>> welcome to daybreak asia, we are counting down to the major market opens. >> the top stories this hour, asian stocks following a u.s. rebound, treasury yields falling on dovish fed comments and wiki

as consumer spending. brace for furloughs as the government shutdown looms with a last-minute deal looking unlikely. shares of carmakers gaining again and the auto workers union is dialing back its push for a 40% pay rise. >> that report said u.s. stocks slightly higher in the new york session, we saw stocks rebounding and we also had to contend with technicals where we were nearing that oversold territory for the s&p 500. right now, 14 to april tip strength index around the 35 level, you could see u.s. futures extending those gains as well. we saw the treasury selloff cooling down a little bit, the 10 year yield backbone hope 4.6%. we have data that we were trying to digest, including consumer spending, rising at the weakest pace in about a year last quarter, not to mention comments from a couple of fed officials that took it more devilishly. we have the dollar index also

falling for the first time in seven sessions and oil in the asian session you can see the wti up .2%. that massive rally we have seen pausing in the new york session because that market is also settling in over what territory. -- overbought territory. we are following the bond market selloff as well. we heard that it -- it really was going to get a larger than expected deficit which took investors by surprise, not to mention that we also have mounting concerns about that higher for longer narrative which is now spreading from the fed to european markets as well, so that selloff is also spreading to u.k. markets with a 10 year yield seeing the biggest gain since february intraday then settling at around that for 48 level -- 4.48 level paul. >> white house staff getting guidance on furloughs in the latest sign that a deal to avert

a shutdown might be out of reach here. let's dig into this, the latest on the u.s. economy, with our political news director jodi schneider. is a shutdown looking inevitable at this point? >> paul, it certainly seems that way. we have not seen any movement by either side in either chamber. the house with speaker kevin mccarthy is maybe going to move one more bill or one more attempt, but it has deep spending cuts the white house really want go for. therefore it bought get very far in the senate. the senate is trying to bring a bipartisan bill, that won't go far in a republican-controlled house. it seems like right now unless there is an 11th hour agreement, stephanie anticipates, that this will shut down on sunday, which

is october 1, because it will have run out of money and they didn't pass enough spending for the government to continue operating. the white house is not really getting involved, this is unlike the debt ceiling debate where they -- they're wired have been financial calamity according to many outsiders as well as white house officials, if that debt ceiling was allowed to be reached. in that case, the white house and congress came to an agreement, at the last minute. at this case we don't think that will happen. the government has weathered shutdown before. some signs we see a shutdown coming, white house employees got notices on whether they are exempt or will be furloughed, if they are furloughed they will not be paid just like other government workers will not be paid until a spending deal is reached. there shutdown, they will be paid. furloughed workers can check their email, they are supposed to not be working. those who are deemed essential

will go to work but not be paid. >> even if we are headed towards a government shutdown, it is how long that lasts that puts pressure on both sides. so what could give way for that to happen as we get this shutdown underway? >> is more blame game. both sides will probably come in for some of the blame, although they, after a while, there usually is a pattern of who is being blamed more, and of course as you go into campaign season and the entire house of representatives is running next november and a third of the senate they start to care about that. after backing kevin mccarthy, this time he is backing that bipartisan bill in the senate because he is afraid the republicans will be blamed.

it's really, i think that is what will fall things when they seek that there is fallout, political fallout. whether that is a few days, weeks, or more is a real question. the last shutdown under former president trump was 35 days, the longest one. >> what will be the economic fallout, stewart? >> estimates of the gdp consequences of a government shutdown range. they range from 10 basis points per week to about 20 basis points per week. we -- if we received a long shutdown of four weeks, which would be pretty long, and we make that assumption at the upper limit that the gdp cost is 25 basis points per week, we are shaping 80 basis points off of an annualized gdp growth. the thing to keep in mind is that we will end up seeing a giveback back in the subsequent month and quarters. as we head into 24, there could

be a little bit of a tailwind from that reopening effect from that lower based -- lower base in q4, against which 2021 would be measured. not only other political ramifications, probably for mccarthy and allowing for a government shutdown, but there would be economic tailwinds heading into the election for the democratic party. what car they would have to keep that in mind. >> this will have an impact on households and mortgage rates have been rising as well, and never been fixed returns at reasonably low rates, what is the buffer say -- savings buffer right now? >> i appreciate that question, the savings buffer has been thinly, we see excess savings, we have been heading towards zero, most importantly, when you look at the liquid financial assets on a income tile basis,

the lower half of the income distribution, they are a liquid financial asset on an inflation-adjusted basis and below 2019 levels for several quarters now. and with that in mind, the tailwinds were spending our starting to fade, the household particularly lower income situation cannot rely on that savings buffer. and we just saw in the annual benchmarking that between 2020, between 2017 and today, estimates of savings have been revised down by nearly $1 trillion. a big chunk of that came in the post-covid era that contributed to the saving buffer that people have been put into a supporting spending. that downward revision speaks to the economic landscaping more fragile than a lot of policymakers believed it to be. >> our political news director

joey schneier and stuart there on the looming shutdown. let's look at how we are shaping up for the final day of trading in the quarter. in the asia-pacific, we have new zealand up and running at the moment, by two thirds of 1%, following a positive session for u.s. markets. we have heard from the new zealand national party over the past while saying that it will reduce debt faster than the current incumbent labour government and has released its fiscal plan ahead of the election, which is getting pretty close now. october 14, the national party saying it plans to return the budget to surplus in 2026 and 2027. government debt in new zealand has a preach record levels after the pandemic. we also have futures in sydney, getting higher as we get going, and over the next hour, up by point 6%. we have had a much weaker yen for a while now, we heard from the former top currency official

in japan a while ago saying that it is at 155 when the government will get worried. wait to see a lot of markets the region today as the golden week holiday gets underway in china and other markets. china, taiwan, south korea, and others will have no trade today. chinese property developer evergrande has confirmed that it's billionaire found -- founder is suspected of crime. another blow to the real estate tycoon who was once amongst the richest people in asia. we are tracking the latest on the story in hong kong. annabelle, this follows from our reporting earlier this week that he has been placed under police control. >> that's right. we had a statement out from evergrande late yesterday coming through, but essentially concerning a statement that he is suspected of illegal crimes. what exactly those crimes are, evergrande did not comment on specifically.

