>> good morning and welcome to daybreak australia. annabelle: we are counting down to asia's major market open. shery: the top stories this hour, traders bracing for a massive week of central-bank decisions and the rate forecast is looming as a key risk for bond markets and risk of a third straight year of losses. paul: michelle -- haidi: michelle bullock takes charge of the rba. shery: and country garden with debt lines and cardinal approval or -- credit approval. take a look at u.s. futures. a mixed picture after stocks fell in new york friday. s&p 500 erasing the week's gains

. nasdaq dropped almost 2%. a few events to watch out for. and options expiration events and concerns about how long a strike in the auto sector would last and data showing treasury yields gained across the board with the 10-year yield above the 430 level. we are looking for the rate decision later this week but take a look at inflation expectations showing they fell in early september to the lowest level in two years and the consumers grew more optimistic about the economic outlook with the sentiment index on the bottom panel and inflation expectations on the top panel.

so consumers expecting prices will climb at an annual rate of 3.1% in the next year, down from what was expected in august. haidi: michelle bullock has taken over as australia's first female central-bank governor as the rbi embarks on a big overhaul. [indiscernible] obviously a new leader but expecting policy to maintain trajectory. >> when michelle was recently asked for her top priorities she said inflation control was one of the biggest things she is looking at and it is working in the favor of the rba. but it is too early to declare

victory and the rba is reluctant to raise interest rates by a lot more and michelle will continue on the path and economists expect another 25 basis point hike. that may or may not happen. shery: what can we expect from the new governor? >> one of the biggest reasons she was promoted was the treasurer was looking to bring change in the way the rba functions and communicates and michelle is seen as a strong community -- communicator so we expect more clear communication

from the reserve bank, which was a problem with them during and after the pandemic. so it is a big change in the composition of the reserve bank. haidi: how was the australian economy doing? >> data coming in is not bad. jobs data is strong. retail sales doing ok. a small drop in consumption but it is not dire. property market has rebounded. our first quarter gdp data was revised higher. second quarter was stronger-than-expected. overall it looks like the economy is absorbing the rate hikes better-than-expected. we will see how the coming months will be in the fourth

quarter will be very important because that is when the impact of rate hikes will be felt. shery: the latest on the rba and australian economy. autoworkers in the u.s. continue striking against ford, gm, and so lantus as the union pushes for a dramatic change in benefits. >> the two sides remain very far apart. the union is asking for a 36% raise so there is a wide gulf between them. haidi: does it mean this could be an elongated situation? >> it is hard to know but some

analysts say it could go through the end of october. it depends on how quickly they can bridge the wide divide. shery: what are the risks to each side as this continues? >> if the union does not succeed here they could set back the efforts to organize the nonunion auto factories in the u.s. owned by ford and tesla. the big goal is to expand mentorship -- membership with those factories. if the union succeeds that companies labor costs could go so high they will not be competitive so there are risks for both sides. haidi: have we heard from president biden? this is key to him at this point. >> he spoke after the strike started friday and encouraged the companies to reward workers

for the record profits they have enjoyed. he squarely took the side of the uaw in the dispute and has called himself the most prolabor president ever. michigan, where many of the workers are, it a very important swing state. he won it in 2020 and currently leads by just one point over trump. shery: we see a costly shift towards electric vehicles. depending on the outcome, what comes next? >> between gm, ford, still lantus, they are spending more than $100 billion to build electric vehicles so they are saying they cannot afford big contracts and the ev transition. for the union the next option is

to ratchet up the strike. they have only struck three plants so far, when in each company. they could still strike that big plants. haidi: keith norton in detroit with the latest. we will continue to monitor developments. let's look at how we are setting up here in asia this monday morning. annabelle: a couple different things. central bank has key rate decisions and in japan, boj traders have been advocating for a policy shift after they were told there could be enough data by the end of the year about wages to justify a move but at the end of last week we saw government officials pushing back and saying perhaps the guard -- the market misinterpreted the data. we see the yen trading around a

new year low against the dollar and little to push us away from going past the 150 level. japanese markets are shut for a public holiday. the other key thing is what comes through in that chinese property market. country garden faces fresh tests and two big headlines looming for the session. a bondholder vote on whether a you wan debt deadline -- yuan debt deadline should be punished for another three years. haidi: the focus this week is going into where next for the

