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yvonne: you are watching "daybreak: asia," coming to you live from new york and sydney. annabelle: we are counting down to asia's major market opens. haidi: traders still piling in despite concerns of an over more -- overbought market. rate rise very likely. the boj is up next with jp morgan seeing a surprise policy tweak. plus, jd.com seeing a return to retail growth this quarter. annabelle: we are counting down to the opens. sydney, seoul an hour away from now. the focus is really on the wall street session, and we continue to see the s&p 500 on its longest win streak since november 2021, so that's one supportive factor leading into this.

the other one comes down to expectations around china's stimulus and perhaps there could be meetings coming later today, announcements over the weekend, and we have seen traders perhaps not buying the fact but at least buying the rumor for now. kiwi stocks already online, japanese futures a little bit more subdued at the chicago contract proves a little bit less liquid, but traders will have to wait and see. we just heard the boj meeting decision do later. the expectation broadly is that we will not see any sort of changes to the yield curve control program. still negative rates, though jp morgan, one of the outliers, saying we could see some sort of tweak, but that is something we have been really focusing on across the morning in the fx space as well because that differential between the boj and the fed has been really playing out in the japanese currency, trading around a seven-month low, still at that 140 level.

also keeping an eye on other central bank moves. the ecb hiking by 25 basis points, a signal we could see another move higher as soon as july as that rate differential very much in focus. we are about that 153 level on the euro again for the first time since the financial crisis, and broadly, the euro-dollar trading at an elevated level, and some say it could reach 110. jerry: the dollar seeing the worst day in --shery: the dollar seeing the worst day in trading since january. a little bit of pressure after the s&p 500 topic that what he 400 level and gain for a sixth consecutive session in new york. the nasdaq also extended this year's surge. we are seeing futures under pressure in the session. we are also trying to digest some data. u.s. retail sales unexpectedly rising in may, though when it

comes to the jobless claims numbers, we did see another rise as well, so we are seeing a bit of a mixed picture when it comes to data here in the u.s., and we saw treasury yields gaining a little bit of ground with the 10-year yield holding at around that 3.71 percent level. crude under a little bit of pressure and really reversing that rebound that we saw in new york, given that speculation of more stimulus to come from china, but of course, the next couple of hours or the next morning is all about the bank of japan. most economies expecting no change, but is it still a very exciting decision, isn't it? markets remain on guard for the slim chance of a surprise. our global economics and policy editor kathleen hays is here with the latest. i want to say still exciting just because the way that other central banks have moved, and

boj, it looks like they are staying firm on that ultra-loose monetary policy at least for now. kathleen: this is governor ueda's second meeting. governor kuroda held the job for 10 years, some of the most extraordinary stimulus in the world, and now you have a new governor, and people are wondering what he will do. inflation is high and rising. don't even have to acknowledge maybe in a press conference that they see a somewhat different view on inflation? we shall see. first of all, and this team at the boj, many of whom have also been here a long time, and the staff economist who were at the boj for many years, just have to be 100% or 110 percent sure that inflation, even though it is running 3.5% year-over-year right now, is going to not come down too much to percent, maybe get there, but right now, they still see it below.

in terms of history, look how long these rates have been at or near zero, the policy rate, that is, so it will be an important shift, and it is one we felt around the world. another thing going on here, of course, is there is no inflation outlook change at this meeting because they only issue the new economic outlook every other meeting. won't do that again until july, so that is kind of a technical practical reason why nothing is expected, but there's other things, too. remember last autumn just before governor kuroda did that tweak that surprised the markets? bond markets pretty well contained, although the fed rate hikes, that is something people are watching more closely, and the yen was another thing driving governor kuroda and his team on that decision, so the fact that the yen is weakening again, could that be something we will at least have to acknowledge at the meeting? i think one more thing,

$145-yen, that is the step that pushed kuroda over the edge. haidi: rate hike was expected. the message afterward from christine lagarde, was that a little bit more hawkish? kathleen: yes, and to me, just so strong, so clear. "we have not finished our job yet. there's more work to do." not even leaving a question. does that mean you are going to move again in july? she was pretty definite. >> it is very likely the case that we will continue to increase rates in july, which probably does not come as a big surprise to you, but that's what i'm doing, and this is so because we are determined to reach our target in a timely manner. are we done? have we finished the journey?

no, we are not at destination. kathleen: not at the destination, going to move in july. as i said, pretty clear messaging here. of course, this has taken their key rate up to a 20-year-plus high. another hike would take it up again, but more people are saying maybe it will not just be july if inflation does not behave better. maybe it could come again in september. the big problem now, one that she mentioned at the press conference, is the fact that even though headline numbers have started to come down on inflation, their own forecast for inflation suggests it will be rising a little bit again. this is not the time to stop. that is the message she has given loud and clear, and once again, they are tilting toward a hike, not just leaving the door open. haidi: of course, we saw that big fx reaction. our senior importer for fx and

rates joins us now. in particular, we take a look at dollar-yen, at euro-yen. what is next? >> it is all about the yen. the yen weakened overnight to the weakest level since november. we have seen officials come out to talk about currency, but you have to look at it in context. the fed still has hawkish comments coming out. we just heard from christine lagarde as well. all of this means you will see continued pressure on the yen. major central bank peers are continuing. haidi: when does the yen become

problematic for the boj? >> we are seeing various levels, and it is not a hard and fast rule. i was speaking to a trader who mentioned very candidly that it is an element the boj loves to employ, but until we get that, you will see a climbed past that level before i step in the market can be potentially seen. 151 was the level we saw last year that proved incredibly worrying to officials, but this is a step-by-step process to get to that level. it is not a hard and fast rule. haidi: we will have more on the bank of japan decision coming up . if over that official shares her -- a former fed official shares

her opinion. first, we talked with ruth about the level of the weakness of the again, if it becomes an issue for the boj. this could be around 145, 150 when the boj could likely be forced to act. we will discuss. this is bloomberg. did you ever stress about us having three kids?