but certainly is it -- it is another signal to us that the issues around evergrande are entering a new phase. because he is the most high-profile person so far to face police measures, but he is not -- it is not the first either for the country. we heard look at media reported that his own son has face police or taken into custody, and we were reporting earlier this week that the former ceo and cfo, plus some of its staff at the world management unit have also faced questioning from officials as well. he is this -- suspected of crimes, and he is now subject to mandatory measures. that is also a difficult part to decipher, but according to procedure law in china this can take a number of different forms. that could include summons, release on bail and residential surveillance, detention and arrest. what bloomberg found from sources that we were reporting on earlier was that he was first

taken into detention earlier this week or month, and he is under so-called residential surveillance. what that means is that he would need to stay in a designated location and he would not be able to meet or communicate with others without any kind of approval, and that he would have needed to have given his passport and id cards to police. essentially just wrapping up there. suspected of illegal crimes and not subject to mandatory measures, just exactly what he is accused of and what sort of shape that the tension is looking like it's not clear at this stage. >> let's look at the company itself. they have had to scrap regular meetings and had to revisit their restructuring of offshore debt. how did they move forward? >> there is a high level of uncertainty and a lot of different issues for them to work through. in terms of what is next, were going to wait for any kind of

updates that we do get to those creditor meetings and understand that evergrande is trying to reach some sort of agreement with these class c creditors that are big holdouts. the stock is suspended from trading, that kicking from yesterday. the market reaction we had seen on wednesday given the scope that we had earlier this week, down 20%. essentially we want any update on the restructuring plans, whether it has been able to meet any compromise, and the deadline that evergrande is facing because you can see october 30 is the hong kong court hearing on a winding up petition which essentially could force the company into liquidation. certainly a lot of? over the health of evergrande, and as i said, a signal to us now that he -- they are entering a new and broader phase in this crisis.

>> are there implications beyond evergrande for china's debt market? >> it plays into the invest ability of china and a lot of the guests that we've been speaking to over the course of those -- the week, they are asking whether we see the bottom forming for chinese stocks. this could be something telling us that there is further to go, and if you look at this chart here, the stock flows in and out of china but foreign funds have really picked up their selling pressure once again, we are releasing a handful of days over the course of august where we have seen inflows into mainland stocks. of course, foreign buys and the equity space to represent a small portion made up mainly of mainline investors, but in the dense face this is an area we can chart because we have china john kennedy for a third straight year of double-digit declines. it is that going concern that low rate of debt in china is an investable. you can see high-yield debt in

china down 14%. sherry, really, we know that evergrande is suspended and we are approaching the golden week holiday. we will be able to see a lot of reaction to this, but we will be watching the reopen for markets there and what impact it has been, and we will have some of those indicators from golden in terms of property sales and whether or not there were bright spots that emerged out of that as well. >> annabelle in hong kong with the latest on evergrande and the property sector there. still ahead, why 155 might be the magic number for japan's finest -- finance ministry when it comes to currency intervention. we get the outlook from the men that they call mr. yang. and why this golden week is a key test of whether china's trick-or-treat of policies can turn domestic consumption. this is bloomberg. ♪

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>> hitting their hopes on china's golden week holiday to give them a boast, chinese shares are undervalued, but perhaps set to outperform the rest of the year. we have our -- the emerging

markets portfolio manager at every spring investments. we had a chat on the bloomberg terminal that shows how much china shares are undervalued. we have earnings estimates rising, valuations getting week. at what point does this picture looks so cheap that it is irresistible? >> i think you have a disconnect between sentiment, which continues to get week as you mentioned, economic data, which has been very weak but is stabilizing, and earnings and company fundamentals which are pretty good and getting better. and i think that when you balance the three of those you see a picture of stress and chinese shares looking undervalued. i think we are beginning to find a floor, we are looking at the terribleness flow coming out of china over the last quarter, and some of the difficult background -- micro an amount -- macroeconomic data. it's week but holding up better

than other emerging markets. we are finding a floor and it would not take much good news to start seeing these shares moving upward. >> bad news is not in short supply. we were talking to annabelle outlining problems with china evergrande and the property sector, and including -- considering how close that is to consumption and sentiment, how do you invest their but insulate yourself against contagion? >> it's hard. we don't have any exposure in the real estate sector, you are correct, but any continued weakness or significant decline in the real estate sector will further hit the consumer. it is something that we need to watch closely. the fact is that the real estate sector has been a major driver of wealth and consumer sentiment for over a decade now, and to the extent that is off the table, as it probably is, or worse, begins to drag, we see the consumer being even more value conscious, even more concerned about spending than

they already are. >> we see more optimism about broader emerging markets, x china. is there anything that you like? >> i think that extra, emerging markets are in a much different place, with -- overseeing markets is a typical cyclical interest rate driven cycle, as inflation has peaked in emerging markets, and in many emerging markets they have become to come down, we see that going from a very significant headwind to equities to eight tailwind equity, we have seen that with hawkish fed and a stronger dollar, but as long as it remains firm in the u.s., i think the writing is on the wall, on a 6-12 month view, low interest rates will be very stimulative. >> a stronger dollar has really wreaked havoc.

we saw the brazilian reality stronger against the greenback, but after the longest losing streak in more than two years, with the currency fluctuations derailed the potential merger market equities -- emerging-market equities? >> it will, and your currency is going to be the barometer for health. it's a huge driver, headwind or tailwind according to emerging-market equities, as long as the fed remains with a hawkish bias, it will support the dollar and the relative gap between em and dm interest rates and it makes it harder. i think that it probably creates an opportunity to begin accumulating emerging market shares when we see the rate cycle continue to decline in 2024. >> we saw the rate of decline, the dollar spot index, maybe a bit helpful. with the emerging-market in the

region, you have changed your position from underway. what brought about the change? >> we have been underway for some time, and we are increasingly closer to neutral on the market. there very much is a bottom up discussion for us. it's not a cost call, it's a stock pacific call, particular in the tech sector. we think that as spending around ai improves and tech cycle -- tech cycle spots along the bottom and continued to improve, it should be and intervention. it's a call on the tech center in korea. >> it's also the start of golden week holidays and we expect a lot of chinese travelers to head out overseas, southeast asian economies and their markets, we saw a bit of a comeback and inflation is an issue in acm

countries as with everywhere else. is there anything that you like there? >> we are probably neutral in the region, we saw exciting opportunities regarding the reassuring of supply chains into southeast asia and vietnam, and near term, there is a lot of upticks in those markets to those interest rates as long as they remained reasonably hawkish that they will stay on hold. we do like them longer-term, they will be not only beneficiaries of supply chains but as china slows over the next several years, chinese companies will begin to focus on their neighbors in terms of investment and trade. it certainly is already occurring, and that can be a really big buoy for local equity markets there. >> emerging markets portfolio manager at global investments, thank you so much for joining us. lucky to have you in sydney here today. plenty more to come, this is

bloomberg. ♪

>> strength in the u.s. dollar for the first time in seven sessions, weakness when it fell still around the highest since december of last year on the others of the trade. the japanese yen rose in the previous session and we continue to see strength against the u.s. dollar speculation that we might see policymakers intervening near 150, the offshore yuan also seeing a little bit of strength after gaining ground in the previous session against the u.s. dollar, but it faces multiple headwinds at this point, we are getting to the start of golden week holiday, trading will be frozen in mainland china but it continues

in other parts of the world. we are really watching out for that potential disconnect with other assets. coming up, a pulse check on the chinese economy as the property sector concerns, we dig in with beige book international. this is bloomberg. ♪

