shery: you're watching daybreak: asia coming to live from new york, sydney and hong kong. >> we are kind onto asia's major

market opens. haidi: the top stories this hour, china backs russia stability after an apparent mutiny from the wagner militia group. investors evaluate the russia situation with equity futures edging higher. plus apollo leading a group of lenders providing as much as $2 billion to support the expansion of the u.s. chipmaker. shery: take a look at how u.s. futures are trading. a little but of upside after the s&p 500 last week saw the worst week since may. we are talking about the nasa 100 heading for the best first-half ever with immense danes including the s&p 500 up 13% this year. we were watching last week a little bit of pressure coming from the hawkish rhetoric from global central banks including

fed chair powell. we have a global bonds rally. the 10 year yield falling to the 373 level. we continue to watch for more volatility this week. we are expecting more commentary around inflation with u.s. pce numbers out this week. take a look at how commodities are trading. we are watching oil prices closely. we have the short-lived uprising in russia. we are seeing a little bit of bullishness in prices at the moment. every ti and brent trading over the $70 a barrel level. this coming after the fact oil prices so the worst week since may. we had a lot of downside pressure given the recession concerns worldwide. seeing gold bid up a little bit. every time you're geopolitical to tensions we had -- to see upside for gold prices. annabelle: taking a look at commodity link currencies. we have the aussie dollar, the

q. week inching fractionally higher. the kiwi up a 10th of percent. when you take a look at how investors are reacting to these events in russia, we aren't seeing too much activity in the session thus far. tracking the euro. this would have been a risk off event. if we had not had some major civil war on our hands in russia he would've expected to see a big drop. that currency a little bit higher. watching the japanese yen. that is a safe haven play. focused on the weakness we have been seeing in the currency and we have just been burned from japan's currency chief speaking in tokyo the last few minutes. saying he will not rule out any options on fx. he is asking for stability in the currencies market. seeing the yen looking a little firmer. still trading around the 140 52 level. in the equity space today we are

expect to be a little risk off in the session. we had geopolitical events in russia in focus. seb sang in the short term like you to take this in our stride. longer-term it does mean domestic politics in russia likely to have a bigger focus for investors. haidi: a great deal of uncertainty after the extraordinary weekend. russian officials have met with allies including china and north korea a day after. the leader of the mercenary group health that has advanced toward moscow. the deal to diffuse a muni as sure is safe passes to belarus. the threat of prosecution tas men and allows them to join the russian military. couldn't had described the uprising as treatment and failed harsh punishment. the kremlin says the drama has not affected the fighting in ukraine but washington says the revolt has damaged putin's authority. >> this raises profound

questions. it shows will cracks. we cannot speculate or no exact where that is going to go. we know prudent has a lot more to and for test answer for in the weeks and months ahead. shery: our next guest says the uprising will most likely lead to a crackdown and president putin becoming more hard-line. joining us as a senior fellow at the council of foreign relations. great to have you with us. have you seen such an event happen in the past under russia under president putin and perhaps a more hard-line sense -- hard-line stance coming from the president after such a dissent from people in his own country? >> we have not seen anything like this since prudent came to power over two decades ago. this is clearly the most serious threat to his rule and to political stability under prudence leadership. i'm struck by what did not

happen more than by what did happen. there was a coup of sorts but there was no violence. wagner troops were not shooting at the russian military. drove up the highway to moscow. no one was hitting them with airstrikes. now he is going to belarus and wagner troops are going home. a second thing that strikes me is major elements of the state did not join wagner. the military, the security services. the mayors. they all stuck with prudent. that says to me he is in pretty good shape. no big impact on the war in crane. troops were not withdrawn to pull them back into russia. they were bombing ukraine overnight. this is a big deal but i'm not sure how much has changed as a result. shery: what about prudence stance on the international

stage given the image this has projected to the world? >> no question it is a blow. that one of his own team members turned against him and publicly questioned the rationale for the war. that hurts putin. i do think he is going to react by cracking down. that is what president erdogan of turkey did in 2016. that is generally how strongmen react to being threatened. i think you will tighten the grips at home. press dissent even more than he has been doing and i would not be surprised if we see an escalation in russian operations in ukraine as a way of saying i'm in control. i'm doubling down. this war is the right war and we are going to win it. haidi: that was part of the support for wagner and that a

satisfaction by the broader people. russians wanted a more hard-line approach in ukraine. how does it change the calculus for allies like beijing. do you think xi jinping would be reassessing the friendship without limits if the partner he is looking at has a less than firm on power? >> i think you make an important point that the real criticism from prudent is he is not doing enough. wagner was going after the defense minister because they work building the war and were not handling it well. cap because they were leaning in. i think this is going to rattle xi jinping and china. china has been on putin. china has stood by this war even though i think beijing is not particularly comfortable with it. now they see instability in russia. it is the last thing they want

to see. they saw the soviet union pull apart and they said we don't want that come our way. now they see a rebellion in russia. they are thinking don't want that come our way. i guess for now they're going to be steady as she goes and continue to standby prudent but no question this is causing anxiety in beijing. haidi: does this hasten the nature of the war or what the end game looks like for ukraine? >> probably not. i think the impact on operations in ukraine is minimal. ukrainians are going to continue the offensive they began a few weeks ago. it has not one particularly well in the early reeks but it is still very early. ukraine has yet to bring most of its combat power to the field so we are going to have to wait and

see how this goes but i think prudent strategy will be the same. that is to put up a staunch defense against ukraine and try to wait out ukrainian resolve and wait out american and european readiness and willingness to keep funding arms and economic assistance. prudent thinks of the time is on his side. i'm guessing this rebellion in part because it came and went so quickly has not really changed his fundamental approach to the war in ukraine. shery: do we have a sense of what the mood on the ground within russia is? we saw social media video of people cheering wagner. >> there is an uneasiness in the streets now that the putin regime was respected and in some ways earned its legitimacy by

providing stability. putin was saying this is only a special military option. go to the restaurants. continue life as usual. this is not life as usual. this is a threat to the regime i think many russians never saw coming. where there some people cheering on wagner? yes but i also think the absence of any real public support or any support in the higher echelons of the russian regime is telling. it does suggest putin is pretty strong. he enjoys a strong element of public support for the continuation of the war. i was struck over the course of the rebellion that we did not see any real inflection point where any significant state institution or segment of the population said yeah, prigozhin,

