intermediate and several below 77, it has been under $85 for some time. all of this is taking directions , energy commodities, taking directions from the broader market which has been tumbling. a major commodity, analysts are writing the volatility roller coaster. there is a disagreement on russian oil price caps, those will be imposed later this year, possibly in november. opec is on track for another

monthly cut to output when they need it. their second monthly cut to output. oil is on track for a large slump. west texas intermediate is in a quarterly slump. a lot of concern over the direction, we have a major energy conference taking place in singapore. the first time since the pandemic that will traders and analysts and refiners are meeting. some of the big banks are predicting that oil will be higher by the end of the year. goldman is seeing $125 a year end. shery: still ahead, japan said to hold a 12 million-dollar state funeral for shinzo abe. we look at why it is proving to be a political headache for the current leader. this is bloomberg. ♪

shery: we are counting down to the start in trading in tokyo and seoul. investors are watching formal pressure in risk assets, fear of a global recession. alipay plus works with cashless travel in south korea, users of the wallet can now pay at over one hundred 20,000 merchants in south korea. -- 120,000 markets in south korea. over in japan, we get a read on the services ppi for august, ppi rose 2.1% year on year in july. bloomberg has learned that finance -- binance is seeking

approval in japan and the state funeral for shinzo abe will be attended by kamala harris. other leaders as well. haidi: the japanese have grumbled about funeral costs being the highest in the world, even before they 12 million-dollar state funeral for shinzo abe prompted a public outcry. let us bring our bureau chief, what are we hearing about this? >> this state funeral is exceptional. it is not normal for a former prime minister here in japan to have a state funeral. that is for the emperor, the only other funeral for a prime minister was in one or two. he was the longest-serving of course and the architect of the economic and fiscal policy that is used as the blueprint for his

successors today. we have seen opposition to holding a state funeral increase. that is sense he was shot and killed in july. at least some of the opposition will be coming from people who are opposed to the policy in life, the decisions during his premiership, his defense and security policies in particular. some samples -- scandals he weathered. there is chrism of the state funeral, the way it was announced and justified by the current prime minister. he has seen his approval ratings really tank and get into a dangerous slump. the funeral will be over today and people will move on. he has taken a huge hit to his popularity when those opinion polls also say people are concerned about rising prices in japan and inflation for the first time in a generation. it will have to deal with all of that on the back foot. this is coming off of the state

funeral. shery: we are watching the state funeral in japan. we turn to the latest business flash headlines. elon musk and the twitter ceo are said to be seeking to reschedule their depositions in the company's lawsuit over musk's buyout. they were scheduled to face questioning on monday, the twitter ceo asked to reschedule and i must wanted his moved to a different location. a prime day sale on october 11 targeting consumers starting holiday shopping early. retailers are bracing for a slow season because of higher inflation. it is the first time that they have hosted the elephant twice in one year. -- the event twice in one year. there is a sign of how much

demand there is for a sheriff sale at the top end, a sports carmaker is valued at almost $73 billion. porshe shares are set to begin trading on thursday. haidi: let us take a look across the market rate we see the strong dollar story dominating the narrative. it is hard to get away from that regardless of which currency you are seeing. we are seeing a pullback when it comes to the aussie dollar. the u.s. is watching, continued

annabelle: this is daybreak: asia. 30 minutes out from the open and the stock trading for japan,

australia and we are looking at the bond space this morning because we see some big moves. the aussie three years at levels we have not seen since 2012. also bigger moves in terms of the longer end of the curve. also for the kiwi, really reflecting these recession fears building in the market. we did have the rbn debt out saying they are at the end of their hiking cycle. we did get a note out from j.p. morgan asset management talking about what would happen in the event that the control program is abandoned, which they say is happening in the northern hemisphere this spring. they say it could jump by 13 basis points and the program is out of touch with the global inflationary pressures we are seeing elsewhere. let's look at what we are seeing other markets -- we did see big moves in the treasury space overnight, really reflecting broader concerns around cpi at a