fed policy and we have had a string of resilient data and consumers, services, labor market and this suggests may be with inflation readings insight that higher for longer has been the narrative but there are some doubters when it comes to what we see in the bond market, and expectation amongst a cohort of investors placing bets in the economy not staging the soft landing easily in a short policy reversal in orders so heads has been put on fed cuts, slowing pace of data showing the session -- it puts together what is a difficult outlook for the fed because the higher for longer situation could mean it is a direct threat to the inflation and potentially according to one paper that rates are too high and would hurt supply and lift

price pressures, a difficult balancing act. shery: despite all of that we see bullish stock market as it is interesting to see the continued rally and strategists called for losses this year having to reverse game or upgrade the forecast. [indiscernible] boosting the year and target last week on the index to 4750 from 4300, a 25% above. morgan stanley is michael wilson said in july it was too pessimistic for too long but he sees u.s. stocks falling more than 10% before the year is done and haidi concerns about the economy continuing in the bond market has never been for this

long. haidi: and we keep wondering if u.s. stock market -- u.s. stock market exceptionalism will continue. coming up, rising tensions between china and the u.s. the finance minister joins us. and our next guest says it is premature to assume the worst is over for china's economy. the market outlook next. this is bloomberg. ♪

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shery: you are watching daybreak asia. a rush of monetary decisions this week might set the tone for the rest of the year as the world adjust to the u.s. keeping rates high. the fed kicks off on wednesday with jay powell acknowledging the economic backdrop is more favorable than a year ago but that policymakers are ready to raise rates further if needed. investors will watch the next policy steps in brazil and paraguay which began easing cycles in august. thursday, the trade rolls into asia and europe with the boe expected to raise rates by a quarter of a percentage state -- percentage point.

and traders interpreted the some recent comments on wages and inflation is potentially hawkish and that is your week ahead. haidi: our next guest says it is premature to assume the worst of china's economy is behind us. this theme will be top of mind this week for policy makers. it is great to have you. we saw signs of stabilization in domestic activity numbers and we have seen lower key policy support measures, particularly in the property sector. are you optimistic we will see the efficacy of those measures now? >> unfortunately i am not. i'm not that positive. i know we have seen improving numbers this week but i feel i

am concerned about the developments in key drivers. property fell in august and that is [indiscernible] to encourage more people into the market but under strong stimulus we see numbers falling. another concern is china's relationship with the west, with the u.s. it is a sign china is not in the position to improve tension and that's concerning because it will stop more capital, orders, demands out of china so those are the areas where i feel concerned and until there is

convincing improvement, i will continue to be cautious that the worst is not over. haidi: does that lend itself towards your strong call for the yen or because you expect meaningful changes from the boj policy to close the divergence gap? >> i do expect meaningful changes through the end of the year. we got the sense the boj makes some shift and the language was changed from august and we are waiting for wage growth. i expect that will be a big change from october to november and it will impact nearly 20% of the labor force.

it makes me believe boj will make some meaningful moves in the fourth quarter and support the japanese yen starting next month. shery: how challenges -- how challenging will commute patient's be for the governor -- will communications be for the governor? we hear from policy makers about intentions. >> the boj [indiscernible] when i say meaningful change it does not necessarily mean they will change everything completely but there are a lot of things they could do, like a slow exit and changes to-year-old curve control -- to

yield curve control. a slow process but they are moving towards that. shery: in the u.s. we are expecting the fed to pause. what would that mean for potential rate hikes in november? >> for me it is getting more likely. the pause appears to be likely. a hawkish pause looks likely given development in inflation so the watch points for the coming meeting are what sort of urgency language they will send into the markets for the next rate hike? if it sounds urgent and hawkish the market will tend to price in more for the november hike.

they will increase more certainty of what we can expect to happen in q4. and they made changes on the inflation and interest rate targets and that would paint a bigger longer-term picture for how long -- how far the interest rate will keep moving. haidi: a new governor is at the rba this week. does that change your outlook when it comes to assets in australia? >> yes. it is a big week for the australian central bank. the key message for the new governor will be crucial. we will see whether or not she will follow what the previous governor set up.