go to moscow and get rid of prudent. far as we know that was not there. haidi: great to have you with us. we appreciate your time. a senior fellow at the council on foreign relations. we will stick with the china aspect. muska looks for support from its allies. let's get more from our greater china executive editor. we were talking with charles about whether there is a potential recalculation in the upper echelons in beijing which has been looking at the weekend leadership in its pli and partner. -- key ally and partner. it is counting on putin to build this block outside of the u.s. and europe. >> i think what is happening in russia is causing concern in beijing. you can see that in the brief statement we got over the weekend. chinese foreign minister saying

china supports russia's efforts to maintain national stability describing stuff that is happening over the weekend as an internal issue. there is so much uncertainty with the situation that beijing is trying to figure out what is the best response to have to what has happened. shery: how does this alliance or partnership with russia affects china's image in the world stage especially when it is trying to make a comeback after the covid zero policies they have implemented during the pandemic? we know this week they are hosting the davos of the summer in tianjin. >> i think the little support china has offered to russia during the war has come at a cost of beijing around the world especially in the west. support for xi jinping's government in europe especially in the united states has waned

because of the rhetorical support china has offered russia. the refusal to condemn the war has come at a cost to beijing. in terms of the most recent uprising we have seen over the weekend i think it is going to take some time to tell what the exact repercussions could be. the earlier guest from the council on foreign relations talked about it to beijing is not going to want to see instability in russia in a neighbor with a very long-winded border. shery: bloomberg's greater china senior executive editor joining us from beijing. still ahead the latest on foreign business and investor sentiment. up next, oxford economics joins us to assess how the latest

geopolitical risks around russia could impact global growth peered more analysis in a moment. this is bloomberg. ♪

shery: let's take a look of the week ahead. it is all about inflation. the fed's preferred price metrics on friday. consumer price data expected to show the pace of underlying inflation accelerated. in june we will get cpi prints from tokyo. china's prints will most likely see the economic recovery struggling to gain traction. the cover service is expected to point to a third month of flowing activity. the data could reinforce the case for stronger policy support from the pboc in the second half of the year. industrial output numbers from

singapore retail sales figures from japan and australia. pans jobless rate. we'll be watching two major global conferences this week. the ecb form where many leaders will gather. the summer davos convening in china. pakistan making changes to its budget to appease imf concerns ahead of a june 30 deadline to revive its bailout program. that is your week ahead. haidi: these latest developments in russia are adding fresh geopolitical risks to global growth. let's discuss what that means for asian economies. our chief asia correspondent joins us. if nothing else the weekend tells us how these black swan events or grey swan events do add further complications to what is already a difficult growth environment for the region. >> good morning. that is true.

it has already been a difficult growth environment. we have come off the reopening phase in of the fundamentals are kicking in which are the dislocations that have taken place due to covid. the hit that has taken place to households, or bricks and how that is affecting it plus the global economy have been raising rates everywhere that means the global economy is going to slow more. a difficult environment. the conflict between russia and ukraine has been sitting in the background of all of this. the initial effect was there was a rise in oil prices in that affected the large parts of asia negatively except for the energy exporters. it was a large negative impact. what do the developments over the weekend do? it is probably easier to be an economist than a political commentator because they have all kinds of scenarios that are

likely. for us, there are two things i think we need to worry about. one, what is going to happen to risk premium and what would happen to interest rates and exchange rates across asia. the effect has been relatively small but this was a short conflict and much of it took place over the weekend so you have not seen the effect. it probably -- across the region. the second is oil prices. probably has not sure what the effect will be from such a short conflict but it is a negative if it does go up. it is a negative for large parts of asia. these are the two things to worry about. look at what happens to long-term bonds deals. look to what happens from exchange rates and oil prices. haidi: and it comes at a time when the volatility broadly is unusually low. so maybe you need to start

looking at the potential tail risk as well. if you take a look at china, key in this calculation with moscow, it already has economic origins of its own. there is no massive stimulus that is forthcoming at this point. you take a look at the pmi data this week, is it going to paint more evidence of a rebound that is not as strong as what was expected coming out of covid zero? >> good point. the pmi data, we are expecting it to show -- this is about expectations so we expect it to soften a little bit. china has not surprised us. we had expected there would be a bounce in the first quarter because china reopened peered at is the same bounce we saw in almost every asian country when they first reopened after covid. china was a bit different because other countries opened in stages. china did everything in one go. it was a bit different.

the question was how long would this covid rebound last because you would expect it would fade as it has faded in other countries. if you go back to where china was before covid, there were a variety of issues that were in place. china had been slowing since 2009th. that does not go away. it is an agent population -- in aging population. there is an equal but -- and economic conflict going on with trade. it is in aging population there are many issues where actually nothing changed through covid. plus the dislocations that took place due to covid. we had expected this bounce would fade. it started fading and there is a question of where china settles. on the others, the government is fighting back. i think most likely it is not

going to be able to change the nature of the slowdown. the economy will still slow. there's probably a cushion in terms of how much it will slow. shery: how much has beijing and also other governments done when it comes to addressing less visible scars from the covid-19 pandemic? i address this because i know the oxford economics is on separate research on the impacts of education around the world. >> it is too early to tell. what is the extent of the scars. you brought up a good thing peered schooling has been disrupted for many children across and you are going to see -- long-term effects of that unless it gets fixed so that is one part of the work we have done. one way in which we are looking at this crisis and the aftermath