>> let's get you some breaking news out of japan, we are getting cpi numbers for tokyo for the month of september, coming a bit stronger than expected, 2.8%, still a slowdown from what we saw in august, the survey was for a 2.7% increase. it's a different story if we take out fresh food, 2.5%, the

expectation was 2.6%. the boj minutes rigidly underscoring being patient on inflation, waiting for inflation to bet down, those numbers out of tokyo, fresh food ready inflation slowing down a little bit than expected sherry. >> we expect that to be a good indication of where they are hand. take a look at the jobless rate as well. 2.7% for the month of august, slightly above expectations but at the same level as they were in the previous month. the jobs applicant ratio is 1.2 nine, same level as the previous month. we continue to see export blue around asia manufacturers, may be less willing to add workers. the service sector has seen growth, but it seems to be peaking.

we are still stable in the labor market at 2.7% jobless rate. let's go for fell for a check of how markets are setting. >> for just taking a look because we are approaching the last day of trading for this the -- the third quarter monday, kicking off what will be the fourth quarter of trading. religious taking stock of the moves that we have seen over the last three months for asian equities, taking a look using the seasonality function, but asian stocks losing ground over this. -- over this stretch of time. asian stocks tend to decline over 2.5%. over these three months, asian stocks have to gain ground. over the past three months, one of those is in the bond space, you can see what the long end

of, moving the most since 2009 over this stretch of time up 80 basis points, again, different reasons there have been that -- these moves, there has been a narrative about keeping rates high for longer, we saw your borrowing for budget deficits, that downgrade coming through from fitch, plus the energy crisis playing into this. he had the moves, very interesting. the run-up that we have seen in bright crude over the past three months, changing on, this is the best quarter we have seen from brent crude over the past seven, this has been a time when we see supply cuts coming through from russia, saudi arabia. that has sparked a lot of concern about the dynamics of the rest of the year and some analysts say we could see a reduction of 70 million barrels a day until the end of 2024. a headwind that will be putting

pressure on asian equities and make economies here, major energy importers, even if some parts are not clear. one of those is what demand dynamics will be seen from china. >> let's delve into that economy because the stakes are higher than ever for china's property industry as the eight-day golden holiday begins. the fresh drama facing major property developers, including evergrande, comes as beijing seeks to fix the housing crisis and revised sentiment. let's bring in our guest, who says a lot of the and it could -- economic gains have already faded. this is the managing director at china beige book interact -- international. good to have you with us. let's start with the property sector. what sort of numbers are we seeing in terms of sales and prices? >> the property sector is in deeper trouble this month than it was last month, or at any point this year. housing prices, according to developers are contraction,

sales are declining, the sector is really starting to struggle and if we are expecting a recovery this year, a mild one, even, it has gone the opposite direction. >> how much of the pickup do you expect are the golden week holidays in terms of demand, sentiment, and people going out and spending? >> we have seen some winners from the golden week travel already, but travel agencies in the leisure sector actually see gains and are doing quite well. and i think that in the coming weeks we will find out if other purveyors of foodstuffs, and center, also get better results and that will be reflected next month. i had to tell you right now outside of areas like travel consumers are not spending again. they are pulling back, if anything. >> i feel like a lot of the conversations that we have at the moment revolve around how important the golden week holiday is going to be in china.

if expectations do not measure up, what are the implications going to be from markets? >> markets have already been so depressed about what is happening in china that any hope that now we could start to see a better recovery picture will just absolutely fade. so the golden week is very crucial, very simply just to lift expectations. it's likely that later in the year we bet -- get better data, but expectations are abyssal right now. >> borrowing is very cheap in china but corporations taking on debt, what have your findings been around that, are they even able to? >> one of the thesis is -- feces for the year has been that china needs to step up stimulus. if you look on the monetary policy side of things, you see clearly that there has been easing. the cost of credit has become cheaper throughout the course of the year. but because this is confident -- business confidence is lacking,

comedies are unwilling to borrow at levels that they did before the pandemic. what you find repeatedly is that there is a limit to how much patient can do to revive the economy by trying to push credit into the system. >> we continue to see this diversions when it comes to manufacturing property services as well. are we going to see more recovery in those sectors anytime soon? or is stimulus not going to filter through to those areas? >> i think the manufactured picture has held up a lot better for the course of the year when you look at a range of data that we have seen so far. that said, they are building and accelerating, manufacturing caps will probably continue and lose steam as we get through the end of the year, and the hope really is that over the next six months or so we finally see if it is a slope improvement in

consumption, but we get that consumption improvement. and we were hoping to find some in the for the property market, -- in the probably market, but hopes were dashed. that's of the to look out for now. >> and the housing market is supposed to exports. when we talk about a slowdown in the u.s., the european economy is already very weak. what are the risks for the chinese economy because of that pressure on exports? >> are export order index returned some of its worst numbers for the year, i think we are already seeing that weighed down. the potential for a recession here, weakness in europe, that is going to arrest the manufacturing picture, and the demand for manufacturing project stepping in looks like a long shot today.

the futures over the next couple of quarters is probably not very bright. >> your report also notes the job growth in september, to what degree is unemployment and most particularly youth unemployment, not just economic but political risks as well. >> this is a full and as our recovery and something you see on a month-to-month basis is the parts of the economy losing steam like jobs. pulling back the $30,000 foot view, the youth from -- the unemployment futures will get worse, next year and the year after, and i don't think there is anything in the toolkit in beijing to fix this. there is no quick fix associated with this problem. this is a larger structural challenge we are talking about. >> the managing director in china beige book, thank you for joining us.

