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s shery: welcome to daybreak asia counting down to asia's major market opens. haidi: a cautious open as traders break for a massive -- brace for a massive week in central bank policy with markets expecting a potentially hawkish fed pause following fresh inflation data. >> the pboc under pressure on stimulus as china's recovery stalls. one of the biggest oil. goldman sachs cuts forecast for brent. shery: a look at how u.s. futures are trading, upside early in the asian session after the s&p 500 pushed further into bull market territory friday. we are talking about the 20% plus gain from its october low. now around the peaks we have seen in august last year, around the 43 hundred level. technology resuming its climb

higher. this all ahead of the fomc decision this week. there is expectation perhaps we might see a skip from the fed. we saw treasury yields continuing to gain ground in the new york session with the 10 year yield around the 373 level. the two year yield close to the 460 level and swap trainers pricing in one third of a chance we could see the fed hike this week. about 90% odds for a hike come july. of coy's -- course, oil prices have been under pressure as we have seen in the regular session as well given concerns about the broader economy. haidi: the concerns could see a bit of a tepid start to trading in asia. let's look at japan. a ninth straight week of gains when it comes to the nikkei 225, the longest advanced since 2017. really, we continue to see these as being the major drivers when it comes to the asian equity

rally. of course, a lot of concern into the week that holds not just u.s. but boj decisions. we are not expecting any tweak to the yield curve control program by the boj but we will watch for other signs of potential risk aversion there as well. china futures, off by just about .25%. the pboc also in focus. greg economics and bloomberg intelligence is split as to whether we will see the pboc cutting key rates as pressure mounts when it comes to expectations for further stimulus to give a bit more of a catalyst. we had a anemic cpi and falling ppi as well supporting the case for more measures to come through. take a look at the oil market, one of the biggest movers we have seen over the past week. flip-flop trading continues to the downside today. new york crude off about .4%. brent crude also a bit softer. goldman sachs really driving what we see when it comes to potentially the future catalyst

for the oil market holding the losses as they have cut their outlook again. they see brent trading below $90 by the end of the year. really, this very interesting situation. broader macroeconomic concerns. of course. perhaps the focus for oil traders is more on the demand side when it comes to the china story and production cuts from the saudi's. shery: let's bring in our global policy editor kathleen hays and ruth carson. it's a busy week for central bank decisions. let me start with kathleen. the question seems to be whether the fed will come out with a pause, a hike or even this thing called the skip. kathleen: the skip or you don't hike rates but signal you might raise them again after the meeting. it's not a pause indefinitely, it's a pause where you figure out what you need to do next. jay powell the fed chair definitely opened the door to

this very clearly in a may 19 speech when he said the fed can afford now to look at the data and make careful assessments. so, again, he did not quite say pause. but he said that chris waller the fed governor may 24 he followed up saying he could see waiting a month or two to do the same thing. see how much impact rate hikes have had. see how much tighter. -- credit conditions have been spurred by banking turmoil in the u.s. and cautiousness on the part of bankers now. then, we have the doves like jim bullard from the st. louis fed. and lori master from the cleveland fed. looking at all the rate hikes they have done read in 15 months 500 when he five basis points of rate hikes. a red occurred rapid amount of said hiking. wouldn't that be enough? they say maybe not. inflation is still high-end has not come down enough. that is why they are arguing the other side.

maybe powell will convince everybody this is the hawkish pause. we will watch the data. we are not stopping at is more needs to be done we will do it. that puts a lot of focus on the dot plot because the dot plot is the result of the fed changing every three months the forecast for gdp, unemployment, and inflation. right now the idea is inflation is still way above what was forecasted in april so they will have to raise inflation forecast. unemployment has not raised as much as they have thought because the economy is so resilient in the face of 525 basis points of rate hikes. that will feed into the message they send out for is a short-term guidance. i mentioned banks and banking regulation. it will be a very interesting meeting. i think jay powell will have a lot of perhaps, i would say, explaining to do in terms -- in explaining terms and explaining what they are trying to tell us. haidi: perhaps implicating the hawks, right? ruth, when you look at traders

on the market at the moment what does it tell us about expectations for the fed? ruth: the risk on trades are important to remember. it goes beyond whether the fed will raise interest rates again this week. investors have been relentlessly betting the fed will be forced to cut rates this year. the bets, when you look at them now, they have called significantly from a months ago as inflation comes back down. they remain stubbornly high. some officials say we still need to go tighter to tame the beast. right now traders remain split over whether a rate hike is likely. all eyes will be on jerome powell. importantly, the press conference, the decision for traders to really recalibrate their responses to what the fed's next move will be. we will see treasury yields

really jump higher in the past week. that is in part thanks to the shock interest rate increases we saw from australia and canada. the message from central banks is clear. the fight against inflation is far from over and this means bad news for bond investors. that said, investors, some of them are seeing the selloff as an opportunity to buy. at around 3.8% where we are now for the 10-year treasury yield investors at jp morgan say the levels are actually pretty good to get into. singapore said they are actively adding duration to take on high yields. it depends on where you sit on the curve. haidi: kathleen, in a way the fed is just kind of the kickoff, right? it's a big week for central bank policy globally. kathleen: bank of japan, here we come. the governor how, his second meeting. he started in april with his first one. now it's june.