-- it is not business as usual and you come out of it. you cannot shut down economies for such a long time, have such dislocations and not recognize the scarring that has been created and we are looking at the scarring. if you in broad macro terms they can affect fiscal accounts and the balance of payments, household balance sheets. to try to see how that is going to affect things. part of the thing you brought up which we have looked at is the effect on education. you can look at what has happened to the remote great that has taken place where workers have gone back to villages and what effect that is going to have. there are many effects from this pandemic that have yet to surface. it is something they are looking at closely. haidi: good to have you with us -- shery: good to have you with us. you can find more on these

stories and the days top stories today. today's edition of daybreak. you can find it at dayb for terminal users and also available under the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪ rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

haidi: take a look at the latest when it comes to job cuts across the banking sector peered goldman sachs is said to be cutting director roles as part of its cost savings drive. sources say about 125 mds will lose their jobs including some in investment ranking. we are told not all of the whales have happened yet. a deeper drive has seen goldman go through three rounds of drum cuts in less than a year. jp morgan is said to be cutting

force -- cutting 40 investment anchors in north america. the bank eliminated 20 investment banking roles in asia last week the president expect second-quarter fees to decline 15% from a year earlier peered coming up next, bond traders are darling back that the hikes will settle a recession. the yield curve has traders price in more hikes. this is bloomberg

annabelle: you're watching daybreak asia. we are half an hour out from the opens for cash markets and equities in tokyo and australia. we are focused on those events

in russia over the weekend. so far the activity we are ceding we are seeing, suggesting it is fairly subdued but watching the japanese yen, this is a safe haven play but we have been seeing a bit of strength coming back into the currency given what we have heard from tokyo or japan's top official. saying he will not rule out any options on fx. he says the moves have been excessive and he is looking for stability in fx markets. so a bit of government jawboning to start the week because we don't have equities trading as yet. in terms of whether you can expect to see sustained reaction comes strategists say we will not see anything given traders are still expecting no real intervention until we see the yen hitting 145. we are not at that level just yet.

when he take a look at implied volatility we are still looking quite subdued when you compare back to other points in the past, the lines and a red looking at periods of intervention. you can see the implied volatility well off those levels we hit at the end of last year. shery: let's turn to the commodities given the muni in russia. oil futures arise as investors tried to outweigh the fallout that. in joins us with the latest. this comes with a context we see a fall in oil prices last week. >> west texas intermediate down. recession fears dominating the trading sentiment last week. as expected the russian events over the weekend dramatic, surprising and buckley over really put a bid under energy prices. both west texas intermediate and brent move about a percent higher.

nat gas also rising although there are other folks boosting natural gas. analysts winning out europe is disconnected from russia for supply versus a year ago when prices were flying due to the russian conflict. that is amid a slower than expected recovery and a demand following the pandemic. a lot of oil participants watching for potential turn -- potential return of iranian oil said the market. it is a challenge for opec plus which has been cutting oil out what to support prices. another is the prospect of more oil coming on the market. big pressure -- big picture for oil, you see the big peak last year when the invasion into ukraine first occurred and oil prices surged well above $100.

clearly not the case now but some say the instability factor will keep a bit of support under oil for the near term. haidi: gold catching a bid but if we take a look at history, the geopolitical event rallies rarely last long. >> we do know that gold is one of the first financial assets to react. that was the case here where we saw gold catch a bid. any political conflict, any hint of uncertainty really boost gold. it is the commodity can count on to rally if there is geopolitical instability. training data shows traders have been piling into gold but the key drivers typically are the dollar and will rates. market -- point out we just heard from heidi the -- if you will back and remember

the 9/11 terrorist attack in 2001 gold jumped more than 7.5%. but actually wiped out most of the gains the next day and all of the gains but early december. a lot of people piling into gold but for different reasons. the jump we are seeing out of this event not expected to translate into the days that follow. haidi: let's take a look at some of the other asset classes and how they can move in the session. let's bring in bloomberg's chief rates correspondent. it has been an extraordinary weekend of events and perhaps we are seeing an eerie calm when it comes to the geopolitical developments. what do you see is the longer-lasting -- things that investors should be looking out for? >> i think for investors the key question is where does oil go. that is how the most direct

transition -- disruption coming out of russia. the mutiny was ongoing if there had not been a resolution and there were serious concerns you might have greater instability in russia. the immediate potential impact is a reduction in the supply of russian crude to the global economy. you would see oil prices rise to the simple supply and demand. that can be extremely concerning in a lot of ways. we already have central banks being hawkish because they're worried about inflation expectations becoming d anchored. poor readings for inflation becoming sticky. one thing we know around the globe, drives inflation expectations are and consumers is what is going on with the oil price. if we had a resumption of the

spike we had when the ukrainian were kicked off, that would both have a direct impact on potential inflation in the short-term but also an impact on the way consumers are looking at it. that would increase the bias that is already strong for central banks to be hawkish. that is a bias that is hanging over any attempt for risk assets to rally especially this week to get a slew of inflation readings culminating in the u.s. core pce deflator which is the key gauge the fed looks at. shery: what are we seeing in terms of how the markets are perceiving inflationary pressures and where the fed goes? is the bond market that was aggressively pricing in the rate cuts from the fed finally falling in line with expectations from the reserve bank? >> not exactly.

they have adjusted to the new reality the fed is very determined it is not only not going to cut rates for the end of this year. it is going to raise them. we are pricing for about a 60% chance of one rate hike by years end. not even fuller pricing in one and yet the fed has forecast they will go twice. there is still a mismatch. it is perhaps less of a mismatch and the directional mismatch has gone away where the fed expects to go higher. the market is expecting the fed to go higher. there is at least that much of a change. haidi: it is all doom and gloom as chinese traders come back after the four day weekend. is there any reason to be optimistic in the absence of any

eminent or significant stimulus package? >> that is going to be one of the main potential drivers of any optimism would be signs the authorities are wanting to go further. it is going to be interesting to see where the yuan goes. there's been some speculation the pboc is turning toward a weaker yuan as a potential tool rather than adjusting interest rates dramatically which goes along to some extent with one of the more surprising difficulties for the chinese economy perhaps has been the exports have continued to drag so that would be a direct plus for that site and the chinese might decide that is a better area to stimulate strongly been some of the other areas property sector, some of the other sectors which

have their own disadvantages if you go too fast. overall, there is not a lot of reason to be optimistic. we have more concerns about the global economy. we had some soft preliminary pmi's freely europe and the u.s. last week. china fits in with that at the same time that we have seen already we have had a couple of false starts with covid zero being taken away and the boom after that which faded rapidly and then there was optimism about the stimulus and so for the stimulus has not done too much and has not had a lot of follow-through. shery: garfield reynolds. let's take a look at some of the most read stories on the terminal this hour. a group of lenders led by apollo is providing as much as $2

