>> the bond market might be closed but there is plenty to watch in the stock markets. bloomberg markets starts right now. we will get a quick check on those markets here because you do see some pressure in the stock market down about 1% on the s&p 500. the bond market is closed to see where the yield has actually been sticking. it will start once again trading tomorrow and we will see how much catch up the bond market has to play to this pain and if yields were driving the dollar higher, that seems to be the trade today anyway. the dollar stronger by .3%.

what happens when yield catches up to the story? and you do see some weakness in the entire commodity complex. the materials down .6 percent altogether. it's really crucial to talk specifically about the treasury space broadly and that is where i want to bring in the next guest. the announcement on the buyer exodus, who better to bring in then chief correspondent liz mccormick, two whizzes when it comes to the treasury market. i want to start with you here and talk about the exodus. the idea that there won't be that much demand for treasuries. walk us through where we traditionally see it in where we will see it right now. >> over recent years, the fed has been demand buyer number one and they are kind of getting out of the business of buying debt.

they are rolling out their balance sheet and commercial banks were huge buyers. as the fed was doing q. week, it was bolstering their amount of reserves and buying treasury. foreign demand has really been falling off partly as you have been talking about the strong dollar and we have central banks intervening. those are the big players and they are going opposite of what you want if you want yields to fall. kriti: lori, let me bring you in here because i'm curious what that means for the broader economy. when you're talking about perhaps the slower demand and treasuries probably, does that mean the rest of the world is not feeling as confident or a strong on the u.s. economy? is that fading a little bit?

>> i think it is relative to its peers. when we look how it is performing relative to its peers, there is a strength and momentum in the u.s. economy that even the tightening financial conditions, it is with a strong labor market and consumers continuing to expand. the u.s. is performing pretty well on a relative basis but i see some signs in a way that the good news is bad news for the fed that all of this resilience we are seeing in the labor markets means the fed needs to lean against demand that much more in order to cool the economy to bring down inflation. this makes me a bit more pessimistic about the outlook for the u.s. economy. kriti: what is interesting is the pessimism that lorena was just referring to but does that just mean that the case for

treasuries off that thesis doesn't exist anymore? >> i was thinking that it kind of makes to forces, some of these structural demand forces that are going aside. and also the u.s. economy is remaining pretty resilient. some saying that you i think with the fed and we just got that strong unemployment report that there's just no sign that they are slowing down anytime soon. it just doesn't look rosy for fixed income or equities as well. kriti: we get cpi on thursday and retail sales on friday. the margin of deceleration, you

will potentially see those inflation numbers. >> we expect momentum and inflation data. when i look at consensus expectations for inflation, i care particularly about core. what does this mean for the fed? i don't think there's enough slowing data that they will go by 75 basis points. i don't think it changes the near term outlook. we need to see so much more slowing and inflation data.

that slowing needs to be sustained and we need a clear and sustained downward path of inflation. one or two is simply not going to do that. i think we need to see inflation to the end of the year slowing in a meaningful way before the fed can pause and think that the tightening and financial conditions is having an effect on the real economy. and let me just also add that we focus a lot on the inflation data. and retail sales will also be very important. what we have seen is a number of inflation's, the ppi and out foot places. part of that has been consumer demand in the u.s. has been relatively strong. retail sale data will be an

early warning sign for that trend. kriti: a little extra emphasis on the retail sales numbers. we are getting headlines commenting in a chicago speech. we mirror some of the comments you heard from charles evans just this morning and the fed is attentive and will try to be restrictive for some time. for now, let's get to the first word news with mark crumpton. mark: chicago fed president charles evans says the fed needs to quickly get to a level of interest rates where policymakers spend feet --

policymakers can feel comfortable pausing. they don't want to overshoot. >> frontloading was a good thing given how far below normal neutral rates were. overshooting is costly and there is great uncertainty about how restrictive policy must actually become. mark: mr. evans believes he wants to raise rates further and hold that stance for a while in a quest to bring inflation down to the 2% target. as covid tallies rise, fears of a potential lockdown are taking shape. the country reported almost 1900 cases on sunday, the highest since august 20. shanghai boasted its largest number of cases in almost three months and anyone traveling to shanghai will need a negative covid result within 24 hours of

arriving in the city and will have to do three days -- three tests in three days. new york asked a federal appeals court to block in order that could overturn a ban on firearms within the state. the current gun ban prevents individuals from carrying guns and subways within times square and other public places. last week a federal district judge ruled that many new york gun free zones are unconstitutional. a pro-russia hacker group says it is responsible for temporarily knocking the websites of some of the biggest u.s. airports off-line. airports in new work, los angeles, and chicago were among those affected. the reports say there is no impact on operations. there were cyberattacks against a number of western targets. global news 24 hours away on air and on bloomberg quicktake powered by more than 27 hundred

journalists and analysts in over 120 countries. this is bloomberg. ♪

kriti: this is bloomberg markets . vladimir putin is threatening more missile attacks on ukraine. for more impact on the markets in the u.s. response, let's ring in our agricultural market and covering the clinical side of things. walk us through the events over the weekend. we know the bridge to crimea actually connected the two pieces was bombed and then in turn you had some commentary coming from vladimir putin. walk us to the impact. >> it has been remarkable with regard to the sheer volume of attacks in response that we saw from russia. vladimir putin blaming ukraine on the attack on that bridge which has a real symbolic importance tying crimea and russia together. we have not seen this many

missile strikes and across such a vast area of the country since the beginning of the war. we finally got a statement from president biden a couple hours ago, what you would expect referring to the utter brutality that included kyiv. these attacks at as you can see, have killed and injured civilians. this is what vladimir putin said in terms of communications infrastructure and so forth, this was an attack on civilian infrastructure. they attacked the most popular park in kyiv. what should we be sending? the very slow incremental ratcheting of weapons, or do we go all the way into what ukraine was asking for.