three months ago there was more expectation may be the boj would be ready to tweak because inflation has gone one above 2% on every single measure red is staying there. now we have learned from reporting in tokyo that the boj officials do not see a big need to tweak yield curve control right now. you have a bond market that is pretty stable. you have a yield curve that looks normal again. so even though they realize that yes, inflation is a stronger and we may have to boost the inflation target, that's probably as far as it will go. i think people are figuring that also having heard so many dovish comments, dovish ways of talking about monetary policy, the need to normalize or not, that's another reason why we don't move. look at the ecb. this one is really easy. christine lagarde, the president, has said on more than one occasion the last couple months that inflation remains too high and more needs to be done and they will do whatever they need to do.

guidance. that's what you want to hear from her. were they going? how much more do they need to do? for the people's bank of china, china's recovery is not quite as robust as they had hoped. the consumer is holding up. not as strong as the consumer needs to be potentially to drive the economy. we heard the head of the people's bank of china say recently that, he just reiterated, we will maintain stable policy. we will have stimulative policy. but, not stimulate any rate cuts. which is to the point for all the people that think, maybe they will not cut the major lending facility. they passed on that on the lpr. the loan prime rate. that it has to be coming. but that does not seem to be in the cards yet. haidi: our global economics and policy editor kathleen hays and are rights and policy reporter ruth carson ahead of a busy week for banks. let's get vonnie quinn with

first word headlines. funny: a bus driver was arrested after a crash in the australian state of new south wales killing 10 people in the hunter wine region north of sydney sunday night. it is believed the bus was carrying wedding guests returning to their accommodations. prime minister anthony albanese tweeted all australians send a sympathy to those affected. the scottish former first minister nicola sturgeon released without charge after being arrested in a party finance investigation. scottish police confirmed she was questioned by detectives for several hours sunday before being released. an inquiry into scottish national party finances is looking at whether donations for the scottish independence campaign were used for other purposes. malaysia is trying to lure investment from microsoft and out of that in a direct -- drive to be a data hub. the prime minister told us his country can be a neutral supply

chain base as the region deals with u.s./china tensions. elijah has already attracted investment from the u.s. and amazon -- from tesla and amazon. >> we are attracting as many as we can. microsoft, we are also in talks with them. we are trying to establish ourselves as a data center hub. there are many here. amazon, others as well. others have announced they are coming here. >> former u.s. president donald trump appears to be holding onto his political base as he heads to court to face federal charges. a national poll suggests around 75% of republican voters view the charges as politically motivated. he faces a 37 count indictment for allegedly mishandling classified documents after leaving the white house and will face court in miami tuesday. global news 24 hours a day on air and on bloomberg quick take powered by more than 2700 journalists and anaylsts in over 120 countries. this is bloomberg. shery: ahead, only three out of

47 economists expect tightening by the boj at this week's meeting. the former deputy executive governor shares his outlook later in the hour. first, moody's analytics says apap economies are struggling to maintain traction with a downturn in global trade. the regional chief economist joins us next. this is bloomberg.

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>> the press conference will absolutely be the most interesting element. how they describe this gives the market expects will be critical. if they don't get favorable inflation numbers, they are in a really hard situation because they would have to surprise the market. haidi: opinion communist mohamed el-erian there. shery: the week ahead has a massive few days for central bank policy. fed policymakers signal an intent to skip a rate hike at wednesday's meeting, but not necessarily stop rate hikes altogether. that decision will come one day after u.s. cpi friends that are expected to show cooling price pressures. thursday economists expect the ecb to hike again adds inflation pressures remain high. bank of japan is expected to keep policy unchanged.

officials see little need to adjust its yield curve control program. in china may activity data is likely to provide further impetus for stimulus with bloomberg economists forecasting the pboc go cut its policy rate as soon as this week. also watch rate decisions from the state bank of pakistan and the bank of taiwan. that to week ahead. haidi: what a busy week. our next guest says apac economies are struggling to maintain traction with a downturn in global trade. the chief apac economist at moody's that is -- analytics. steve, look at the most direct policy impact we could see this week. potentially, a move from the pboc. do you think that is warranted? isn't that something we are expecting given that so much signaling has spent -- pointed to the opposite from the people's bank of china? steve: i think definitely there will be stimulus coming along

