of japan. when will they make that move? >> i'm thinking the bank stay on hold for quite a while. the reason is, the next eggs -- best issue. this will start to be negotiated in september. will taxes be going up? how much of the covid support measures i want to be allowed to roll off. how much of the support measures will be crept back? it is not so much about monetary policy, even though you and i like to talk about it. really, it is about fiscal policy where japan needs to focus on. >> so what extent do you think japan will be affected by what is going on? a lot of weakness in the data. will that have an effect? >> the answer is absolutely yes. you do find that china is japan's largest trade partner on both exports and imports. it is an incredibly dense economic relationship. as you know, we just had the earnings for the april 4th, and a lot of machinery companies, they reported orders from china down 40%. that is going to have a big knock on effect. the sensitive japanese machinery. >> we saw that yesterday, which is why brought it up. thank you

again slips as the bank of japan steps in with unscheduled bond buying for a second time this week. asian stocks and european futures selloff as hot u.s. jobs data pressure on the fed inflation fight. the bank of england decides with at least another quarter-point hike expected today. speculation rose it could hint at a faster pace of bond sales. earnings heat up with amazon and apple taking center stage. but first, socgen posts better-than-expected second-quarter net income, with ing results hitting the tape now. good morning, welcome to thursday. the misery continues in asia, after a miserable end to the session on wall street. the s&p 500, it was its worst day since april. the nasdaq was down over 2%. august is typically the most volatile month. the fear gauge, the vix is at its highest since may. there are jitters about how much the bank of japan will let yields rise under its yield curve control regime. it has made its second intervention in a week. not to mention tepid earnings from qualcomm. the 10-year yield rose to its highest since november, as the u.s. ramped up debt issua

of things to keep in mind first is fixed income. japan has more u.s. bonds than anybody. some of their increase in rates may be related to the bank of japan, not to the downgrade, as i think both of you guys have been saying. i don't think this event is going to lead to a huge, huge spike in rates. on a relative basis, there's no question right now that earning his 5% plus in cash or what you can do in the bond market with high-quality credit, private credit. we have something called asset-based finance, which is linked to housing and other types of collateral. those are tactical positions. one of the negative impacts of quantitative easing is that we keep rates artificially low. over time, to catch up, they're going to need be further out on the risk curve. that is where investment like stocks, private equity, other things that can adjust to inflation, make sense. most of our models would say that credit is more attractive than equities right here. alix: one more question on the impact of this and the boj. do we wind up seeing slows out of the u.s. into japan? you are bullish on japan. they are exiting deflation. it is a big, bi

of the central bank. david f.: the call is based on that with that caveat that the bank of japan does not intervene and goldmanbasically the bank of japan is not going to raise rates anytime soon, which is what they have indicated, and equities remains of because if equities sold off, that would be risk off a version, which help the dollar, but also helps the yen as well. if those two criteria do be seen, they see a weakening towards 155. it is a big caveat. it is on the caveat that the bank of japan does not intervene, that the weaker yen does not become unpopular, therefore force the ministry of finance's hand. what i have not really seen a lot of rhetoric out lately because the yen is in this consolidation phase, but of course that could change quickly later on this week with a slew of u.s. economic data out and particularly u.s. payrolls on friday. david: stay in japan. the jobless rate, which most if not all economists were expecting to remain unchanged at 2.5, ticks up to 2.7%. any support from the bmj stance? -- boj stance? david f.: the jobless rate is still slow compared to other countries. or importa

on the same day, another major asian economy, japan, releases gdp data for the second quarter. it could provide hints of whether the bank of japan provide hints of whether the bank ofjapan will continue to remain an outlier and keep interest rates ultra low. earlier, spoke to fidelity international�*s catherine yeung, who told me china is facing a confidence problem. just this lack of confidence both within the consumption sector as well as the corporate sector. so if fact last friday we had july's m2 money supply and aggregate financial data released and it was marginally weaker than expected. so tomorrow, in fact, we have this element of operations all the expectations are for no cuts in the benchmark, generally speaking, we could see a slight increase in probability of a ten basis point rate cut. so again policy isn't going to outright change, it is going to be this continuing tweaking to be this continuing tweaking to be accommodated.— be this continuing tweaking to be accommodated. tomorrow we will aet be accommodated. tomorrow we will get some _ be accommodated. tomorrow we will get some extra _ be accommodated. t

