look at what the boj did and what they said so far.ey made a move that does take them a little bit further down the path towards the eventual exit of stimulus? has would say the july move stuff tapering without causing the taper tantrum, so they went on and on about forward guidance massiveing this stimulus going, but you know, the result is as you showed, that the long rate is edging up. and they are reducing the purchase of the long bonds, and also etf's, they hinted that they reduce purchases, so this is, you know, very quiet first step towards exit, but many, many more steps to the exit. kathleen: your argument is interesting. you think that the moment that governor kuroda's team introduced yield curve control, that was the beginning, right then, of the stealth tapering. why and in what form? >> because it changed the instrument from the quantity of the purchased to the interest rate, so now, back from the quantity to the interest rate. so this is the preparation to reduce the purchase of the long bonds. >> please go ahead. finish

. >> the boj is the hind everyone else normalizing but the reality is the boj is tapering.sset purchases are falling. they are not buying as much, but they had this slightly conflicted policy-setting where they had the yield curve controls and the yield target and an amount to buy. there is a tension between those two things. there is reluctance from the bank of japan to drop their asset purchase target because they are scared of looking like they are tightening too much. >> the big news this morning out of the two korea's meeting was the second round of talks culminating in the military agreement. >> we heard promises from kim jong-un when it came to denuclearization. the question is will he follow through on his word? >> that is the question at stake. if you look at the joint statement released by moon jae-in's presidential office, it mentions specific nuclear facilities kim jong-un has agreed to dismantle and he has also agreed to invite professionals from related states, nuclear experts, other parts of the military agreement include withdrawing some of the troops -- gua

the boj decision among them.ve little reaction in the yen to the cpi data, trading around against the dollar. futures are nudging higher in tokyo, along with sydney and seoul. overall, we do have positive catalysts to help drive the risk on moved from a softer dollar. speculation that china will cut tariffs rates for trading partners, particularly even the united states. we have south korea's finance minister saying preparations are being made for the possibility of a prolonged trade war. japanese terms of stocks roaring back to the line, we are looking at what's the best week in about two years. can it be sustained? sophie: with policy normalization unlikely anytime soon, it was made clear this week, plus signs the economic recovery will continue, and chief stock valuations, these could be important to help japanese shares outshine the rest of china. if you look at the world equity index f function and compare what we see for japan to other major benchmarks, in the bottom part of the panel we have the nikkei up

as you see the boj today, a little bit of movement on the steepening of the curve.t is still relatively happy -- it is still relatively early days and small. but the amounts coming out of japan going into europe because of the steepness of the curve is a big factor in that treasury-bund spread. as the boj policy involves, as the economic fundamentals warrant, you may see some pressure on that spread come off. krishna: i think if european rates are a product of a bunch of things. part of it is european growth outlook. we have a slightly different take. we think european growth probably does not re-accelerate. if anything, it tapers off. the driver of that is the slowdown in emerging market growth. emerging market growth has been one of biggest drivers of revival of european growth. that story stabilizes our faith and i think you have an impact on european growth. i think the european fundamentals, far more than flows. let me make another point -- jeffrey: i agree with that completely. i'm saying is a factor in the european fundamental biggest drivers. krishna: one po

bottom line, he says, at the july meeting, the boj made some tweaks.nything else. they will need to be much clearer about what their intentions are. kuroda leading the boj with widening the ban for yield curve control, the band around , an for that 10-year jgb early sign that, when they are ready to a, that is one of the doors a could start walking through. the boj has been careful not to that.at -- to contain at the next meeting, it will not be so much of a focus. we will have to wait until the when there is a monetary report. the trade deficit is expand by higher oil prices. not a full speed ahead for the boj, but makes them feel a little less concerned. haidi: a robust scenario. thank you, kathleen hays. coming up ask, jack ma is preparing for the next age in his life. we are on the watch for him to announce his retirement from alibaba. the latest in just a moment. this is bloomberg. ♪ ♪ is daybreak asia. jack mize expected to step away monday from the company helped launch to focus on his first love, philanthropy and education. he told bloomberg la

