dani: -- kriti: good morning and welcome to "daybreak: europe." israel steps up ground operations in gaza. prime minister benjamin netanyahu rules out a cease-fire with hamas, dismissing calls to resign. the bank of japan makes a modest week to yield curve control, sending the yen lower despite boosting the inflation forecast dropped 2025. stateside, all eyes on u.s. treasury issuance. earnings season continues in europe and we will bring you numbers. also reporting ahead of the european open. you are seeing risk sentiment sour around the world. euro stoxx 50 futures down by 1.1%. a mix off in the european --

american markets and that is what to do with what you are seeing in the bond market. the defensive push you thoughts and yesterday's session getting pared back overnight. that even though geopolitical risk is arguably increasing, you are not seeing that bid coming out of the european and asian investor base, so that will be interesting to see. take a quick look at the bond market as well, getting so excited. we have to get through the numbers on talk about what is going on in terms of issuance, and this is where you are seeing changes come out in the two year and 10 year. you are seeing the move flat across the curve. yesterday the u.s. treasury came out on said there fourth-quarter borrowing estimate was less than previously expected. the market was expecting more to fund the fiscal deficit. issuance of supply is going to be in focus. that is going to have a real effect on yield and the dollar. right now the biggest index contributor to the dollar is the

japanese yen, but euro-dollar also in vocus. we will call it 106, sibley because the euro dollar parity conversation is still in the -- simply because the euro-dollar parity conversation is still in the background. let's get to the micro. raking earnings stories. the third quarter organic adjusted ebitda for ab inbev was at 4.1%, and estimated was for 1.1%. they were focused on their expansion in brazil as well as the u.s. they had the reports coming out saying that maybe that is where the pain point would be. it looks like those margin numbers specifically on the ebitda is coming higher. we do not have the numbers live on trading, but on the surface, that sets them up for a positive trade in the european open.

let me bring you the basf story as well because you are seeing full-year sales up the lower end of the range as well. and what is important here is their sales are coming in at 15.7 billion. their estimate was for 17.4 billion euros for their third quarter sales, so whereas ab inbev is posting strong numbers, you are not seeing the same thing for basf. i want to bring you one more because we have not gotten our fill on earnings stories yet. omv coming out with numbers as well and there full-year average production at 360,000. we are still getting them circling out, but again, something that we will be watching very closely. all on the heels of a massive bank earning as well because bbva had come out before the show and their third quarter net income beating their estimates. their net income coming at 2.1

billion the estimate was for 2.2 billion. the ratio for the earnings coming in line. what you need to know is ab in bev came in positive, the asf came negative, and oh mv and -- omv and bbva coming in line with estimates. let's check on how the markets are faring with avril hong. walk us through it. avril: there are two big stories in the age of region today. -- asia region today. one of them is the bank of japan decision. we saw them eking out gains, and then the chinese pmi numbers dropped and we saw the region's benchmark slipping into negative territory. the stock benchmark in the

greater china region as well as the currency also weakening off that data, so let's get a closer look at those numbers. weaker than expected and then from the previous month on both manufacturing and nonmanufacturing numbers out of china. to zero in on what we are seeing from manufacturing, slipping into contraction. obviously raising concerns we are seeing our frail chinese economic recovery. there are calls for more stimulus and support growing ever louder. keep in mind even though this can be accounted for in part by the h day long holiday at the start of october, bloomberg economics points out that if you look at the historical trends, this is still a bigger than usual decline. let's get to the other story we are tracking out of the asia pacific where we see how japan assets are reacting to the boj's decision. across as such, they were expecting a more major policy tweak. we did not get that, so we are

seeing the yield on the 10 year moving up again in the japanese currency floating above 150. that is supportive for the equities picture, so the nikkei and the topix both in positive territory, reversing from the earlier losses once the boj decision came out. this is interesting as well, what we see on the financial relations stocks because if we exit from the negative rate policy, they would benefit. we would not get that, but we are running more on the idea that we will see a normalization of policy, especially given how the boj raised its inflation forecast for the years ahead. lots to cover in the region. kriti: a lot that is going to have ripple effects for the rest of the world on the other trading sessions as well. avril hong with the report. i want to expand on what avril was just talking about, the boj in focus. they did little in terms of