. >>> now, the bank of japan governor ueda kazuo will attend the symposium in wyoming. alysts are watching whether he'll give an indication of the boj's policy direction given the falling value of the yen. the central bank says ueda will take part in the annual three-day gathering from thursday. the symposium has long been seen as an opportunity for central bank governors to present their policy directions. u.s. federal chair jerome powell will speak on friday. it decided last month to allow long prm interest rates to rise higher than previously tolerated. the boj had said its decisions were to enhance sustainability of yield curve control, the key elements of the policy. last year's symposium powell stressed tightening must continue until the job is done. his job highlighted the difference between the fed and boj which has stuck to monetary easing calling the yen to plunge in value against the dollar. >>> now, the cost of living here in japan has been steadily on the rise for a couple of years now. however, the bank of japan is determined to stick with its ultraeasing m

who is playing this game of chicken with the bank of japan? that's what i was wondering. : the boj owns half of the market if you can call that market. today, something truly historic once again. donald trump due to appear in a washington federal court later on after being indicted on two charges of constructing -- conspiring to obstruct the 2020 election. is the third criminal. for the former president. so look out for that conversation. i also wanted to squeeze in this as well. going to be talking about this in about 15 minutes. six time super bowl winner tom brady turning his attention to english football, investing in birmingham city as a minority owner. brady is investing in a second-tier championship club alongside tom waggoner who purchased a 45% stake last month. we will catch up with him in about 10 minutes. lisa: i want to understand the entertainment and a factors behind this. we know the tom brady is a genius behind marketing with a whole host of endorsements and products. how much that is going to be part of reviving a team that has been on the back foot for a

of course this is being reflected by what is happening outside japan, seeing the yields rise around the world and wage rises in japan finally are reaching a decent level. the bankf japan has said many times it needs to seek sustained wage increases in japan. finally, we appear to be getting that so there are quite a few negative factors at home regardless of what is happening outside japan. it finally is getting traction on the inflation front and yields are going higher. lizzy: mark, as you have written , the pboc was to show us that it really, really, really wants a stable yuan. what is it mean for other currencies, this support? mark: if they really can achieve stability particulates in the dollar yuan exchange rate that is a bearish factor across the globe because it's in the past, when we have seen the dollar yuan start to turn lower, it affects the asian currencies and gradually spreads around the world. he would probably see initially the singapore dollar, korean won start to track the yuan movements but the g10 currencies would start to follow that as well. that is a way off. first off, they have to be sure they have clamped down on the speculation agai

in addition to suggesting the ratings downgrade from fitch, we heard from the bank of japan overnightushing back against the view that the recent policy tweaks so pushing back against the expectations that we may be in for a further tightening from the bank of japan. a lot for investors to digest, but the overall tone i would use to describe overall markets, risk-off. >> our julianna tatelbaum, thank you very much. live from our newsroom. >>> we'll take another check on futures. again, under pressure after the downgrading by fitch of the u.s. the dow jones down more than 200 points the s&p down just about 1% the nasdaq, the hardest hit at this hour, down more than 1% let's bring in annika gupta. good morning thank you for being here. >> good morning. >> i think we have to start with the downgrade of the the u.s. credit rating by fitch how do you see that impacting the markets today and then longer term? >> i think in the near term, you know, fitch's downgrade was inevitable i think they've taken it in a different direction. the u.s.'s position is deteriorating. for example, we like to

it could provide hints as to whether the bank of japan will continue to remain an outlier and keep itsmark zuckerberg has said elon musk isn't serious about holding a cage fight and it's time to move on. in a post in his soders —— social media side, he said he had offered a date but the rival entrepreneur had offered excuses. mr musk had suggested on x formally known as twitter that he was willing to fight as early as monday. the builyan agreed to a bout injune, sparking huge media attention. that is all we have you on this edition of asia business report. i'm at monica miller. thanks for watching. bbc news, bringing you different stories from across the uk. the thing is challenging enough in itself to ride, it has a flipside today which is not making things any easier. adam certainly like — making things any easier. adam certainly like to _ making things any easier. adam certainly like to challenge - certainly like to challenge himself to say the least. training for his latest fundraising mission is nothing compared to the biggest challenge of east a few years ago. the huge abdominal

the bank of england moved to 5% plus. the bank of japan still has negative short-term rates.they let their 10 year increase, it is possible you will see a move to higher levels. if that happens, we would get even longer teresa at this point. we are at slightly longer federation. if the fed is restrictive enough and there are better standards at the banking sector, it is good enough. the fed asking for higher unemployment, lower inflation. 2% real yields on five-year tips . you have to go back 15 years to the 2006/two thousand seven level. it did not stay there for a year and a half but that was a wonderful opportunity after years of financial repression. we want them to extend take advantage. katie: let's talk about it three points. the point on the bank of japan, it feels like the ultimate while hard. -- wild card. when you are thinking about entry points for a long duration, you say you are already slightly there. for people looking to extend a recent, is now the time or when you wait? erik: --matt: in our preference, now is the time. risk is always to exciting. china seems

of august injapan. this comes after the bank ofjapan�*s august injapan. this comes after the bank of japan'suly after the bank of japan's week two policy in july allowed interest rates to rise more freely but narrowly in response to higher prices. meanwhile, south korea has released its latest trade data for the first 20 days of august and the country's imports are falling almost 28% while its exports also felt by 16.5% on the same time a year earlier. this brought its trade balance to just over 3.5 billion us dollars. now to australia, where spain has beaten england, winning the women's world cup. after every men's world cup, there is usually a familiar dance of a bonanza as clubs compete for the stars of the tournament. massive signings are a sign of how lucrative the men's game is for big clubs, but will the same actually happen now after the women's world cup that has reached record audiences? laura doyle is the head of women's football at one of the world's biggest sports agencies, caa stellar and she told me how transfer fees may change after the tournament. this fees may change after