billion to semi conductor from will speed. the deal is set to support the expansion of two duction facilities. sources say will speed chose to tap private credit to limit the number of artie's that would have access to its intellectual property. greece's former prime minister has quarter landslide. in a general election. the result gives the new democracy party a comfortable majority in the ability to form a single party government. has pledged to build on one of the fastest economic recoveries that has greek debt close to a return to investment grade. recession alarms are around europe's bond markets replacing the previous panic over inflation get good curves from germany to the u.k. are the most inverted in decades as investors pile in to long data bonds for cover. a swath of weak economic data on friday from germany to france

has sealed a shift in focus after the u.k.'s brutal inflation print. haidi: let's check out some of the most read stories on the terminal. you can see which stories are being shared along with other terminal users. coming up next, the amp chen japan president joins us to discuss business and investment sentiment with markets on watch for possible intervention. this is bloomberg. ♪

haidi: japanese markets almost open of the top of the next hour and ease and ease of -- even as we the asian ducks on a losing stretch at the moment it is a question as to how much for the upside see when it comes to the soaring rally in japan. investors finally buying into the old their error structural reform and so much optimism particularly when it comes to the warren buffett effect of doing down on stakes when it comes to the village -- to the japan trading houses. also watching dollar-yen as we see the further we miss getting closer to 144.

on 45 days where -- and it is him you and intervention could seems like you're getting ever closer. we have not really seem that much when it comes to young strength even as it is a traditional safe haven as of have the developments of the russian attempted mutiny against vladimir putin over the weekend. we are watching some of the other related stocks including defense-related companies trading in japan and south korea and japan. singapore nikkei futures like we will see downside. unsurprising given the gains of the past 10, 11 weeks we would see some profit-taking and a breather for the rally. watching jgb's as well as part of the broader watch as to what bond traders are doing when it comes to repricing both the divergence between the boj and the fed and broader expectations from central banks.

shery: which is why we saw the yen slumping toward levels we have not seen since the last time government officials intervened. i wonder we are on watch for potential currency intervention from policymakers. let's bring in the president of m chen japan to discuss how micro economic conditions are affecting members and investors. great to have you with us. what are you hearing from your member businesses about the weakness in the yen yeah -- in the yen? >> overall we are so pleased after having market regions of asia be here in japan for a lot of reasons. we are very positive on japan's current growth and its potential for even more. especially in light of japan's goals of but me in foreign direct investment by 2030. for global oriented companies like our membership, ultimately for geopolitics becoming more clear why market activity in

japan makes a lot more sense than any other part of asia. japan still faces structural challenges. we are encouraged to government is taking steps to address those. shery: how does a weaker japanese yen affect your member businesses especially with uncertainty about what the boj will do next? >> that is a good question and it is not universal across our membership should we have everything from startups to entrepreneurs to global companies and for some sectors like the defense sector there are questions about the weakening yen, what that means for the buying potential for the government ultimately. shery: we have seen this concentration and focus on some of the geopolitical issues globally that have led to different investment flows including the semiconductor business. what are your thoughts on that site and are your members benefiting? >> it is clear the u.s. and

japan and other like-minded countries are committed to strengthening tech supply chains and semiconductors. both governments have committed a lot of energy and money chose strengthening bilateral commitments. you're probably aware in may prior to the g7 president biden and prime minister kishida met and addressed efforts to strengthen economic cooperation on that front including negotiations for the indo pacific economic framework. also the promotion of clean energy and secure supply chains. this deepening technology cooperation in r&d is critical for companies. even among universities. we are encouraged to see statements from minister nation more at the may meeting when they met in detroit with emphasize the same points about r&d cooperation. both countries have committed money and effort so those are

promising for our membership. haidi: what are the biggest risks and things that are lacking in the overall ecosystem because you have written about the potential lacking when it comes to certain skill sets and talent. >> that really goes across several industries. everything from tourism where with the borders opening up we are seeing the only thing holding back even greater market expansion is the ability to get the right kind of talent into the workforce to support the needed bilingual skills and including the financial sector where our members see the possibility of up to 50% more activity in the capital markets if there are structural reforms and and opening up to attract and retain the right kind of talent that bring in diverse skill sets, new ideas, new financial structures.

we still think there is great potential for the capital markets themselves to contribute significantly to japan's overall gdp. haidi: it does feel like japan is going through a revival when you take a look at the huge amount of optimism as being seen in the stock market rally and some of the growth themes. what do you think the biggest risks and the policy and governance developments would you like to see to ensure we finally do see the breaching of the full potential this time? >> as i mentioned, some of the structural reforms are ongoing. the devil will be in the detail. last year japan passed an economic security law. it is in its implementation phase. we want to make sure the regulations don't inadvertently do anything other than guarantee fair market access and don't

unintentionally end up in any protectionist measures that take away from the u.s. japan relationship. shery: president of amcham japan. breaking news out of japan. we are getting the may services can super numbers. the estimate was for a growth of 1.8%. it is really staying at the same level of acceleration as the previous month of april this coming on the back of easing numbers for the previous two months. now seeing a little bit of stalling in the services number. a time when we have seen inflation easing any other parts of the world but central banks remaining hawkish given they are not quite sure when the price pressures will retain something completely different with the

boj because they do think the inflationary pressures will not last. haidi: and still a great tool of uncertainty as to when we will see the tweaking of the yield curve control. the new governor has been nothing but cautious and patient at this point. we are getting the bank of japan summary of opinions from the june policy meeting. there was one boj member who said it was appropriate to continue to continue with monetary policy easing and will watch to see how this plays out when it comes to the trajectory for the bank of japan to come. certainly we do see some of the uncertainty coming from inflation that the rate of inflation given japan's consumer prices at the latest reading in may rose at a much faster pace than expected. the deeper inflation trend continuing to strengthen for japan and some of that is fueling expectations the central bank will sooner rather than later raise the inflation

forecast come july and put through the tweak to the stimulus program. through some of these summary of opinions we are seeing the expectation when it comes to consumer price index seemed to likely decelerate towards the middle of 2023. high uncertainties over whether it will pick up again after that. clearly a lot of caution as to the sustainability of the inflation we are seeing in japan and have the bank of japan deals with that. also citing the importance to support wage momentum along with easing. more to come on daybreak asia. this is bloomberg. ♪

shery: take a look at how some assets are trading after the dramatic weekend uprising in russia that was short-lived as the mercenaries ended up calling off the assault. we are watching oil prices after the huge selloff we saw last week. it was the worst week in terms of losses on a weekly basis since may. we are now seeing a little bit of upside in brent prices. u.s. futures holding higher. this after we saw the worst week since march. we are seeing gold futures slightly higher.