we will like to see what she will stress come if she is more hawkish or dovish is a key watch and until it is clear the market will wait and see as there is a lot of uncertainty to unpack. shery: good to have you with us. you can get a run above all of the stories you need to know to get your day going in today's edition of daybreak. go to dayb and customize your settings to get the news that you care about. this is bloomberg. ♪

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sleep next level. shop now at sleep number.com haidi: you are watching daybreak australia. we have learned ubs has cut a

dozen jobs in the u.s. investment bank last week as part of integrating credit suisse. we reported the firm expects to cut hundreds of jobs in asia and could cut half of credit suisse is overall workforce. debt swaps are under scrutiny after new labeling guidelines were issued. south korea has asked apple to report on electromagnetic waves issuing from their iphone tropes after finding more -- iphone 12 after finding more waves were being issued than is allowed in europe.

shery: we are watching the japanese yen holding at the 147 level. it has been week, following to the weakest level since november against the u.s. dollar as the dollar holds steady. not a lot of movement when it comes to the aussie quirky we. -- aussie or kiwi. data out of china last week showed retail sales picked up so we had strength in the chinese yuan after data beat forecasts. we are waiting for commercial banks to potentially cut another five basis points which would be the benchmark for corporate loans and just one policy decision we expect on the monetary side of things across the world. haidi: it is a huge week when it

comes to the potential uncertainty from that policy trajectory take a look at how asian markets are setting up, in the asked -- in australia futures 6/10 of 1% lower and asian equities probably looking week following the declines we saw in wall street friday with investors sticking to the sidelines ahead of this big week with the fed and boj some of the decisions we are watching, hong kong futures are softer as well after chinese stocks fell 7/10 of 1% in new york and japanese markets are shut on monday for a national holiday with the dollar yen holding jus hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician.

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when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. haidi: a possible november

meeting between xi jinping and biden was on the agenda when officials met over the weekend in malta. let's bring in stephen engle. what is the significance of this meeting? >> it is not as significant as the conference in 1945 when churchill, roosevelt, and stalin met or were 1989 when gorbachev met george bush senior but malta played a key role this time in getting chinese and american officials to talk again and potentially lay the groundwork for xi jinping and biden to meet in san francisco at the apec summit. but there are other issues between the countries for the national security advisor and foreign minister of china to discuss, including the impending

visit this week to moscow to talk with his counterpart and jake sullivan expressed concerns about that made ongoing support of moscow by beijing amid the war in ukraine so those issues were obviously brought up, as were taiwan, a regular issue between the countries for many years. according to sources besides reiterated their long-standing positions on taiwan with china and reiterating it is a redline in relations between them. there was nothing discussed about the whereabouts or fate of the chinese defense minister who u.s. officials suspect has been removed from his post so a lot of discussions went on over the

weekend in malta and laying the groundwork for a potential meeting between biden andxi -- biden and xi in november. the last time they met was in may. the big target now is san francisco november apac whether they will meet and talk. shery: shery: stephen engle joining us from hong kong. as tensions rise between the china and the u.s., paraguay punches above their geopolitical weight. a delegation is in new york for the u.n. general assembly. carlos fernandez joins us. paraguay has been balancing major powers on the world stage. tell us about what trade relationships we could see from

paraguay and taiwan. >> many. paraguay are a good provider of food and help contribute to food security but we want to diversify the composition of production so that will be key for the war, the possibility of producing green hydrogen because we have enough water, we are one of the few countries to have an excess supply of electricity. those components will be good to produce green hydrogen. shery: we've talked about green hydrogen for chile and brazil but when it comes to putting

investment it is a different issue so what do you expect this year and next? >> people are already investing. we have some production of green hydrogen. not just green hydrogen in the form of alternative to oil. something we think is better suited to the economy of paraguay, producing green fertilizer. it's a different product. you do not need a large amount of energy. but it will be good for the whole region because the whole region is a big producer and user of fertilizers so we will produce green fertilizer in order to provide for the region. shery: your global partners in that green hydrogen projects, what we get in the geopolitical sense is paraguay is well-positioned to get

investments on concessions from taiwan and china. are they involved at all? >> it's not a question of china versus taiwan. we are open to everyone over there. one thing is the economic relation and the other is that pollution but if chinese want to go we are open to that -- population but if chinese want to go we are open to that. we are tied politically to taiwan but economically, we are open to signing an agreement with china. we are open to do business with china. where we expect investment to come, many from brazil. we inserted our economy into the