four decade high. the risk is the fed pushing the terminal funds rate to 4.6% by next year. this did move the treasury space. we are also saying -- seeing u.k. gilt yield. drastically repricing expectations for the next boe move. really hitting the pound as well. haidi: we are seeing the saturating trade following the record drop against the dollar. i speculation of an emergency rate hike. joining us is the head of the national economic set cpa. we saw the strain on emerging markets but now we are seeing the pound trading like in e.m. currency. with the hike have actually have

helped? >> it might make the situation even worse. the ball is in the court of the government. haidi: outside of that, it is a u.s. dollar strength story? joseph: -- even the swiss franc. haidi: where do you hide in this environment. let's look at the yuan against every other pairing. against the dollar, nearing a record level of weakness, both when it comes to onshore and offshore. where do you think are the biggest pressure pins for policymakers? joseph: policymakers have to make really blunt statements about what they are willing to do to get inflation down. inflation is the biggest problem globally. what the u.k. government has done wrong as they are trying to

unwind some of what the bank of england are doing. for me, it's the focused on inflation and that means we are going to have recession in various parts of the world, that's the cost of bringing down inflation. shery: and that is playing on the euro as well, with italy, where do you expect europe to go and how much more strength will this provide to the dollar? joseph: i think euro can go materially lower. it's already gone through the low levels we thought it would be going through early next year. for me, the big indicator to watch is the spread which can the italian and german government bonds. that's a very good indicator of risk sentiment and concerned that italy's fiscal sustainability, and if that keeps going up, the euro is going to keep going down and down. there are certainly plenty of

problems and unfortunately, the euro, given you've got many countries with one monetary policy and not one fiscal policy outside the risk is certainly there. i don't think it's going to be the situation we saw more than a decade or so ago, but it certainly can get worse for the euro before he gets better. shery: especially given the energy crisis continues. we found some coverage in commodities boat what are you doing when you see commodities plunge at the same time? joseph: we are very negative on commodity currencies. we see the aussie dollar going to $.62. given the current environment, it's probably going to get there sooner rather than later. given the forecast at $.62, it could easily dip below $.60. aussie has not had a five handle for a couple of years now. they briefly had that near the

pandemic, but i suspect it's going to be at those low levels for longer this time around. haidi: i went to get to the king dollar trade. where do you see the next currency crisis coming from? joseph: i've been concerned about italy. there structural problems have not by way. very low growth potential. there government bond market is at a 4% yield at the moment. they cannot hang onto that for very long. i would be very concerned about that. countries that have current account deficits, there are a few places in east asia, but not many. india sticks out. arts of latin america outside of brazil, there are places i'm looking for. haidi: we are starting to see capital outflows intensify from ems but the fundamentals are fragile. joseph: one thing is this time

around, several of them have substantial reserves and do not have fixed currencies. having a fixed currency is always a problem, but this time around it should not be as bad. haidi: you mentioned india as sticking out and debt traders are looking, what do you expect in terms of policy and the possibility for crisis? joseph: it's very difficult being in e.m. in a central bank. they've got to tread a very fine line. that will probably continue along the current path but you've got to be careful to keep investors on the side. investors can change their mind very quickly. haidi: as you say, if there's any more hint of the global crisis, that's going to drive strength to the dollar. joseph: the dollar is called

king dollar for a reason. haidi: great to have you here with us. let's get to vonnie quinn with the first word headlines. vonnie: ecb president christine lagarde's is the governing council will only consider shrink the balancing sheet onto has lowered rates. interest rates remain the appropriate rate to fight inflation and the debate about quantitative tightening will be held. the ecb is holding about $4.8 trillion of bonds bought during the recent crises. the new zealand central bank governors says there is still work to do. they told an audience that the inflation rate is too high but still lower than other countries. forecasts suggest the bank may hike rates at least 4% by early next year. the inter-american development bank has announced its new