anytime you have geopolitical tensions usually see a reaction in gold prices. we are watching also the japanese yen holding at the 143 level. a little bit of upside not really that much. not trading as a safe haven asset given the events in russia were pretty short-lived. watching for any currency intervention given the weak levels against the u.s. dollar. we'll be discussing that with nico asset management next. the market opens this is bloomberg. ♪

shery: this is daybreak asia and we are counting down to the market open and more potential fallout from the short-lived uprising in russia in a week

that is also busy with ego data began at the lowest level since november last year against the u.s. dollar so plenty to watch. haidi: watching gold and u.s. futures on modern commodities on oil prices. if nothing else, it speaks to the volatility we can expect from geopolitical developments that were unprecedented in putin's regime. what are we watching for the start of the week? annabelle: a lot for investors to be digesting as we get another week underway in asia about the open now for tokyo, seoul, sydney, and at the open we are watching moves in japan in particular because we just had the summary of opinions come out from the june policy meeting and that main indication is that at least one boj member is

saying it is appropriate to begin with the monetary easing for now in terms of moves from that it is something that has been playing into the japanese yen because we have been seeing [indiscernible] in the session down to traders perhaps listening to what we hear from the events in russia and on the other hand we have the lines that came out from japan's top currency official earlier this morning saying he will not rule out any options on fx but we are still seeing it trade around the 143 level, and some strategists say that would be necessary to have any bigger intervention beyond just talking from government officials. the outlook for stocks, nikkei 225 looking weaker at the start of trade that had been indicated in futures, perhaps profit-taking is playing into it, when you look at the moves

over the last week we saw the nikkei snap a 10 week win streak friday in the session. let's change on because russia is playing a role in the trading moves this morning but actually still a lot of investor focus is on what we see in the outlook for recession, the expectation that central banks will have to continue hiking on the outlook for china's economy which is starting to play out in different ways. korean airlines under pressure this morning, local media reporting it will be forced to cut flights to china given the demand we see so just another way it is eating into company profits. korean won trading past fridays level of 1300. a risk off play at this stage it seems. let's change on because we are watching commodities where we have seen a bit more trading

action and moves this morning and brent crude is higher at the start of the days trading. in terms of other moves, you can see the contract that has just come online this morning and is essentially what some strategists are saying is we could the prices trading higher nearer term because that is where we are unlikely to get any progress on the export deal brokered between ukraine and russia later on. haidi: russian officials have met with allies one day after the leader of the mercenary group stopped is advanced towards moscow. the drama has not affected the fighting in ukraine, russia says. but washington says it has damaged putin's authority. things are quiet. but you would imagine there is a lot of recalculating going on in

moscow and with allies like beijing. >> that's right. right now we have not heard any comments from vladimir putin. he has been silent since the deal was brokered. we know the president spoke on the phone and putin thanked lukashenko for his work arranging the deal. as far as the mercenary group, we have not heard any comment since the video on social media showed him departing from a military installation amid a cheering crowd. there was going to be a day off in moscow because of the security situation.

monday will be a nonwork day but the stock exchange will open. antony blinken referred to the situation as raising profound question and shows real cracks in russian leadership. haidi: what did china and north korea say? >> the chinese foreign minister met the russian deputy minister in beijing over the weekend and china's deputy also met with the russian official and they discussed the grim international environment. there was also a common from north korea's state news agency

and the north korea news agency expressed the belief that the armed rebellion would be successfully put down. shery: bruce sign her and latest on russia and we are watching the market impact from that uprising. let's bring in the chief global strategist. it will be a busy week. the japanese yen strengthening but it looks like it might not be direct reaction from what happened in russia but the currency chief in japan top this morning and not ruling out any fx options. >> that's right. they are not going to pre-announce any intervention but they are getting very nervous and they are ready to intervene if the yen gets much weaker.

we think the yen will strengthen in the next 12 months because the trade deficit will turn into a trade surplus, especially for goods ends, because tourism will keep booming because mainland chinese from the people's republic of china have not increased in size very much so far. they used to be 50% of all tourist and we think that they will start coming en masse soon and that will help yen along with other factors. shery: of those differentials in rates and where the boj is headed compared to the rest of the world? >> right. the fed is doing 25 basis points more and then stopping and then that will give some relief on the rate differential basis and

that the u.s. 10 year bond will start to decline in the fourth quarter of this year. there are quite a few things. the amount of money floating into the japanese stock market these days is quite tremendous and so that will help the yen as well. shery: -- haidi: when it comes to sectors, where will you see more longevity in this rally? >> with the yen strengthening, i should have mentioned before that we do see why cc bumping up 25 basis points by the end of the year. we have penciled that in. that would also help the yen. on sectors it would not be the yen sensitive sectors that do particularly well in this environment, it would be more

the domestic plays and probably less of the commodity plays because we see commodity prices tailing off the rest of the year. value plays, of which there are quite a few in japan. haidi: when it comes to the risk from the bank of japan, clearly caution is the name of the game and they are not in a rush to do anything dramatic but if the inflation trend continues the way it is, what are the broader risks in the markets when we start to see a tweaking from the boj, particularly as so much money has been put into that divergence trade so far? >> we think it will be bumped up 25 basis points. a lot of that is priced into the market.

most economists on the street have it bumping up in july. that could be a minor headwinds but moving from 50 basis points to 75 basis points is not such a big deal if the market did not have confidence it could keep it at 75 that would be another story but right now the long bond is well below the 50 basis point cap and that is even with the bank of japan reducing assets in the last 10 days so there is not a lot of pressure. it could be that the short-sellers of the 10 year jgb have been forced out of the market and having to buyback their bonds and that could be suppressing the yield but it is hard to know at this point but it is well under the cap as it stands, which is good news. shery: mainland china is coming back online. what are we expecting in terms of trading in china? do you see opportunities?