the boj is interesting. no change in policy in their most recent meeting. we have seen them tweaking the amount of bonds they're going to be buying. longer data than 20 years. with the reduction in appetite. as a result we see yields go higher. the japanese thirty-year going up. i wanted to talk about commodities in particular. copper is higher. barclays talking about how copper prices will recover. goldman sachs talking about how we are going to see commodities rally. a lot of market moves to talk about as we see record highs on u.s. stocks. let's get a bloomberg first word news update. >> the u.k. is promising fresh plans to break the brexit stalemate after eu leaders rejected theresa may's blueprint and warned that time is running out. two days of talks in salzburg austria broke up without progress as leaders piled pressure on the u.k. leader to aift her stance. they say november summit will only go ahead if the u.k. makes more concessions. may reiterated she is ready to crash out of the bloc. >> as i have always said, we are preparing for no deal so tha

you rightly say the boj is behind everyone else normalizing, but the reality is the boj is in fact laboringe asset purchases are falling. they are not buying as much. i think they have the slightly conflicted policy setting where they have the yield curve controls, the yield target, also an amount to buy, and i think there is a tension between those two things, and i think the reality is there is a reluctance from the bank of japan to drop their asset purchase target because they are scared of looking like they are taken into much. nejra: and therefore perhaps strengthening the yen, but is the yen actually undervalued by some measures at the moment? michael: we have a metric which suggests it's very cheap, 15% undervalued. it really should not be that concerned. in the context of concerns about global growth and also because, look, japan is halfway to meeting its inflation target, and they are just not that confident that inflation, especially with the tax hik e, they are not confident they have it on a sustainable path yet, so you can understand why they are cautious. nejra: if you look at

and the boj -- lisa: real yield!ya: the boj is actually trying to inject a little bit of volatility in the market. can they gap it at 20 basis points, or can they not? if they start rising, we have a bigger global route. we're not looking for that, but that is a risk factor. lisa: where is the big excitement going to be going into the end of the year? iain: i think it could well be in the emerging markets. i think that is where we could see some volatility, but also see decent returns. i would say on the german, on the core government rates, i think we could see yields push a little bit higher over the course of the back end of this year. although when i look at germany, i agree. you are capped by what the ecb is doing on the cash rate is not going anywhere. lisa: where will you be? michael: one trade we like is the relative yield between u.s. and germany. sometimes it is easier to pick relative yields than absolute yields. i think those yields will compress over time. lisa: everyone is sticking with me. priya misra,

. -- new flowtrade out of boj which has moved things around a little bit on the fixed income market. pushingll of this

this has to be reassuring to the boj on where they are heading.ewer they have to buy, that is the bottom line. i think what is important with prime minister anna: reelection, people are saying -- i think what is important with the prime reelection, it is a reinforcement of fiscal stimulus, reregulation and reducing that. monetary stimulus at the top of that list. the of every election is probably good for stimulating growth and continuing the fight, haidi. haidi: yep, he is said to be the longest serving premier in japan after years of revolving door leadership. thank you for that, kathleen hays. let us take a look at how we are setting up, going into trading day in asia. record highs when it comes to the s&p and the dow overnight. sydney stocks are looking to open up by about .5% when we get trading. there was also sustained a strength from both the kiwi and the aussie dollar. plenty more to come. this is bloomberg. ♪ xfinity mobile is a new wireless network designed to save you money. even when you've got serious binging to do. wherever your pho

most people do not believe there is any reason for the boj to start exiting now.saying they have already started tapering. these are the kinds of things that governor haruhiko kuroda will be asked about when the press conference wraps up. we will be doing the headlines pretty soon and that will set us up for the press conference later this afternoon in tokyo. all right. kathleen, thank you so much. roughly in about 50 minutes, we should be getting the boj's earliest -- rishaad: let's head to the lunch break. seeing some of the stocks which are moving, and what do we have so far? david: it should be an update. nikkei 225 last i checked was up more than 1.5%. this would be the third day in , at of one plus percent gains for the nikkei 225, 23,800. rishaad: you have to look at what is going on in the yen. fresh yen weakness in generating positivity for exporters which are quite heavily laden on the topix ints -- particular and we are seeing a broad moved to the upside. david: 21 straight month of japanese export growth. 1130ar-yen has averaged 1 and change. this is b