president. governors voted to fire over an alleged romantic relationship with a top aide. the u.s. supports the dismissal. the idb is a key part of u.s. influence in latin america. japan will hold a state funeral on tuesday for former prime minister shinzo abe. the current prime minister decision to spend $12 million on this are money has been mint wit -- has been met with growing anger. among those attending will be u.s. vice president kamala harris and the prime mr. of india and australia. residents along florida's gulf coast are stocking up and heading out of town is hurricane in gets closer. the storm is gaining power as it heads toward florida, threatening be -- threatening to become the worst storm to hit tampa in a century.

tropical storm winds could reach florida late tuesday. more than 300,000 people are expected to evacuate. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: the ukraine war is in focus at the united nations general assembly after president putin renewed veiled threat of nuclear weapons. we spoke exclusively to the you ng president about what diplomacy can achieve. >> we would like to see very concrete progress and it will probably take some work time. but all 190 countries who addressed the general assembly in the last couple of days, all of them spoke about ukraine and today, during the nuclear disarmament meeting, basically free but he agreed on the point that in the civilized world,

there is no place for nuclear weapons in the future and nuclear threats should be removed from the toolbox while addressing disputes with their neighbors. shery: and yet the world is so fragmented and the implementation of that agreement has been hard. even getting to the invasion of ukraine, how much of this has shown an existential issue for the united nations as an institution? >> it is a vitally important issue. 190 countries out of the 130 heads of states and governments, all of them spoke about the dangers of the war in ukraine and most of them expressed not only immediate danger but the impact of the fight in ukraine on the world economy and the world's most fragile countries

thousands of miles away from ukraine. there's a large majority of member states which said this war should not have started and this war should be stopped now. shery: you also talk about speaking and discussions. so many treaties and sony agreements, how do they get to implementation of those changes -- so many agreements, how do they get to implementation of those changes? >> the member states are very good at drafting resolutions and agreements but we are much less good at implementing them and making an impact. therefore, i announced the priorities of my presidency that sounds solutions to solidarity. solutions because it is time to make an impact. shery: the u.n. general assembly

president they're speaking to us earlier. coming up, the growing hydrogen project is the world seeks to wean itself off gas and oil supplies. we will get more on that next. this is bloomberg. ♪

support for clean high asian projects rose as the war in ukraine highlights the world's reliance on gas and oil supplies. the new report shows growth when it comes to ambitions for hydrogen production. is this being driven by the disruptions from the war? >> yes. our hydrogen database makes up 67% growth and the hydrogen around the world, that's 44 million tons versus 27 million planned in january. i think there are two factors behind this growth. the first one is to d carbonized parts of the sector where hydrogen complaint a substantial role.

second, europe's desire to switch away from russian gas. we see projects being planned not just in europe but in other places around the world to supply europe among other things. not all of this is actually going to be built but more projects are likely to be announced. the momentum behind clean hydrogen is here to stay. haidi: where should we expect the most projects to be built? martin: three places. the u.s. and china. starting with europe, the eu has the largest market for hydrogen projects. we are seeing that in the project pipeline. in europe, you they could build two thirds of a gigawatt fight next year. massive compared to what we saw last year or the year before that. most recently, the eu approved state aid for over 5 billion

euros. it shows how keen they are on hydrogen. the u.s. has recently increased the budget for hydrogen significantly through the inflation reduction act. that should result in about half a kilowatt by year. but the biggest market is china. even though they have very low subsidies for hydrogen, china could build up to three gigawatts. more than that eu and u.s. combined. most of this is coming from its own companies which may explain, there's a lower need for state funding and china. we should see about 300 megawatts out of australia where a company will make hydrogen for export to europe and asia. most of that is not coming until next year. in the long run, we could see more coming out of places like australia. shery: does that mean the price

will get cheaper? martin: yes. a good rule is the more we make, the cheaper they get, you've seen with solar panels and wind turbines. we just published a price survey on how much it costs. it is expected to see a 30% decline in electrolyzers. in china, electrolyzers are already very cheap and we've seen chinese electrolyzers being sold overseas. even chinese electrolyzers can still get cheaper. but we expected prices to fall because of high commodity prices and they didn't. if that persists, that could make electrolyzers more expensive.