if the bank of japan does nothing at all and don't change policy at all and make no effort to supporthe yen, goldman sachs might be right. we might see the dollar-yen at 155 somewhere around there. that is unlikely to be the case. you can already see the boj chief ueda is hinted that he does not like the feedthrough on the wiki on into the inflation data in japan and is getting worse. this month, the yen has weakened again. not just against the dollar. it is very weak and that is a risk to japan. oil prices are relatively high. this will show up in their data over the next few months. the chance are that not just the ministry of finance's response will for the yen but the bank of japan may play its part by doing something to monetary policy to support the yen. it is unlikely they will say back and do nothing and just allow the dollar-yen to go to 155. way before then, you can expect intervention. it came last year heavily around 150. this time, we might get modest tightening of policy and intervention together. letting the yen go is not an option for japan. lizzy: thanks to bloomberg

>> the bank of japan's policy change has posted bancshares since last week, the best performer since d we have seen earnings from two of japan's three biggest banks today. their shares have retreated a little bit today. they are affecting some caution. you can see most do not for -- they do not expect for the policy change. the yen has come down quite a bit. they will curb rises in long-term bond yields. having said that, it is quite clear that any rise in bond yields an interest is going to boost bank earnings going forward. >> the question is how long does the support last? >> that is probably the most important part here. people are not buying this just because earnings this quarter or next quarter are going to be better than expected. it is a bigger story than that. if inflation will take hold in japan, that is going to be a major boost for bank earnings. for a long time, i have suffered from inflation, disinflation. nobody wanted to borrow money. suddenly, if you have inflation, it does make sense to borrow money because the real value will get cheaper. defendants have been risin

even the bank of japan. how much of that is filtering through? liz: i love kriti but plumbing matters. you may call it technical and whatever but it is really mattering more. you have that risk and all of these forces. what is pivotal is we have rising government deficits, more government spending, when the economy is slowing. but the economy is not and they are plowing forward. you spoke to folks in washington. they say the democrats want to spend more, republicans want to cut taxes, that is not going to change. i think that is why people are really concerned. maybe people are finally worrying about that. you have all of this debt coming and maybe inflation is going to come down. maybe china weakening will help, but i do not get the sense the fed -- they are not going to declare victory next week. they have a long way to go before they are clear. guy: essentially we got fewer buyers. for the sake of argument let's assume we are in a 5% world. how much more adjustment to other assets have to make to get back to a world where 5% is normal? kriti:

yeah, and you're also seeing lines cross now from bank of japan officials and this verbal intervention of sorts is pretty much unexpected. i would say at this point. we're probably going to hear a bit more given how much yields and the dollar have really been putting pressure on both of these currencies. but yes, as you say, bank of japan, obviously the big part of this tweak that happened around regarding the reference guidelines around the jgb ten year note was had to do a lot with this currency volatility. and we're seeing the currency still weakening. so we'll have to see if there's going to be more verbal intervention in the days following. all right. thanks to bloomberg's tanya chen for that update on asia markets. and i want to stay in asia now because taiwan's vice president is seeking to reassure voters that he's a steady pair of hands as he campaigns to become the island's next leader. he spoke exclusively to bloomberg businessweek in his first interview with international media since becoming vp and told us about his plans for relations with mainland china. take a listen. we

decision by the governor last week to increase flexibility in the way that the bank of japan it conducts curve control is a sign that they are at least considering some policy tweaks before the end of the year. formal policy tweaks by the end of the year. given uncertainties regarding what intervention means, we saw them twice last week intervene but we do not know if they will intervene more regularly if pressure increases. i would say we are going to see the market guessing and we will see japanese 10 year yields moving toward the 0.6% level in a more sustainable manner. kathleen: reserve bank of india, another big central bank expected to hold except for the expectation that may be in laois will swing up again and tempt them to do another rate hike. what do you see there? >> they are most likely going to hold this week. preferred option is to not have to do additional interest rate hikes. our b.i. is mindful of inflation and there are two things that can drive inflation swings in india drastically. the first one of course is energy prices, because the country is one of the largest net

place because it's having the aftereffects of brexit, which is not positive for the economy or inflation. >> what about japan, what are you seeing in terms of the bank of japan intervention? >> you'll notice, julia, i completely left japan off that japan is always its own special case japan is trying to loosen up yield curve control, which essentially to tighten policy but do so in a halting and somewhat curious way, it raised the limit on its yield curve control. but then came back in and bought bonds earlier this week. it's not entirely clear the drift of policy or at least the strength of the drift of policy. they are going tighter but doing so in a very halting way japan always and ever its own special case that you can't really talk about in the same conversation as you talk about the other three central banks. >> japan, bank of england, staying busy thanks, steve. >>> let's get a news update with bertha coombs. >> the day after russia hit a key grain port in ukraine, the prosecutor's office in kyiv says it's investigating moscow for possible war crimes. ukrainian officials say russia has launched attacks on its agriculture infrastructure since

market is focusing, i think, very much and has been for quite a while with respect to what the bank of japan might be doing in the future i think nobody really expects the bank of japan to be doing anything more on monetary policy in the months ahead. we have had some positive economic day tachl for instance, we have had news this week the jobless rate continues to see tightening in the market that should be good for market growth we saw last week they're recommending, looking for 4% incarribean in minimum wage. it's generating this sort of wage price spiral, which japan wants which everyone else wants to depress you know, they're gathering some ground, and that should keep alive hopes that they could be some further tweaks within policy in the coming year or so for japan. >> okay. so for the japanese trade, clearly the japanese side is also a big factor here it's not simply a reaction to the credit downgrade, but thinking about the credit downgrade and the market impact more broadly, do you see today as the beginning of a more sus spained risk off narrative taking hold for markets, or is th

so we had interesting comments on some of the factors the bank of japan is considering. he called china' or down a disappointment and also said japan was at risk of losing out in the global rates to attract top companies, because perhaps it does not have adequate infrastructure, but no word about yield curve control or monetary policy changing. from surveys, we know traders and investors have already pushed their ideas were when that might change up to april of next year. he was certainly not talking about the again either. central bankers tend not to talk about their currencies, but there was no mention of how the yen has weekend 12% -- weakened to percent against the u.s. dollar, in part because interest rates are lower. haidi: the u.s. commerce secretary gina raimondo is in china seeking to expand business ties despite ongoing tensions and revelry. let's go to our bloomberg editor who joins a set of washington. several top u.s. officials had visited china and the last few months against this backdrop of what we know is going to continue to be a difficult and often stra

banks. what does this mean for us? most of our interest rate income will increase in tandem with the rise in short-term interest. the decision is up to the bank of japanwe believe that end of negative interest rates is a huge chance for us and would result in a significant increase in profits. >> what about tweaks to ycc? does that impact your business or profits? guest: we believe the tweaks to the yield curve control will have a positive impact on our revenues and profits. first we can switch to a higher rate when a fixed rate asset reaches its maturity. secondly, a fairly rapid rates of increase in our deposits means an incremental boost to our assets under management. that incremental part allows us to enjoy the positive impacts of rising long-term interest rates. it may be even more so than other banks. shery: directly tim danks ceo hiroyuki nagai speaking exquisitely to bloomberg. -- rocco towne bank -- ra kutan bank's ceo hiroyuki nagai, speaking exclusively to bloomberg. vijay sharma's steak will rise to more than 14% and ant's will drop to 13.5%. kkr has signed a deal to purchase simon & schuster, the book publishing firm, for 1.6 2 billion d

of august injapan. this comes after the bank ofjapan's tweak injapan. this comes after the bank of japan'sllowing interest rates to rise more freely but narrowly in response to higher prices. before we go, from today the retailer tesco says it will cover the sales tax of its own brand period underwear to make them more affordable for customers. it reduces the price by 20% and brings that period pans in line with other period pans in line with other period products which are tax—exempt. a campaign has been launched with tesco has joined calling on the british government to re—classified period parents so they are exempt this tax. that is it for this addition of asia business report. i will be back with newsday at the top of the hour. to join me if newsday at the top of the hour. tojoin me if you can. thank you for watching and do stay with bbc news, sport is coming up with bbc news, sport is coming up next. bbc news — bringing you different stories from across the uk. the end of another busy panto season. but for veteran dame david robins, the work doesn't end there. these elaborate wigs ar

raising concerns that the bank of japan may need to intervene for the second time in as many months. >>> and president joe biden hails his inflation reduction act one year since unveiling the landmark policy. as europe continues to reckon with volatile energy prices. we'll be discussing the european energy landscape with the ceo shortly. . >>> well, good morning again everybody. just -- i want to kick off the show with some news we're getting out of the bank. they have decided to hike interest rates by 25 basis points and now remember at the last meeting they went 450 basis point hike and indicated that further tightening was to come. today they have gone for a 25 basis points but again they have kept the forward guidance about further tightening being warranted in the future. policy rates will be raised further in september but of course, as oh central banks say, the future policy rate will be dependent on economic developments. so just bear in mind that the recent inflation print, the cpi print in norway, came in slightly lower than expectations. decelerated to 5.4%. but of course

very likely you will see the bank of japan. david: rate differentials matter, and it really matter a lot these days. just getting us up to speed on our set up as we approach jackson hole. by the way, very important. we had initial jobless claims overnight. we had a sizable drop overnight. something to consider as we make or break your data point of the u.s. economy. some are coming in weak not like this one but several this week. relatively though things have been fairly resilient and fairly stable. on the headline number, you are getting more weak spots underneath the hood on some of these components. that is for another day. more importantly for today, i went to flagged this for our viewers and clients, bloomberg is actually updating seven hours from now. we will be releasing the august survey of private economists in the u.s. what you were looking at our forecast for july. the reason this it will be important is sends a visit last survey was up, there has been a lot of conversation throughout soft and no lending. it is the l

it would be good news for the bank of japan.e yen starts to turn, japanese authorities would not necessarily have to do any intervention. so far they have refrained from it even though we have reached levels we have not been far away from last year. they have not had to yet. bank of japan would certainly like a bit more time before it changes policy. it could be a situation where as we go into september everybody could be happy. it is one of those bad data is good news for everybody situations. a little bit of a goldilocks scenario which we have seen this week. if the pce data comes in close to forecast, it is happy days for everybody. central banks, the preferred choice is not to do anything. suddenly the data is giving them reason to stand on the sidelines and just watch what happens. lizzy: speaking of the data, we have the china pmi's slightly better than anticipated overall. i'm looking at the hang seng currently down 0.5%. same for the csi 300. that's not what was expected. is it? mark: that's a little misleading. we did s

dynamics of what's happening in the yield curve, when you think about what's happening with the bank of japan, all of the different factors that are going to change the rate environment for us over the course of the next six months, and you're not seeing that being reflected, and these stocks that have experienced so much multiple expansion already, i'm very surprised at the sharp moves this morning and into the middle of the day >> this time around, in terms of the yield environment, it is a little bit different, because it's not just the fed raising rates. now we have the bank of japan basically stepping away from yield curve control. we know the treasury is going to have outsize issuance, particularly on the long end, steve. are you concerned that higher yields will ultimately catch up with your amazon trade is that a factor when do you start factoring that in there are other issues here at play here, not just the fed raising. >> there's been a tremendous disconnect between what's happened with the yield curve, right, which is inverted and what's happened with the rates overall over the la

. >> it's a healthy correction i think what the bank of japan has done with some of the weaker data outchina, there's just a lot of things that are sinking in, saying maybe we shouldn't have gone that far that fast >> do you think there's buyers remorse? >> not right now we just kind of got ahead of ourselves and we're taking a healthy break. at the fed, everybody is pretty happy. i think the fed is ecstatic about this data and i think they probably, you know, we got one more cpi before the next meeting. assuming that's not a point three or point four, they're in great shape. >> goldman says they're done there was no september hike which we talked about. they say no november hike. that this is it. there won't be a need to go again. i don't know how much of a difference that makes with some people are talking about this next year. that's their take, this is it. >> yeah. unlike goldman, i'm a little more humbled before the future >> i'm probably wording it more strongly than they are >> i this i they're not going to hike in september. i think the data will dictate whether or not they hike

downgraded but pointing out some of the technical elements of issuance, technical elements of bank of japan, maybe, no longer yield curve targeting, and boj also in terms of central banks globally buying less in the way of treasuries, higher yields here are something that i think equity markets have not contended with so, i think we're all -- have been scratching our heads over the last couple weeks, for sure, as they've been crescendoing the fitch announcement, we're going to talk more about this, i think there's comedy on both sides. the fact that we're referencing january 6th. as a u.s. citizen, i didn't like january 6th, that was january 6th, you know, that was 2020 the fact that this is coming up now, the government's dynamic, the qualitative elements of this, relative to at least o other -- other central banks or treasuries in the world, i think, is not even close the white house's response is also kind of laughable so, it does, you know, put a bright light on the political folly here equities were overbought, and yields are going higher and it's not good for equities. >> you know, to

there are clear signs now that inflation is over but the bank of japan that inflation is over but thejapan will be cautious. then they sent virtuous cycle between wages and prices. they need to see further evidence. it's around i—2% injapan, whereas in some other major advanced economies, wage growth is five to 6%. it is still a large gap and we need to see further acceleration in wage growth forjapan to consider tightening policy.— growth forjapan to consider tightening policy. staying with ja an, the tightening policy. staying with japan, the government - tightening policy. staying with japan, the government is - japan, the government is encouraging large companies to have more women in boardrooms. it requires some firms to have a third of their directors filled by women by 2030. the asian country has lagged behind western nations on gender diversity. women madejust over 15% of the directors injapan last year, compared to 31% in the us and 40% in the uk. naomi is the chief executive of on board, which specialises in connecting female leaders to companies, and she said a change is un

. >>> the development bank of japan expects large company capital spending to climb about 20% this fiscalear led by makers of semiconductors and electric vehicles. the government backed lender bases the projection on annual survey that drew responses from more than 1,700 large businesses. expected capital investment among responding companies totaled 20.6 trillion yen or about $144 billion for the year ending in march. that's up about 20% from the previous year's result. the survey shows spending on digitalization and decarbonization are key drivers of the increase. the poll says investments in nonferrous metal production will grow about 140% year on year. bank officials also cited expected increases on spending on equipment and facilities to manufacture silicon wafers. tsmc plans to establish chip making facilities driving investment in the sector. and caltop spending in the automobile sector will rise 21.7%. they'll rise prukds for evs as well as increase in development fo for autonomous driving. >>> japanese gaming giant nintendo has posted its ever highest sales and profit for the apr

all of this supporting the bank of japan's view that price gains will moderate as we see falling commodityice services index number is stronger-than-expected at 1.7%. chinese banks are wrestling with a range of challenges as the economy struggles to find its footing. squeezing lenders margins and they feel further declines even with valuations even low. let's get more from our reporter. the current earnings announcements, can a turnaround sentiment when it comes to chinese banks? >> good morning, haidi. we have china construction bank earnings earlier this week. the indication from the construction bank is not that great. the bank reported a profit increase -- but a shrinking margin. the net interest margin, which is probably one of the most basic gauges of a bank's profitability, the interest margin dropped by 30 basis points. from january to june, when things were not that bad, really expecting things to get worse in the coming months. haidi: we are not expecting any bargain-hunting? hideyuki: if you look up on the valuations, they are extremely cheap. china construction bank is -- 0.3.

and you have a time when the boe, the bank of japan, is maybe pivoting. you have china certainly not leaning in. i think there is other reasons why the ten-year has moved and i think they are paying atoetenti to that. the term premium is pretty positive. and that's something that i think we have got to be mindful of or at least watching. >> sure. what happens if inflation continues to come down, right, it's just north of 3%, it's come down a long way in the last -- >> its over four. >> i know you are thinking of -- i hear you on that. i know that's what they care more than anything about. what happens if the economy is able to stay stronger for longer than you think and inflation comes down at a similar clip to which it's already come down and that enables the fed to cut -- to cut rates, not because the economy's dramatically bad, dictates they have to, but because they can, because they actually have mission accomplished, they have achieved their goal? >> i am thinking about the larry bird/michael jordan commercial where they are fighting over their happ

growth in the inflation rate slowed as energy prices fell, but it's still well above the bank of japan's% target. the internal affairs ministry says the consumer price index for the capital central 23 wards in august was up 2.8% year on year. the index excludes volatile fresh food prices, which fluctuate based on the weather. lower fuel prices pushed down energy costs with electricity bills dropping 22% and gas 14%. meanwhile, tokyo consumers are still feeling the wave of price hikes in super markets. prices of food excluding fresh items soared almost 9%. these figures for the capital are seen as the key indicator of nationwide inflation. we'll get those numbers on september 22nd. >>> now, sales of tax-free items at department stores across japan in july topped levels not seen since before the coronavirus pandemic. tax is waived for foreign visitors who are returning to japan after travel restrictions were dropped. the japan department stores association says duty-free sales last month topped 31 billion yen or over $200 million. that's up 11% for the same month over 2019 and more than tr

it was close to the bank of japanning came close to owning everything in the entire country. st owner of government debt, biggest holder of stocks like the soviet union. it is not sustainable. the bank of japan has ripped off the bandaid. they are reassuring markets and be they will be careful and flexible but apparently the markets don't believe it. the interest rates are jumping up. the biggest risk for the u.s. 10 years of zero rates meant $3 trillion has gone overseas from japan. they're trying to get some kind of return on their money. so you know, over a trillion of that is in u.s. treasurys. another two trillion is spread out in the u.s. and europe mostly. that's in corporate stocks, it is in green projects, it is across the board so if that money starts coming home to japan now, that will drainma liquidity out of those markets. you had a couple of guests mentioning federal government ramping up borrowing, fed is selling f japan is selling, china is going through a rough patch on their economy, everybody is selling, nobody is buying what will that do to prices? charles:

soft landing those four things are probably more important than the recent fitch downgrade or the bank of japan. >> and so what does it mean from here it suggests perhaps we're in a higher range in terms of yield for some time. i know you've been making the point we go back a long way before october when we got to 4.3% of the ten-year, before the global financial crisis before you were out of here seems luke like a trend change. >> a lot of it has to do with the shape of the yield curve even if we look at the fed funds to ten-year yield, if we look at that spread right now, that spread is like 130 basis points inverted, 120 basis points inverted meaning the ten-year yield is so much lower than the fed funds rate if that went to zero, you would start to have a natural rise in the long-term bond yields. and that could bring ten-year yields up towards 4.5%, 4.75%, and that would still mean that the fed funds to ten-year spread is still inverted. that doesn't even flatten the curve. that keeps it negatively sloped and just keeps it there, but less negatively sloped than what it is right now or less

as you know, mike, is that we're very vulnerable to sudden downturns we saw this last week with bank of japanntial of 1.2 --this will be the first down day since may 23rd, as i recall but it's this vulnerability that we keep talking about. that's why, don't be surprised if we get a sudden 5% downdraft in the markets with this kind of pricing. >> rich valuations kind of a pre-existing condition that makes any little jolt a little bit worse. plus, you've got the seasonal factors turning a little bit less positive, into negatives. and also, i guess, the answer to the valuation question is saying the market says 2024 earnings are actually going to pick up more and the market is getting ahead of it. >> that's exactly right. we have a u-shaped earnings expectations here. the bottom of the trough is q2, as you've been talking about, and every quarter, q3, q4, q1, q2, we're up, and so suddenly q2 in 2024, they're expected to be up 15% from the second quarter so there's your u-shaped recovery in earnings that's what's got to happen to get this multiple down a little bit. and if that doesn't happen, yo

of japanese investors repatriating assets back to japan from the u.s.? >> yes, this is quite significant, in the sense that obviously japanese investors have historically put a lot of money outside japan, the u.s. bankst or one of the dominant places where that money goes the ramifications here could be profound in the sense that yields may go up if there is less demand for certain types of debt instruments, mortgages may go up, putting extra stress on homebuyers, and of course the context here is this is happening in a tightening environment. quantitative tightening, interest rates still elevated. so there could be extra stress on borrowers in the u.s. because of this. in the equity market as well, less demand for equities, for u.s. equities, taking off some of that premium u.s. stocks have had relative to the rest of the world. quite profound potential impacts. >> coming out a very sensitive time for the u.s. economy. especially when we have the downgrade of u.s. sovereign debt as well. what are the implications for treasuries? >> well, the strategists and investors are talking about -- were talking about this this morning in various notes to bloomberg, making the obvious parallel with the 2011 do

markets and that could be its last regardless, the bank of england has one or two to go and the bank ofjapan has has one or two to go and the bank of japanare a lot of central—bank people appearing at the event, a lot of information to be gathered. and we are talking about a critical time for central banks for interest rates, for inflation and therefore for the global economy over the next couple of years. economy over the next couple of ears. , ., , ., years. interesting to see what comes out _ years. interesting to see what comes out of _ years. interesting to see what comes out of that _ years. interesting to see what comes out of that -- - years. interesting to see what| comes out of that -- meeting. let's get some of the day's other news now. the australian airline qantas has posted a record profit this year, reiterating its forecast to have international flights back to pre—covid levels by the middle half of next year. as part of its quarterly results, the company said it would also be ordering 24 wide aircraft as part of its fleet expansion. the airline though has been extensively critcised over cancelled flights, lost luggage, lo

controversial maneuver with respect to compensating victims of forced labor and the comfort women from bank of japan next to clean peninsula in the early 20th century, so this is a not for culmination old efforts, particularly by president ewing to try and punch on this relationship. and i just to add on that point if i may, the language that we see in the comp david principles and the tri locked will statement is very much reflective itself because he is own in the pacific strategy and self cookies approach to value based diplomacy. and this idea of sold is that the pivotal state respecting a not holding the norms of the rules based international order. nancy, a, this, this, the tones, the faith and talking brought to tell us a little bit more about this mutual acrimony, if we can put it that way between south korea and japan and where it stems from briefly if you would, and how much it is taken for both countries to, to, at least for now it seems put it behind them. of this has been remarkable. i've lived here on and off since 2012. and when i 1st arrived, i had no idea really the extent of the ac

bank of england. we are going to start the day looking at the dollar-yen, up to 140 six. now the highest since november of last year. traders are testing what the bank of japan resolve is on policy. futures down 4.5% this week. paul: let's talk a little more about the latest fed minutes. concerned inflation may fail to receive and further rate increases will be needed. let's discuss this with stephen stanley from santander u.s. capital markets. thanks so much for joining us. let's take a look at those minutes. one of the key takeaways, most participants the upside risk to inflation. how accurately do you think markets are reflected the potential path ahead for the fed here? >> i think the markets have been more dovish than the fed recently. you look at fed fund futures and other measures of what the market is expecting and only a small chance of the -- another rate hike. the fed has been pretty consistent that they see more to come. we are starting to hear more about the possibility of a pause given that we have had two good inflation numbers. most officials pretty far from being comfortable that the rate hike cycle is over. paul: a cup half full approach he

i think the big influence has been the bank of japan widening yield control and the same time fed conducting qt. a lot of central banks conducting qt and the lack of foreign central bank buying. mostly buying shorter term treasuries. it is not because we see the sudden exacceleration of econom growth. some people are comfortable that we don't go into recession any time soon. >> let me jump in. there is a big story in china not cutting rates on the key lending rate there. it impacts the property market. how does that make you look at the property market and other chinese equities today? is there more downside pain to come? would buy the dip or stay away from chinese equities? >> china real estate distress on the developer side is a multiyear process. cutting interest rates for them may help slightly on the margin in incentivizing demanded for the consumers to buy excess supply. we get to the point where they are pushing on a string and tweaks here is not going to do anything. >> peter, i'm almost out of time. is there a sector you would put money into today? >> we are bullish on long energy s

i find it strange in terms of the bank of japan's policy because the consensus of economists is why don'toat was in the direction of monetary tightening just to endorse that you've got more inflation than anticipated six months ago because that inflation has surprise in the wage inflation that we are getting is a surprise to the upside. therefore, i think the bank of japan tightening modestly will be supported and strengthen the yen. haslinda: how crucial is upcoming reporting season? we have 160 companies at the asia pac index reporting this week alone. how might they weigh on where stocks go from here? gary: yeah, i think it needs -- the reporting season because we have gone post-covid. the initial impetus that we had from everyone being able to move around the world has helped. but we need to see follow-through and companies getting back to their business plans. and within those plans, achieving their profit forecast. it will be good to see impetus from that. it feels that with china in the background, there has been a lack of -- i hope the results gives a good surprise. rishaad: what

i think what you saw with the bank of japan and loosening of the yield curve controls is pushing rates up more than the downgrade. when you think of the 4.25 level on the 10-year treasury, we haven't broken that. everybody thought we would be lower. i think that is something that could spook markets. we would be buyers. >> you are adding to the wall of worry. you are seeaying it is yields we saw the long end of the curve go down a bit after the fitch d downgrade. it had meaningful impacts on the bond market. how does it shape your view on the fixed income are you buyers >> we have been long duration. 5% over the benchmark. we have not jumped in and added more we want to see where the yields settle in. not only in asia, but the inflation data coming in wheat prices are moving up a bit. oil isagain. >> we have not seen commodity prices tick up i want to talk about the fed you sent us notes. according to the cme, an 80% chance of pause at the september meeting. that is with voting member michelle bowman saying she thinks they need more hikes. how does that shape your view short term and l

of japan as expected. the key gauge showing signs of going off a little bit in july. the question is if it is enough to convince the bankor kathleen hayes is here. with these numbers came in line with the forecast. that is not always the most important aspect of a report but the point is that things didn't really change much from what was expected and what is going on with japan when it comes to inflation so let's recap the numbers and start with the headline. 3.3% year over year. but we are really looking at here is the next fresh food. that was the turquoise line. it did take down a little bit. in terms of what drove this, boosting the numbers, food, more than a percent year over year. clothing and shoes. japanese people want to get out and do stuff. these are the price increases to be a jet looking for. it is not just things you need. it is about things you want to buy. that is what the real final consumer demand is all about. pulling it off, we saw utilities, medical care -- medical care. all these things. in the end, what changed? not much. it is actually messing this very important factor of things like demand, ho

if you are looking for funding currencies, within central banks there are only a couple of central banks that are still dovish. the bank of japanhem. the people's bank of china is another one. they are still looking for easing whereas other central banks are still talking about incremental hiking even though they have pretty much came to the point of the last hike. the chinese yuan is still a funding currency within the reason -- region but i would be cautious in a sense that as we get closer to 7.3 or 7.4, the authorities could to squeeze liquidity and that could jack up interest costs of financing. haslinda: how about dollar-yen? it has breached 145.0 seven. some say real intervention will not happen anytime soon or closer to 147. teck: i think different from last month where 145 sort of brought in pretty urgent comments from the japanese officials, so far we have not seen that. i do think the 145 has already been broken and the market was cautious that it could draw intervention. i think that given that the u.s. yields are rising as they are currently, there is little effectiveness even if they were to cut to. i think 147 is

that we have the reversal of that, the boj is the last major central bank holdout to tighten policy when yields rise in europe, they rise in the u.s. when yields rise in japanlated in terms of the moves in interest rates. with respect to the boj in particular, widening the band also makes jgbs more attractive. japan's the largest holder of u.s. treasuries from a foreign perspective. there's potentially flows that leave the u.s. and go to japan, and i think it's just this sovereign bond unwind. markets got comfortable that inflation was moderating, the fed's almost done raising interest rates thinking that it was all clear, and i think this rise in longer term yields took us all by surprise because of the bank of japan moving quicker than we thought. but maybe for the first time ever, u.s. stats and deficits actually matter, and i say that for the first time ever because it was the 1980s when people were first talking about, oh, my god, the u.s. budget deficit is getting out of control, and here we are 40 plus years later, and it hasn't mattered, but meaning this time it does matter. >> jed, greg was on talking about debt to gdp. it's never been this high an

what is your, i suppose, roadmap for what happens at the bank of japan? mikio: well, by now, i guess you know me a little bit. i'm a bit of a monetary policy nerd, if you will. i think when it comes to the boj and how they think and what they actually do, or intend to do, i thing off and there is some misunderstanding in the markets in general. so in the run-up to this week that we saw recently, the expectation was inflation. we saw it everywhere, so the boj has to normalize a little bit. i personally do not think it is so much about them intending to tighten policy in japan in a meaningful way. i think it is much more about weaning themselves out of the yield curve control policy and regaining all sovereign control, if you will, of their own monetary space. the reason i am saying this is because the yield curve control system basically makes you a passive -- or hands over control to the fed and other central banks. and i think that is what they want to achieve. and by making -- the first step was to make unclear where the exact target is, but i do not thi

some of the bank of japan below this. we recognize the late psychodynamics are still at play. terms of european equities, i know things are cheap and they can always get cheaper, the discount versus the u.s. doubles what we normally see at this point. how much longer can they go? do you think the european equities meet it or the s&p goes down? baylee: the spill over from china, we know that europe does have some type trade links to china. any of the news we are seeing that -- there feared we are also seeing the benefits of tech at the same time -- they are. we are also seeing the benefits of tech at the same time. i think it is a little more tied into china. the position that happens there will have a breakthrough. guy: can i believe in higher rates that are going to be higher for longer. and in the tech sector at the same time. can i hold those two thoughts in my portfolio and head simultaneously. baylee: sure. in history we would not even be asking that question, we would not even put those two ideas in the same sentence. going forward, we are envisioning an environment wher