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haidi: take a look at how the bond space is faring right now after we had treasuries rallying. we had a wrapped up economic data, including higher than expected initial jobless claims, not to mention this was also helped by a large block trade in treasury futures. in the asian session, we are seeing yields under pressure at the moment with a kiwi 10-year yield holding at that for 46 level. we are seeing the australian yield as well at that 395 level. jgb holding steady, this, of course, ahead of the boj rate decision we are expecting from 44 out of 40 seven economies surveyed by bloomberg, no policy change this time around, and as the japanese yen holds around

that seven-month low, a little bit of strength in today's session. our next guest says the japanese currency continues to weaken on the bank of japan will likely be forced to act. joining us now is the head of asia-pacific fixed income at alliancebernstein. at what level of japanese yen weakness could we see the boj move? >> i wish i knew exactly what that level was, but i think it will be towards the 145, 1 50 level, which is where they had to act last year. at the margin, there's sort of the hawkishness of the ecb and really hawkish fed, despite not hiking, might put more pressure on the boj then we were expecting a week ago. let's not forget, it is the dollar-yen one looks at, but the yen will also be weaker than the euro and some of its trading partners.

shery: the expectation is the yield curve is smooth enough that governor ueda does not have to act, but some are saying maybe this is the right time to do it. what do you think? >> yes, while conditions are relatively stable, why not? the political environment is relatively stable as well, and we also have the japanese equity market rally very strongly. the backdrop for allowing the boj to tweak is certainly coming later this year, and i expect we will see some tweak. they cannot go significantly higher when the policy rate is at such low levels. haidi: the uncertainty

increasing over the fed and game and the endgame for many central banks now looking uncertain. it is now the time to start adding duration to corporate bonds? >> across a range of bonds, if it's government bonds or higher rate credit bonds does make sense for us, particularly in the euro market and aussie dollar market. where high rates spread products look quite attractive. there's opportunities there, but more broadly, u.s. 10-year bonds was the talk of our expected range, so adding duration into markets like that makes sense to us, in markets such as the u.k. where the yield market has significantly underperformed. haidi: do you think the yield we

saw as a result of the aussie jobs numbers was perhaps overdone or does that just lend to your conviction that it is good to trade on? >> cannot be too long because of the flip-flopping by the bank of australia. i think that the australian yield curve can continue to invert as the rba has to react to somewhat stronger jobs data and sticky core inflation. let's also not forget announcements of potential policy easing out of china. the aussie dollar is reacting to that already. the australian economy is strong relative to new zealand, so we do see room for australian bonds to underperform new zealand

bonds. shery: is there anything you like in china at a time when it seems bad news is good news in the sense we are now speculating more stimulus is to come? >> for the grave robbers in the dollar credit market, there are some chinese issuers who are likely to benefit significantly from stronger monetary easing coming out of china and we have already seen some reaction to prices yesterday. quite often, the china bond market lurches one way to the other in the expectation of monetary easing has seen more pressing into that market, so i don't expect chinese rates to rally strongly from here. nonetheless, i think you will have china remain quite a stable market compared to other markets around the world. given the easing to come, again, likely to be a little bit weaker

in the short-term, but an opportunity to get longer likely to pay off. haidi: always great to chat with you. get a round up of the stories you need to know in the bloomberg terminal. you can customize settings as well so you just get the news on the industries and assets that matter to you. this is bloomberg. ♪

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haidi: the ceo of jd.com says the e-commerce giant is on track to emerge from a record sales slow down. he spoke to us exclusively about where he is seeing the rebound in consumer sentiment.

>> i think our service revenue will grow relatively steadily in the second and third quarters. it is still hard to say how much it will grow, but it is part of the overall ecosystem for marketplace merchants so long as we do a good job in the infrastructure of the ecosystem, the growth will remain healthy. works in the first quarter -- >> in the first quarter, jd.com retail reported a slight drop in revenue but an increase in operating income. why was that? >> there are many reasons. one of the main reasons is that jd.com has provided the largest and most complete supply chain in china during the three years of the pandemic. in the past three years, jd.com has won the trust of many users and has taken on the

responsibility for delivery at many epicenters. therefore, when the pandemic ended, our first quarter growth rate was slightly lower compared with our previous high base. for some other companies, they had a rather low base during the pandemic. there is a trade-off in the middle, but we did realize the changes in consumers since the second half of last year, so we have been constantly adjusting. i believe you will see an upward curve in the growth rate when we release results for the second quarter. >> you are expecting revenue to start to increase in the second quarter? >> we will definitely get better and better. >> what does that tell you about the rest of the year and what to expect in terms of the marketplace for the rest of this year? >> judging from our own business situation, jd.com is constantly

gaining consumer recognition, so we are relatively optimistic and confident in the second half of the year overall. >> right now for jd.com, what would you say is of greater importance -- market share or profitability? >> in the long run, i think market share is necessary for the survival of every enterprise. when you don't have market share, the prophets are actually fake -- the prophets -- the profits are actually fake. i don't think this is what an aggressive company like jd should do, caring only about profit. we have always believed profit should be a natural outcome, but a warning indicator of operation. we cannot take measures that turn out to be too aggressive and lead to a big decline in

profits, but as long as demands to expand market share are reasonable, we should take them to serve more consumers and gain recognition, so we make long-term market share a priority. >> what are you thinking about overseas going forward? >> we have a very clear strategy overseas. jd.com has advantages in supply chain and logistics. of course, it may take some time because of the overseas market. i believe that we can see more and better progress overseas in the second half of this year and next year. juliette: -- haidi: jd retail's

ceo speaking exclusively to bloomberg. china got the credit for driving the sector's rally but is facing blame for the pullback. the latest economic data points to a fading recovery. this upends a trend that has been central to making luxury powerhouse lvmh among europe's favorite stock bets this year. >> you don't have any concerns about china's slowdown for luxury? >> there are many concerns for the world, but there were always concerns. finally, our activities are growing very well. haidi: day two and four -- stay