shery: tune into bloomberg radio to hear more from the days big newsmakers. broadcasting live from our studio in hong kong, listen to berg radio.com. stay with us. ♪

shery: we have breaking news out of japan. we are getting the japan cpi number -- year on year growth of 1.9%. surprising to the downside. the expectation was growth of more than 2%, which we've seen in the past two months. it would not have been surprising considering we continue to see a weaker yen. the ppi year on year with growth of 1.9% for japan. haidi: let's talk a bit more about the dollars against asian currencies putting pressure on the region shares when it comes to commodity imports. the strong dollar is having an impact on asian equities now. >> yes indeed.

investors seem to be getting more worried and if we look at the data, last week, we've seen the largest turn by foreign investors since july. if you think about it, u.s. stocks are writing to about 4% in the near future. that's without taking any risks and there is less incentive for investors to take risk in the stock market or other markets at the moment. so yes, it is having an impact at the moment. haidi: where are you seeing the most vulnerability? >> one group of countries seems

to be vulnerable. oil prices have fallen a little bit from the peak earlier this year. they are still quite at elevated level. many oil importing companies -- many energy importers are making current account surplus but things are getting worse than before. some countries like south korea and taiwan are hit by the market and the fall appears to be addressing some of those factors as well. haidi: at the same time, a lot

of companies are falling from the highs of central banks as well. are they worried we could be falling into a major crisis? >> that is a very good question. at this point, investors to not a major crisis at least among middle income asian economies. they have grown much more resilient compared with the past. more than six months of import needs. few investors expect any immediate crisis. that said, if the dollar continues to strengthen, things will grow bigger and some markets have done so well that

company 8 -- countries like indonesia may be at risk as well because india's valuation is quite expensive and foreign reserves have been starting to fall. not just indonesia but some asian countries seem to be intervening in the park it's. that could create concerns as well. haidi: bloomberg's senior asian stock reporter. these are some of the things we will be watching -- should be movement on metals -- and south korea, we are watching defense stocks. north korea and the u.s. all continuing to rise.

oer ev news as well. nissan will assess the merits of renault's ev company before joining that venture. finance seeking a license to operate in japan for years after retreating from the country. shery: coming up in the next hour, why ubs favors allocations for parts of the market that have proven resilient to the slowing economy. plus china's trade surplus set to top a record $1 trillion this year. we will discuss. this is bloomberg. ♪

this is daybreak asia. we are counting down to asia's

major market open. asian currencies are seeing a little bit of a rebound. even the british pound starting to gain ground. click yes. we continue to watch these dollar stories preserving rates across asian assets. let's get you straight to annabelle for a look at the market open. >> just counted down to the opening of japan and australia. treasury markets will be coming along. we will be watching in particular have the 10 year yield is coming online now. there is the for us to be watching her. the two year yield is in focus for us. the jump in treasury here has

been weighing on the direction of the end. it is trading a little bit weaker this morning. given that you'll get, the cost b is coming online. it is moderately more positive this morning. the dollar impact is really starting to show off the stock markets in this region. they are reaching the most since early july. let's turn to australia. this is likely being driven around economic conditions. bring is round the key $84 level.