>> i'm not really an expert on the chinese stock market meant to be honest, but we do think for instance the hong kong hang seng index, which is primarily chinese companies at this stage, will have quite a big rally in the next three to six months. the general economic scenario we are forecasting is reasonably good, a soft landing will provide a lot of help not only for the west but for china. china will keep growing pretty decently so that is good for the hang seng, especially with this property component as well as the mainland china component. so good news for sure in our opinion. shery: john, always great to chat with you know. haidi: let's get back to

annabelle for a look at the movers and oil is in focus today . what do we see for energy stocks? annabelle: brent crude wta -- wta trading a little higher with investors weighing the fallout from the rebellion in russia over the weekend that has turned into one of the biggest threats we have seen against vladimir putin's almost 25 years of rule and russia is a major opec-plus producer but in terms of market reaction we see energy plays trading a little higher on the outset. let's change on because there is another group of stocks in focus after the events of the weekend, these stocks are largely moving to the downside and it appears quite contains but some saying more analysts saying more credence will be put on any sort

of domestic political events and tensions inside russia. let's change on because the others stop we are watching his sk innovation and this is dropping quite sharply at the outset for soul this morning. this company plans to issue more than 8 million new shares according to a filing that came through friday. the proceeds will be used to put into the company's green businesses and it is planning to double global production in that area by 2025 but the estimated price per share is significantly below where they are trading today so the estimated price per share is 143 -- the final price will not be decided until september 6. shery: coming up, cushman and wakefield share their outlook on the commercial property sector

and why they see a rising risk of office obsolescence. first, more on russia's efforts to diffuse a mercenary uprising. this is blueberry. this is bloomberg. ♪

shery: we have breaking news. a filing that there is a change of executive director and ceo at shady logistics.

-- jd logistics. we have a statement that he has a resigned as a result of personal health reasons and there is no disagreement with the board and the resignation has been duly put in place and a replacement who will take over june 26 with the strategic and planning direction. he has been with jd.com since 2010 [indiscernible] with extensive experience in operations and management across logistics and of course we are watching for any kind of reaction we see today of course as we see the jd.com change the ceo. shery: and we are watching any

reaction in terms of the dramatic uprising this weekend in russia. china says it box -- facts moscow's actions to maintain national stability as the country looks for national support. how difficult of a position does this put beijing in, given the difficulties russia is facing now? >> it is certainly awkward for china at the moment and president xi has invested personally in the relationship with putin going right back to before the war when he hosted putin and announced a no limits partnership. since then, china has tried to walk that back a bit, particularly as the war has been

protracted and russia has shown no signs of achieving objectives in ukraine, ukraine has been resilient and we have seen china try to organize a peace process to give russia a way out of the conflict and paint china as a neutral broker, which no one really sees. but we have seen china at least try to distance itself a little bit from russia while maintaining diplomatic partnership that persists. we saw that in the statements yesterday. but really there is a number of worries for president xi at the moment. control of his own forces. over the weekend the ple -- peel you issued a statement linking to a speech from [indiscernible] emphasizing the need for the

party to maintain control over the military. whether that is happening in china, last week when joe biden called president xi a dictator he highlighted the fact that he was not aware of the spy balloon and that was embarrassing and that suggests he does not know everything going on so that is one worry for china at the moment and the other is just losing the counterweight to the u.s. led [inaudible] russia has been that and that is what china has stuck by them but this dysfunction ultimately will strengthen the west and for china it is bad ultimately. it loses a key pillar in the push to fight against the u.s. more widely. haidi: building that coalition outside the u.s. and eu and russia being a key partner they

are but economically what does this potentially mean because you would imagine there will be a serious rethinking of troops in ukraine when it comes to the absence of wagner fighters, will beijing be tapped for more economic assistance in this way? >> china has always sort of been providing what it calls a normal trading relationship. it may step up on the margins to help with that. certainly china has gained in terms of the overall relationship with russia. russia becoming almost a client state depending on china to buy its energy and hard cash. so that will likely continue. we have seen china be reluctant to provide any support that would make it the subject to sanctions from the u.s. and

europe. we saw that when li qiang went to europe last week. so whether china will come to the aid of russia, it definitely does not want russia to collapse but we have not seen a sign that it will go above and beyond to prop up the russian regime in a way that would make china subject to its own fallout from the u.s. or anything that could hurt china's economy. shery: on all of the developments around and russia and the response in china as well we see the response in the commodities space from that uprising over the weekend and we are seeing upside for oil prices but put into context we saw the biggest week the loss in prices

last week since may and a little upside for gold prices and we are watching wheat given that russia is the world's largest exporter of it. let's turn to su keenan. recession fielders -- fears hit oil last week. >> we saw one of the biggest drop since april in terms of weekly losses. turnaround very quickly as we saw oil open in the asian market , they were up over 1% pairing those gains now as expected and futures now gas rising as much as 2.5% although analysts point out europe is now disconnected from russia in terms of dependency on natural gas so there are other factors boosting the gas and the speculation perhaps overdone as we also see

gas pair original gains. west texas and brent down 14% year to date, slower than expected recovery in demand following the pandemic. meanwhile the oil market participants are watching closely for the potential return of iranian oil to the market, where there are reports of renewed u.s.-a radiant talks that could see a return for oil and that is a challenge for opec plus which has been taking oil off the market to prop up prices. shery: history suggest that geopolitical rallies like in gold are short-lived. >> gold is always the first commodity to react quick we. after the 9/11 attacks, gold futures had dropped but got that out of the gains by the next day.

you are looking at the gold initial jump, a lot of analysts saying this can be short-lived but geopolitical conflict, heightened risk for signs of instability typically put a bid under bolin last week gold, people piled into gold for various reasons, mainly the dollar. haidi: this is bloomberg. ♪ i nearly died. i was a young journalist with a great career starting a family. the only way we found out i had any kind of heart issue was when i went into sudden death. my coworkers sprung into action. they had recently been trained in life saving cpr protocols developed by the american heart association. they're the ones that kept me alive until the medics came. they did many tests on me in the hospital after my cardiac arrest and found my arrhythmias and created a treatment plan.