production chain of brazil through a system you probably know here. the michaela factor is in paraguay produced 10% of the whole export of paraguay in a given year so it is something that was really small so brazilians are interested in investing in paraguay and looking to invest so paraguay you could see as an island of stability attracting private investment from the region. haidi: what about paraguay as a source of shoring? the u.s. has been keen to diversify supply chain. have they approached paraguay? >> the u.s. right now is into a [indiscernible] but paraguay is open to business

and i believe u.s. could play a bigger role but otherwise someone else will take the place . if you look at the region, china right now is taking the place of u.s. or europe because they are investing over there but we are open for every type of investment, if you want to position yourself politically and economically in the region, paraguay is a good place to start. haidi: when it comes to china, how do you business with china? how do you approach beijing? can you give us insight into how it works? >> we are open. i am the finance minister, the political arm as the minister of foreign affairs, i do not know if they will have a meeting here but we are open to talk with anyone who wants to go and invest. shery: it is a very important

week for monetary policy. we expect a rate decisions from paraguay and higher u.s. rates for longer. what are the implications for paraguay? you have a budget bill including millions of dollars from local and government bonds. >> we are in a different cycle for monetary policy. we are cutting interest rates. the first cut was last month. in the future we will probably have further cuts. so a different cycle from u.s. and europe because we already have inflation converging to around 3% per year. was almost 12% a year and a half are in a different cycle. we are looking at the u.s. because -- and what the fed does so for us it will probably be more expensive next year to issue the bonds but that is the

market rules so we will see for how long we are going to issue those bonds because maybe it is going to be better for us to issue for five year instead of 30 year term we use to issue before in order to do the rollover in five-year lower interest rate. shery: your neighbor that constantly has issues with our economy, argentina in crisis and expecting an election. what is the impact of that on your economy? >> it is important argentina and brazil do well. for us it is good to have a strong growth rate in the neighborhood but we have a difficult neighborhood for the past 200 years so that is the way we learn how to survive in this neighborhood that is characterized by a volatile economy. it will be good for them to recover and start growing strong again but we are able to really

perform very well despite the fact that argentina or brazil have some problem. if you look at the growth rate of paraguay in the last 20 years, 4.3% per year. paraguay was able to quadruple the gdp of the country during the past 20 years. shery: brazil and argentina are your partners when it comes to a south american trade deal and the deal with the eu has been stalled for quite some time. what do you expect and what would the impact beyond on the economy of paraguay? >> we have a meeting with the finance minister of europe all of them in spain last week so there is a lot of talk but we need to walk the talk so i mentioned there that after 20 year it is really time to sign the free trade agreement between

europe and not all of latin america but given that everyone was talking about the need for more integration, i mentioned this will be the right thing, walking the talk if you sign the agreement right now and not delay further. shery: minister, it is really great to have you with us. carlos fernandez joining us in new york city and making time during the busy week. the eu must reduce reliance on china. buyer bob told us about how recent strategy has changed amid the global fallout from the war in ukraine. >> we have learned our lessons from our russian dependencies. i believe you can be self

reflective, this is obviously not the way to go, we had such a high dependence on russia in gas and oil and in the past former governments took decisions which were not the right ones, speaking about that gas pipeline as a purely economic thing, nothing to do with geopolitics, and i was in a position back then and also at the peninsula for example where there was a source of this pipeline coming through when i spoke to many people and i could not only feel from our partners in the baltics but also there that this has also a geopolitical dimension so before the election i was always arguing we have to trust our words and see the action and now when we came in government we said already air pollution treaty that we have to rephrase

our dependencies that we formulate also before the russian war and after the invasion the full invasion we not only wrote the strategy but prepared for the things we should change in the future and this is like limiting -- >> what about chinese italian legation -- chinese retaliation? >> first of all understanding if you are bound to closely, it can endanger you, especially if you have such a high dependency of a regime like russia, which is overtaking your piece orders so therefore cutting down dependency with russia and with china de-risking is our general understanding of the strategy, no decoupling because you cannot decouple in interconnected world and a connected world is the way to peace but we should be able