>> fears of a potential trade war over the eu's anti-subsidy desiccation into china ev. we spoke exclusively at the bloomberg global dialogue. >> the economic model which i favor is to have a global competition, i'm very much in favor of globalization. it made it so that billions of people left property, and many came up to the middle class in many countries, many new cities have been built and will be felt and we soon -- see new railways, airports, hospitals, universities and schools, all spreading out -- of all of the globe. this is a good thing. we must not just make this part of the world, even if it is safe part, we must grow and have

owned infrastructure and industrialization and things like that. and this would also be a much sister -- safer world. but the economic well, let's say, of germany, but i think it's a model that fits for the whole world is that we are not working texture lists. we -- all over the world, and south america, in all these places. we are open to cap the costs of other countries in the market in germany, and i remember the big debates that started when japanese cars came to germany.

a fair part of the market. there are now german cars in japan and japanese cars in germany. what is the problem? the same happened when koreans were successful, they became a successful car producer, competitive on the whole world. they are doing a good job. now, there are cars in korea, and korean cars in germany, what is the problem? and we should look at these things like this. it is the better alternative than protectionist ways. >> olaf scholz there. the latest there on the u.s. auto strikes as we learned that the years -- the union has died back its demands for a 40% pay rise. more on that scoop next, this is bloomberg. ♪

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haters jumps on a bloomberg school today, we learned that the uaw union wants to emerge from its strike but they pay rise for workers of at least 30%, lower than the 40% hike it originally wanted. su keenan joins us with the latest. two-week said, we finally get closer to a deal. >> it certainly looks like the sides have come closer together with this new floor to the salary demands from the uaw,

that is why we saw stocks reacting in a positive manner. a source close to the matter is telling us that the union not only wants to set a floor on compensation at at least 80%, but it is their hope to take that to the broader auto industry, nonunion workers, and use it to attract more union members. as mentioned, the level is lower than roughly 40% wage hikes that they originally proposed to ford, gm and stellantis, who were offering half that, and our source is on a mission to expand the uaw by organizing in battery plants and targeting workers at tesla and the u.s. plains of asian and european automakers. check out the auto parts supplier stocks. the union might be coming down off of its high wage demand and it previously came down to 36%, helping lift not just auto stocks but auto suppliers. you have to recall that this was

going the union expanded its strike action by targeting 38 auto strike -- auto parts supplier plans likes the -- gm and stellantis. how we are seeing these stocks respond to this news. as for the status of those contract stocks, we have a cost of living payment on top of that 30%. if the formula gives workers additional races and the union's floor is revealed to be around 30 plus percent, this could indicate a smaller gap between the two sides. the union submitted a counterproposal to stellantis on thursday. that is where things stand as of today. >> what is going to happen next then, we know that the union set a new deadline on friday. >> they did indeed, and we know that the uaw's strategy, which is a big departure from prior

strikes, is to keep automakers guessing what comes next. in other words, in this particular strike, which began mid-september, uaw first has struck one plan for each automaker, then they expanded to 38 facilities for stellantis mgm, and now we are being told that as of friday at noon they may well expand the strength even further. the uaw president is expected to take to the livestream on facebook at 10:00 a.m. east coast time on friday to announce what will be happening at noon. the threat has been that if there is not major progress from all three automakers, by noon, there will be a lot more action taking place. meanwhile, we have talked about how president biden was there many picketers in mission -- michigan midweek. trump was out that the following day and there is a war of words

between binding and trump, by contract -- slamming trump for a speech in which he accused by the of wanting to have electric vehicles and saying to the autoworkers that is your problem. back to you. >> su keenan they are keeping an eye on the uaw strike. still to come the japanese government right step into foreign exchange markets again if the yen heads towards 155 against the dollar, our exclusive interview with mr. yen is next. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

>> the japanese yen holding steady at the 1.49 level -- the 149 level after rising for the first session in five, we continue to get warnings about potential weakness given the currency, and all of this as we wait japanese data at the moment -- await japanese data at the moment with a year on year contraction of 4.8%. this was expected by economists, but not as large as was expected. although the contraction has deepened from the previous month. month on month, no change in the august balloon area numbers for factory output.

the expectation was for contractions. in that sense, the month on month numbers, it seems that we are actually meeting expectations. of course, we had expected increase car manufacturing to help with that factory output number, the month on month number seems to have stayed relatively unchanged. we are looking at retail sales as well. you're on your growth of 7% for the month of august, which is outpacing economist expectations, and also growth from the previous month. on a month on month basis, only a growth of 1.1%, lower than expected. there is a little bit of a dichotomy when it comes to the japanese retail prospects given the weakness of the japanese yen and inflation involving that 2% level. get a bit more on the yen from the japanese finance minister, saying that the government might

be close to intervening in markets again to support the currency. the man known as mr. yen talks exclusively about 155 per dollar gain where official start to worry. >> if it be goat -- goes beyond 150, and that is quite possible that the government would step in. but, well, 148, 149, government would not take any dramatic action. that is my feeling at this moment. >> even if officials give repeated warnings, it's not going to get them out of jail, the yen is going to continue weakening. is that how you see it? >> it depends on the policy of the united states and japan. as long as they are tightening the monetary policy, japan might be easing the policy, and some

depreciation is inevitable. that is what is happening. i think there is quite a big possibility that u.s. policy might change in the near future. if that happens that the yen would start to strengthen. 130. you know, from 150. >> perhaps the u.s. does one more hike around december and that is the peak of weakness? >> i think so, i think so. >> essentially, it's a matter of buying time. until then. do think that japan can get to december without intervening in markets again? >> i don't think that authorities are thinking of intervening at the moment. so they would probably, you know, already go that way.

>> janet yellen made comments suggesting that some kind of smoothing movements under intervention to achieve that could be understandable of certain conditions. -- under certain conditions. does that mean they have done the green work and have -- the groundwork and have the green light? >> that's not something that i know at this moment, but when i was working, i would contact the american -- my american counterpart and try to get their understanding to intervene in the market. at least, i made it short that they would understand that was very important, so getting in contact with the counterpart is very important. >> say japan doesn't intervene, and the key policy as is and we had through to the end, what is

the weakest level that they and could reach this year? >> it will go to about 150. >> is 160 a possibility? >> close is a possibility. but i don't think that it will go beyond 150. but i don't think that it will go beyond 150. >>surely, 160 would be too much for the government and they would intervene before 160. >> that's quite possible. >> would you agree 155 also -- they could not surely allow -- >> i could not specify the

number, it depends on the situation at the moment. but something like 155 is the level which they would start to worry at. >> the japanese vice finance minister speaking exclusively to bloomberg's paul jackson in tokyo. coming up in the next hour, here white bmp asset management is overweight on consumer services and disk -- consumer discretionary stocks. plus china's golden week is underway, with the travel industry expecting a boosted demand. hsbc shares that outlook next. the market opens in sydney and tokyo, were -- this is bloomberg.