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shery: the fed vice chair says the central bank is in data dependent mode. global advisors of pimco say a rate hike next month may be the last in this current cycle. >> the fed, really since november of last year in its statement has been indicating that at some point, it would want to pause and take stock because monetary policy does operate with a lag. in some ways, they have telegraphed for months that they would want to pause or skip, and that's what we saw yesterday, but i do agree, they did mark their projections in directions which showed much lower decline inflation, much less decline in economic activity, and obviously, they shifted up their view that potentially two more hikes are needed. it was what i would call an awkward but hawkish pause, and of course, the chair at one point said skip, and then corrected himself, but i will call it a skip. >> what do you need to see in this next meeting to have yet

another skip? >> they actually don't get a lot of data between now and the meeting. they will get one more employment report, one more cpi report, and i think they did get a question in the audience yesterday along those lines. as the chair indicated, the next meeting is live, which is fed speak for saying that they could go. i think market price more or less lines up with where we are, they're given what we saw yesterday, they will probably get that rate hike in at the july meeting, so that's the way it looks right now. >> so you would call it a skip? you do like that terminology? you just referenced july. how many hikes do you think we have to go then from the fed? >> i think that for the first time in a long time, the fed is

data-dependent. i think one reason why market pricing has not fully reflected the second hike -- indeed, on the show you did basically market pricing has one more hike and then the fed is done -- is i think the markets and pimco have a different view of inflation and activity of this year. the fed has inflation coming more slowly than a lot of folks, and the fed also has a smaller rise in unemployment than a lot of people expect, so i do think that if the data is closer to market expectations versus fed expectations that they could be done in july. i think for the first time in a while, they really are data dependent. haidi: former fed vice chair richard clarida speaking to us earlier after the fed paused and the ecb hike. let's turn to annabelle for a check of the markets. plenty to keep investors busy today. annabelle: absolutely.

it has been quite a win streak for u.s. markets because they have been trading around this expectation of the fed going on pause, and also this exuberance. we continue to see 40 ai-rally-link microsoft. in terms of the perspective of this because yes, we are at six straight sessions of gains, but is this the longest win streak we have seen since 2021, and we have actually only seen 34 occurrences in the past decade where we have seen gains over the sort of period. when you look at the possibility of extending the advance further so there's only 11 times we have reached that seven-day mark, eight days gains has only happened four times in the last decade or so, so if you took this on a coin toss possibility, it is really only a 12% chance

we extend into an eight-day, so something we will certainly be tracking. haidi: we are looking at 10 weeks of gains when it comes to japan stocks. annabelle: yes, japan is where we have been discussing the exuberance coming from a few different factors. mostly the boj, of course, and its expectation they will keep a policy settings. corporate governance performance also a factor, but essentially, we have been ek on track for a 10th straight week of gains. the last time we saw that was back in 2013 with abenomics or the run-up to abenomics. haidi: expected to hold monetary policy when it announces its decision this friday. let's get to our next guest who is not expecting any surprises at this point.

former boj policy board member and current professor at keio university. really great to have you with us. if not today, when, given that we are seeing pressure starting to build? >> based on what covenant -- governor ueda is saying, raising interest rates will only deteriorate economic and employment conditions, and he is hoping that inflation starts to pick up in the second half of next year, so i think at this point, it is difficult for the bank of japan to take any policy actions. kathleen: i'm wondering, why do you think markets keep looking for governor ueda to take the

boj in this step, even though the boj totally keeps signaling that they are not ready to move. >> yes, this is a very interesting feature. governor ueda is sending the message that monetary easing is very important, so raising rates is not the time. despite his message, the market and banking sector really have a strong view that they will try to do some flexibility. i think this is because for 10 years, the boj market was really distorted, and it's kinda upending the financial system, so they are really hoping that more market-based transactions will take place.

in market expects interest rates to go down some time this year because they are worried about the economic recession. in the opposite direction, but i think there is a gap between what markets view and what the central bank is saying. >> when will the week japanese yen become problematic? >> that is one issue. is it certainly the boj policy has continued into this. this is why inflation is getting higher than what boj is saying. governor ueda says inflation

starts to go down below 2%, this year, but that seems to be unlikely. in the july outlook report, the projection will be announced, but the expectation or inflation for 2023 is only 1.8%, but the market right now expects inflation this year to be 2.6%, so there will be a lot of pressure from markets that boj should take action. >> does that mean at the july meeting if they do raise their inflation forecast -- that seems to be the big question now -- if they raise inflation forecast for 2023, maybe 2024 as well, does that increase the chance that they could start signaling, saying, maybe even doing some kind of tweak on policy? >> i think it is difficult for them to make changes, but next

year, we will see some sign. maybe boj becomes more flexible and they try to continue monetary easing but with more flexibility, but i think this year, it is a bit difficult and completely contradictory to what covenant -- governor ueda is saying. kathleen: the stock market has rallied in no time to a 1989 hi. is there any chance or would that be considered a policy change they cannot make, so they start on the real path towards normalization? rex the boj hardly purchases anymore. they don't need to. i think they will just maintain

the current. right now, stop markets are getting higher. japanese stock prices are undervalued and they want the opportunity, but really look at the japanese macroeconomics, it is not that strong. shery: so you are not worried about financial stability at this point and that is not a concern for the boj? >> know, at this moment, i think right now, japanese stability is ok and distortion in the market is severe, so distortion and liquidity getting bigger compared to january, so in that sense, the boj can maintain policy a little bit longer, but

in terms of yen depreciation, just in case come again will depreciate significantly last october. maybe there will be a chance that boj has to think about what they can do to cope with this undervalued depreciation for yen. haidi: you could argue the market is relatively calm, investors are not currently testing the 10-year cap, so there is a bit of room for them to tweak policy at this point. with a also be looking at some of the other global central banks facing recession risk and thinking maybe there is an argument to move a little bit more cautiously? >> at this moment, japan's economic performance looks slightly better than the united states only because japan's recovery from the covid-19 pandemic has been very slow.

even at this stage, we see growth for january and march. u.s. was already rebounding and getting stronger, so now the economy is slowing down because of interest rate hikes. in the case of japan, they are having very weak consumption growth, investment growth, and now we are starting to see pickup. kathleen: i remember being in that same place where you are standing at the boj meeting several years ago, and even then, you were saying the bank of japan policy was going to distort the bond market, the secondary market trading is almost gone, right? is that still an issue? >> yes. personally, i think maybe they

need more flexibility on the 10-year yield, perhaps expanding the range to 1% is good. so boj does not need to intervene at all. i personally think it is better for boj to take more flexibility action. in that case, we have another crisis in the future. the boj can do more monetary easing. that is better. what i'm saying is because when i listen to governor ueda's explanation, he likes for the short-term interest rate to adjust more flexibly. in order to do that, he has to achieve 2% inflation, and it looks like that is his priority. as long as he is sticking to that view and to percent flexibility is the boj's mandate, he said.

at message is really strong. even though there are some side effects, the boj will probably want to put the emphasis on maintaining correct policy. haidi: great to have you on with us. thank you so much. this is bloomberg. ♪

haidi: take a look at how currencies are trading after the dollar slumped most since february. on the other, the euro climbed on that ecb rate hike. you are seeing the other side of the trade in asia and we see the japanese yen holding steady, and we are talking about levels we have not seen in around seven months or so. the aussie holding steady after it rose against the u.s. dollar. we had a robust jobs report in the previous session. that helped. we are seeing the offshore you want at the moment trading at that past seven level, under a little bit of pressure against

the u.s. dollar, but all of this as we saw those gains against the greenback to the highest in nearly a week, given the weak economic data and the rate cut speculation that there might be more to come in terms of stimulus. let's stick with japan because the prime minister says he is not thinking of dissolving parliament during the current session, cooling speculation he could call an early election. after months of speculation in the past few days has reached a fever pitch, why has he opted not to call the election? >> right, well, as you say, for the past few months, speculation has been that the trajectory would be he holds a successful g7 summit in may and that puts him in prime position to call the election this summer. what has changed is that since

then, the boost in the polls has already started to fade. we have seen three weeks of polls where his support has fallen and that would translate into probably fewer seats with his ruling liberal democratic party in parliament. the reasons for that are probably various, but among them, we have this scandal we have had in the past few months over the introduction of a national id card and we have seen a lot of slip-ups and misses with that, leaks to the wrong people, and that has caused a great deal of unease with the public. we have also seen a partial breakdown of his party's coalition with the junior coalition partner. haidi: will waiting it out help at all? prime minister kishida has not been one of the most popular politicians in japan. >> this is hard to see anything in the near future that would

improve things for him. on the other hand, there are several things we can see that would make things even more difficult. one of them is the expected tax hike that is seen coming to help fund these plans for expanding defense expenditure. that is expected at the end of the year, so it is widely thought he will hold the election before he has to make that announcement, so that points toward automat this stage. haidi: bloomberg's isabel reynolds joining us from tokyo with the political landscape. coming up, biden's -- binance lazar staff as it prepares for what is likely to be a legal battle with regulators. this is bloomberg. ♪

haidi: take a look at how cryptocurrencies are trading at the moment. we are seeing bitcoin hold at that 25,500 level. this as we continue to see the largest cryptocurrency taking a bigger share of the crypto market value, the highest in about 20 months. lots of smaller coins are nursing losses after those lawsuits against binance, against coinbase by the u.s.

sec. binance laying off staff as a basis for a costly legal battle with regulators. the sec suing binance and its u.s. affiliate as part of an industry-wide crackdown. su keenan joins us with the latest, and a lot of cost-cutting to come. su: yeah, a lot of charges, and cost-cutting. the sec filing suit against binance for a salute of -- a slew of charges, and the company confirming they have laid off staff. reuters confirming that is about 50 people. the number of people not confirmed by the company. their principal location is in miami according to the sec suit, and bloomberg has learned they sent a letter to staff informing them and asked management to shrink the size of teams because it wants to prepare for a multiyear and costly litigation process, so it is cutting costs

to gear up for that fight. the sec suit against binance and its billionaire founder alleges that crypto exchange is essentially illegal, that it mishandled customer funds, misled investors and regulators and broke security rules. the companies have disputed the allegations. both binance and coinbase, which was sued the very next day for similar charges, have vowed to fight vigorously. on tuesday, a bit of a victory for binance u.s. they and the sec were able to work on a deal that avoids a total asset freeze. the lawsuit initially said the sec wanted to seek an order to freeze all the assets at the crypto trading platform. binance u.s. has said a freeze would have basically put it out of business, so now they are working around that. haidi: minimal, the criminal case against ftx founder sam

bankman-fried has been split into two criminal trials. what do we know? su: bankman-fried is facing 13 charges tied to what the government claims is a multibillion-dollar fraud in the collapse of his ftx crypto exchange. you're looking at video from earlier in the year when he appeared before a new york judge. he had challenged five of the charges saying they were not part of the extradition agreement that paved the way for his return, and he received a minor victory from the court in the bahamas, so rather than delay proceedings, the judge granted a request by prosecutors to separate those charges from the indictment, so the trial will still go forward in october, but there will be a separate trial in march 2024. again, those are photos from earlier in the year. you can see bankman-fried getting a bit of a rougher reception. you're looking at crypto's main coin, bitcoin, under pressure as of late.

blackrock trying to get a spot in an sec filing. this will be the 33rd attempt by issuers for such a product, but blackrock known for its ability to read regulatory tea leaves, so we will see if this one gets approved. haidi: bloomberg's soup can in there. -- su keenan there. defense-related companies could move after career testing two short range missiles on thursday, the first launch in about two months. also, energy-related stocks will be in focus. talk of more china stimulus sparking optimism for crude. this is bloomberg. ♪ with a partner that always puts you first. start for free at godaddy.com