the yield is rising above 1%. >> very interesting what is happening with the jgb's. you have the curb moving. especially when you have it brought in terms every selloff. let's bring in our next guest who says developments are pointing to a stronger upside to inflation. good to have you with us. let me get started with the 20 year jgb yield. given how active the doj has been in the jgb space and that liquidity being drained out, what are the implications here when you have a broader treasury

and global bond selloff or jgb's? >> we have a big debate on the plan of the bmj. there is probably a limit on how much the food can -- we are at the end of deflationary pressures. in the medium to longer term, that will have some positive implications and eventually the bilge i will have to let go. i think we are not there yet. we will probably get more pressure because the fed will increase interest rates. we now they have a very weak japanese and but of strong --

but a strong u.s. dollar has well. >> we were very bullish on these. the beginning of the year, we locked in the u.s. dollar. there are a few other currents -- currencies as well that could be strong on the back of the u.s. dollar. the flipside is you were in town and we see some weakness over the next couple of months. we probably don't need the fed to permit until we see the peak of the u.s. dollar. we are not there yet. >> when it comes to the 6040, we keep hearing it might make a return. also, that bonds may become a

useful part of the portfolio now. is this trade really dead in the water? >> the correlation has really skyrocketed on both sides. we see the pressure on both sides's day. equities are heavily down. we do think that the last interest rate hike will be in december. there is still a chance but in their view, the fed could be done by december. you have much more yield on the table and on the equity side, earnings are still under pressure. >> adrian, is china a part of the cyclical oil to serve the

downside? >> china has key issues. the key issue is covid. it could be a big relief cfos are being removed. china could strongly rebound. the rebound is much more muted than everybody had expected. the other key issue is property and property of such an important sector. it is 40% of the bank balance sheet. as we don't see very strong movement and support for the real estate sector, we think the rebound will be muted. the china growth component could be counterbalancing some of the downside. it will probably take longer.

>> that is why you are not to say you are expecting the on to weaken by years end. we are almost there. >> i think there is probably a bit more downside. we actually do think the inflation numbers will come off in the fourth quarter. much more visible. if this happens, we will see the peak and others -- other central banks will have to do much more. the weak currency is adding to their problems. this is probably the first big central bank to stop hiking and

that could be the peak of the u.s. dollar. basically we can we connect add to the air and. >> where is the next currency crisis? >> probably -- look what happened to the pound and the euro. we have trade deficit in both of these regions. that is very unusual. eventually we might even need some central-bank coordination if it continues. in the very short term, it looks like the u.s. dollar does not have much further to go. it is really an issue out of the russian war and out of the

commodity crisis that is centered on the european currency. that is something we have to watch. >> it is great to have you on. head of global acid allocation, let us get you to vonnie quinn in new york with the first word headlines. >> member states have agreed that nuclear weapons have no place here. russia's president has made a veiled threats that the war into the ukraine -- veiled threats as the war a new brand stretches into its seventh month. most nations want the words and now. quick speaking not only of the immediate danger on the battlefield by the impact on ukraine.

there is a large majority. this work should not have started. this work should be stopped now. quiznos lease classified documents that show how the u.s. and british governments are not suspected of climbing. sources say sticking point is concerned that chinese monitors pose a national security threat. with additional restrictions on how users are stored. nasa has successfully crashed its spacecraft into an asteroid

11,000,000 km from earth. it could take weeks or days to know if the goal of nudging the space rock slightly off course work. part of the early plan to protect earth from potential asteroid collision. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> thank you. let's look at some of the movers. quotes both of those tuning benchmarks here. we see the swing with the corner market. looking we are also looking at

another second. this has been flipping to its lowest since july and june. td security says in general, the outlook is pretty weak but this is the reaction we are seeing. still had, we take a closer look at china's markets to find out what they think is behind the u.n. slide. also, how much further weakness we expect. we will get an update on the global outreach next. this is bloomberg. ♪

>> our forecast is a challenging one. we are forecasting a significant slowdown of the economy. still, a slowdown this year and next year recovering a little bit.

the organization has the will jolted by soaring inflation. what was the main message here? >> main message was goodly to -- and then they downgraded the growth were cast in around with a sweep at the moment. all of this in terms of global gdp. in terms of russia's invasion for you rain. in china you're looking at growth of 3.2%.