market reaction but a lot in changing their inflation for gas. let's bring in bloomberg's paul jackson. i am confused. walk me through it. the idea that yield curve control is not going anywhere anytime soon. at the same time the higher inflation forecast, a bigger emphasis on wage growth, and economists are still expecting some yield curve controlled week early next year when that inflation forecasts are significantly higher going into the end of 2025. why the timing disconnect? paul: [laughter] there is a lot going on, isn't there? the boj is caught between a rock and a hard place with the yen sliding and yields going up to levels that the boj just three months ago had said would not be reached. that is the 1% mark. so it was in a tight spot and needed to do something. we saw a report come out overnight suggesting they will allow yields to go above the 1%

mark, and if you score the reaction of last night we saw the yen strengthening, which is the reaction you would expect from that move. but when the actual decision dropped today, what we saw was disappointment. the optics of looking at something that looks very similar, say everything that investors took, the way it was explained and worded in the statement, less convincing, less bullish unchanged to come than my had been expected. -- might have been expected. what we have is a halfhearted step in either direction of normalization. it is like a move to biotime. -- buy time. the boj logically wants to wait until spring, see the data moving out of march.

the most sensible timing you would expect for it to scrap its negative interest rates and start to normalize policy. so this is a way of buying time for that by just easing some of the stress on its easing freemark and reducing -- framework and reducing the buyers, but the language is not enough to convince buyers. kriti: perhaps buying time for the bond market come about the blessings and the curses of the fx market is that it trades 24/7. talk to us about currency intervention. we crossed the 150 mark on dollar-yen. where is intervention? paul: we need stronger movements in the yen to get us into the red lights flashing on the alarm bells. i think if you think last year, we had intervention and the last

intervention was close to 152, so it is difficult for them to move before then. on each occasion last year, we saw a move within 24 hours of about two yen in the exchange rate, so we have not seen that extent today, even though the moves have been sharp. i do not think there is risk of intervention today, but let's face it. if this was a boj move to help the government prop up the currency and avoid intervention, it did not go very well. kriti:. clearly not and this has global repercussions because the boj is working against the tide of global monetary policy. bloomberg's paul jackson in tokyo, and thank you for breaking down the confusing central-bank story for us. it is confusing story looking at today. if you are a terminal subscriber, just type in the ayp

go bigo on your bloomberg terminal and you will get more on the chart. the chinese data as well. in addition to everything going on in the middle east, specifically in terms of israeli politics, the future of benjamin netanyahu as he dismisses calls for his resignation. all of that on dayb on your bloomberg terminal. we will continue with the theme and be live from tel aviv on that story and the prime minister's reaction to a cease-fire. all of those developments next. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe."

israeli prime minister netanyahu has ruled out a cease-fire with hamas, vowing israel will fight until the battle is won. he has also dismissed clients -- calls to resign following security failures in the october 7 attack. >> the only thing i intends to resign is hamas. we will resign them to the dustbin of history. that is my goal, my responsibility, and that is what i am leaving the country to do. -- leading the country today. kriti: let's get more with oliver crook. benjamin netanyahu unsurprisingly turning down those calls to resign. what else did he say? oliver: he gave a press conference last night and gave it in english. there were a lot of international press there and i wonder if some of that is who he is speaking to. he says you need to draw a moral distinction between those who deliberately target innocence of aliens -- innocent civilians and