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shery: this is daybreak asia. we are counting down to asia's major market opens. after a rally on wall street as investors bet the federal reserve will end its tightening cycle sooner than later, we still have the ecb hiking rates. we are headed toward a bank of japan decision. haidi: it is all about central banks. certainly the endgame for central banks is starting to look more risky. new zealand going into recession. the yield curve suggesting fears are escalating over a restatement -- over a australian recession as well. with the bank of japan, equity markets are going from strength to strength. >> one of the big beneficiaries of the boj keeping its policy settings in place. that is the expectation. announcing that policy decision on friday. the opens for japan, korea, australia, starting treasuring for cash treasuries. the boj in focus.

we won't see any adjustments coming through on the program of yield curve control, nor for an exit from negative rates, even though we have jp morgan saying we could see some tweaks to the policy settings. they are an outlier of that. we are seeing the japanese yen weakening. some strength, sitting around the 140 level we have been sitting at for most of the week. in terms of the direction for stocks we are a bit more wait-and-see. we can expect some thinner trading volumes, even though we had a strong lead from the wall street session, traders waiting to assess the applications. the yen recovering a bit from the seven month low. let's change on because we have korea opening and we also have geopolitics in focus, given we aw north -- we saw north korea firing more ballistic missiles. two of those we are watching defense stocks.

in terms of direction of markets, from the wall street session, a six-day rally for the s&p 500. we have only see that around 30 times or so in the past decade. the longest win streak since november 2021. we are seeing the kosdaq getting .5% in the open. the korean won is getting further. we saw the dollar retreating. the expectation some thing that could help stocks in the session, especially an economy like korea that is quite dependent on the chinese economy, this expectation we could see further stimulus. perhaps announcements could come over the weekend. we see china futures pointing to a slight gain at the open. commodities have been very reactive to this call for further stimulus from chinese officials, given more economic weakness coming through. we saw brent crude rising. we had a huge rise in the bloomberg commodity index, up

more than 2% in the price session. in terms of what else we are watching, aussie stocks coming online. we are a bit higher at the start of trade. a staggered start. it is that focus on the yield curve inversion we are seeing in australia for the first time since the financial crisis, an implication of stronger jobs numbers telling us the rba might need to hike further ahead. certainly a focus today on the boj. shery: let's delve into our top story because most economies expect no change to the bank of japan setting. markets still remain on guard for the slim chance of a surprise. our global economics and policy editor kathleen hays joins us with the latest. we are not necessarily expecting any change in the monetary settings. what should we be looking out for? kathleen: whatever governor ueda says at the press conference after this meeting. let's step back, this is an

historical time for the boj. they had governor kuroda in office for 10 years. governor ueda himself was on the board of the boj in the early 2000 when he voted against the decision to hike rates, which helped pushed opinion back into recession. -- japan back into recession. it is the second meeting. this is something he's not ready to do, in part because that premature tightening. he is now worried that could happen again. he says the risk of premature tightening is far greater than the risk of letting it go too far. it is inflation one of the main measures, but the boj's forecast from the april meeting was that it was going to stay at 1.6, or come back down i should say to 1.6%.

they cannot change their inflation outlook officially. but won't he get questions? how can you say you are not sure it will stay above the 2% target? how will he answer that? at the same time, the conditions we have been talking about during the show, the bond market is pretty well behaved even though the bond market is raising interest rates. the yen is getting closer to the 145 level where governor kuroda was forced, along with an unsteady bond market, to do the tweak in december that no one expected. we just heard from another former boj board member. she is quite certain they won't do anything, but she doesn't say if the dollar-yen should get up to 150, that could push their hand. that is i think what is interesting here, there is a press conference.

they can go for an hour. all the questions we want answered, why you will, how you would. it will be interesting to see how he answers them. everybody says for all central banks medication is the most important part of your job. shery: kathleen hays here, telling us more, 90% of economies surveyed by bloomberg expect the boj to make no policy change. but j.p. morgan securities is taking an outlying view, saying we may get a surprise adjustment. let's hear more from their cheap japan -- chief japan strategist and a former boj official who joins us from outside the bank of japan. good to have you with us. tell us a bit about the economic conditions right now in japan that make you think perhaps we could see some tweaks. rie: we see the consumption is

now strong, that a delayed economic reopening is happening in japan. with this growth, j.p. morgan sees the same view with the market consensus. the timing of the boj's change is in the july meeting next meeting in their report. back in april, the boj shows core cpi estimates in march '24 would be 1.8 and march '25 to up to 2%, and march '26, down to 1.6%. but because of this growing momentum or momentum of economy, i think the boj is likely to

change its core cpi estimates next month. but j.p. morgan's house view is to expect an adjustment today, not next month. the boj may think if they change the cpi outlook and ycc altogether, they may have a risk to impact markets too much to hawkish messages. prime minister kishida yesterday announced there will be no snap election. that has just cut one of the events that boj might look at. that is our view. that is the defense of our view from the market consensus. haidi: if we see that adjustment happen today, where are we going to see the biggest moves in japanese assets? rie: now we see very weak yen.

yesterday's dollar-yen hit 1.41, the highest since november last year. i think in short term, if no c hange, as market expect, the yen gets weaker. but if boj adjusted ycc change today, this would be a surprise. there could be about three yen changes in dollar-yen level to 1 38 or 137, in our view. haidi: when you look at the longer term spec for the japan equities rally, we are going into a 10th street week now. do you think the same drivers that built the narrative will continue to drive the upside? a lot of the things about structural reformse necessarily new factors. rie: yes, i think the weakening yen is one factor which

supported japan equity performance, recent drug performance. but i think -- recent strong performance. but i think there are several structural changes underway in japan. there are more structural transition to an inflation economy. the other thing you pointed out, the tokyo stock exchange initiative to enhance corporates , corporate governors reform. this is a corporate governors reform timing in 2021, and this time. up until now, about one third of price-to-books of one time corporate's reacted with large shareholders down policies, announced in their announcement. i think residual corporates will also follow to those corporate

toward the end of this fiscal year. in addition to current yen environment and a transition to a more inflational or economy and this corporate governance initiative and development are the supporting factor for japan. i think japan equities rally as a trend will continue. haidi: we have been talking about how narrow the range has been when it comes to the u.s. equity rally in terms of being dominated by ai and tech. would the big japanese trading houses overtake tech as the riley leaders in japan? where do you see the opportunities across sectors from here? rie: some five or six ai names

drive the market. very narrow leadership. we see for japan equity market more variety of groups of stocks to push for the japan equity as a whole to be stronger. one is as you said ai related, some went up along with nvidia stocks. we see that against a backdrop of tokyo stock exchange, compared to u.s. value stocks have a higher performance so far. and also because of easing of the supply chain dislocations, we see more production in auto sectors and machining has gaining momentum. weaker yen is part of the factor, but not only just that.

corporate managements are really confident to show a positive earnings guidance in 2023. potential u.s. economic slowdown or u.s. recession. we also see cyclical things, exporters, another group to be forecast on for better performance. haidi: really great to have you with us, the chief of japan strategist from j.p. morgan securities in the front of the bank of japan as we await that decision. sticking with japan, what are we watching? annabelle: toyota is in focus. outperformance not just related to tech stocks but a broader spectrum in japan. you can take a look at this chart because it shows the moves in toyota over this week. more than a 13% gain, nearly 20% or 30% for toyota over this

year. we have seen toyota joining back into asia's five largest stocks. it is now ahead of alibaba, icbc. it is not just about the value of the company overall, it is about how the company is pushing ahead. we had its annual general meeting taking place this week, a lot of investors impressed by its outlook on ev. toda another name that benefited from foreign outflows into japanese stocks. we have seen those for 11 straight weeks. let's take a look at another sector of stocks. these are the names that are in north korea, given we had pyongyang firing two more ballistic missiles thursday evening. that is the first such launch we have seen in two months. one projectile according to japanese officials splashed in their exclusive economic zone. the missiles were launched as the u.s. and south korea ended

live fire drills this week near the border with north korea. these are some defense stocks we can see in japan and korea. they are moving a bit higher at the start of the day's trading. move to a different sector. we are keeping the space link stocks in focus given the moves we are seeing in virgin galactic in after-hours trading. that stocks surging more than 40%. this is after virgin set a date for its first commercial flight to space in june. shery: still ahead, we turn to china. power sustainable investments says it is a good time to play the stimulus trade there. the cio there will tell us more about their short-term optimism in the chinese economy. but first, china's commercial banks set to lower lending rates next week after the pboc's easing move. more china stimulus shifts too. this is bloomberg.

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haidi: china's weakening economy prompted the pboc to cut interest rates for the first time since august. bloomberg economics expects the central bank to firmer -- to further trim the mlf rate. the activity data not good but it reinforced a sustained

slowdown. where there any major drivers for why we continue to see that weakness? david: i think it was mainly the week confidence that was driving the economy growth. if you look at the data you will see that the investments from the private sector was quite slow. i think the reflected weakness in the real assets sector, because people know that sector has been in sluggish trends over the past several quarters. in addition to that we found that on the production side, the private sector will also slow, so that is reflected week confidence in the economy. shery: we finally got the pboc's cut of the one year rate. how strong are the signals

overall that they are really shifting towards more stimulus and support for the economy? david: in our view, we think if a signal in fact is stronger than the actual effect from the rate cut, because we think the 10 bp rate cut can only lift china's gdp by 0.1% this year. you will see this is not a big step in easing, but yes we see the pboc is shifting toward a more supportive stance. i think that is the most important information to the market. overall we think this can help the economy, but to risk to get the economy on track we have more to do. shery: david with more on china's economy. and that hope, or signals that

we are seeing about a broad package of stimulus measures to boost the economy, well, that is providing a break to china's dollar junk bond market after months of pressure. our bonds and loans reporter joins us in hong kong with the latest. we are talking about this junk bond market which is dominated by property developers. what are we seeing? loretta: since the end of may there is another rebound. the bonds are rebounding on expectations that the government will roll out more support measures for the property sector. it may seem the stress in china's bond market has increased. that is because it may we had a developer default. we had a conglomerate in china facing several investors concerns, including its ipo progress. a lot of negative news affecting pricing in this market, but now

investors are hoping authorities can come up with more measures to help the property sector. haidi: does this have longevity, or is the risk of selling on the fact if it doesn't disappoints? lorretta: i think that is what a lot of investors are wondering. during the past half year or so, we have seen at the end of last year there were a round of measures that were supposed to help developers liquidity, that was supposed to stop all the defaults happening in this space, but has failed to do that. i think investors have become very cynical right now. all sorts of property support measures we are seeing are quite specific, targeting certain regions, certain cities. it is not a broad-based measure that people are hoping to see. that is where uncertainty remains. on the other hand you can't

really have a property market picking up when you have youth unemployment rate at 20% and people are not willing to take more leverage to put down mortgage when they are uncertain about their own employment. that is the big question concerning china property market, uncertainty around china's economic growth. haidi: plenty more coming on daybreak: asia. this is bloomberg. ♪

shery: bloomberg businessweek revealed a previously unreported chapter in the history of chinese tech giant huawei. it scoops on bidding for a danish 5g contract in 2019 and lifts the lid on practices that have sown suspicion around the world. our senior reporter helped break

this story. tell us about how this bid in denmark turned into a hunt for a corporate mole. >> basically the biggest telecom in denmark, when they were involved in negotiation with huawei and ericsson over the buildout of their 5g network, realized that while weight seemed to be getting information that they should not have been having. the company launched an investigation and ended up finding that the senior leadership of the company compromised -- was compromised in all sorts of alarming ways. we think this gives us a portrait into what it is like for companies to get caught up in the proxy conflict between china and the u.s. over technology. haidi: why are we doing this story now, about bidding for a danish 5g telecom so important?

drake: it does give a sense of some of these practices that at the time of the story, late 2018 , early 2019, huawei was on the march in europe and other places. since then the company has won fewer contracts. there have been some hope trial -- some high-profile decisions by european governments to not allow huawei gear in various parts of their telecom infrastructure. this incidents gives us a view of the practices that alarms some of huawei's business partners, in addition to the leak of the information from tdf , the investigation itself seems to have gotten compromised in a variety of alarming ways. the investigators themselves

felt like they were being followed around by people they didn't know. there was a bug sweep of the conference room at tdc that turned up some microphones that nobody really knew how they had gotten there. there were even some drones that ended up showing up in places where there was stuff to look at. this series of cloak and dagger occurrences that gave people pause. haidi: really great story there. bloomberg's senior reporter for tech there. you can read that on bloomberg businessweek. our next guest says the chinese economy is looking up in the short-term. power sustainable investments p(jennifer)inable investments jthe reason why golo customers have such long term success is because we focus on real foods in the right balance so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy.

release sets you up for successful weight loss because it supports your blood sugar levels between meals so you aren't hungry or fatigued. after i started taking release, the weight just started falling off. since starting golo and taking release, i've gone from a size 12 to a 4. before golo, i was hungry all the time and constantly thinking about food. after taking release, that stopped. with release, i didn't feel that hunger that comes with dieting. which made the golo plan really easy to stick to. since starting golo and release, i have dropped seven pant sizes and i've kept it off. golo is real, our customers are real, and our success stories are real. haidi: we are getting a trade why not give it a try?

numbers out of singapore.

hearing your contraction of 14.7% for the month of may, almost double dull contraction that was expected by economists. it was also deepening from the previous month, so we are talking about eight months of contraction. when it comes to electronic exports, 27 point 2% contraction for the month of may year on year. this is a deepening contraction from the previous month. it is already seven months where singapore's electronic exports have fallen into the double digits. we continue to see this week external demand heading a very drained economy. this will just add two more concerns. we continue to see more pledges of rate hikes coming from the fed.

how are we looking in the markets right now? >> there is the overarching idea that we do still have the need for further rate hikes, but also recession fears are building. in terms of stocks today, the tailwind coming from the u.s. session overnight because we saw the s&p 500 advancing, the longest win streak we have seen since november 2021. we are seeing stocks here climbing in markets in australia, south korea. the nikkei under a little bit of pressure as we get trading underway. the boj is coming out with its decision in the hour ahead. no big changes to its negative

policy settings or to its yield curve control curve. otherwise in the currency space we are seeing some climbing including the korean won. that one is advancing. the other big think we are watching today would be any sort of reports that come out around china stimulus. something that has been building into the commodities space. we saw the bloomberg commodity index rising more than 2%. shery: as we head towards the china open, we are watching the tech sector. the retail ceo of jd.com says they are on track to emerge from a record sales slow down. he spoke to us exclusively.

>> i think our service revenue will grow relatively steadily in the second and third quarters. it is still hard to say how much it will grow, but it is part of the overall ecosystem for marketplace merchants so long as we do a good job the growth will remain healthy. >> in the first quarter, jd.com reported a slight drop in revenue, but an increase in operating income. why was that? >> there were many reasons. one of the main reasons is that jd.com has provided the largest and most complete supply chain in china during the three years of the pandemic. in the past three years, jd.com

has won the trust of many users and has taken on the responsibility for delivery at many epicenters, therefore when the pandemic ended, our first quarter growth rate was slightly lower compared with our previous high base. for some other companies, they had a rather low base during the pandemic. there is a trade-off in the middle. we realize the changes since the second half of last year's so we have been adjusting. i believe you will see an upward curve in the growth rate when we release results for the second quarter. >> so you are expecting revenue to start to increase again? >> we will deafly get better. >> what does that tell you about the rest of the year and what to expect in terms of the marketplace? >> judging from our own business

situation, jd.com is constantly gaining consumer recognition. we are relatively optimistic and confident in the second half of the year overall. >> what would you say is of greater importance, market share or profitability? >> in the long run, i think market share is necessary for the survival of every enterprise. when you do not have market share, the profits are fake. so i do not think this is what an aggressive company like jd.com should do caring only about profit. we have always believed that profit should be a natural outcome, but a warning indicator . we cannot take on measures that turned out to be too aggressive

and lead to a big decline in profits, but as long as the measures to expand our market share a reasonable, we should take them to serve more consumers and gain recognition. so we make long-term market share a priority. >> what are you thinking about overseas going forward? >> we have a very clear strategy overseas. jd.com has advantages in supply chain and logistics. they may take some time because of the overseas market. i believe that we can see more and better progress overseas in the second half of this year and next year. shery: jd.com ceos speaking

exclusively to us. we saw china's economic recovery we can may, putting pressure on policymakers to step up stimulus. joining us now is m. what can we expect when it comes to retail sales in china? >> i think we are stepping into a very interesting period and over the next two months, we will see the normalization of retail sales whereby there is not going to be anymore of the year on year distortion from lockdowns last year. going forward, it will be interesting to see how e-commerce companies are doing on their platforms to stimulate spending. as well as on the physical store

side of things, what are consumers -- where consumers inclined to shop? one of the disappointing areas in may numbers was the physical store growth has not picked up over the last two months despite the absence of the lockdown. haidi: how has the online strength benefited? >> i guess it shows two things. merchants and consumers are definitely inclined to shop and sell more online. i think that applies for traditional retailers as well. move into the e-commerce channel is the way to go and that will

benefit the marketing revenues as well as all the fees that have been driving the top line growth for jd.com as well as alibaba. i think it gives alibaba a good opportunity to try to cap the decline we have seen from their customer management revenues. haidi: more to come here on daybreak. this is bloomberg. ♪ avalarahhh ahhh

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haidi: expectations are running high that beijing will soon offer more stimulus. investors will be watching for clues sign which sectors will benefit. our next guest thinks it is time for investors to play the stimulus trade. jun li is from power sustainable sh. great to have you with us. in terms of broad based stimulus measures, what are you expecting? how much longevity is in the trade in terms of the actual impact of any stimulus measures that could be announced? >> i think investors start to

realize that stimulus may be needed to stabilize the economic growth in china given the relatively weak economic data in may. we are looking at a few areas we think need more fiscal spending support, for example, the consumption, to support the demand for various products. such as automobiles, etc.. we want to see our government can give more support to private businesses who are actually suffering from economic slow down. and also we would love to see more support from the government to solve potential structure issues, such as the local government debt issues. we have already seen a lot of monetary loosening and we would love to h more about what

fiscal spending stimulus could be of help in the coming weeks. haidi: which sectors do you expect to benefit? does a give a broader lift to the consumer, which has been the main driver when it comes to this part of the rebound? do you expect the property sector to get meaningful support? >> for the consumer sector, we do expect a bit more support from the government, which can stimulate willingness to spend. automobiles, we have already seen regional and local governments issuing different levels of support. and home appliances as well. also, i think we are really watching to what extent the government will support the

housing demand. i think there will be a lot more companies built into the market for the economic recovery. i think for the second half, recoveries on the way. but we do need some more boost to ensure and stabilize the growth. from that point of view, we are in the short-term relatively optimistic about the equity marketing china. we think trade can last for a while and we will still wait to see what will be the real impact of such monetary and fiscal policies to impact the real gdp growth or the economic sector growth. haidi: are there risks acting on the monetary policy of things?

>> i think the united states is definitely a risk. we are waiting to see more signs of dialogue between the u.s. and china. with lowering the interest rates we think there will be pressure on the exchange rate. investors discussing whether [indiscernible] in our mind, if more policies can support economic growth, i think investors will view longer-term confidence in the economy and the market. haidi: have you seen a change in sentiment by foreign investors after we saw policymakers inviting foreign business leaders and vowing to open up

the markets? >> we see and hear some investors, for example from europe, start to look into the china market. we believe more capital will likely flow into the market if the economic policies are going to be supportive for the growth. haidi: when it comes to long-term conviction calls, are there any themes and sectors you preferred that are more in line with what the government is hoping to achieve? >> i think there are a few investment themes that in china are still valid for investors to consider. with technology innovations happening globally driven by a

high technology, there are a lot of businesses that could have potentially long-term benefit. for the chinese government, clean technology, electric vehicles are the areas the government is very supportive in the medium and long run. i would just say that the current risk is that the technology names, especially the ai related names, treated at very high valuation and there might be some short-term volatility. but from the fundamental point of view, we see them as the long-term trends for investors to consider. haidi: the ai one is interesting. what do you think the regulatory landscape will look like for investors? >> i think for the development

of chatgpt technologies, we anticipate more clarity on the regulations on what would be developed, but i think from an application point of view, there are a lot of sectors that can benefit from such technologies. we are still positive on the potential for those technologies in china, despite the fact we hope to see more clarity on regulations. we do not see that as a restriction on the development. we see that as a policy that could potentially guide investors about what could be expected in the future. haidi: jun li from power sustainable sh, really great having you with us. you can dive into any of the securities that we talk about on

tv . this is for bloomberg subscribers only. it is on tv . this is bloomberg. ♪ but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company. hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star.

hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪ it can happen to the people who teach us and rescue us, the people on our team and in our family. it can happen to the people who serve us and the people who served. the people we work late with and stay out late with. it can even happen to the person in the mirror. opioid use disorder is a disease that can happen to any of us. it's possible recovery can happen to any of us, too. haidi: take a look at how asian stocks are trading.

we are seeing energy materials leading the gains. a little bit of pressure on oil prices. in the wall street session we saw a rebound given this expectation of strengthening demand. in china we talk about speculation of more stimulus to come. we are seeing consumer, discretionary and industrial leading declines. we continue to have concerns about cracks on the global economy, with more rate hikes promised. we are seeing the discretionary stocks taking athletes. haidi: a senior official has traveled to hong kong. let's bring out our reporter. this comes i head of antony blinken's visit to the region as well. are these consolidating indicators that there has been

more effort put into this relationship? >> definitely. it is another sort of marker. over recent months we have had a couple of exchanges of officials of whether they are coming to hong kong or china. but all mid-level officials. it is seen as paving the way for further discussions down the line. but of course, the main effort right now will be the antony blinken visit and bat will be crucial. even though these other visits and meetings, also some chinese officials went to the united states, is all very encouraging, but the ultimate test will come on sunday when antony blinken meets with his counterparts here in china. depending on the outcome come out we might see a subsequent flurry of further meetings.

shery: what will be discussed? there are so many challenges in this relationship right now. >> both sides have definitely been quick to temper expectations. many are saying it will not really address any of the big issues on the table, but what it might achieve is a signaling that communication channels are beginning to open again and hopefully there could be some concrete deliverables about security measures in the taiwan strait. apart from that, we will be looking out for other smaller issues that are still significant indicators. that would be around things such as exchanges, how journalists are treated by both countries. but again, expectations are low.

remain on sunday to see what is the tone and what are the outcomes of this particular meeting. shery: some stocks we are watching ahead of the markets opening, big stocks. dog european union is said to be banning equipment from hawaii, cte from internal commission. air china may passenger traffic is up over 400%. china eastern more than 500% jump in traffic. china southern 248%.

haidi: we will be hearing from global industry leaders on alternative investments in the region. they talk about opportunities and risks in the property space in the next hour. we will also be hearing from alvin chua later on bloomberg markets asia. that is just about it for daybreak: asia. markets coverage continues. we look ahead to the start of trading. speculation runs high we could see discussion of stimulus measures from beijing. this is bloomberg. ♪

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