i had my pacemaker, my defibrillator. different surgical procedures have been all with research from the american heart association. that makes it pretty, pretty personal. i think unless you are a heart disease patient, you may not know how much work the american heart association does behind the scenes to save your life. that's why i'm doing everything i can to pay it forward. and i urge you to become a monthly donor. your support will help get the next person trained in cpr, the next hospital to be certified in high quality cardiovascular care. the next medical breakthrough, one that could save your life or the life of someone you love. heart disease kills one in five americans. and we urgently need your help to save lives. go to helpheart.org or call now to become a monthly donor today. when you become a monthly donor, you'll help sustain life saving work all year long. and when you start your monthly gift of $19 a month, just $0.63 a day, you'll get a t-shirt like this one.

from the moment you put it on, you'll help raise awareness for heart disease and stroke. since my cardiac arrest, i've had two more children. i've watched all three of my children grow into adulthood. i'm going to cry now. graduate from college. my daughter got married. i have grandchildren. and i'm still here. call now or visit helpheart.org to become a monthly donor today because it's personal. shery: an unusual start to [indiscernible] as we go into this monday, go into chinese markets coming back after a four-day holiday and

also the geopolitical discretion -- disruptions over the weekend. australian equities and revision with consumer stocks but across commodities as well with jeffries saying commodity demand is overt bloomberg intelligence saying the stock is more to the beginning than the end and could stretch to 2024 as rates have that impact. much more to come. thi

>> the fed has been trying to talk the market down. i think the fed has to sleep with one eye open. >> the markets is fighting the fed. >> the fed will have to stay higher for longer. >> to pause while raising your

forecast and the level of rates we will have to get to to get to the problem, that's a tough job. >> forget about the chance of cutting this year. >> it is a mistake to a central banks to solve inflation all by themselves. annabelle: some of our guests sharing their outlook for the fed going into the second half and it does dovetail nicely into the market results just out. the latest poll survey looking at the outlook for the second half and the key takeaway is that investors are finally starting to heed the message from jay powell over at the fed because the understanding that is coming through is that the fed is serious about bringing inflation under control, even if it comes at the cost of the economy so in terms of what that means for assets and bonds in particular, we can expect the volatility we are seeing to persist. so the question was put to

investors and there were nearly 280 respondents in the last week and the question was what will be the peak rate for the fed and you can see it is fairly evenly split between 5.5% and 5.75%. so there is still a ways to go, even though some investors have been saying that perhaps the fed could be on pause for now, given the economic weakness we are seeing but the vast majority saying there is still a ways to go. in terms of what assets are best to perform, given this environment of rising rates and recessionary outlook that is building on what is happening in terms of geopolitical tensions, we see the asset class that is best said to perform in the second half according to the survey is government debt but also you can see stocks is a fairly even split between them. shery: and mainland chinese

market coming back from a long holiday on the back of all of that macroeconomic back drop fell talked about and as we got more hawkishness from global central banks let's discuss what to look ahead for as the market opens and bring in our next guest. will we see this cash down? >> onshore chinese market is set to come back from a holiday and we are likely to see the gloomy mood from last week extending into today's trading session. there was a pullback in the rally since july and there has been an expectation mismatch on chinese policy stimulus. people thinking [indiscernible] to bring back the economy recovery but so far what we have seen is stimulus and people were

disappointed on that front and also there is a lot of external volatility going on. we have the monetary tightening and geopolitical tensions and that is weighing down on the chinese market. haidi: what could potentially be the catalyst for a turnaround short of significant stimulus measures? >> to be honest, there is not much people expect now. one thing to look ahead would be the meeting in july but otherwise it seems that chinese markets lacked direction and a report last week said most long money funds are significantly underweight chinese assets and so far what we see mostly is hedge fund and in short positions which suggest recent gains might be driven by [indiscernible]

chinese assetsy. haidi: bloomberg's john chen there. let's take a look at some of the stories we are following on the terminal. a group of lenders providing as much as $2 billion to semi conductor firm. the deal is said to support the production of two facilities. there would be a limited number of properties to that would have access to the intellectual property. and a new democracy party led by [indiscernible] an ability to form a single party government.

greek debt is close to investment grade. europe's bond market concerns. the yield curves inverted for the first time in decade after week economic data on friday a shift in focus after u.k.'s brutal inflation prints and jumbo rate hike and you can check out those stories on read ago and see which stories are being shared among other terminal users. coming up next, we explain why there are strong growth drivers and new office jobs. this is bloomberg. ♪

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haidi: a new report says a risk of obsolescence is rising across the world. 76 percent of office stock in europe and 61% in the u.s. would likely be impacted by the end of the decade. the asia-pacific has a place

where 72% of office stocks does not meet the needs of tenants. let's bring in the head of research at cushman and wakefield. good to have you with us. a lot of willfulness around of this occupancy post-covid starting to see a recovery now. >> if i was to talk about the region as a whole it has been resilient during covid. over 200 million more square feet of office space is occupied now compared to before covid so overall the region has been strong. and we have seen a stronger return to office in some markets across the region compared to europe and the u.s. so certainly fundamentally the region is performing very strongly.

from an office market point of view. haidi: what are the biggest drivers and what is the make up when you look at the properties? is it mixed-use, retail, what is the broader picture? >> at its base level it is about the quality of the assets. if you think about the office sector we are looking at the grade a premium grade office assets. the top of the market. that is pretty -- that is very much where we see the demand for space and that is a global phenomenon, not just in the asian pacific region. the needs of tenants are changing. there are different modes of working. more flexible modes of working, more collaboration, those sorts

of things. so the workspace itself needs to evolve to meet the changing demands and behind that we see tenants move up to the high quality premium grade office space and that is where we see the demand for space in the market at the moment. shery: are there any differences? and if so, what are they in terms of office demand in more mature asian markets like australia and other developing economies like india? >> it comes down to a few things. india has been flying along recently. demand has been very strong. it has been very expansionary. some were like australia, there has been more churn in the occupied space. we have not seen the same levels of growth.

rather we see tenants upgrading office space. so moving to a higher grade. there are also different drivers in terms of sustainability. some markets like singapore, australia, we see a strong lead with the sustainability side of things and having to get holdings rated while it is still more voluntary in some more emerging markets like india or mainland china so we are seeing differences in demands of occupiers but i think going forward as occupiers start to meet sustainability criteria, they will increase demand for green buildings and green spaces and that will be a common driver across the world. shery: what about differences in terms of the return to office trend we see in asia compared to the rest of the world? >> that's a great question and

certainly something we are constantly asked almost every day about. as a blanket statement i would say there is a much stronger return to office in the asian pacific. mainland china, hong kong, it is praise -- it is practically 100% occupancy. in tokyo, korea, similar. high 80%, 90%. even australia where there has been flexible working practices for years, depending on the city , anywhere from 60% to 80% occupancy levels. compare that to the u.s., where it is more 40% to 60% range and in parts of europe like the u.k. it can be as low as 40% or 50% in some cases so we do have a much stronger return to office in this region than in elsewhere.