those whose and a military emaar killing civilians. we are talking about a death toll according to the gazan health authorities that has gone above 8000 people now. he has also talked about the note to cease-fire. people have talked about this as a potential humanitarian pause and even the united states has been in favor of an idea, and that is to get aid in, but he says regardless to have her stand with israel, they will get to their ends, and that is to dismantle hamas. one of the questions he took at the end is if he can continue to lead israel if he has lost all the popularity he has gained, particularly in the wake of what happened over the weekend where he made those tweets, shifting the blame and diverting responsibility from himself to the security apparatus. we said his only intention of resignation as the resigning of hamas and to resign them to the dustbin of history. we have had more open critics pay his former defense minister

said they lost confidence in him. there have been ceo's, and one of the ones to the big israeli tech startups said that again. some mounting pressures for the war. kriti: what do we know about the latest moves from israel's defense? oliver: we had a military briefing this morning an hour ago, so the headlines, we are expanding the activity into gaza, we have more soldiers coming in, more tanks and armored vehicles. their focus will be in the north because they see that as the center of where hamas activity is. they say more than 800,000 civilians have left so far and they have also said they are trying to get -- they will facilitate 100 trucks getting through every day, which is what the u.n. and other aid agencies say is needed to help the situation, the humanitarian situation that is developing. yesterday, however, only 26 trucks crossed, so this is

something we are waiting for and watching. we also understand that the head of mossad want to qatar to talk about the potential negotiations of hostages. that one israeli soldier has been returned to her family, but this is a slow build up and we are watching for more escalation and exchanges with hezbollah, but no significant steps either. kriti: in terms of the international reaction, we are starting to see pushback in the united states on the western european countries in terms of how this entire war effort is being carried out. is there a reaction locally in response to some of the hesitation from the united states, from europe? oliver: it has got to be one of the main concerns for the israeli politicians but also for the israeli nation, is the support that is needed from the united states. let's be clear, the united states has been unflinchingly supportive of israel. if there has been any critique

or advice given, that has been done through the back channel. we have heard biden and blinken all say, i will give full support. have said things that are tacit cautions, which is how they go about executing this war, is going to be fundamentally critical. biden has made comments about reducing civilian casualties but also more having to be done in terms of aid. the united states and it supports is fundamental to the israeli war effort and we will see that this week with the gop potentially splitting at the israeli aid from the rest of that biden package. that is another thing closely watched in israel. kriti: something i am sure has ramifications for the rest of the world as well, specifically when it comes to the role iran plays as well. over a creek, thank you for joining us this morning. speaking of iran, looks like more issues on other fronts. saudi arabia, their military on high alert after deadly clashes with yemen's iran backed houthi

rebels. four soldiers were killed in a fight with houthi forces. saudi arabia's defense forces have also intercepted a missile fire by the houthis past week. we will initially see a reaction into the markets because there are always the potential for those rebel attacks to hit saudi oil fields. in the past it has and it has moved the market, so when you see headlines like this, immediately it is smart to go click and look at the brent crude. it is higher at 0.7%, but not the panic we saw when the crisis first broke out. we are also awaiting what the kind of move is in terms of iranian sanctions and what iranian oil output looks like. they do make 11% of opec output altogether, but right now brent crude trading at $88 per barrel, higher by 0.7%. nymex crude on its heels, also

at about the same margin. that is your macro take. coming up on the program, we take a look at apple's latest launch. we bring you all of the details next. stick with us. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe." i want to bring you news from around the world on the eve of the u.k.'s ai summit. president joe biden has also signed an executive order on artificial intelligence that is to up great standards for security and privacy protections. >> one thing is clear. to realize the promise of ai and avoid the risk, we need to

govern this technology. we face another inflection point in history. one of those moments is the decisions we make in the near term will set the course for the next decades. kriti: in other tech news, samsung has beaten profit expectations in the third quarter and protected a recovery in the semiconductor economy year. the world's largest memory chip maker says it is stepping up spending on advanced chipmaking tech despite the downturn in the industry. apple has announced a new imac, mac pro per -- macbook pro, and a new chip that improves graphics. bloomberg's mark gurman has more. mark: on the eve of halloween, apple rolled out two more among -- two more max as well as a new