the way for china. given the really weak numbers and the unevenness of the data coming out of china. i am not so sure there will be an overall rate cut, a cut in the lpr or something like that. my guess is that because of the now very high debt level in china and the high debt level amongst the whole government, amongst households, amongst business, perhaps, a rate cut may not be the way that the policymakers want to go to stimulate the economy. because, there will not be a desired stimulated increase, a broad increase in debt across the economy. i think there is a greater chance of there might be much more targeted stimulus to try to simulate some of the specific components of the economy that are struggling right now. for example, there could be some easing of some of the rules

related to buying homes, making it easier for households to purchase a home or provide more access to liquidity, to the property development sector, to allow them to either finish projects, or, get new projects going. but, i do think that one can argue that the government, the policymakers will be trying to do more targeted policy measures rather than broad rate cuts. haidi: is something like that likely to be affected -- effective? with the property sector there are often structural or potentially existential issues with that broader sector that have been building over the years. for the consumer there seems to be a broad lack of sustainable confidence. are any of the measures to loosen liquidity in lending actually going to be taken up? steve: one could argue the same

thing about rate cuts. would it really have that much of a difference in the housing market given the multiple issues in terms of week demand, excess supply, and, the liquidity problems for builders. i think for the consumer sector, you know, what it we're -- will really take is simply bringing down the unemployment rate, particularly, the unemployment rate for young people in china. i think there could be some very targeted measures to try to create jobs for university levers to be able to get them employed right away rather than struggling to find a job that perhaps might be more effective, again, than simply lowering interest rates. shery: what are some of the actions taken by china so far that could have the biggest implications for all these other economies that depend on china?

steve: it's tough because, you know, the trade patterns across the region are so weak right now. exports out of all of the asia-pacific countries are down except for japan and malaysia. japan is exporting cars still at this point at a pretty good clip. malaysia is still supported by commodity exports. but everywhere else, exports are down by somewhere around 10% over the year. a lot of those exports are intermediate goods that go to china. so, if the manufacturing side of the economy in china were to get going again, i think that would bode well for demand for exports out of the rest of asia. the trouble is, there is not a

lot of demand for chinese goods now. exports out of china are down is imports. even if there was some stimulus provided to the manufacturing sector, it is questionable whether it would have much impact. i think that the most important piece of the export trade activity out of asia right now would be whether the north american and european economies can continue to grow and perhaps begin to accelerate a little bit. you know, they are growing very slowly, well below potential. at least, they don't seem to be in a recession right now. that's a positive factor. again, demand for goods from asia is weak. shery: what is your base case scenario now when it comes to the fed and ecb rate decision on how that will affect their economies, and in turn affect asia? steve: yes, that ecb as you mentioned earlier, it is pretty

clear that there will be an interest rate hike there. the u.s. fed, our base case is that actually, no increase in june, possibly, an increase in july. but, that should be about it. and then hold steady until sometime may be the end of first quarter of next year. so, the turnaround, the improvement in the u.s. economy will be gradual. given that interest rates will still be high. at least, the labor market still seems strong. consumer spending is strong. investment spending is fairly strong in the u.s. as well. so, those factors in the u.s. economy do bode pretty well for a demand for goods coming out of asia. shery: i guess that means rate differentials against japan will continue to be there for a while and perhaps widen. is your expectation that we will

not necessarily see a change in stimulus measures coming from japan for the time being estimate steve: that seems pretty clear. it will definitely be a while before the yc see measures will be changed in any major way. and any outright change in interest rates i think will be some time to come. even, despite the wage negotiations in the spring. domestic inflation is still rather weak. so, i think the boj will wait until there is some signal that there is more pressure from domestic demand rather than external sources pushing inflation in japan. >> steve cochran, the chief apac economist at moody's analytics with a very busy day for monetary policy this week.

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♪ haidi: the latest headlines. british hedge fund manager crispin noda has been ousted from odey asset management after allegations of sexual misconduct investigating his treatment of women over 25 years. he denied the allegations. the edge manager will be run by his co-founder. u.s. agribusiness bunge entering

a deal to acquire viterra. the deal could be announced by monday. it will create an agricultural giant large enough to take on cargill and archer daniels midland. there is more to come on daybreak: asia. this is bloomberg. ♪ hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds,

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>> the rest of his mortgage

don't have a positive carry. they cost you to store it. no one is going to want to hold them. request that was jim carrey the. that reassessment of lower crude prices and brent prices by the end of the year. this is what we are seeing when it comes to brent crude. some of this is coming down to lowered expectations. watching it very closely after goldman sachs.

saudi arabia cutting production. markets and traders have not reacted as we would have seen in the past so positively. >> with extending those gains was out. we are seeing a little bit of downside. we do have not only the federal reserve but the ecb and the boj as well. nikkei futures pointed to some upside when markets open at the top of the hour. this after the nikkei 225 saw a net consecutive week of gains as

-- the longest streak in five years. stimulus in place despite the fact that we are seeing some upside in inflation. we are not expecting big changes to come from the boj. >> one of the stories we have been following very closely over the past few months, monday sees a symbolic close. the memo internally signaling that the ubs deal will close on monday. this is what they call legal close. : this a bit of a moment for the broader finance industry. we know this deal is said to create a new european banking giant. he recognized there was still many questions remaining about how this will affect staff and credit suisse.

>> you're right. this will really shape the global battle for the very lucrative business of wealth management. we have seen this in april finally going through. we are getting a few more details when it comes to how they will operate. ubs will be imposing strict restrictions on bankers including a ban on new clients from high risk countries. this according to the financial times includes two dozen red lines prohibiting credit suisse staff from a range of activities, a limitation meant to curb risks for ubs as this deal is being enclosed this week after was agreed in march it was going to pose a reshaping of the battle for this business of wealth management. really just creating a new mega bank.

for now, let us get over to vonnie quinn with other headlines. >> china has five bases in cuba. the bases would allow china to ease electronic medications throughout the southeastern united states. the central bank governor was suspended. there were suspended after markets close on friday. the governor was widely seen as acting in lockstep the air

quality worsened for sensitive groups. the air quality started to deteriorate, followed to moderate in many regions. this smog is forecasted to linger until monday. novak djokovic has won the french open, giving him is 23 grand slam singles title. he says level with serena williams. the 36-year-old wasn't allowed to play in last year's australian or u.s. open because he refused to take a covid vaccination. 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 and this is bloomberg. >> malaysia is trying to lure some of silicon valley's biggest names. this in a region dealing with u.s. china tensions.

how they are planning to build on investments. >> we actually have contributed about 35%. we even recently sent a framework of supply to the u.s.. more portly, going forward, everything we see today, cars, medical devices, pharmaceuticals , they all require a critical component. we are a key player in the semiconductor industry. >> diminished to attract big companies like amazon as well as tesla. are you intending to do all the

others? >> we try to take as many as we can. we are slowly establishing ourselves as the center, many rate here. we are seeing a lot of realignment of supply chain. >> talk to us about expectations for the rest of 2023 versus what we saw back in 22. >> investments, you are seeing this coming up. this is important. this is a key engine of growth and gdp.

i think malaysia also stands to benefit. i think it is important that we are opportunistic anyway that we have indoor sectors. courseware is tesla in its commitment and operations in malaysia? have they asked -- have they started hiring key personnel? how much are you expecting tesla to be committed? >> tesla had -- none it was

maybe on the unemployment side. they started to recruit. >> how big was it? >> they have ruled out the infrastructure first. it is important. malaysian companies actually supply a lot. the sector is the key. request the malaysian trade minister speaking exclusively the husband, -- to haslinda amin.

we will speak to a former dividend governor next. this is bloomberg. ♪

>> extending in order to destroy

ballistic missiles. that order was originally sent to on sunday. all of this amid ongoing speculation that they may call for an early election. family is keeping a watch i when it comes to the slew of japanese economic data. japanese markets will open at the top. take a look at how we are trading at the moment. the nikkei 225 showing those nine straight weeks of gains. we are also watching the emily comes to expectations of stabilization as we continue to see regional and global diversions on central-bank policy shary.

>> sources are not telling bloomberg that boj officials are seeing little need to adjust their yield curve control program this week. given improvement in bond market functioning but also the smooth shape of the yield curve. joining me as to form a dip of the governor at the bank of japan. also with us is kathleen hays. i will walk up to you both. let me start with what we are expecting when it comes to the policy decision this week. market traders don't necessarily seem to think there is any change coming this time of that we may see something in july. what are your thoughts? >> out think there will be any change in the market. this information has been sustainable and stable. my guess is that in the june

meeting, there will be nothing. >> the governor is the father of forward guidance. whatever they say in their prepared marks, the reporters at the press conference are going to ask him a lot of questions about what happens next. we did -- what do you think he will signal about the july meeting? what they have japan be more sustainable and stable. there are some lofty designs in terms of economy.

many people would like to know the timing that the boj will take for the next meeting. >> what about raising the inflation outlook? there is typically a change in the economic outlook from the boj everything -- every three meetings. can they raise the inflation outlook? can the acknowledge how high above it is? maybe getting some progress made on getting sustainable 2% inflation? >> advocat will be due next july. the question is the governor and the other members of the policy committee.

they have yet changed the prediction for recent dynamics. for the next half a year or so, we will see some decrease in the price. that said, the information will then pick up. the government said he is not confident about the picking apart. the overlooked picture may not change. >> we are trying to gauge what kind of governor he will be. how critical will communication be here? we are talking about the fed potentially going for a skip

rather than a pause or hike. >> the communication over the boj at this juncture is a very tricky one. i think the governor has to project himself as a continuity person. he will maintain the monetary easing for the most part. the boj challenge is to communicate.

there would be a change in the monetary policy. it is a big challenge. many interesting things are going on in the japanese economy. the boj strategy is consistent with policy objectives. it may change. >> talking about interesting things happening in the japanese economy. as a prize were you at the negotiations? they did not yield or expected results in terms of inflationary pressures. >> inflation has been good news overall. they should have taken that long time to recover japan's liquidity market.

that was 1989. that is the inflation itself. that is the race between these two forces. >> what is the boj have to see that it has not seen yet to say it really is time to start looking at normalization? >> they are certainly the numbers themselves. when the public opinion at some point? consumers and businesses may not be happy if inflation stays high. >> could not hear the question. question what does the boj need

to see moving toward mobilization? there is a public resistance against high and rising inflation as well. quick you're talking about the public perception of the inflation. >> right. having it is always a problem. it public perception changes, that is when the boj can feel confident. that is exactly what the boj is

hoping to achieve. >> what role does the government position play here? there are letters where the questions around boj normalizations. what the government wants in terms of easy policy versus the need is on point to start normalizing. quick you mean in the general election coming up.

not yet. the boj will not consider that aspect. they don't really want to get to those because of politics. it is not really that good further monetary policy.

the communication will be very interesting and very important. >> it will be super interesting. we really appreciate your time. we have japan's main producer prices seeing a rise. slightly softer than expectations. much more to come. this is bloomberg. ♪

>> these are some of the things we will be watching. north korea and japan watch those pharmaceutical companies. in else drug has gained support from u.s. regulators. keep an eye on japanese defense shares. in order to destroy ballistic missiles. and and south korea come to some about us is providing a preliminary review. the market opens in korea and japan are next. this is bloomberg. ♪ ♪

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>> >> this is daybreak asia.

we are counting down to asia's major market opens. another busy week as we get the fomc and boj policy decisions this week at a time when we are seeing more risk assets gaining ground. pushing further into bull market territory. it is really about what the boj will do this week. we have seen a we japanese yen over the 140 level. we are seeing highs we haven't seen since the 1990's.

the yen holding at that 139 level. the 10-year yield in the u.s. at about 374. gaining ground last week as well. not much in terms of a rate hike. markets are pricing in 90% odds. we are looking at the kospi at the moment. we are seeing gains of .3%. this after the korean won gained to the highest level since march last week. improve investor sentiment. we are getting the export numbers for the first 10 days of this month.

this really gives you some indication of how external demand is still a risk for this very export dependent economy, highly. ? it's at the moment are actually taking profits after a bullet started june. always great to have you with us. there seems to be a little bit more consensus in the market. >> let's put in context.

merely central banks being one of them. it is not as much debbie we have the market will be coming down with a crash soon. we think the market is supportive. using part of those profits to be exposed on the outset, that is the strategy we prefer. they could still remain open. they could spook the market a little bit. >> we don't know what rate they might cut if they do it all. does that change your outlook on potentially having a catalyst for the next leg of this rally?

>> hopefully yes. again we have been waiting for some kind of a catalyst to keep the rally going on that side of the world. this could potentially be one. more with respect to better visibility. this will not be enough to really make a sustained rally going forward. >> did you see more opportunities? we have investors piling into japanese assets at a time when the japanese yen is also week and but you must to change. not coming from the boj. >> the boj is one of if not the central bank. it does make sense that global investors look at japan as

technical and the breakup we see recently is a bullish sign. how much further from here can it go? we have come a long way. we would not necessarily change the rally at these levels. >> you are expecting a hawkish tone to come from the fed. what does that mean for yields? >> with respect to tech, it is about the ai story. people have not really or understood how much ai can really change our lives.

in terms of the fed, a more hawkish tone, that could change rates maybe a little bit. we actually see markets start to price out. we think there will be one more hike. still to be decided whether it will be now or in july. do expect one more there. >> what is your approach to sending opportunities in ai or ai adjacent stocks? it has been such a big run-up. there is a lot of uncertainty when it comes to application and regulatory hurdles that would still lie ahead. >> we're just at the beginning. we'll have to see how this will change everyday life. you'll get into some kind of a correction.

you are going to be needing those software is that will preparing and laying at the base for ai to take over on a number of industries. think about how it -- how ai will be exponentially increasing what they can do. really look at the mid-cap names which are extremely well-positioned to gain from the current trend. we're just at the beginning. we think ai could be something very similar with respect to disruption. we are watching one side jump into the highest level in almost two years at the moment.

this is paving the way for what could happen before regulatory approval that could lead to broader insurance coverage. the six advisors voted unanimously to recommend the traditional approval of the first treatment clearly shown to slow the progression of alzheimer's. we are seeing this jumping by the most in almost two years. let's get the vonnie quinn with the first word headlines. >> thank you. george soros is handing the open society foundation to his son, alex. the foundation donates money to humanitarian and democratic causes ranging from justice reform to climate change initiatives. it controls the majority of assets. malaysia is trying to look investors from microsoft and

alphabet. they told us exclusively that his country can be a neutral supply chain base. already, malaysia has attracted investments from the like of tesla and amazon. >> we are attracting as many as we can. they have announced they are coming here. >> released without charge after being arrested in a party finances investigation. she was questioned by detectives for several hours on sunday before being released. an inquiry looking into whether donations toward the scottish independence campaign were used for other purposes.

a bus driver arrested after his vehicle crashed. killing at least 10 people. it happened north of sydney. police say is believed they were carrying wedding guests. all australians send their condolences to those affected. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> opportunities nai next. this joins us at the page in our hong kong. taking a closer look at what to expect when it comes to monetary policy in the u.s.. and of course japan. this is bloomberg. ♪

>> investors are preparing for a pivotal week in central-bank policy with decisions affecting some 60% of worldwide gdp. let's bring in kathleen hays. what are we expecting from the fed? >> we are expecting them to signal a pause but they will call to skip. a pause is when you have been

hiking interest rates for 15 months and now many of you think maybe we should just pause for a while. they are not sure they're going to remain positive. what if inflation does not keep sending out? what about if it showed it is still hot? what do you do? you start hiking again. jay powell said this holding up pre-much on may 19 when he gave a speech and said the fed can afford to look at the data and make careful assessments of how the hikes are affecting the economy and inflation. he had several people in his account, governor waller. chris waller. then you have the hawks. you have jim bullard from the st. louis fed. there is about a half a dozen.

they say we think they have to do more. bottom line, they may be pushing for the hikes, at least one more. that could be leading to some descents. jay powell will have to explain why this is a skip given this hawkish pause is just a skipper now kind of reading. that will be the communication. one more thing, the dot plot, don't forget that. they can give us a more hawkish view of the economy and rate hikes over the rest of the year or they can keep it just as hawkish as it is. the unemployment outlook, they will have to be changed a bit as well. there is a lot to look at this meeting.

quickly of the boj, pboc. these managers of the you will cast aside. disturb the bank of japan. this is the second policy meeting. in april people thought maybe he will give us some sense that this high inflation and dependable places is going to be leaving him to consider some -- some served week. in a speech he gave on friday, he sounded very dovish as he has recently. >> i think it is still too early

. my guess is that the june meeting, there will be nothing. >> they may indicate a higher view of inflation. the forecast is going to have to raise higher. that is probably the most you will find there. the president has said that more needs to be done. she has very little doubt they would need some big sign of inflation. that is why they see hiking by another five basis points. what do they signal for how much more they will do? the people's bank of china has been widely expected to do some kind of breakup. the lone primary did not get cut.

you can see the governor of the pboc speaking there. continuing to say basically we are going to keep policy where it is now. they did over the deposit rate. he wants them to spend more and save less. i guess it will be on the people in these kinds of things to move the economy forward. this is the disappointing recovery so far. >> this is such an interesting meeting for the pboc. this will signal that perhaps we want a bigger stimulus. the brick economics and

bloomberg intelligence are conflicted and what we could see. >> whether or not there will be a rate cut is anyone's guess. calls are coming to take some action. they are for stainless to boost that is after the slew of bad economic data released last week. china's export in may saw double-digit at the same time,

consumer inflation. the manufacturer is struggling. this is deep and negative territory. all eyes are on june 15. people are speculating about whether the pboc might use these in order to drive down bargaining costs. let's see. >> we had a guess from the analytics. perhaps this kind of stimulus is needed. policymakers may choose more targeted measures. what are the risks for the economy if they actually go all out and they do carry out these rate cuts? >> you're right.

some people are arguing there is no need for the pboc to lower interest rates in the short term. consumers are not spending. business confidence is low. they can remain mired in a slump. they are investing in china because of these particular risks. the credit may not be driven into the economy. and also as a policymaker, you have to keep u.s. interest rates. the interest rates again this week. the ones between china's interest rates and the chinese

government bond yields. they would widen further. this is about is triggering capital outflow. we expect more decisions and economic data out of china and you can get more in the story and all of today's stories on today's edition of daybreak. dayb is the function on your terminals. you can customize your settings on the bloomberg anywhere app. this is bloomberg. ♪

>> oil, copper and the rest of these markets don't have a positive carry.

you're going to have to drain down these inventories as much as you can. oil and copper are a liability right now. they are not an asset and until they become one, no one is going to want to hold them. course the global head of commodities research jeff curry on oil and copper markets as we continue to see the downside pressure on wdi and brent as well. we are talking about brent now below that $75 a barrel level as goldman sachs really cut the outlook for the price of brent. $86 a barrel for december. this would be the third in six months. why isn't the oil market pay more attention to what saudi arabia is doing in terms of output cuts even warnings?

>> saudi arabia just over a week ago give a natural cut and also hinted there could be more to come. that was just a couple of weeks after they want the people who are speculating oil prices could be ousted. the reaction from the market has been pretty underwhelming. by the end of the day, it was only up over 6%. the same prices declining from there. a couple of big reasons. potential the biggest want is china. the market is still waiting for a strong rebound. it may still happen. people are getting a bit more pessimistic on that. the other big one is russia. last week, russian oil exports

were probably about 300 barrels a day shy. that is despite the sanctions, icecaps, russian experts have proven the market busily. we have what looks like a disappointing summer drive this season. here is diesel demand looking shaky globally as some big economies are you there slowdowns or potential recession. there is a supply demand dynamic and it doesn't like it is supporting high oil prices at the moment. that is why the market is ignoring what saudi arabia was same for the time being. >> what is a bigger driver of momentum going forward? is it the demand side from china? some of the capital outflows suggest there could be further downside to come? >> i think china is probably the

main factor. you played a bit objectively in the intro. they have just come out with a third downward revision. they now see brent at now six by the end of the year. engelman has been a very big commodities both in recent years. they will back bullishness. they admit they got things wrong. interestingly tonight, u.s. dosing brent. quick we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you

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>> is the hiring consumer that is feeling a bit more nervous than the low-rent.

>> there is this that other consumers had on their balance sheets and we are starting to see that dwindle now. >> people have confidence in continuing to spend money. put something else would break between now and year-end. have they raised prices more than needed throughout the pandemic? 200 and 88 responded saying companies on both sides of the atlantic have been raising prices in excess. 76 percent of responders agree that tighter monetary policy has been the right way to tackle profit that inflation. as we await the boj decision, the deputy governor says he does not expect any substantial policy change. they see some upward revision for the inflation outlook in july. >> i think the most important question is has japan reached a

stage where it would be more sustainable and stable. the boj would say not yet but that is the growth in terms of the economy and the inflation dynamics. many people would like to know what the timing of the boj for the next week. >> what about raising inflation out? typically there is a change in economic outlook from the boj every three meetings. that would be july. can they raise the inflation outlook? acknowledge how high above it is? good to get some progress made on getting some stable 2% inflation? >> the outlook will be due next

july. i expect some sort of outlook in the development but the question is still the governor and other members of the policy committee. they are saying that they have not yet changed the prospect. that is for the next half a year or so. they could see some sort of increase -- decrease in the price. then the information could pick up afterwards. the governor said they are not yet confident about the picking apart. the inflation prospect is maybe

apple but the overlooked picture may change. we are not sure the boj would change policy in july. >> that was the deputy governor speaking to bloomberg's kathleen hays. and some of wall street's biggest banks are turning to a less positive consensus on chinese stocks after the market wipe out around $1.5 trillion. for more, let's bring in the asian equities reporter. what are strategies saying about how much room there is to run for chinese equities? >> we are seeing is the wall street banks from goldman sachs, morgan stanley. they are lowering it from 80 to 70 for a different time next year. they have less positive outlook for the market because the economy's recovery has been slower than expected.

the current targets, while there are still some rebounds on the current level, that is a less rosy outlook if you compare the targets last year. wall street banks are keeping overrate readings. they said evaluations are really attractive. one of those could be central-bank policy. the pboc will take -- this will be tough to spot. what are investors looking at if not pboc signaling? >> speaking to a business in shanghai, the pboc government has said policy will be targeted and the credit expansion will be stable while they signal there could be some adjustments being made. investors not expecting policy stimulus but they are expecting the government could help

adjust. we could see measures like that in those areas. the previous he governor said they will be provided some finances. also, the sectors are key to creating jobs. let's get you to vonnie quinn with the first word headlines. >> thank you. the white has acknowledged that china has spy bases in cuba according to issued a statement that came anonymously. the wall street journal has reported the bases would allow china to eavesdrop on electronic communications throughout the southeastern united states. donald trump appears to be broadly holding onto his clinical base as he heads to court to face federal charges.

a national poll suggests around three quarters of republican voters view the charges as politically motivated. trump aide is a 37 count indictment for allegedly mishandled classified documents after leaving the white house. he is due to face court in miami on tuesday. the air quality in new york city and washington worsened on sunday to unhealthy levels for sensitive groups. a smoke and haze for canadian wildfires lingered over the northwest united states -- northeastern united states. the equality started to deteriorate. this mug is forecast to linger on monday. novak djokovic has be cast to root. the serbian has not surpassed rough canada most major advance titles in the open era. that is level seven williams. the 36-year-old was allegedly in the u.s. opens. he refused to take covid

vaccination. 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 and this is bloomberg. quick the bank take over by ubs will close on monday. talk us through the latest developments. this would symbolically bring to a close what has been a difficult few months. >> good morning. yes. it looks like the day is finally here. this deal will be completed. this will eventually recognize the biggest banking the since the crisis. this deal is forced between them . that is to share $10 billion of losses with the swiss taxpayers.

and more recently, the financial times reported there is a series of redlines. this is forming areas around new business with clients and high-risk countries. also, a ban on accepting yachts and extensive real estate as collateral. >> lots of risks to be cognizant of. what are the biggest challenges in integrating ubs and credit suisse at this point? >> that is right. the engagement happened almost three months ago. they will be thinking about today.