we saw that so-called stealth tapering from the boj.en a great week for the greenback amid this improving risk on sentiment. the aussie dollar having some of the best gains over the course of the week in response to that rally in commodity currencies. set for the best weekly gains since 2017. nejra: thank you so much. u.s. equities climbed higher yesterday. the s&p 500 and dow rising to record levels. the last of the four u.s. benchmarks to hit that record high, the dow. all benchmarks have erased their losses from february. investors shrug off the latest salvo in the traits couple. the boj -- the trade scuffle. the japanese 20 year yields reaching its highest in 18 months. we have to look at the even longer dated bonds as well. oldrtfolio manager at mutual global investments still with us. i have a chart showing the 30 year yield climbing it nine basis points. -- 89 basis points. the boj cuts superlong purchases. are these yields going to sustain these highs? >> they can. they are much more concerned about controlling the front end of

steadyanese yen holding policyhe boj held unchanged.so seeing the korean .on trading like this, stronger commodity currencies have been grounding. this is bloomberg. ♪ to rent a movie? showtime. or buy the hottest shows. even here? we've got you covered. now they are all yours. to take on the go. on any screen. bingo! alright! and watch whatever you buy. wherever you are. head to xfinity.com/stream to start watching. simple to rent, easy to buy, awesome to go. haidi: very good morning. asia major markets have just opened for trait. shery: good evening from bloomberg's global headquarters in new york. "daybreak:come to asia." >> asia-pacific markets facing a muted start after banks lifted for the second day. the kiwi climbing as new zealand gdp beats estimates. will this escalating trade war claimant another scalp? >> shinzo abe is backed to one another term. his critics say he has largely failed to deliver. >> u.s. 10 year treasury yields topping 3% at the moment. some say this could lead to more volatility in other markets. let's see h

shery: first, economists expect the boj to hold study this meeting.. ♪ haidi: this is daybreak asia. shery: the bank of japan wrapping up its latest i'll say meeting in the coming hours. even though no changes are expected, investors are keen to hear where they may be heading next. kathleen hays is here to set the stage for us. of course governor kuroda has to be very careful on his comments. he does not want to spur speculation he will be exiting anytime soon. kathleen: because he does not want to disrupt the markets, that is what everyone is saying. i think people are expecting he will shed some light on policy, particularly the steps taken at the last meeting when it comes to yield curve control. what did he tell us about that? because of that point the boj said the range for the 10 year j -0.1, around that. now it has widened out to 0.2. let's look at the bloomberg now, one of our charts in the bloomberg library. look at where we are now and where we have been. we're looking at japanese bond yield. this is where the boj went to negative rates for

right, now speaking of bonds, the story is in the boj stepping back.d yields are higher on the long end. yvonne: we are seeing yields pick. having a huge not reaction, we heard from the boj cutting those bond purchases when it comes to superlong bond s. 40 years, ticking up 1%. this is the first time since january we have seen moves like that. so, they are pressing ahead when it comes to stealth tapering and pretty much what we've been hearing for all these economists, this is line with thatthe boj is signaling they will be more flexible when it comes to bond purchasing. is this tapering or are they tweeting the yield curve control, to prolong the stimulus program? also, watching the treasury market, of course. treasury yields holding above that 3%. it seems like the trend lines, broken above 3%. perhaps they can finally stake there. some of the long-term drivers, we have this rate hike potentially next week. also global wages are starting to pick up. trade pressures when it comes to price and supply and those could send upward pressure when it comes t

we have heard from the boj in the last hour.saying they're going to watch as market changes can arise and they are going to examine the jgb market function. you have the u.s. dollar stronger there against the yen. also watching this week is coming through, dollar strength against the emerging-market currencies head of the affected said -- expected fed rate hike. we have been watching the stay virgins between china in -- top or in china versus the weakness on the lme. at least looking like the chinese copper traders are ignoring that trade angst somewhat. nejra: thank you so much. chinese stocks lower this morning as investors digest the impact of washington and beijing slapping additional tariffs on each other. china says restarting talks is entirely up to the u.s.. let's bring in our china correspondent in beijing. to china's comments suggest a tougher line? we have had this white paper on trade. the comments seemed balanced. was that you're reading? >> potentially balanced with a bit of an edge toward a tougher line. what they