chip processor. the m3 has eight cpu cores while the m3 probe cranks it up for 12 cpu cores as well as 18 gpu cores. and the m3 max have up to 40 gpu and cpu cores. the base m3 chip is coming to two products. a new lower end macbook pro as well as a refresh to the 24 inch imac. the m3 pro and the m3 max are coming to the 16 inch macbook pros. all of the new machines go on sale in the coming weeks. from bloomberg news, i am mark gurman. kriti: bloomberg's mark gurman en apple's latest lineup. i will stick with the tech sphere. sam bankman-fried has told the court he was aware that alameda research did not take steps to properly hedge its risks, even as he proved billions of dollars

of investments before both companies collapsed last year. big been freed had previously tried to distance themselves from the hedge fund. he also denies charges of fraud. x is worth less than half of what elon musk paid for a year ago. bloomberg has learned restrictive stock use rewarded to employees valued the company at 19 billion dollars. a year ago, musk had bought twitter for $44 billion. let's move to the consumer and food space. a major analyst downgrade to know about. krispy kreme has been downgraded to hold on concerns about potential from weight loss drugs like ozempic. they cited the uncertain impact of the treatments on the snack industry. the donut maker stock is up some 25% year to date. here is why that is important. we know that ozempic has talked about -- had a major impact on

how consumer businesses revalue how much spending is going to be. you have had a lot of calls even from barclays actually saying shorting fast food credit may be the way to go as a result of weight loss drugs like this. that is one conversation in the broader market. we should also talk about the idea that the two's and 10's inversion is something we are watching closely on the microsphere. one of the big issues right now in the bond market is not necessarily the federal reserve decision tomorrow, but also the fed refunding -- treasury refunding announcement we will see that will reveal how much they will ramp up some of the sales. this is important when we talk about the move in terms of issuance. do we start to see more issuance on the long end of the curve to fund the fiscal deficit in the united states, or do you see more issuance on the front end of the curve because treasury bills have seen the most ease of digestion? that will impact how much you will see on the move for the

bond yields. keep in mind this is something people are watching very closely. yesterday we got a quarterly borrowing estimate that was cut, suggesting the amount of issuance the markets are expecting is not what we all will actually get. for chairman powell, signaling the positives and rate hikes is going to be there for longer, but if you do not have that ease of digestion than the treasury market, do you need this pause in rate hikes? this is one thing that is on investor minds. coming up, we will discuss the yen dropping after the boj made only minor changes to yield curve control settings. we will bring your headlines from the governor's

kriti: good morning and welcome back to "daybreak: europe." let's get to the top stories that set your agenda. israel strikes targets in lebanon as it steps up ground operations in gaza. prime minister benjamin netanyahu ruling out a cease-fire with hamas and dismissing calls to resign. the bank of japan makes a modest tweak to yield curve control, sending the yen lower despite boosting the inflation forecast throughout 2025. stateside, all eyes on the u.s. refunding announcement tomorrow. earnings season continues in europe. we have had numbers with bp reporting ahead of the european open. a lot on the macro and micro fronts. you look at the futures trading, you are seeing risk sentiment souring around the world. ftse 100 futures as low, paring the very small declines we saw

earlier in the session. now marginally higher. s&p futures on the other hand, even nasdaq 100 futures notably in the red on the defensive bid from yesterday completely gone. the trend we have seen before the israel-hamas conflict, the european and asian sessions are not seeing this bid into european -- american futures the way you would have seen a few months ago. a lot of that is to the bond market on the volatility. we are on watchdog for the federal reserve decision tomorrow but also on the watch for the refunding announcement tomorrow. how much issuance will the treasury put out when the market is expecting a significant one? the last 24 hours alone, the u.s. treasury has cut their borrowing estimate. they might not actually get it and that is creating both flattening in the curves. all of that will have repercussions for the dollar as well. euro-dollar at 1.06, and brent