this is the broader risk culture. they are going to have to trim assets to try to keep a lid on the balance sheet. they have a bit of a buffer to get their capital ratios. that will be a big challenge as well. >>, of, our next guest says generative ai may become the

biggest transformation. this is bloomberg. he's ignorant

>> australia stocks are not trading today on account of

public holiday. look at the nikkei 225 extend those gains in the japanese session. have a present along with the topics. the nikkei continuing to go from strength to strength. the longest run since 2017 as it continues that leadership throughout asia. also watching the kospi. a little softer at the moment. these numbers hitting an eight-month high on a report of a meeting with openai, sam altman and saul, sherry. >> according to bloomberg intelligence, generative ai could emerge as a $1.3 trillion market by 2032. ubs is hosting its first future now a pack conference focusing on ai and technology driven trends. let's discuss the opportunities and bring in the head of a pack

technology research and ubs. great to have you with us. why now this inaugural conference by ubs? some are key in the supporting industries. we started this journey, this conference was important to focus not on ai but we do not quit respect that. we step up to the scene as much as they have. >> in asia, we are seeing the geopolitical risks around tech. will that be one of your topics

you will be discussing in the conference? what are you hearing from clients when it comes to this risk of tech will -- tech deglobalization? >> yes. you are absolutely right. this is the forefront of what investors are currently trying to think about. what we think is likely to come to the forefront here is to trends. one is potentially a reassuring of manufacturing. this is about whether this needs to have d's asian. it has been very important and efficient over the last 30 plus years. and potentially bifurcation to some extent. if it happens, one of the applications for cost could be going higher. very important tech to have a

free flow of engineers to continue to innovate at the pace we have been innovating at for the past few years. >> global cooperation is meaningful for when it comes to the is an admission of and applications. he said that china should be heavily involved in building out these guardrails. how does what you're saying square with the fact that we note is not the situation in china? that market is part of the broader echo system. request number one, there are a lot of resources on the softer side of ai innovation.

it has been dealt with very readily. that is very important. the large internet companies have a very important role to play. some entrepreneurs we talked to in china about that specific field is open for their companies. obviously, what is key is access to core technology's to support ai computing going forward. request me take a look at investment opportunities. a lot of low hanging fruit that has been driven by the chipmakers. and i guess more obvious parts of that narrative. what are you more interested in terms of future applications, monetization?

>> testing a little bit longer, obviously uses performance in the sector and let's remind ourselves none of this would happen going forward. overall, i think investors are actually figuring out the sector. from the investment perspective, this remains very important. on the application side, from an asian perspective, this used to be seven innings very simply

because the services sector is not quiet as -- this is for providers to actually occupy the field of territory for democratization of google -- the monetization of global jihad. we would like to see more niche business models. focusing on specific ideas in a more targeted matter. we would hope he will come to market in due time. claims have big is a generative ai market for semiconductor supply chains? how do you expect us to look in the next few years? as we are seeing more and more countries trying to build their own redundancies and supply chain systems?

>> if we focus on the markets i mentioned before, -- this is if you are focused on the side. that would include the potential market for graphics processors. probably some further upside for smartphones. you should get larger and larger chips to get this more efficiently. this will basically be multiplying 46%. on memory, we assess generative ai services contributing to 4-6%

of this volume demand by 2025. a 2% difference in demand basically create supplies. it was great to have you with us. be sure to tune in to bloomberg radio to hear from the more -- from the big newsmakers. they are broadcasting live from studio in hong kong. you can listening via the app. morehead, this is bloomberg. ♪

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by his comanager following his ouster. the london-based firm decided to remove its founder after facing fresh assault allegations. the financial times said this is amid fears of high of those in the coming days. request they accepted the resignation of francisco d'souza. any of a debate to carl icahn seeking his removal. they initially survived the attack when he was one of eight directors reelected last month. charles was named interim ceo while the san diego-based genentech company seized a replacement. the u.s. agribusiness said to be nearing a deal to acquire this. sources the deal may be announced by monday and that but it shareholders will hold a

significant majority. their position will create an agricultural giant large enough to take on cargo and are still dying as mainland. >> the stocks we are watching ahead of markets opening in hong kong and china. watching the property space as well. they are missing a payment on a 316 million dollar offer bond. also, alibaba's want to watch. >> look at how oil is trading at the moment. this as we continue to see more uncertainty about the broader economy, global supplies also increasing.

we are seeing winnie demand. the saudi oil minister say opec-plus is tackling market uncertainties. we are not seeing the broader reaction along trading in the oil space with goldman sachs now. again, downgrading their forecast for brent to $86. available from a previous estimate of 95. still to come, we talked fixed income strategy with hsbc. in professional fighters the discusses investing in mma. that is it from daybreak asia. the china open is next.

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