you can see china picking it up next year. they see the pickup there. when you look at the smorgasbord of problems, inflation, security, continued growth slowdown, that points to the ongoing pressure on the global economy. >> where we hearing in terms of everything that is being signaled from the fed? >> we had officials overnight. they say inflation is too high.

particularly, they are keeping an eye on this, this is a major trading partner from the u.s.. there was a hint and a nod about how this was being spread. they remain committed on being down. they are signaling that more rate hikes are coming. it is ongoing business. settlements around the world as well. central-bank including the fed are spreading around.

>> so much speed coming from central banks around the world. they are talking about the most effective tools to fight inflation. what did she say? >> there are a whole range of variables at play. the ecb was just making the point. right here, right now, the main tool is raising the cash rate. that probably would have been kickoff qt. her main message was the ecb inflation.

>> let's look at what is happening in the u.k.. the bank of england and the treasury have failed in a bid to call financial markets. danny is a former member of the monetary policy committee. >> this was october the sixth. if the eight members say you have made an announcement, the say you don't get the fed market policy. your statement is not represent what i think.

maybe that is what is going on. if it was me, i would have said you don't get to speak to me. i want to know what my colleagues think. that is very different than the government that is under considerable political pressure. i am assuming the government doesn't want to ways -- raise rates. there will be huge pressure. the government at the bank of england, what is your answer question mark i think what will happen is volatility in the markets. the pound is probably sinking again. >> that was danny blanche power. let's look at european futures opening up of the session.

we are seeing so much of that risk being played out. stuck 50 futures are up. they are reaching the bear market as we see multitude of risks continuing. plan more to come on daybreak asia. this is bloomberg. ♪

>> a quick check of the latest business-class headlines. a 5% stake being sold here. the deal is worth $1.4 billion.

it is effective from december 31. they are working to merge air india and the star under the joint venture. singapore airlines may hold a minority stake of just 25% of the jv. elon musk and twitter are seeking to reschedule their positions in the company lawsuit over the $44 billion buyout. sources say that they are trying to reschedule the session.

vw is expected to have this pass on wednesday with sources began to start training on thursday. >> we are seeing a little bit of upside for u.s. futures. we are seeing the selloff in the treasury space in the asian session. as we continue to see the dollar using on record highs, the dollar index, trash fields are still high.

this is adding to the hawkish rhetoric. raphael bostic also making comments. the fed has that way to go. this is how we are trading in the asian markets. we are seeing a little bit of upside on these consumer discretionary stocks. we are seeing a little bit of a rebound when it comes to asian stocks. rcmp restocks are gaining ground. >> we are seeing that relative policy diversions.

this is a record number of the local currency bonds. the australian dollar market is looking a little bit less expensive. domestic bonds are really rising the pace of fuels by rushing to replace cheap pandemic euro funding. that is the first ever in nine months. lots more to come, this is bloomberg.

>> this is daybreak asia. we have a check on markets. 30 minutes until the trading session in japan. we are seeing a little bit more

positive risk on sentiment coming in the markets. markets were shut and the public holiday. the british pound is now pushing up that record though. it is only a matter of days before that is tested again. in the sovereign debt space, we are keeping our eye on the longer end of the curve. in the previous session, the biggest drop there in 2020. we are keeping an eye on what we are seeing. they are really reflecting those border risks.

also, the expectation that the fed will be hiking around 4.6%. our market is pointing out that there is no wonder there is a big selloff on monday. there is an understanding that a fish is really far from done. a focus on 2020 44 we see any other changes to policymakers. the one continuing to struggle. we have seen the end of the on mitch -- reach multi-years of those. the authorities are trying to intervene so what is next question mark >> a bit more of

the same. the u.s. dollar is so strong. you will see more from japan. the worst thing they want to see is the currency becoming a one bet to the downside. the previous he is bringing in some measures that are more expensive to use. they know they will not change the currencies dramatically. japan is very committed.