shery: could you gauge through research any changes in employment trends themselves in terms of jobs growth across different economies? >> it is something we constantly look at and it constantly evolves as the global economic picture changes. one thing i would say is on the fundamental level, for asia-pacific there is a very strong office jobs growth outlook with current forecasts estimating 15 million office jobs to be created by 2030. if you look at the breakdown, almost half will be in mainland china and india and the philippines are rounding out the second and third places. between those three markets it's about 70% of the regional office jobs growth. so there will be leaders in that trend and to some markets likely

to grow more slowly. shery: dominique brown, great to have you with us. thank you. turkey central bank has moved to simplify rules in a bid to boost turkish lira savings. the maintenance ratio has been lowered from 10% to 5%. banks will get a discounted ratio if they shared leah deposits rises to 70% but changes under the new governor come as the lira continues to slump in june. pakistan is making changes to the budget to appease imf concerns on taxes. the finance ministry says the government is planning new levies to raise revenues by $750 million. pakistan is seeking an imf bailout worth $6.7 billion as they deal with record inflation and reserves that have shrunk to

one month of import. south korea is reportedly considering slightly lowering economic growth forecast for the year. one news agency says finance ministry officials could cut projection to as low as 1.4% from 1.6%, which reflects a sluggish performance of the chip industry. a technical recession after expanding in the first quarter. china's travel spending during the dragon festival house -- holiday fell short of free covid levels. 160 million domestic trips were made by almost 13%. the political leaders are working through the impact of the mutiny and back down by a

mercenary group in russia but as mark champion tells us, officials and key believe the events -- officials in kyiv will only benefit ukraine. >> people watched with a sense of glee. there has been no fallout on the battlefields of ukraine so far but the armed insurrection of a mercenary leader in russia is being greeted as a sign of weakness that will ultimately undermine the russian war effort and benefit ukraine. it cannot come at a better time. the troops or three weeks into a counteroffensive and many feel it is the best opportunity to defeat putin. one aide to president zelenskyy said officials will not jump into any kind of action until they see how things unfold in

russia. even so, officials describe the turmoil in russia as proof that putin's system is in a state of disintegration. putin might know feel like he has to consolidate power by doubling down. after 16 months of heavy losses and dissolution in the population, [inaudible] amongst the confusion about what happens next, if he was right, this was indeed important for ukraine. haidi: let's look and the markets as we process really the reverberations from these developments. we see risk assets holding up ok . futures up to tenths of 1%.

a little advancement with gold futures. geopolitically driven rallies tend to not last long. broader metals prices are the bigger long-term price choppers. brent crude seeing an uptick as well as the dollar yen pulling back a little from the earlier strength we saw in the session but 144, we are on the watch for potential yen intervention from policymakers as we get to these levels. elsewhere in the region we are looking for the come back of traders in china after a four-day holiday and how they will react to risk assets particularly as the stimulus package is still not forthcoming. tune into bloomberg radio for

in-depth analysis from the daybreak team. we forecast live from our studio in hong kong. listen on radio plus or bloombergradio.com. more ahead. this is bloomberg. ♪

haidi: take a look at what we

are watching for trading in australia. the 10 year falling 3.7 basis point from the previous day and this is headed for a one week low. the biggest decrease we have seen in a week. we saw the impact it comes to inflation for march coming in at the biggest decrease from the previous reading and 21 months so watching for the july cpi and how that continues to really play into rba expectations as these concerns for the hike may be being on the horizon, job numbers support that and that this point in the rate cycle more globally for central banks is looking more high risk. shery: goldman sachs starting to cut managers across the world.

vonnie quinn joins us with the latest. >> another blow for global employees, this time in the senior ranks. at in the investment banking industry. this after goldman announced the biggest round of layoffs ever, laying off this year more than 3000. goldman, morgan stanley and citi we are looking at over 11,000 layoffs this year and j.p. morgan also announcing this week they are laying off 40, some in the investment banking business, and this on top of some investment banking jobs going away in asia last week as we reported here. some reasons are obvious. dealmaking is not coming back. banks have ramped up the ranks during the pandemic when deals were in a frenzy. valuations were depressed and everything was happening all at once. now the fed has 500 basis points

or so of increases and less optimism about where the direction of markets is going and a lot of volatility and the banking crisis did not do anything to take the chill out of the air. so if dealmaking is not coming back in capital markets are not being ramped up by the end of the year, why should banks head onto the staff members? they are getting rid of them to help the bottom line and placate shareholders ahead of what could be a resurgence next year, when banks can already start rehiring. haidi: if they get rid of talent but still anticipate a return to deals? >> the deals are not coming back fast enough. banks are probably trying to hold onto talent but now we are in the second half of the year and we are not seeing the deals coming back and companies content to raise capital or debt

and the ipo's happen across the globe so banks have decided it is time for them to go. we also learned goldman may reintroduce the annual culling of underperformers in september. we just heard from j.p. morgan's president who said the bank expect -- expects banking fees to drop 50% from a year ago and that was already down 54% from the year before so banks are really suffering in terms of dealmaking and they are not willing to hold onto even talented staff. some boutique banks might try to take advantage. one is starting to take in the better bankers and hiring some top tier talent in the industry. haidi: some stocks we are watching a of markets opening in the hong kong and china, property shares in focus in central china. alibaba reportedly seeking

approval of a spinoff listing on the hong kong stock exchange in two weeks and the cofounder has resigned as a nonexecutive director of the company for health reasons. china gas among companies reporting earnings later today. that is it for daybreak asia. markets coverage continues as we look ahead to the start of trading. bloomberg markets: china open is next. this is bloomberg. ♪ the vehicles are all-electric. the feeling is all mercedes. the choice is all yours.

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♪ david: good monday morning from hong kong. welcome to bloomberg markets china open. i'm david with yvonne man. yvonne: