a couple of headlines, rbnz in a statement, one governor saying that the rbnz is prepared to navigate economic financial challenges. he also says the economic recovery will continue, they will continue monetary support, and eventually settings can normalize. no details on when that can be. rbnz also saying that recovery needs continued monetary fiscal support, and they have planned to embed new risk appetite and capital framework. remember we have reports suggesting the rbnz may see bond purchases resume in a couple of months. all those headlines from the rbnz governor adrian orr. now let's get the first word news with vonnie quinn in new york. vonnie: this nation has defended its decision to launch airstrikes on iraq. speaking on a visit to rome, secretary of state antony blinken says it sends a deterrent message that the u.s. will not hesitate to protect its interest in the middle east. >> regarding the strike last night at the president's direction, u.s. military forces struck iranian-backed militia groups. they targeted facilities used by groups responsible for recent attacks on u

rate hikes -- the rbnz looking to downshift rate hikes. vladimir putin vowing to press on with his war in ukraine as he suspends moscow's last nuclear treaty with washington. >> i'm at the goldman sachs global macro conference in hong kong, day two, bringing together the bank's biggest names and industry leaders. we will hear from the -- david kostin about why 2023 means the return of alpha after a macro driven 2022. we will have a conversations about the outlook for european stocks and the war in ukraine as it heads into a second year. >> take a look at how u.s. futures are coming online in the asian session. we are seeing a little support after the s&p 500 was in the red in the new york session. the dow erasing all of this year's gains. it's all the worst day in three months -- it saw the worst day in three months. a combination of fear over geopolitics, poor corporate outlooks, and rising 10-year yie lds, close to the 4% level, as the markets try to reprice where the fed is headed from here. we have u.s. pmi numbers coming in above expe

the rbnz did not play ball. the open daca -- the opec story is in play for david: it might be the turn of the calendar, a first quarter and a reassessment after a few days. we haven't gotten to the point to what those few days means because as of now, we are extending the risk rally across the region. 4.4% of the catch up trade here in hong kong. the dollar, more downside as we speak. against the dm though, the dollar stable right now. we will get to opec in a moment. look at this. in terms of repricing, we have seen it, but the repricing has taken place over the aggregate expectation of how high the fed will actually go. so, there has been a little adjustment. but if you measured it all the way to next year, and a reminder from the rbnz and now the philippines central-bank that because of inflation, that they say they are ready to take further policy action. it might have just been the rba. yvonne: it might have been the rba bucking the trend, offering parameters that they have very high household and also vari

why do you think the rbnz will go today?se the question is if they feel that there is a necessity potentially could do more, should they just do it today? sharon: that is what it boils down to. we can see that overs and wonders in the data. there is no one smoking gun. monetary policy is clearly working and that is what most people expect a hold. but if you look at what the reserve bank said in november, they showed a forecast, 19 basis points of tightening, practically a full hike. so our take was that they need to give us a nudge, rather than a big shove. unemployment did not rise as much as they thought. inflation didn't fall as nearly as nearly as much as they expected, migration is a bit stronger. so overall picture is still things are going there way, just to fish slowly. they also -- the overall picture is that still, things are going their way, just not too slowly. sort of the story of the wheels slipping a little bit on the risk of inflation staying too high for too long. so you can run with it a while and hope for

the rbnz was not expecting it just yet. it is likely to last for most of the year and that is they point to talk about, they have already done a lot in the -- and now they have a difficult challenge if markets begin to believe the rbnz exchange rate. kathleen: a technical recession in the u.s. is a bit different because there was a committee that determines when it is a recession. in the case of new zealand, it is a rounding error. underneath it all, how big is the slow down? is it enough to bring down inflation? is it enough to make the rbnz think it has to move before is seen as a meaningful decline in inflation? >> that is right. i think we are going to see, with the gdp, declines. when we look at what is going on with new zealand, we have had the surge in migration. even though it was a rounding error, you are seeing a big curtailment of consumer spending. the rbnz, we have the data about the average interest rates being paid by households to may. even though interest rates have risen, they increase in what consumers ar

rbnz kept rates on hold. world's biggest asset ,anager is betting on beijing 2016 will be good for china and investors will be sorry they are not there. do follow me on twitter @rishaadtv, and don't forget to include #trendingbusiness. china, hong kong markets underway in 30 minutes. let's have a look at what is happening. the day after the fed, and asian markets are liking the sense of patients conveyed in that policy announcement. snapping three days of declines for most of these markets, , i continued rebound in crude oil as well as basic materials. gains, the extending kiwi dollar surging since the fed left policy rates on hold. 225, ahead of the boj announcement. 56% expect some form of additional stimulus coming be furtherether that cuts into negative rates, etf of lying, or potentially negative rates for loans, which means lenders will be paid by the central bank to lend. ,traight times index up malaysia adding negativity to the regional look at the moment. let's take a look at some earnings stock reac

haidi: we are watching the rbnz decision.mes to retail sales, stripping out inflation quarter on quarter, coming in at a contraction of 1.4%. that is worse than expectations. it extends the contraction of 6/10 of a percent that we saw in the previous quarter. a fall in retail sales mirroring the concerns about recession risks for the new zealand economy. the budget update did give a bigger than expected spending boost for the economy, there are expectations that the influx of immigration will be and inflationary force. hence the expectations the rbnz is not finished, expectations are for 25 basis points, even 50 basis points. we are seeing a depression when it comes to the consumer side of the economy. more ahead here on daybreak. this is bloomberg. ♪ lomita feed is 101 years old. when covid hit, we had some challenges. i heard about the payroll tax refund that allowed us to keep the people that have been here taking care of us. learn more at getrefunds.com. shery: a quick check of business flash headlines. alibaba is a cloud

that's swati pandey on the rbnz. speaker kevin mccarthy left the capitol late tuesday afternoon say the two parties had yet to reach a deal to avert u.s. default. u.s. contractors are already reporting government delays in payments. joining us now is bloomberg derek wallbank. what sticks out to me is republicans may be having skepticism on june 1 being the actual six date m-- ex-date, is there a possibility we will not get resolution by next week? derek: congress works best with a firm deadline. there is a necessary amount of flex in the deadline. the deadline set by the u.s. treasury is as early as june 1. doesn't mean it will be june 1 at midnight, there could be a little flex. i've read multiple reports suggesting when the actual ex-date might be. you wind up in some bad scenarios if you say it will be at one time and it is two days in advance. it gets into danger areas. understandably, the treasury and speaker mccarthy don't want to go down that road what you do see some thoughts that that is not actually the ex-

is the rbnz really done? >> yes, we think the rbnz is done.llar was because markets as we went into the meeting this morning was pricing in either one or two hikes. it was the liquidation of those that have priced in two hikes. if you take a step back and look at the global central bank landscape, in most of the economies, the inflation pressure is between five and 6%. when a central bank brings about 7%, i think it is only natural for them to consider a pause in take to an end because they reached a state where the rates are back to neutral or slightly positive. it is what we are seeing from the fed, they are calling a timeout for now. it is not a surprise and we think it is the last hike in the cycle for the rbnz. rishaad: we have a government saying the latest data she is seeing this pleasing after a long battle. this is the language, we had yvonne say this, mission accomplished. surely that is a bit premature. you also have another player on this which is the aussie dollar is outperforming its kiwi cousin. >> i think it is a little bit pol

we will be speaking with the rbnz governor later this week.ou don't want to miss that conversation and of course, we are talking about dollar strength given some of that risk on sentiment that we had today across wall street. concerns that the economic recovery will lose momentum amid the resurgence of covid weighing on consumer discretionary stocks. u.s. listed chinese stocks something. let's bring in our markets reported. u.s. retail sales numbers really not helping. >> it was a risk option. risk off worries. you have it with the delta variant already building up and you have the retail sales, a disappointing miss. for a consumer economy, never good news. a sustained message across corporate earnings, bank of america fund survey. it is across the board here. haidi: when it comes to chinese adr's, also falling again. beijing ramping up on its crackdown. it has to work out what an adequate discount is going to be for these stocks. >> while china tried to moderate its growth, some of the regulatory scrutiny -- they do actually make sense. for t

the rbnz meets later today. other part of this story of the rally here is also what we were seeing in terms of the rsi is so most of these markets at oversold conditions coming into the rally so some strategists saying the pessimism really had reached such extreme levels that i bounce was just a question of when it would happen but phil, the thing that is very important is not to get caught up into thinking that the market bottom is here. it could be but we could be in another bull market or trap rather. we are still in a bear market and this could be another relief rally and this idea really based around a fed pivot perhaps is not near at all because if you bring up this eco-u.s. function here, we can take a look. these are all of the fed speakers that are coming up over the coming day. we already heard from mary daly earlier speaking at the council on foreign relations. she basically called inflation a corrosive disease that is eroding income. it really does paint this picture that fed officials are still very

ahead, we speak to the head of the rbnz governor -- the rbnz, and whether -- on whether the inflation dragon has been slain. this is wilbur. ♪ -- for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company. 76% of 23andme health customers surveyed reported taking healthier working foactions.th merrill. because they know health isn't just a future state. health happens now. start your dna-powered health journey today with personalized insights from 23andme. >> let's take a look at corporate stories, jd.com's u.s. trading shares fail -- felt after they changed -- they change their merchandise. profitability of the core retail missed estimates as they boosted marketing expenses to

the bok and rbnz hiking rates as well.week we have a jobs report out of the u.s., pmi numbers out of china, europe as well, and the opec-plus meeting that will be front and center after the fpr release. everyone is looking at their crystal ball for 2022. it is interesting what they think in terms of china. given what we have seen in the lack of performance this year, next year could be different and quite positive when it comes to socgen, if the msci could lead in their forecast for next year. they are talking about above 10% when it comes to growth for msci china. compare that to the nikkei, out beating even europe, japan, and the s&p, which is at the bottom of that chart. potentially we could see these darling trades start reversing. paul: south korea and the u.s. vying for your hearts and wallets through pop-culture. we explain what soft power is all about. >> south korea is having a moment. between the netflix show squid game, the boy band bts and the oscar-winning film parasite, its culture suddenly seems to be everyw

the rbnz is doing its best to see through the fog.nce in new zealand's banking system. and they have strong tier one capital buffers in australia as well. you can understand his areidence that loan losses expected. the buffers should help absorb all of that. they can keep supplying to the economy. but these smaller ones, they could the less able to withstand any shocks. -- be less able to withstand any shocks. housing prices are likely to fall in new zealand. he's -- he suspects sustained impact on the economy and said some of them will fail. plenty of unknowns heading into the future of the rbnz. we will be hearing more in just a little while. shery: new zealand has been quite successful when it has come to stopping the spread of the virus. what are we seeing in terms of the government's plan for the economic path forward? paul: it is an interesting situation. the deputy prime minister who is not part of the majority party -- he is a minor coalition party -- without him they would not be able to govern -- he has broken ranks with the

we had the rbnz this week with j.p. morgan on what to expect. yvonne: don't forget to turn to bloomberg for more on that rbnz decision with governor for -- governor mark -- governor orr said to speak next hour. year end, rates could be at 3.20 5%. the peak, 3.90 5%. in new zealand, this is bloomberg. ♪ re efficie you become. such amazingly perfect shapes run throughout the natural world. and can now be found in the automotive one. the world's most aerodynamic production vehicle. the eqs sedan. david: 100 25 more basis points in terms of rate hikes. that is what the rbnz just told us minutes ago. have a look at the market reaction. as far as the currency is concerned, it is on it rocket here. yields actually lower here. rishaad: seen as being ahead of the curve, we did have them saying a short while ago that they would rather have too much too soon, which is better than too little too late. anyway, is that the case elsewhere? thanks for joining us. the reserve bank of new zealand is seen as being ahead of things, generally speaking, but is the na

so rbnz staying pat for a second time in a row at 5.5%.remember, this is the central bank that has done 525 basis point hike. it has been pretty aggressive ahead of the curve, way ahead of the fed. and now it is keeping its rate standing pat at 5.5% for a second time in a row. dave. yep. yeah. so we're looking at, to your point there where there is some commentary on inflation and how restrictive rates are and they're saying already restrictive and that should be enough to return inflation to target. we're just going through some of the phrasing here on the statement because that i guess in some ways, short of hearing from the governor himself, which rule, by the way, here from is perhaps the best indication of tone right now. a couple of more lines coming through. the activity slowing is more in rate sensitive sectors. suffice to say it does look like it's working in terms of the currency markets right now. there's a bid coming through ever so slightly on the kiwi dollar. some forecasts are now showing a small chance of another rate hike.

on rbnz calibrates meaningful arrivals until 2022.degree that our view is right and we achieve herd immunity in new zealand through the course of the next year, borders open up, pressure for the rbnz to do negative rates should ease. that should be a kiwi dollar positive dynamic at the same time the rba is turning more dovish. that is where the balance of risks lie at the moment. haidi: always appreciate your time. andrew boak there. westpac says it is paying a acord $1.3 billion to settle money-laundering case. we get the details next. this is bloomberg. ♪ haidi: we have breaking news from that white house press conference. white house economic advisor larry kudlow saying he doesn't think there is a need for another broad stimulus package, that there will be targeted measures only, that they need to be smart about those measures. this coming on a day where we had a parade of federal reserve officials stressing more fiscal stimulus is critical. chair powell calling fiscal stimulus unequal by anything else. larry kudlow saying they wou

the rbnz keeping its rates unchanged. of course this coming on the back of inflation expectations which have soared and growth momentum has eased. cutting property prices would be another factor. the kiwi right now losing a bit of ground, currently at 70.54 on the back of the rbnz decision, pretty much expected on hold. rishaad: yep. also at the moment equity markets moving to the upside. also against this backdrop in hong kong of the record antitrust penalty handed down to alibaba. this may not be a one-off. china continuing to scrutinize its most powerful technology companies, ordering 34 to drop anti-competitive practices over the next month. let's get over to senior analyst with eurasia group. why are they doing this, first of all? guest: i think there is the obvious message why a regulator is pursuing this route, and then there is the implicit message as well. on the obvious side, the antitrust crackdowns have intensified is the message irregular wants to send to the company. the record fine is not a one-off event. f

in its policy statement, the rbnz said it expects to get up to 5.7% at its peak. now we've got that other rate hike in place so you can see when you look at that inflation rate, even though they expect it to come back down into the 2% range over the next several months, for now it's a big gap. that's one of the reasons they are moving now and why they expect to move more into 2022. unemployment down to a record low in new zealand at 3.2%. their partition rate is 71.2 percent. it's interesting that in this statement, they note that there -- they are somewhat concerned about the impact on business sentiment, getting a little bit weaker. vaccination coverage is going very well. the lockdowns are ending. they will reopen in january. we spoke to achieve economist at rbd capital markets. she said not only do they expect that rate to get up to 2%, she said it could go higher. let's listen. >> but we've seen in the policy statement is an upward revision to the rbnz's cash rate projections. up about .5%. it's probably closer to 2.5 percent. that does seem appropriate for a

here is what he said in a policy statement where the rbnz cap there record low one .3%.etary policy will remain accommodative. numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly." he has also said that it is just likely that the rbnz could raise its key rate as cut it. the fact that he said that bank would also like to seek a weaker new zealand dollar because that would help their gdp get stronger, you might think he would be ready to cut, but economists don't link so. far away from that 3.5% he would like to see in the second half of the year. no cuts, even though that could help boost new zealand's exports. chance of a move from the philippine central bank today? well, there are two economists who follow this in our recent bloomberg news survey who are looking for a rate increase, but 19 others say no way, and that is the majority few when it comes to the philippines. bank is keeping the therate at 3%, but it is first time it has not been ironclad unanimous since 2014. let's look at a chart, th

expressed by rbnz officials.that has come in double what was expected to be in december, before the gabriel storm that devastated the north island of new zealand, repairs are going to be going on for months, it will need billions of dollars, that will be an expansion -- expansionary, it will add to output. along with a surge of migration, 100,000 or more migrants are expected, new people in new zealand, helping to fill job positions, etc. a 2% rise in the population will result. they will be bringing more demand. that is another reason why people are saying, maybe they will do a 50 basis point rate hike. he has never been loathed what something that surprises people a bit. -- with something that surprises people a bit. some are betting on 50 basis points. they at least as they update their forecast, could not move that vision of a 5.5% terminal right to 6% --ate to 6%? at least a 25 basis point hike is the messaging it will be focused on. >> speaking of messaging, with a meeting to out tomorrow, what are we looki

the rbnz has charged ahead.ight player like that depresses volatility and curbs -- deters foreign investors and bank earnings as well. volatility is much greater than japan's, but it is declining. raisevernment agreed to -- purchases to 60% of the market as well. this is an interesting situation for the rbnz. it continues to grow. >> paul allen in sydney with the latest on the rbnz. malaysia's record budget may face a tough path to approval in parliament. opposition parties are urging the finance to allocate more andy to a covid-19 fund improved social initiatives. >> the announcement has been -- and recognize the issues we face .oday it is the largest budget ever in malaysia's history. people,support not just but also the economy. it will allow us to fight the pandemic. it is highly focused on sectors that will give the highest impact. the other point i want to talk his own health care. we are spending a lot of money to ensure the government is willing to pay. >> an aggressive budget requires rigorous spending.

you want to take a look at some of these rbnz related trades. seeing that trading pair now coming near fair value. they are not confident that the rbnz will be able to meet the more dovish pricing we are seeing across markets. chicago nikkei futures are looking upside one quarter of 1%. annabelle: yes. you said it was that story in the u.s. session. we did have that late they rebound in the u.s. benchmarks or get s&p 500 closing back above that 5200 mark. treasury yields climbed in the session. 10 year yields dropping back from the highest levels of the year so far. oil. we saw it dropping somewhat this morning, fairly steady here. more on the geopolitical angle of what we are tracking here. gold hit a fresh record high again intraday in the session. interesting to note, given there's not such a clear catalyst for gold in this sort of inflationary environment. certainly the focus is very much on valuations at this point in time. we are getting priced to perfection. anything less than that that we get in the ego data, any sort of political noise

still above the rbnz target.he rbnz government late last year, he said inflation expectations are going to be key and could force us to move faster. another reason i figure people think they will be aggressive. 50 basis points in one day? i think not. that is the consensus of economists who follow this. bloomberg thinks that as new zealand opens its borders, omicron cases are rising, that is going to hurt workers for some businesses. but they expect wage increases to slow, one thing that will make it did -- a difference. and they are also looking at the housing market cooling-off. mortgage rates has risen. that might allow the rbnz to move on rates without having to be ultra aggressive. haidi: on the other end of the inflation picture, we have the bank of america call that beckoned -- that bank of japan will have to reduce amulets. that is a big call. kathleen: and they are saying in october that the boj is going to go for that. the real rate is slightly negative, zero .1% or something like that. they will get it

hawkish stance out of the rbnz. reporter bloomberg learning the united states: has given an advisory for traveling. sources say that could impede beijing's ability to gain data. we are told the -- democrats have reached an agreement on a $3.5 trillion spending and tax plan. president biden's jobs and families initiative without republican support. senator schumer says it is part of a two track process by which they will consider a 579 million -- billion dollar intern -- infrastructure bill. an economic rebound in singapore. this is weeks of viruses. gdp for the 3 month at the end of june contracting from 2%, a jump of 3%. it means year on year, gdp was up more than 14%. no bases during strict lockdown at the start of the pandemic. the covid lockdown has been extended until the end of july in australia. australia is a good city -- australia's biggest city is performing more -- reporting more covid cases. australia is the second vaccine rollout among countries on the oecd. vonnie: lack of legal protections left asia's

our next interview is coming up, the rbnz governor joins us at 9:30 a.m. in sydney.on the earnings, walmart and home depot suspending outlooks for the year despite pretty resilient sector results screen we get the results from the biggest u.s. retail names next. this is bloomberg. ♪ shery: retailers have been among the hardest hit by the plandemic. -- the pandemic. we now have the latest round of earnings. let me get started with walmart. they beat expectations but they withdrew guidance for 2021. how well-positioned are they? allhis is the bigger move retailers have made, saying it is hard to predict the future and consumer buying habits. but omar tidwell. they increased same-store sales -- but walmart did well. they increased same-store sales. they are providing people what they need. haidi: in terms of forward guidance, do we have any expectation what they think the next recovery could look like? >> it is not clear. they are working through the with current size of consumers, they are leaning buying central goods, groceries, things for the home and that is what wa

sophie: this is the rbnz's financial stability report.e uncertainty for the new zealand economy. kiwi stocks lower by six times the 1%. the kiwi dollar pairing from an earlier jump sparked by the surprise beat in the first quarter jobs data. this as unemployment came down. the labor market still has some way to go. ozzie futures are pointing lower. the outlook for aussie stocks looking more optimistic. jp morgan raising its target to 7500. gains of 7%. more than double what we have seen for the msci aipac index. australian stock correlations with commodities a big factor with the raw material companies the second-biggest rating on the australian gauge. switching out the chart, the commodities rally has been broad. the cyclical recovery boosts demand for everything from energy to metals and agricultural goods. with this momentum, that has pushed the commodity price gauge 211 year highs. we are in overheated territory at the highest level in 13 years. shery: for more on the outlook on commodities, we are joined by the founder and ceo of van

and, a preview of the rbnz policy decision, next. plan to remain diligent in setting monetary policy to return the economy for stability in a timely way and be judicious in balancing the risks to minimize the pain of that journey. shery: the cleveland fed president, speaking after the u.s. labor market report showed a cooling-off that could bolster the case for less hawkish fed policy paths. policy editor kathleen is back with not only what loretta mester said but more as well. >> we were talking about this earlier. what struck me about the jobs report today was as much as bond yields fell a bit, when you look at the report, it may be cooling from a hot level but it's not really cold and not even close yet. we are talking about job openings and labor turnover, a survey the fed does. it showed the vacancies which have been closely watched since the pandemic when we came out of the pandemic it peaked at 12 million vacancies, people just didn't want to get back to work. before the pandemic, you could see it was averaging around 7000, 80

were looking at a 92% chance ont the rbnz takes it down august 11.resting to see how they control speculation in the property market. let's see how all this plays out. asia looking like this, up about 6/10 of 1%, highest level so far this year. not bad given all the challenges for the global economy. rishaad: thank you, david. let's look at how china has managed to weaken its currency -- so muchting much as a squeak out of its trading rivals. it has triggered cries of market manipulation and interference. g20 finance meeting taking place this weekend, they don't seem to be worried about the yuan anymore. it is a curious situation. when china last hosted the g-20, there was concerned that china was planning a steep device wishon and global markets were on the edge. all forward, and the yuan 3% against the dollar, 6% against the basket. ase people have described it a stealth device way should, but there is no finger wagging. there therestory is is so much money around the world, so china is going into this g-20 as the chair and a comfortable position.

we are right at about 50 basis points on the rbnz. they will still deliver, not today, but the risk market says it's probably going to be one, maybe two. yvonne: and there's a statement from the rbnz talking about renewed restrictions, highlighting the ability of the virus, that they remain alert of the display supply disruptions covid can create and they are talking about the unemployment rate as well, at or above maximum sustainable levels. and prices are both sustainable levels. they are very much part of the economy that they have to talk about in terms of overheating. and as our james mcintyre said, they have other tools in their toolbox to handle these issues right now, but for now hold is bably the bestition. the taliban say they will allow women to work in government roles, the latest next. tencent expected to report its first profit decline in almost two years after china's crackdo wn on the tech sector. this is bloomberg. ♪ david: the internet stocks this year, we have retraced about 42%. recently we were ok, about a week an

a preview of that rbnz decision.apan's famous bullet train, riding it will get more expensive for tourists. we are looking behind price hikes of up to 77%. this is bloomberg. ♪ haidi: the rally and treasury yields to fresh multi-year highs taking the dollar to the highest evel in 10 months. on the other cited the trade, weakness for other currencies, even the japanese yen despite that it strengthen so much on intervention chatter. it is down against the u.s. dollarowards the 149 level. let's talk about more what is happening in japan, because prices are being raised for the japanese train for the first time in four decades. our reporter has the details. so how much does this have to do with what i mention how cheap the japanese yen and tourists are coming in and we been talking about this inflationary pressures in the country as well. >> good morning. they have just hiked the price of the great passes used by tourist and not residents, the first right hey kai -- rate hike and 40 years. it is not believed that it will

the rbnz delivered as expected.: they did but it still quite a dovish statement from the rbnz. i guess there are key elements that have caused a reaction in markets. the first is, there is size of their the asset purchase program to 60 billion for the year. there was speculation this would happen, but i think it goes beyond that when they signal that there is still a range of monetary policy options they can add other assets to the purchase program, and they will think about other ways to support the economy. fairly dovish in that regard. they have also left the cash rate unchanged but haven't ruled out a negative cash rate in the future, signaling it is an option. aren't prepared yet but there is discussion and consultation, so very much signaling it is prepared to move into negative territory if needed, that it could do more beyond even the step up in the asset purchase it signaled today, including suggesting it will do whatever it takes and is prepared to do more. we have seen interesting reactions from markets.

later on daybreak asia, we speak to the rbnz governor adrian or. let's get to annabelle for the markets in asia. annabelle: we are focusing at what we are seen in the kiwi bond space. yields move in a little bit higher following the decision yesterday. the rbnz indicating inflation could take a little higher. one more rate hike may be needed. the question revolving around how long do rates need to stay elevated. the key rate in new zealand could be at 5.5% until 2025. in the equity space, futures will open in the red. kiwi stocks online to the downside. we have been watching the moves in the japanese yen. we are above the level the dollar again crossed in september when intervention first started. while above that at this point. the question is whether intervention risk is on the horizon. anything that will lead to meaningful appreciation of the japanese yen will need to be an exit away from the negative rates. we have seen a lot of currencies depreciate amid the dollar strength over the course of this month so perhaps the boj are unlikely to act j

watching new england ahead of the rbnz -- watching the new zealand ahead of the rbnz decision. looking at another 50 basis point hike, trying to get ahead of the curve. shery: take a look at u.s. futures right now rebounding after we saw those losses being pared back. we still had losses on the s&p 500. with the defense companies gaining ground and we actually saw them now at the moment rebounding a little bit. the -- even futures up .07% after we had social media companies erasing $100 billion given the profit warning from snap. we are watching treasuries and we have that safe haven rally. the 10-year yielded dropping. right now crude is rebounding after losing ground for a second session in new york. remember, we had the u.s. announcing the release of strategic crude. the department energy offering to sell as many as 40.1 million barrels of oil, haidi. haidi: let's get more with o ur asia editor. you take a look at what happened across the tech complex. there is no exhaustion yet when it comes to the selloff. andreea: hi, haidi. no, it doesn't look like it. even though the na

yvonne: that was the rbnz assistant governor.ng to japan, a new board member sees inflation creeping up in the country. let's bring in our managing editor in tokyo. good news for japan, we are finally seeing some inflation. >> yes, but the cause of inflation is similar to what we are seeing elsewhere. it is largely led by fuel prices and possibly the impact of the weaker yen. these are not the healthy type of inflation that the bank of japan wants to see in order for them to change their fundamental view toward the economy. it is interesting how they mentioned that these factors were possibly going to impact japanese economy. whether that would be enough to change any sort of policy outlook is still quite unclear. paul: we are also seeing the yen week at the moment by the standards we have become accustomed to. he would be good news. she is lukewarm on that as well, isn't she? >> there are two things that play. one, she doesn't want to say anything that would sway or influence the market. a weaker yen is positive for the exporter

what happens for the rbnz?ou have to favorite quickly to an easing bias -- would you have to favorite cook quickly to an easing bias? governor orr: governor orr: we have had very strong population growth. consumption per person is actually declining, so monetary policy is working. but there are more people in the country, so record demand -- aggregate demand remains very tight. when inflation is declining, our concern is that it might not decline sufficiently fast. we are in no mood for cutting until we see inflation expectations firmly back in the bed. i pivot -- a pivot would be too big a word, but where we are with corinne: and being too high at the moment, we have limited headroom for positive inflation surprises. hence our reasonably firm stance that we are taking. haidi: you mentioned you are in no mood to entertain any leniency when it comes to inflation, because the projections show you will not start cutting until inflation is well within 1%-3%, close to 2%, the midpoint. . do you need to be thoroughly

and the head of the rbnz said later it was a communication challenge. how could they turn on a dime so quickly? so they didn't. then -- and we spoke to him two days later and asked him about well, what about october? what about a rate hike then? he said they'll watch inflation. and continued to rise. jobs, they remain strong. and he said in terms of a rate hike, it's definitely a live meeting. >> a live meeting. we retain the right but not the obligation to move policy when we think it's necessary. >> now, today, even though third quarter g.d.p. is expected to track the rbnz said is to go ahead to make the rate hike because they expect a rebound after that. the latest covid developments are seen ruling out a 50 basis point rate hike which they are yesterday to do in august. and again, yes, in our bloomberg eke owe team says they will hold and signal a november hike. so there's a little more drama around this move than we might have thought. it -- thanks in part to bloomberg economics. shery: we'll find out in a few hours' time. our global and economics

the white line is the rbnz official cash rate. low in march of 2020 and now with inflation, the turquoise line, it is back above 3%. home prices in august up nearly 26% annualized rate. a red hot housing market. that is why they were ready to do a 50 basis point hike in august until the government locked down economy because of the outbreak. they had to wait. we spoke with the governor of the rbnz and asked about october. he said they will be watching inflation and jobs and it was definitely a live meeting. >> we retained the right but not the obligation to move policy when we think is necessary. >> they are expected to do a 25 point basis hike. the 50 point basis hike is no longer on the table. our team says they will wait. the virus is taking a toll and they will signal a rate hike in november. shery: we only have a few minutes to find out. kathleen hays with a preview of that decision. the world is seeing the first energy crisis of the transition, and it will not be the last. how much of this energy crisis has to do with the gr

the rbnz has set on two bands of tightening that several economists polled by bloomberg do not expect cash rate will go beyond 2% this cycle. the prediction is for the rbnz to hike key rates to 2% by early 2023 but a rate strategists said there are risks in either direction to that outlook. there could be pressure to hike as mortars reopen in new zealand. over at citigroup, they're noting that rbnz when it comes to inflation, they put up their timeline for the hike at 2% by the first quarter of 2024. haidi: those numbers will come out from new zealand in the next five minutes or so. the st. louis fed president said it is time to end emergency measures to support the economy. he spoke exclusively with bloomberg's michael mckee. >> i think it's clear that some of the inflation will be temporary. how much feeds into a more persistent process is really the question that the committee has to wrestle with going forward. i think we are already above our target on core pc inflation. according to the summary of economic projections katie is -- the committee is predicting 3%, excluding food and

shery: how will the yvonne: -- the rbnz affect others?nition and they have been the two, if you look at rba governor philip lowe's comments in jackson hole, if you have your just rates above that zero or below and you need to use unconventional monetary policy tools, you want to get in front of that and get in early. i guess the nearest analogy is the rba and what they might do. here are some signs from that, when philip lowe, the rba governor, speaks very soon unconventional monetary policy. haidi: in a few minutes time we will be getting that announcement from the rbnz, thank you, james mcintyre in sydney. we are about to hear from rbnz in a few minutes and we will be hearing from the man himself on friday in an exclusive conversation at 6:30 friday morning if you are watching in hong kong. let's check is this flash headlines. nike is breaking up with amazon, ending a pilot project where it sold its products on the website. the company says the decision is part of its focus to get more direct relations with consumers, and that it will i

no surprise from the rbnz either.iette: no, preparing the markets for further rate cuts despite leaving the cash rate on hold at 2%. governor graham willis says easing will be needed to boost inflation in new zealand even as the economy grows at one of the fastest paces in the developed world. record low borrowing costs have fueled a housing boom with growth rising 3.6% to june. the strong kiwi is keeping inflation at the bottom end of the rbnz target band. they key we fell flatly sense they announced they would leave a rates on hold, but has climbed steadily since january. speaking of the stubbornly high fronterra is patting itself on the back with an earnings climb of 65%. revenue however was down by 9%. terra has cut jobs and sold assets to strengthen its balance sheet. shares down by .2% in wellington. the cheek executive told daybreak asia that he is proud of the overall numbers. >> looking at our results, looking back to 2016, extremely strong results in quite a difficult market environment with a geopolitical i

we are joined this hour by the rbnz governor, adrian or. -- orr. haidi: let's take a quick look at markets. we saw that exuberance over the moderna vaccine progress really dissipate quickly. we saw the late session swing when it comes to trading in the u.s. as it has concerns over the efficacy data from moderna causing some concern. take a look at the futures in asia. we are seeing downside when it comes to futures trading in japan, australia, and hong kong, although we are looking at a little bit more of a positive open when it comes to trading on the mainland, and just also keeping an eye when it comes to energy markets as well given that we are starting to see backwardation between that june and july contract for the wti, suggesting some of the storage issues have started to ease. let's take a deeper look at the markets. investors are increasingly debating whether the broader stock market has become disconnected from the fundamentals. if we look closer, the sectors can tell a different story but the view from the president of pence wealth manage

rbnz did decide to hold their rate at 1.75%.he of the rbnz would like to see a weaker currency but he's not going to do anything to make that happen. but the philippines, it's a different story. out of a survey of 21 economists, 2 are predicting that they will, the bnp will raise that key rate today. it's the first time it has been not unanimous that they are going to hold the rate since 2014. it is significant. it's not because the fed raised rates last week. it's because of inflation. let's look at a bloomberg chart, 7034. what you are seeing now is the white line that is the key rate. the blue line, that pretty turquoise, inflation is down to 3.3%. that means it is above the key rate. we have a negative real rate at the short end. that is something people are pointing to as a suggestion, combined with that yellow line, that is the gdp rate growing pretty quick. in 2016, 6.8% in the philippines. that is among the best going economies in the world. at any rate, people say maybe they are starting to fall behind the curve. econom

we have the rbnz physician in a moment here -- decision in a moment here. they could possibly leave the door open to a further hike. the move in treasuries, the japanese yen, if you change on now to hit the 150 level against the greenback. this is typically when we watch for a sign of intervention from officials. you saw the sharp move higher in the dollar against the japanese currency. what drove that was the japanese government intervention. could there be something else aptly? we will be discussing the chance. perhaps to do with options positioning. shery: selling the dollar at the 150 level could be one of the reasons but we are also thinking intervention chatter is growing. let's get more with our . isabel -- with our across asset reporter, isabel. they have warned against these currency fluctuations. why is that 150 level so important? >> it really is just a psychological level. around this time last year, the japanese government first intervened, the first time in 24 years. this is a level a lot of analysts are watching. this could just be a standing

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up next, a conversation with the president of rbnz on monetary policy. this is bloomberg. ♪ >> markets are somehow doing the job of the central bank. >> they will probably respond to this. >> the fed will have to be really cautious and what they do and figure out how to navigate this. caroline: how the situation ukraine affects the broader monetary policy picture. the reserve bank in new zealand raised interest rates for third straight meeting and the rbnz set to take an even more hawkish stance in the year had to contain inflation. kathleen hays is standing by with a very special guest. kathleen: adrian or is the governor of the reserve bank of new zealand, joining us now from wellington. very important time in many ways. certainly your decision to speed up rate hikes reverberated not just through the new zealand market but through global markets. in the last 24 hours we have seen russia invade ukraine and really start a war against them. oil prices have surged, commodity prices look like they will keep rising. is this something that could potentially a

as i mentioned, the rbnz is the clear line to cut.u play the policy divergence, i would go for going long aussie kiwi because while it is marginally less hawkish, it is out hawking the rbnz. that's a very clear policy divergence in my view. haslinda: it wasn't long ago that you on played a part. it has been pretty stable. the pboc has supported it in a huge way. does it play any part it all? what are the guiding factors for asian currencies? >> as you mention, the volatility has been dampened so much. the traders get excited to go from 721 to 722. in reality, that's very little volatility. so the asian currencies are not able to take their cue from the yuan. that's why any changes from the dollar leads to an outsized reaction in the asian currencies as we have seen just today. we have seen again in the dollar. we've seen outsized reaction from the juan and the tieback even though the yuan is still historically stable. haslinda: we have to talk about the yen. 151. closed to 152 which is on the cusp of the 1990 levels that we saw. and y

benjamin from jp morgan wasn't really expecting much nuance from the rbnz.have a preference to be silent, then strike hard and fast. it has historically been a bit of a roller coaster ride. even by that standard, what's going on now does stand out. haslinda: say what you want, new zealand has become a gold standard for other central banks as well. yes it's a small country but when it comes to policy, it does punch above its weight and size. dan: there's a lot of history here. the 90's into thousands were characterized by a shift in many economies toward central-bank independence and buttressing that independence was a formal inflation policy, generally with a two minute somewhere. new zealand was the first. they liked to remind people of that. they are very proud of that. all through the 90's, you couldn't go to any conference or listen to any speech by a central banker without some reference to inflation targeting which drew in a comparison with new zealand. when that trend was in place, it was the gold standard. it's become a little bit squishy or. chris l

after the pause from the rba and the rbnz hiking, it is touching go what the rbi will do.re that they will hike 25 basis points, but they could pause moving forward. that will be the key question. that is what we are watching today. markets are not sitting on the sidelines today as well. haslinda: that's right. as you said what we are coming down to the market open in india in two minutes. rbi front and center. we are watching adani shares that have recovered some losses as of late. if you look at the flagship shares, down 46% since january. taking a look at premarket, positive territory. adani power up 0.60%. adani transmission higher by almost 3%. this is pre-market. big day for india, especially on the back of the rbnz and rba, it does seem like we are some diversions. and it comes to the rba, ed has the property sector front and center, so -- it has the property sector front and center. central banks around the world party much between a rock and a hard place. yvonne: yep, and getting harder. we had the oil shock earlier this week and now we have the central bank diver

why so much uncertainty willunding what the rbnz do?hing to see bits appear ahead of this decision, clearly a lot of uncertainty in the market, after that r.b.a. hold yesterday. twoi think there are schools of thought on the rbnz, having adopted bias in march, there's expectation the governor will want to get on with the job. domestic data the last few weeks soft so he's been delivered the conditions he needs to justify pulling the cut trigger. on the other hand, the economy is not in bad shape. growth has slowed but it's still above 2% and as we saw from the yesterday, there's an equal argument to sit on your hands and wait and see what happens. urgency to bel cutting rates. is the r.b.a.'s decision to hold have any implications for the rbnz? matt: it shows there's no urgency there. paradoxically, if you want to get stimulus into your economy, you want to get a lower and boost that inflation outlook, you want to be doing it when you're one of banks, notentral when everyone else is doing the be thatng so it could it's delivered the rbnz