crude trading just shy of the 89 handle. of course amid all of these moves, we have french gdp coming out. their preliminary third-quarter gdp rising 0.1% quarter over quarter and estimate was right on target. they were talking about consumer moves as welcome expecting a zero point 4% increase on a month over month basis. a slight tick higher in the euro, but nothing to write higher -- write home about. the same time we are getting the press conference that has begun for the bank of japan. governor ueda has already made some comments and has said the boj has decided to add flexibility to their yield curve control policy. they also say they will patiently continue with easing. they have already increased their inflation targets through 2025, a large expectation that any hint of change will not come until next spring. i want to bring in a true

expert, the deputy chief economist over at bnp paribas. helene baudchon joins the program. a pleasure to have you. let's start with this concept of governor ueda's policy bid he is talking about continuously easing just as the boj increased their inflation forecasts for this year, next year, and 2025. yet the expectation is somehow yield curve control is going to be changed next spring. connect the dots. why is that? helene: the situation in japan is particular and very interesting compared to the other central banks because in japan, we have the inflation rate, the highest since the early 90's, and despite that, we are continuing to talk about easing. it is a bit weird, but today the decision was about expectation on rates, so there is was even

change of a slight adjustment in the yield curve control. they have done indeed a very minor adjustment to this yield curve control and we have inflation despite the revision for the inflation outlook. we are still waiting for a true hiker, if i can say so, in the policy rate of the boj. it should be something done next year. we are expecting the fed, the ecb, or the boe to start cutting rates, so there is a difference between the big bonds where the boj is trying to see all signs of wage dynamics to make sure to get to the wage inflation target. in japan, they do know that fear, the wage price spiral,

while in the united states or the euro zone, the central banks do feel the wage price spiral. that is really interesting to watch. kriti: i love that you mentioned the wage price spiral as well because the fact that japan is actually excited by the prospects of getting to their long-term inflation target, something they have not seen in 20 years, is significant to your point. they are waiting for the wages to catch up at the same time they are saying there price increases are actually -- and these are headlines coming out from the governor at the moment -- saying a lot of the cost push inflation is coming from oil instead of oil imports pushing the prices higher and impacting the forecast going into 2025. let me bring our audience the latest headlines coming from the press conference. not only has he said that cost push inflation is coming for oil, he says japan's economy is recovering moderately as well

and they cannot see the inflation target in sight with certainty. he is saying the state of high uncertainty continues and it is appropriate to improve the flexibility of yield curve control, but to your point, back to the wage price story. in a country that has noticeably not been growing in line with some of its other g10 peers, is the spring and appropriate timeline for that wage growth to catch up? helene: this is what we expect because spring, in april 2024, we expect to have more signs of wage growing more rapidly thanks to the ongoing negotiations. we think about wages and we think the next premium will happen as well. japan and the boj will have more signs of a stronger wage dynamic, and to be confident, to

track its inflation target, so this is what we do not expect to have more going on the strong which dynamics next year and depends on the short-term process. kriti: pr point, -- to your point, i love how you are contrasting it with the rest of the well because the boj has been such a precursor to monetary policy. they basically invented yield curve control policy but also the idea of being a buyer of last result for bonds -- last resort for bonds as well. let's talk about the united states, where i want to pivot the conversation as we await more headlines coming out of governor ueda. he has so far just said most of what we know from the statement. this talk about the united states and the fiscal deficit people are worried about.

the last 24 hours alone, the borrowing from the treasury has been cut and a lot of jitters on the bond market on whether or not they will see the same amount of issuance as they were previously expecting. talk to us about how the federal reserve should be interpreting the change in issuance and the refunding announcement we are expecting in the morning. helene: i can imagine if the fed will be very interested in how tighter the financial conditions are getting because as we have seen for a few weeks, long-term rates have been rising quite fast and according to different species from fed governors, it seems they do agree. so this would be the way i see the decision we expect from the