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>> this is daybreak: asia

counting down to asia's market opens in japan and australia because south korea is still away on holiday and now china is on it's on holiday on golden week. which might lead to more distortions in the market given that we are seeing incredible weakness in the chinese run at a time when the dollar is pretty strong. >> we are still open in australia, it will be a quiet day here as well, with develop it close for a public holiday, it might be a pretty soft finish to the quarter. >> that's right, asian stocks still down around 4% over the past three months or so. in terms of the outlook for today, it was very much focused on what has been a major driver over the course of this week, that is the moves in the dead space in particular. japan and australia underway as cash treasuries, we saw a bit of a rebound for yields into the close. but still, intraday, the fives

and 30's breaking news or several cycle highs with that curve having for this team coming into it. really, most of the so-called wipeout were still in it, the u.k. and european debt space. we saw u.k. 10-year gilts jumping up on point by 20 basis points. what exactly was the big driver for that? some are saying that he could have been a positioning wipeout, but still, focusing the session today is what we are seeing in the japanese bond space as a reaction to that, because we are still seeing bits started to persist that the po che will be forced to end negative rates perhaps as early as march of next year. that 20 year yield is saturday, but we are sitting at the highs now since 2014. something we know can change expectations of any sort of pivot away from easy policy settings comes down to inflation, and whether they start to see that inflation coming through on a sustained basis. but cpi figures are out for

tokyo in the past hour, the leading indicator for japan slowness for a third straight month. we saw x fresh food for cpi coming in at 2.5% for september down 2.8% in august. that is the outlook as we get japan underway, the nikkei 225 just a little bit firmer following what we had in the wall street session. let's change on, because a big driver of inflation, particularly the big energy importers like japan, is what happens in the oil space. we do see brent crude under some pressure down 1.2% as we get underway, but still trading around that 95 level. the outlook, yes, we are a bit overboard on a technical basis, but still to the end of the year we look bullish because supply comes from saudi arabia and russia are continuing to tie up the global market. that will feed into what we see in australia, energy stocks in particular to watch their, and we have rba meetings do next

week, and the expectation is that the rba will be holding here with an interesting interview from pimco saying that the australian household is now most impacted by rates than it has ever been. i'm taking a look at the world volume monitor and in this session we are off financials -- on a 30 day basis. >> and we are now expecting a high level departure out of hsbc. we have learned that the head of public affairs is set to step down shortly after making controversial comments about the british government's handling of its relationship with china. they are expected to leave the u.k. lender next month, according to persons in the with the matter. the exact reason is not yet clear, but it comes just over a month after she issues an apology from remarks that he made at a private event in london where he criticized the

unity government for quote being weak and allowing itself to be strong-armed by the u.s. into cutting back business dealings with china. we have been at -- at -- this person has been at hsbc for a decade. it is the last quarter -- day of the trading quarter, and we have seen weakness across the world, local stocks down for the second straight month. let's bring in the head of asian and global em equities at bnp paribas asset management. great to have you with us. , we have significant pressure on em assets as we hear higher for longer narratives coming out of the fed. what is going to be driving markets in the next quarter? >> it's quite macro driven, with

unemployment data of the u.s. which will set the tone in terms of what you have the rates coming out in november, in terms of currencies and em central banks that can have more flexible the on their great decisions in the coming quarter. >> the rising oil prices has come out of nowhere, and it seems to be really flaming those inflationary concerns paid where do you see energy prices going and how will that affect central-bank policy. >> if you look at where the group is, with every group that slowed a little bit through this year and is part of the world, oil prices seem resilient, this has to do with a bit of supply and control that opec-plus has put in place, and this has led to concerns in terms of

inflation. and for some em economies, there is the appointment -- importance of crude, feeding into the cost of living, as well as these economies that have a string of fiscal budgets. this is probably less of an issue, and now it's pretty much on-call, which has been helpful. i would note -- note of caution that a bit of comparison is largely older now. >> aligned with that strong oil price, we have a strong u.s. dollar as well, we had this chart today, the u.s. dollar has just gone from strength to strength. how long do you see this persisting and providing a for em?

>> it will persist for a bit because one of the key surprises from the last fed meeting has the -- been that the dot plots. the dot plots indicates the fed expectation of where rates will be by 2024 as opposed to where the economies are. it is interesting to note that most of the academics on the fed side work -- on the fed side of this point. i think that they were in for a first quarter of next year that might be disappointed, and moving to the strength of the dollar, we could see some of the volatility on site. ironically right now, it -- the strongest playwright now is cash. rex i was going to ask you about

that considering that higher for longer narrative. how tempting is the cash option, what is allocation like? >> at this point, we don't have a lot of cash. we are running about 3% cash in our portfolios. >> ok. considering what we just talked about, what are the key risks free of the moment, is there anything that you are avoiding in particular? >> in our part of the world we are avoiding a lot of real estate names at this point. we are also avoiding some of the operators that will be vulnerable to potentially higher-than-expected costs for oil. and we are more overweight in communication services and consumer discretionary, we received company valuations that have been adjusted quite nicely,

and they offer value from our perspective. >> any of those companies in china? >> we have some of these in china, but the travel team is more or less expected, and on the lower end of consumption, which is exposed to continue -- continued spending, probably not as strong as before, but the valuations have made it attractive for us. rex the head of asian and global em equities at b&b pair about asset management, thank you for joining us. we have been following japan and australia, annabel, what are you watching? >> a couple different sectors in focus. you can see those sports makers or sports apparel makers rising but it does track what we have with nike reporting its earnings, and we saw shares jumping in after hours straight up 8% into we saw -- what we saw

with a drop in stockpiles of inventory. that is a reduction of 10% on the year. what it tells us is that nike is making progress into moving out older merchandise and moving in newark and more profitable items for the company. that is what really drove that. we also saw a earnings-per-share of $.94, really outpacing expectations. a good signal for nike playing out with some of these apparel makers here. we are also watching crypto link companies, --, the bottom to here, we saw bitcoin rising above that 30,000 threshold, and crypto link firms in the u.s. rising, but not translating across into asia as we get underway. let's change on, because in tokyo there is another folk -- group of stocks in focus. we did have a report out from the nikkei and local media in japan saying that the government

has selected 33 facilities for expansion, this is airports and ports, this is due to regional security concerns. there is 14 airports and 19 ports that are being considered or will be upgraded for defense purposes. >> x, still to come, hsbc forecasting elevated fuel prices through 2024. we will explore what that could mean for travel demand later as china's golden week holiday begins. first, the latest on preparations for u.s. government shutdowns, no sign of a deal to end the political standoff in washington. details next. this is bloomberg. ♪