this is what russia would clearly see as another escalation. kriti: harrowing images especially the greater by the children's playground. at risk here is the agreements that have come between ukraine and russia specifically. >> the exports of corn and wheat from the black sea will keep happening. we see today this is right after the invasion. we need those to move away from

the black sea. the u.s. is in an expensive land of stocks. this is helping feed the global market that we do need those supplies in the market if those exports will keep happening. kriti: how much higher can those wheat prices get? >> it was $30 in march and we are now close to 10. it was called -- caused by the la niña phenomena. traders, we have less shorts in

the market today. and we have less shorts, less bets than the market will do. kriti: something we will keep an eye on. joe, you will stick with us because we want to get your insights on another important story we are following out of washington. that of course coming from the chip sector. the philadelphia semiconductor index falling to a two-year low. back to 2020 after president biden expands curbs on china's access to technology. join the conversation is bloomberg intelligence senior analyst hardware and networking. walk us through the chip story and this is something that is crucial when it comes to china's manufacturing capability of chips. how much damage do you think this could do? >> not being a chip expert i can tell you what they are trying to do. it has been the ratcheting up

that goes back to last summer when congress passed the chip act that provided more than $50 billion to incentivize to lure more domestic chip many factoring because the u.s. is in a major move to reshore this type of work which has left our shores. the beginning of september we started to get a sense when nvidia delivered a warning to say that restrictions for ai technology could mean the loss of hundreds of millions of dollars in revenue and that has since expanded and the commerce department has added more to this year. chips for ai and supercomputing and tightening rules on the sale of chip manufacturing equipment, getting to the ability to make chips. they have added to the list of unverified companies, what they call making it much more difficult to sell any technology

to them. we are trying to raise the garden walls here and get our own domestic chip manufacturing underway and try to cut off china from this technology which is used in a lot of weapons systems, communications systems that the u.s. does not want to see china get its hands on. kriti: let me bring you win because how much of that is going to be a successful venture? i'm talking about pain in the chinese chip sector but can they work their way around this? is this really the end all be all? >> it is possible, right? one of the things we discovered back in july is that one of the chinese foundries were able to make an advanced chip and that put a scare into the u.s. to prevent china from accessing this technology. it is one signal that they are trying to make progress by

preventing them from having access to those technologies, that will set them back quite a bit. now the one thing i will say is that they actually need the expertise in the human capital to build it. that will slow progress down as well. kriti: we are still in an environment where there is a massive supply chain crunch and we also know that there is a global demand slow down, bringing those company valuations lower as well. we heard from samsung and amd last week. walk us through how those things don't square up or do? >> we're trying to balance the supply chain to the demand environment. and what we start to see is demand crunch starting to happen on the consumer side. i think we knew that going in,

and what we're starting to see from the preannouncement and the negative outlook is that it has extended to enterprise. now we have this global supply situation and you start to see pricing come down as well as you can see chips, other chips come down. some of the inflationary drivers may start to ease in the near term. >> certainly something we will keep an eye on. we thank you both as always. you can listen to joe every day on his radio program, coming up at 5:00 p.m. eastern on bloomberg radio. we are seeing some movement, the s&p 500 bouncing off session lows and spiking higher. at the same time you see a little bit of a fade in the bloomberg dollar index.

something you want to keep an eye on despite the bond market being closed. we will keep you apprised of all the movements. for now, this is bloomberg. ♪

kriti: this is bloomberg markets. i'm kriti grouped up. i want to get to something that has caught my eye. on the intraday basis, the market has closed. looking at the treasury outflows like you see going all the way back to 2020. you see them becoming so unattractive that the outflows are matching. the exact movement we saw back in march of 2020 with the onset of the pandemic. the demand is disappearing. one is japan, they are starting to get hedged out of the market and that mazes becoming too expensive to hedge those bets. the number one buyer of u.s. treasuries are slowly falling behind on the list, paving the

way for china. the other piece of the equation will be the likes of endowments and mutual funds that will see the price insensitive behavior where they say it doesn't really matter what the bond market is doing. that is no longer the case anymore given how volatile the bond market is. this is something we will keep an eye on as we have inflation numbers showing up next week. we still see some marginal pain in the s&p 500 although some of the losses are only down .2% on the s&p 500 with 10 year still at 388 and the bond market is closed. the dollar a little bit stronger and even in that volatility induced context, the entire commodity indexes lower. brent crude trading at a 97 handle, down about .8%. that dollar story will be crucial as we talk about the ripple effects and the war of the ukraine.

i'm kriti grouped up. it bloomberg markets the close is next. this is bloomberg. ♪ 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.

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mark: keeping you up-to-date with news from around the world, here's first word. the international monetary fund and world bank warned of a rising risk of global recession as inflation moves at a faster rate. the world bank president spoke with the imf managing director at a virtual event today. >> the risk and real danger of a world recession next year, the advanced economies are slowing in europe. levels the developing countries are getting more and more burdensome, the rising interest rates puts added weight on it. inflation is still a major problem for everyone, especially the poor. mark: they warned