fed at the end of the road, so no change from the fed funds range because part of the job is done by the tightening of financial conditions. the reason why the rise in the penultimate's, i am not clear. we have many explanations and one of them is big issuance coming from u.s. government bonds. another reason is the strong u.s. economy, so in fact, we can summarize the fed decision this week, data should argue in favor of another hike because we have a strong economy and still elevated for innovation, even if you are just consuming significantly. on the one hand, data supports another hike, but markets say

no, and by markets, i mean that. this tightening broadly in financial conditions. kriti: you mentioned a key piece of that equation which is the longer-term rates you are already starting to see decline. in the last 24 hours when we got that announcement, what you saw some bow flattening in the curve. are you concerned about the long-term prospects for the united states? we are talking about a fiscal deficit, house prices that have not subsided. we continue to see this wage price spiral in terms of japan. the half price spiral in the united states talked about a decline in long-term rates. whether that comes from issuance are not come are you concerned about what that says of the longer-term state of the american economy? helene: not exactly. partly because one of the reasons why behind this big rise in long-term rates, we think even if it is unclear, there is

a puzzle here, but one of the reasons why is the strong u.s. growth. as long as we have strong u.s. growth, this should be supportive of all this debate around the u.s., sustainability, and it is the main reason of currency in the world, so the fiscal deficit is huge. we have no signs of an economic decline in the pipeline. at the same time, part of this big fiscal deficit is to support some big plans like the rra and the chips act, which are grossly supported. so i would not be that much concerned about the fiscal deficit trajectory in the u.s. kriti: i really interesting take

as we monitor that very closely. you are starting to see the long-term jitters factor into the u.s. bond market. helene baudchon, deputy chief economist at bnp paribas, thank you for your analysis this morning. as we were speaking to her, we got more headlines coming from the governor of the bank of japan. ueda continuing to speak, echoing what you would expect from the statement. he does not see yields rising significantly beyond 1%. that was a statement that was understood from the actual statement that if you look at what the trade analysis looks like, but he is saying the boj will continue their long scale bond buying and the tweaks made last week were made due to aspects they could be flexible on. he does not think the 10 year jgb yield will rise sharply above 1%. right now, not much of a reaction off those comments on the dollar-yen, but again, we will keep you apprised of all the headlines as we get them.

there will be a lot to digest and basically at the end of the day, he says you are still waiting for japan to do a lot of catching up, and that is going to be quite significant as we talk about where the inflation expectations are as they have already raised their forecast going into 2025. we will bring you all the headlines as we get them. coming up, israeli prime minister benjamin netanyahu rules out a cease-fire with hamas and steps up ground operations in gaza. we are live in tel aviv with the latest. stick with us. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe." i'm kriti gupta in london. prime minister benjamin martin

-- benjamin netanyahu without israel will fight until the battle is won. he has also dismissed calls to resign following security failures following the october 7 attack. oliver crook, walk us through benjamin netanyahu's message. oliver: he spoke in english and to international press who gave questions and the press conference was designed to reiterate the points he made so far and justify israel's war efforts, even if there are civilian casualties and trying to draw the distinction between what hamas did and what israel is now engaged in. that is with the backdrop of the growing pressure on the prime minister after he went out on twitter and criticized his own defense and intelligence apparatus, and he was asked at the press conference if he can continue to lead with the popularity falling. he said he had no intention of resigning and the only thing he intended to resign was hamas. the second is the expended

ground invasion that is ongoing. we do not have a huge detail on the mechanics of it, but there are more troops going in and other heavy vehicles that continue to expand in northern gaza. they say the focus will be there and that is where they see how mosque' central nervous system. they say -- they have killed dozens of combatants on the question now will be getting in the southern border with rafah. only 26 trucks crossed yesterday and as the u.n. says, it to get to 100. israeli military says it can get there either today or tomorrow, but the proof will be once those trucks crossed the border. kriti: something we will be monitoring closely. bloomberg's oliver crook live in tel aviv. at the same time, saudi arabia's military on high alert deadly clashes with yemen's iran backed houthi rebels.