>> white house staff giving guidance on furloughs and the latest sign that deal to avert the shutdown is out of reach ahead of the deadline.

let's dig into this more with derek moravec. can we say that a shutdown is inevitable now or is this still -- >> the smartest people i'm reading right now are calling it a 99% chance of something brief at least. what that means is that midnight on -- between september and october 1. that the deadline, noon on october 1 here in singapore. what you're talking about there is a sort of brief funding labs. that you would be talking about immediate shutdowns of u.s. national parks and things of that nature. inconvenient to a lot of people. if it gets results quickly, maybe not a massive, massive problem in a shiite sense. this is not the debt limit, you're not looking at the unwinding of the baseline of the world economy.

you are looking at something that, as maurice said, would give you a little bit of concern about the government being able to do what it needs to do. the basic governance sort of thing. moody's is one of the only big three agencies at aaa and they have warned that the shutdown could potentially impact that rain. >> it seems to be about the u.s. house of representatives at this point, how do you get breakthrough bouts -- where kevin mccarthy and republican hardliners have strong demands but not a lot of leverage because as you said, it's not like a debt shutdown that we saw earlier in the year. democrats are not so inclined to get close to a deal, because the economy would not perish because of it. >> the thing that is interesting

to note here is that there are votes right now keep the government open. -- to keep the government open. if you put something on the house for that is a straight line extension of current funding, that would probably pass by not a small margin. every democrat and maybe most republicans would be in favor. the problem is that kevin mccarthy puts out -- that out, he might not be a speaker in a weeks time, because there is that group of hard white folks who have, in some cases, made it a political point to be a thorn in kevin mccarthy's side. this is the difficulty that he is dealing with right now. he has a form vote margin at the best of times that he has to play with, and that's a thin margin. republicans want to take these points and use leverage that they think that they have to try and extract concessions from

democrats that they would not be able to get otherwise. that's the play here, it's at the helm of leadership, he's been at the leadership as the number of -- two or three guy at points of inflection like this, and it's back to republicans politically. mccarthy probably does not want to shut the government down. that having been said, he is trying to make the best out of a bad situation for himself, politically, while still understanding the idea that if this goes really long and you start talking about actual effects that hurt people, you talk about people in the military missing paychecks, you really talk about potential significant political damage that republicans don't want to take. >> the locations of the u.s. shut down within the next few days there. china evergrande has confirmed that its billionaire founder is under police surveillance and suspected of crimes. our china credit editor kevin is

tracking the latest in hong kong. kevin, we are hearing that the ceo is subject to mandatory measures, what exact the does that mean? >> that's a good question. what evergrande said last night is that he is subject to mandatory measures in accordance with the law due to suspicion of illegal crimes. there was nothing more detail given beyond that, and this confirmed it bloomberg report from wednesday saying that he was under what is called police surveillance. it is a type of police action that falls short of detention, or formal arrest. we have kind of -- we are into this next part of the evergrande crisis where it seems that we have moved from it being a debt story to a criminal one. monday, we had someone say that two former executives who left the company in 2022 have been under police detention. this came after, earlier this month, some staff at the

evergrande wealth management unit were detained by authorities. they have confirmed this actually happened. there is a lot unknown, and china has a pretty opaque criminal justice system generally. we are hoping for details as to what they are looking into and where this goes next. where does it go next, because if evergrande does scrap creditor meetings and shares are suspended what happens now? >> we will just have more uncertainty where shares were halted yesterday. investors will be able to react much do whatever news flow we will be seeing, and we had that october 30 liquidation hearing, that winding up hearing in hong kong. that has been hanging over the company for more than a year, and because of what has been happening in this week over the next few weeks, is it is hard to tell what the judge will do, and if there will be action on

october 30. >> our china credit editor kevin kingsbury there. you can get around up all the stories that you need to know to get your day going in today's edition of debris come up with bricks of product -- subscribers go to dayb , and it's available on mobile and the bloomberg anywhere app, you can customize your settings so you only get news on the industries and assets that you care about. this is bloomberg.

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su keenan joins us now with the latest. what can we expect in terms of getting closer to a deal. >> it's a big step back from the 40%, they have come down to 36 percent, but it appears coming to sources -- according to sources coming to bloomberg, they want to set a floor for the pay increase which is at least 30%. it is their hope to take that to the broader auto industry and use it to attract more union members. lower than 40% that they initially proposed, four, gm and stellantis were offering half that. our sources say that the union's president is very ambitious and on a mission to expand the uaw by organizing future electric vehicle battery plants and targeting workers at tesla and u.s. plants with european and asian automakers. check out the stops of auto suppliers in the u.s.. there were also in the green and

increasingly we see auto suppliers stocks react like out of stocks with the latest headlines on the strike eight you have to remember that the strike was initially at one plant each and expanded 38% -- to 30 eight auto plants owned by stellantis mgm this week. that got their attention. as for the status of contract talks, ford has offered a 12% pay increase, plus a cost of living or co l.a. payment on top of that. and if that gives them additional races, and the floor is around 30%, this indicates a much smaller gap between what the two sides are aiming for. the uaw source says that the union submitted a counterproposal to stellantis on thursday. we will see how that plays out. well, 30% is seen as boosting union membership, because the uaw back into negativities, had

more than a million members, it has less than half of that now. what happens next? we see the union setting a new deadline on thursday -- friday, where do we go from here? >> this is part of the new strategy at the uaw previously they were setting new deadline to up the ante and up the pressure on automakers and we are entering the second week on friday, the uaw already expanded its initial strike of those 38 auto supplier plants in 20 different states and now we are being told on friday at noon they may expand the strike further. the ua w -- the uaw president is expected to do a livestream announcement on facebook two hours before noon on friday east coast time to let the union know what those next steps will be. meanwhile, if you recall, president biden was on the picket line on wednesday,

presidential candidate and former president trump was there after that. aunt joe biden slammed trump for his speech in which he told workers biden is your problem because he wants to have electric vehicles. a little back-and-forth there. trump also attacked gm and ford for not doing more to assist the biden administration's push for electric vehicles. back to you. >> bloomberg's su keenan there. let's check in on some of the top corporate stories. bloomberg has learned that several u.s. investors, including sports giants, are considering investing in the pga tour. sources say that endeavor group, fenway sports and kkr co-founder henry kravis might provide possible alternatives to the tools, beginning with the public investment fund. the pga tour agreed in june to a shock merger with saudi backed liv golf and the dp world tour. federal prosecutors have charged a former goldman sachs and

blackstone employee with securities fraud, allegedly giving france tips on deals. they say the 26 euros told to friends about transactions that he knew about from his time at the wall street firms and it is elected the group made it -- more than $400,000 on the traits. u.s. equal employment opportunity commission is sued tesla, alleging that it created a hostile environment at its california factory. the 8 -- the ev maker supposedly subjective black workers to severe and pervasive set -- black -- harassment. plenty more to i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app.

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>> it feels like the bottom. >> if you look at it of position

or valuation perspective, economy perspective, everything is at the bottom. >> there is a lot of pessimism. >> the index is still concentrated on sectors which have traditionally been the growth for china. i don't think they will see the same kind of growth. >> that was some guests we spoke to talking about whether china's market has reached the bottom. that is something we will look at as we approach the fourth quarter of trading kicking off on monday. the question is whether we have seen the bottom, the most pessimism is in chinese stocks, it will be answered in the three months ahead. we have seen valuations looking cheap. earnings revisions taking higher. keep this -- task is the golden week holiday. china has closed for an eight day period, this is a period

when we have a lot of travel rush. the key sectors we are watching, the property one. given this is a key period for buying of chinese apartments. whether we have started see the bottom of that and part of the economy. likewise what we see in terms of the strength of the chinese consumer. let's take a look at this terminal chart, over the past three months we started to see more signals of strength coming through into this part of the market. taking a look at the msci china consumer discretionary index. that is run a five percentage point gap given that during this period we are seeing consumer discretionary stocks rising. and for percent decline for the msci china index. that is what we are watching closely. we have seen quite a lot of strength holding up with the chinese consumer, it will be tested as we get the holiday

period underway. paul: let's discuss chinese travel demand in that context, as golden week kicks off. the holiday and compasses both middle -- festival and the national day rate. -- day break. outbound travel bookings are 20 times higher than last year. the extra day is a bonus after the population was denied the opportunity to travel during the years of covid-19. joining us now in hong kong is parash jain, head of the honkong and shanghai banking corp.. travel bookings are outstripping what we saw the year prior. no surprise with the pandemic restrictions gone. but is it sustainable? parash: as we know this is the first log holiday after four years. while we have seen the recovery in the domestic market, this

will be the first time when you will see a spurt in international travel. in terms of the level, somewhere around 60-70% of prior pre-covid level in terms of traveling. as we have seen, the rest of the world who has reopened, it seemed like this pent up demand has lagged going into 2024. paul: we have profitability recovering as well for the big three airlines in china. what was the implication for the outlook broadly? if all of these lofty expectations about golden week failed to measure up. parash: that is an interesting question. if you see where the big three chinese airlines differentiate themselves from the rest of the world is perhaps operating leverage. unlike some of their regional peers who took measures with

respect to cost-cutting, the big three did not do any of this. if you look at the first half results carefully, just with the recovery in domestic volume, the big three airlines operating margin turned from -44% in the second half of 2022 to almost breaking even in the first half. and now in the second half, we are confident that the sector is returning into profit and some of these airlines are profitable as we speak. shery: when it comes to international travel, how much will the week chinese yuan hurt when it comes to chinese consumers headed overseas because their spending power has been lost? parash: yes and no, if you look at the consumer's wallet, including in china, air travel is one part where they are ready to spend, that is visible in terms of -- we are seeing the

weakness in terms of the duty-free shopping in chinese airports. but for now the pent up demand for them to start travel, you will see a downsizing in terms of the holidays, you will see a more short call, more domestic travel popping up. probably for now it all looks ok. but the biggest villain of the higher prices is the high price itself. the ticket prices remain high, it will -- shery: do we have visibility as to who the travelers overseas are? pre-pandemic it was the younger generation of chinese people who were headed overseas. parash: it was probably those travelers, business travel, we are seeing more and more group travel. a lot of the countries like thailand have removed

restrictions for the chinese from september until february. you are seeing of that in terms of easing that, and that has helped to drive this. the last missing piece was group tours, that will take them from the 60% to level two pre-covid. paul: you do cover shipping as well. i want to question you about that in the context of rising oil prices. we have seen brent habits strongest quarter. what impact does this have on margins in the shipping sector? parash: that is the largest threat to the airlines recovery. the big three chinese airlines do not -- there is a mechanism -- but that comes with a lag. the weakness in r&b, but when it comes to shipping, the impact is less in the sense that freight

trade often captures. the difference between the often captures, where the price is based on demand and supply. this cost usually will be passed through. in terms of the sector, we have seen the strongest rally in tanker shipping stocks, that is driven by the tight tanker capacity because of the rising demand of oil. it is not driven by more on the industry or manufacturing side, but the service demand. shery: are we seeing the pressure, whether on shipping or the airlines, because of export demand waning from overseas? we are seeing slowdowns and economies including in europe. i wonder if that is having an impact on cargo freight. parash: absolutely, if you look at when we talk about export, we related to the container freight

rates. and they are pretty much -- it has gone significantly below pre-covid level. despite the fact that oil prices are higher. it has impacted. more than demand, the fact that the oversupply has been created, we are in for a downside for a number of years. this time around, the companies have a stronger balance sheet to take it to the wire. shery: good to have you with us, that is parash jain. we have new satellite data now addressing that kind -- china's economy showed stronger economy in september. it is a u.s. firm that analyzes the global economy using satellite imagery. it sees a positive direction for china's construction sector. the renewed consumer confidence. we are joined by our china

economy editor. what have we seen in this satellite data that gives us hope that the economic recovery might be stronger this month. we have heard signs to the contrary when we hear about economic indicators so far. jill: at this point we are at that stage where we are starting to get these indicators for the china economy for the month of september. we have the manufacturing and 90 manufacturing -- nonmanufacturing data coming in. they are taking satellite data, activity around shopping malls and construction sites to get an insight into economic activity. what it is showing is encouraging. we need to temper expectations, we are not seeing a giant pickup in demand. but what we are seeing is activity around shopping malls in china, they have sustained the activity there.