to defend ourselves, not being naïve and so. a partner in climate issue's, a competitor with new technology and also seeing we are systematic rivals and we have to protect our own vulnerability and this is where we have to strengthen critical infrastructure in europe and also locate at outbound entrustment screenings. haidi: [indiscernible] speaking to bloomberg. looking at other stories we are tracking today, south korea has condemned to military cooperation between north korea and russia. the president says the alliance violates international sanctions and hopes to raise issues at the u.n. this week. putin bet kim jong-un last week. they say -- putin met kim

jong-un last week. an energy minister says developing companies can -- countries cannot finance europe and the u.s. and brazil has been calling on developed nations to follow through on climate financing pledges. next, no shortage of hurdles for country garden who faces key deadlines monday. we get the deed lot -- we get the details next. this is bloomberg. ♪

haidi: country garden is facing debt tests monday. one relating to a dollar bond and the other two a yen note. annabelle, tell us about the local debt issue and what is at stake here. annabelle: there are a couple of different ways to look at this. the country garden, the risk it is on the hook for a huge principal repayment next month for investors in this with -- which builds on two-week confidence. then there are the bondholders. a wand denominated bond was

issued by one of country gardens unit. principle is at stake and do october 21. it's being asked to be percent of the stage by another three years. country garden being asked to kick the can down the road is familiar because this is the third time the vote on this has been extended so this voting was already supposed to be wrapped up last thursday but evergrande pushed the deadline to consider whether they will grant the extension through 10:00 p.m. monday night and this note in question is the last in a series of eight bonds where country garden has asked permission to postpone the principal repayment so we will watch for the outcome later, if bondholders rejected country garden will need to pay the outstanding principal next

month of more than $62 million, which would be a company that is already struggling to make smaller repayments. shery: what about the dollar bonds? annabelle: another note in focus . 15.4 million dollars of interest effectively due monday on the dollar security. it matures in 2025 so there is breathing room. there is a 30 day grace period so it will be whether evergrande chooses to exercise this because last august country garden was facing 22.5 million dollars in interest payments and failed to make it. you can see that has been the big shock to bondholders because we still have a number of dollar

bonds trading deeply in distressed territories so country garden has pushed out a lot of deadlines and reduced the amount of repayments that are due by the end of a year and investors are still very wary of what was once china's largest construction company. haidi: speaking about the big players, evergrande seemingly entering a new phase where we have criminal justice getting involved. annabelle: that's right. this came through over the weekend. not a lot of details so far but chinese authorities have detained some of evergrande's wealth money management business staff. police in shenzhen said actions were taken recently, according

to their statement. they have only identified one detainee so far with the last name do. we do not know who that is but the firm's general manager's name is do and essentially no charges were disclosed and the statement does not say how many are in custody so not a lot of details and it points to a lack of clarity across the property sector more broadly and makes it another key reason we watched this sector in the coming days. shery: annabelle joining us from hong kong with the latest. tune into bloomberg radio to hear more from the big newsmakers getting analysis from the daybreak team, broadcasting live from our studio in hong kong. listen on bloombergradio.com. plenty more ahead. stay with us. ♪

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haidi: union workers at chevron's facility in australia continue rolling stoppages for a second day, prolonging uncertainty of a global supply of fuel and one official says the decision to continue the

strikes, at the prospect of lower gas exports has sent global prices higher. oil and gas, oil looking like we could see more price action given refiners see indications they are struggling to make enough diesel fuel coupled with continued cuts we see from opec-plus and the exclusion of implements in china demand has seen crude maintaining the prices for a third week strictly gain and crude up 2/10 of 1% above $90, brent holding at almost $94 a barrel. gas prices in the u.s. surged to a seasonal record on the back of crude's rally that gas price

seeing a little downside but european gas futures having the biggest reaction when it comes to these labor disruptions out of chevron. coming up, [indiscernible] said the fed will not be cutting rates anytime soon. and we will look at the boj altar easing monetary policy. daybreak australia -- this is it for daybreak australia. at daybreak asia is next. this is bloomberg. ♪ did we just get hustled? there'ay they were 70. interesting. hm? it's both an electric and a gas car. yeap. quite the paradox. hmmmm? hmmmm? hmm?

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