sam dagger joins me on the program. walk us through what happened in saudi arabia. why do we care when we are paying attention to the israel-hamas war? sam: good morning to you and your viewers. before all of this, there was a tentative truce in place between saudi arabia and the houthi rebels backed by iran in yemen, and saudi arabia was holding direct negotiations with the houthis to forge a permanent cease-fire and end this war that started eight years ago when saudi arabia went into restore the internationally recognized government of yemen. everything changed on october 7 one hamas attack israel. you had the houthi leader a few days later come out and make a speech in which he praised

hamas, identified himself as part of the so-called axis of resistance that is backed by iran, the different militant groups backed by iran in the region, and the fact that he would do everything to help thomas. he said all military options were being considered, particularly as the u.s. supports israel, and on october 19, the houthis fired a barrage of drones northward in the direction of israel and a lot of these were intercepted by u.s. forces, and one of these were intercepted by saudi defenses, but the saudi's not disclose this. then we had last week the clashes in which four saudi soldiers were killed and at the moment, we have the saudi defense minister in washington

meeting with the u.s. and all of this is top of agenda. kriti: it is a pretty terrifying story to watch not only from a geopolitical and humanitarian perspective, but also from the markets perspective because he will already see the geopolitical risk premium get baked into risk assets and oil. bloomberg's sam dagher bringing us that crucial reporting this morning. stick with us. plenty more ahead. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe." i want to first get a recap of what is going on in the bank of japan. governor ueda carrying out the life press conference and he said there is certainty of achieving the price target is rising a little bit.

they have increased their forecast not only for 2023 but also 2024 and 2025. a lot of it is driven by the expectation of higher oil prices and japan is one of the largest importers of oil around the world. it is actively hitting the japanese economy in a big way. at the same time, dealing with a lot of the fx story as well. he said the fx could affect the policy. we are watching this closely in terms of the 150 level, which has served as a line in the sand for the intervention story out of the boj. right now they are warning that the fx volatility could have a negative impact on the economy and their prices. he is already seeing the move in the japanese bond market is not just a function of the japanese economy but also the selling momentum you were seeing out of the u.s. treasury as well. in terms of tweaking the policy, they are still waiting for any potential updates, developments,

and progress on the wage growth front, and that will be incredibly important when we talk about this timeframe. we just had the deputy chief economist at bnp paribas talk about the disconnect in the timeline, the idea being that if you were waiting for some sort of improvement or tweak on more substantial -- sustainable policy, we will not get that until we get updated numbers in the spring. meantime, inflation forecast going higher all the way to 2025. what is the market supposed to do with that? that is why do i seeing hesitation trading dollar-yen right now, which is -- that is why you are seeing hesitation trading dollar-yen right now. what you need to know is that they are getting more and more confident this yield curve control policy is what they are going to stick to and the last couple of minutes, they have also said they are tweaking yield curve control to respond

to future volatility in the yield curve control tweak this time is also considered fx, the same as in july. the forecast between now and july have been substantially changed and we will bring you more headlines as we get them. at the same time, the other story we are monitoring is not just coming out of japan. but the united states as well. this is in terms of both flattening we are seeing in the u.s. bond market having repercussions around the world, not only with the federal reserve coming out with their decision tomorrow, but ahead of that you have a refunding announcement coming out of the treasury, which asks the question, how much issuance will they have to fund the fiscal deficit? government shutdowns have been heavy on the united states but also on global investors' minds right now. last 24 hours, the u.s. government has said their borrowing estimate for the fourth quarter is less than what they expected. the expectation is for the

markets that are expecting a lot of issuance coming out tomorrow, they might not get that because of that. the effect he will see on the curve is that there is simply both flattening, pitch -- which means that the longer-term premium will fall on a margin more than the short term premium. that makes the margin either bed and pulled back the steepening we are seeing. they are saying that the selling we have seen in the bond market may not actually stick and this potentially might be the end of a bond selloff in the works. a lot to digest. "markets: today" begins shortly. anna edwards, tom mackenzie, and mark cudmore will walk you through it. this is bloomberg. ♪

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