that is what they are saying in terms of a pickup or sustainment and consumer confidence. and on the construction side, you are seeing cement production evidence in this satellite data continue to sustain. you are strained to see a pickup in june. that is where you are seeing the positive signs about activity. paul: the property market downturn is still a big drag, do we have clues about that in this data? jill: that is where part of that output numbers come in. the caveat is that even if there has been a pickup in the month since june, they data shows that being sustained, we are not near 2021 levels. that is where you see the continuing issue that dragged -- that drag, the property sector is showing on the economy. it is no secret the real estate

sector continues to be the biggest drag on the economy. we pulled economists in a recent survey, what they thought the number one risk for the chinese economy was. 80% of them said the property sector. the data does not do a whole lot to say we are passed to the worst of the crisis. but there is sometimes we may be bottoming out on the worst of the activity slowdown. paul: china economy editor there. while ways surprise -- we will take a closer look, this is bloomberg. ♪

paul: the recent debut of huawei's new smartphone may you message to the u.s. that china is not being stop from developing advanced semiconductors. for more, asia technology executive editor joins us. how big a deal is there new phone? peter: to understand the significance of huawei's new phone, you need to go back a little bit to understand why huawei is a company at the

center of the tensions between u.s. and china. huawei is a secretive and powerful firm within china. it became the biggest maker of telecom equipment in the past couple of decades. after dominating that market, it became bigger than erickson and cisco. it became the biggest smartphone company in the world, surpassing samsung and apple. but the u.s. did two things that set them back. it ended up knocking them out of the smartphone business. in 2019 they blacklisted huawei and cut it off from the components they would buy from the u.s. otherwise. and last year in 2022, the biden administration set of export controls that kept chinese companies away from advanced semiconductors. we saw huawei dropping this new phone and it signaled that they had capabilities in

semiconductors that the u.s. had not anticipated. shery: does that mean the gap between where china is and the u.s. is in terms of semiconductor technology is not as big as was previously thought? peter: that's right, the u.s. had set up export controls hoping to keep china at less advanced semiconductors. it cut it off from companies like tsmc, the leading maker of chips in the world. we found out that with this chip, we did the first teardown of the huawei phone, inside we found a semiconductor made in china by a company called smig, which is not the most advanced on the market but beyond what the u.s. headset these export controls for. it signaled the u.s. effort to hold china back had not worked effectively as they had hoped. they had hoped to keep china 8-10 years behind, now it may be

as little as 4-5 years behind. paul: what does this mean for the u.s. and its clash with china? peter: the bottom line is people don't care if the chinese have advanced smartphones. it is not whether they can sell a phone that competes with apple. the issue is whether the semiconductors can be produced at the amount of scale that can be used for other kinds of applications, including ai, supercomputing and military applications. now the u.s. probably has to tighten these controls. but it means the support of apple. anisa support of its allies, including the netherlands and set -- in japan. it is not clear that the netherlands and japan will go along. those are the other two countries that supply the key chip making equipment you need to be at the advanced edge. the leader of the most important company in this area, the dutch

company asml has been opposed to these controls. it is not clear if they can get the allies on board with tighter controls on china. shery: executive editor for asia technology peter elstrom. hsbc's ahead of public affairs is said to step down shortly after controversial comments about the british government handling with its relationship with china. he will leave the lender next month, he apologized for calling the u.k. week for allowing the u.s. to guide its business dealings with beijing. more to come on daybreak asia, this is bloomberg. ♪ fabulous surroundings...

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paul: you are seeing live pictures of tokyo, check in on how the yen is trading right now. 149.38, hovering below the 150 level, showing a little bit of strength. but the u.s. dollar broke a six day's -- day winning streak.

we heard from the former japanese vice finance minister who says the government may be in close to intervening in markets again to support the currency. the man also known as mr. yen has said that 155 per dollar is the level where officials will start to worry. >> if it goes beyond 150, it is possible that the government will step in. but 148, 149, the government would not take any dramatic action. that is my feeling at this moment. >> so even if officials give repeated warnings, it is not going to get them out of jail, the yen is going to continue weakening? >> it depends upon the relative -- of the u.s. and japan.

as long as the u.s. is threatening monetary policy, japan is easing monetary policy. depreciation of yen is inevitable, that is what is happening. but i think there is quite a big possibility that the u.s. monetary policy may change in the near future. so if that happens, then the yen would start to strengthen. >> so perhaps the u.s. does one more hike around december, and that is the peak of yen weakness? >> i think so. >> so essentially it is a matter of buying time until then. do you think japan can get to december without intervening and markets again? >> i don't think that

authorities are thinking of intervening at this moment. it would probably go until december. >> janet yellen suggests that smoothing movements, and intervention to achieve that, could be understandable under certain conditions. does that mean that japan has done the groundwork and already has a green light into intervening from the u.s.? >> that is some the i don't know at this moment. but i usually contacted my counterpart. and i tried to get their understanding to intervene in the market. i made it sure that it was very important. getting in contact with the u.s.

counterpart is very important. >> say japan does not intervene and the boj keeps policy as is. and we head through to the end of the year. what is the weakest level the yen could reach this year? >> well it could go beyond 150. >> you've mentioned 160, is that a possibility for this year? >> you are close to 160 -- close to 160 is a possibility, but i don't think it will go beyond that. >> it could get close to one 60, surely 160 would be too much for the government and they would intervene before 160. >> that is quite possible. >> would you agree 155 also looks like, they could not surely allow that? >> i could not specify that, it depends upon the situation at that moment. something like 155 is the level

which they would start to worry. shery: the former japanese vice finance minister speaking exclusively to bloomberg. we continue to see the 10 year yield pushing upwards. we had seen the 20-year yield hitting the highest level since 2014. we continue to see the upward pressure in guilds globally and the selloff in bonds and the european session being exacerbated by italy's larger than expected budget deficit. not to mention we continue to see concerns of central banks keeping rates higher for longer. that narrative from the fed is spreading to european markets, we saw the selloff spread to u.k. markets where the 10-year yield so the biggest daily gains since february. we are seeing that selloff in the bond space in treasuries cooling off in today's session, we saw the 10-year yield falling back below that 4.6% level.

in the asian session we are at around those levels, a mixed picture when you are seeing the 2-year yield above 5%. the 10-year yield is not doing much. we will continue to watch asian markets. this is the last trading day of the quarter we have seen what will stocks down for the second straight month. that is that from daybreak asia, our markets coverage continues as we look at the head of trading hong kong, mainland china away on golden week. this is bloomberg. ♪

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