china needs to get his economy back on track. they will not have to compete with the u.s.. they are raising rates aggressively. the currencies have to take the strain and we do get pauses. we are not going to see any big change in that picture. >> could they actually risked making it worse? >> it is a fine line for the bank of england to trade because of the race rates immediately, they are going to continue to sell the pound or if they delayed for too long, the

markets don't really care about the pound. the central bank really has a difficult job to do. they do have to raise rates significantly. they will have to put rates of my 100 basis point or 200 basis points. you have to do something very significant. you have to look back at when the pound has been relatively strong. it is pretty wide in favor of the u.k.. u.k. yields -- the needs to be a significant difference between u.k. yields and the u.s. in favor of the u.k.. basically the pound will be a downtrend.

when you look at the twin deficits or the differences in rates, everything is stacked against of the pound. you will have to increase rates substantially. this is on our markets live blog. >> let's get back to china. with us, this comes from the group here. they are looking at this here.

it is mainly because -- >> it is less than a dollar story. does that mean there will be less impact from the data sets whether they are positive or negative? >> is partly dollar store, also, china's uneconomic story. the two most important indicators, the dollar and china's manufacturing pmi.

they will put a lot of pressure on the yuan. the economy will recover strongly. i would say industrial profits will probably made week overall. not compared to the last amount. that is what we see overall. the economy is in recovery. the recovery has been pretty mild because the policy action so far has been pretty mild.

request unit with the economic implications of what is going on in china? >> at this moment, i think a reasonable expectation is that we are going to see some gradual loosening. i think it is very likely that we will see the recovery continue in the fourth quarter of this year. >> what are the political tensions we are hearing from wall street banks customer have

they started growing up contingency plans given the tensions over taiwan? that is the downside risk. -- >> that is the downside risk. >> thank you for joining us today. you can get preventive about the stories you need to know to get your day going. bloomberg subscribers go to the app. this is bloomberg. ♪

>> this is daybreak asia. i am vonnie quinn with the first word headlines. no rate hikes are needed to step up high inflation. they did not know how much more was needed. she says she wants to see inflation cool for several months before concluding it has peaked. then officials expect to reach it with -- 4.4% by the end of this year. 4.6% by the end of 2023. lastly, we took another decisive

action to remove monetary policy. we raised the fed funds rate by 70 basis points and we are continuing to reduce assets off of our balance sheet which also reduces accommodation. click the governing council will only consider shrinking its balance sheet once it has normalized rates. interest rates remain the appropriate policy tool to tighten inflation. the ecb is holding about 4.8 filling dollars worth of bonds during these crazies. the new zealand central bank governors says there is still work to do. 7.3% is too high but still lower than many other countries. he says the tightening cycle is well advanced. japan will hold a state funeral

for shinzo abe but the current leader's decision to spend millions of dollars on the ceremony have angered many. the inter-american development bank has announced idb governors voted to fire them following an ethics probe over his alleged dramatic relationship with top aide. the u.s. supports their dismissal. this is a key part of u.s. influence in latin america. 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. >> rising concerns about global recession and interest rate hikes have sent commodities on a wild ride. we are just trying to see a bit of rain on the screen for oil

and gold futures. suu kyi joins us with the latest. that soaring dollar has taken volatility to the next level. >> the dollar hitting record levels. for all that is going on with the pound and other currencies, that is very bearish for commodities. especially for international buyers where they have to buy commodities that drop into the bloomberg. you can see how the strong dollar really pushed a key gauge of raw materials in the bloomberg commodity spot index. that is more than 27 different raw materials. they have now erased all of their games. we were talking about when russia invaded ukraine and we saw commodity prices just sore and major concerns about supply disruptions and what is important here, we are taking a look at the latest price. some green on the screen. you have copper up a little bit,

you have gold coming back. the gauge has really concerned about the demand because the global recession is the reigning story right now. copper is often viewed as a proxy for global growth. gold is extending its decline or it had been. what is important is to look at what the trading patterns are telling us. a lot of the training data shows us that traders and fund managers are the most bearish on goldman and almost four years. gold is often a safe haven in certain times but the strong dollar really wreaking havoc here. proper traders cut that's lower than 40 years.

that says a lot about this outlook on the economy for now. quite the outlook for oil is changing. >> is the demand that is really contracting. so many analysts believe in the global recession. let's take a look again. we are talking about how oil is starting to come back. in new york trading, we look at the five day graph there. we saw oil settle hundred 77. brantford is also under pressure because of the strong dollar and concerns about rising rates and global recession. it has been taking directions. many of the commodities have in the broader markets. what is important is you have these commodities really brought in the foreign exchange dollar.

that is the story of the moment. layer on some other issues, you have the eu struggling with reaching an agreement on russian oil price caps. that is supposed to take place in november. they cannot quite agree on the specifics but that is supposed to limit oil on the market. we are also talking about and i'll plus meeting coming up. they could reduce their output targets. you are reducing supply. there is such concerned about their production and demand that we are seeing prices had lower. later today, u.s. president joe biden gave oil companies and admonition. he wants them to lower the prices on gas at the retail gasoline stations, prompt prices. he wants them to do it now. even though oil has come down, gasoline at the retail level has really shot up in recent days because of refinery issues. that oil got on track for the

biggest lump in almost two years. notably a lot of oil industry experts that are meeting in singapore this week you believe by end of year we could see oil prices should back up. goldman is looking at 125. j.p. morgan chase is saying that all went fruit will be back above 100. they believe the tight supply is somehow out of sync with the trading we are seeing right now because there is such volatility and because there is such low liquidity because of the cost of trading that has become so expensive. >> that was too cute and with the latest on the commodity space. traders are fleeing the largest emerging market etf's with the fastest pace since the onset of the pandemic. we will have more, this is bloomberg. easement

>> we are taking a look at live pictures of the japanese public. this is for the former japanese prime minister, shinzo abe.

he was shot on the campaign trail two months ago. 4300 people are expected to attend. here is a quick check of the latest business/advance. apple has started making its new iphone 14 in india sooner than expected. amazon will be holding a second prime day sale on october 11 and 12. retailers are bracing for a slow season this year. they may need to rely on deep discounts.

for the first time, the e-commerce ties have hosted a field event twice in one year. bmw expects global deliveries of its vehicles to jump 7% to 400,000. demand remains strong next year. the company aims to make another big leap in sales of purely electric vehicles. he also says there could be as looming in the sales of masks. emerging markets are feeling the pain with traders rushing out of stock etf. for more, let's bring our chief china markets correspondent. we have seen this dollar story really player. >> yes. this is the emerging market etf. if you look at the whole thing,

i am looking at here. there are concerns over growth and the tech space generally. these are currencies that are weakening against the dollar. for u.s.-based traders that want to reduce their exposure, this is a problematic fund. if you have exposure, you want to be currency hedged at least. 710 billion left of this etf last week. a million left this etf last week. the most since may of 2020. >> this is really important given how big china is rolling. casino stocks are surging on a

bit more of a gradual reopening. >> exactly. because there is so much doom and gloom not only around china but everywhere in the world, where do you see bright spots? where do you invest in this? stocks have been battered by the lockdown and regulation. the revival of that industry could be a bright spot for investors. the worst of covid restrictions are over. >> we are watching those shares.

they led a decline in big asian stocks. more than a fourth are from europe. we are also following the order for the third quarter. those are some of those company stocks we are watching. that is it from daybreak asia. our market coverage continues. standby for bloomberg markets china open. this is bloomberg. ♪

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>> good morning from hong kong. it is 9:00 in