speaking of central bank change, the boj out earlier. full story is on the bloomberg and the website. -- when i go running in the morning, i usually do a five to six k three times a week. the boj is doing it two to three times a week but running more. in other words, j.p. morgan said it might be an excuse to start shorting the jgb market. it is the first day since those changes were put in place. we are also getting the markets in hong kong and china. sophie: not inspiring at the start of the session. marginally higher after a five-day decline. the hang seng looking to extend its decline for a fourth straight day. the hong kong dollar very much in the spotlight as it is near the weak end. likely to see more intervention to draw down interbank liquidity. take a look at what is moving in hong kong, the breakdown for the hang seng. i want to highlight tencent, off by 1%. you are looking at a fifth day of losses. when it comes to the biggest laggards, you have geely auto. some stock themes to watch today , watching chinese property shares as

we have the changes in the boj and we think it runs out to 2025.apan now has the highest productivity gross in the g7. that is quite a turnaround from the past. 2012, it was just 4.4%, the lowest in the world, it is now 9.8 percent, currently converging with the rest of develop markets. we think it will reach a third year high of 12% by 2025. we have a whole slew of things that are going on with the trying map. typically, more corporate efficiency driving margins, a greater focus on costs, and even though japan remains cyclical, which is why we have modest downside to our target because it is full of sectors that are globally and cyclically impacted like autos in tech. story and domestically like banks are really interesting to us. is this not being reflected in the macro data in large part? we have that skewed all over the place. the inflatione his head with the blank of generic -- of boj with the 2% target? jonathan: it is priced on the upside of 3%. i was mentioning earlier, gdp in the emerging world is decelerating, japan's gdp surprise on the

this as abenomics and the boj tapering favoring into that picture.boj front, traders will be focusing on long yields on the banks plan to trim its buying in that sector for the month of october. haidi: we are waiting on the survey. what are we expecting? sophie: keeping in mind that it is a lagging indicator, have ate sentiment may drag from the recent string of natural disasters. the focus will be on whether or not corporate plans and outlet to get hit. typically, plans are more look or less unchanged. when it comes to expectations, they are penciling in the large factors index. the top panel on this chart to come in at 22 here at slightly better than the previous quarter as the young likely helped manufacturers. kathleen: sophie kamaruddin, thank you. the u.s.e to trade issues, economic data looming on wall street where investors have the chance to hear more from jay powell after the rate hike last week. also, it is a 3 -- it is the end of the quarter. su keenan is back with all of this. trade wars don't matter when people want to buy stocks. to ma

we are keeping an eye on what the boj may do, keeping a close eye on the superlong sector.saw that jump in 30 and 40 years yields on this chart which you can find in the library. the broad dollar bounce has pushed the dollar-yen to a fresh 2018 high. fed bumping up longer-term projections of its rates. and rubyand rupiah visualized -- rupee visualized on this chart. indonesia and the philippines on thursday increased rates as expected. indicating that more needs to be done to improve sentiment, especially in the face of the firmer dollar. the concern is a ripple effect is being felt in the economy, barring costs rising and companies canceling expansion plans. with that in mind, the rbi expected to tighten as early as next week potentially. thank you so much sophie, in hong kong for us. politics dominated with that kavanaugh testimony. we saw stocks shrugging that off. dollar jumping to a two-year high. the likes of apple and nasdaq -- and tesla making nasdaq the highest of the day. we will talk about tesla as well. that was the dominant story of the day. we did not see the

and boj are on hold.he problems and greatest debates between doves and hawks. what do you see europe doing? the zero also move? move?s the europa also >> there is the verge and's and monetary policy. the ecb is asking us to recalibrate and way through the summer of 2019. all of that continues to play out. it goes lower. we have a forecast of 1.13, next year 1.10, and consensus pushing in the opposite direction. i think they will have to capitulate like to have for the last three to four months. you alluded to the idea that inflation again disappoints, or the character and make up of inflation disappoints. is that part of your contrary and call? >> it is, but particularly outside the u.s. norway hike this morning. the crooner sold off. why? the market is asking what is your destination point, where are you going? tom: i have to interrupt. thank you so much. i should have brought this up earlier. does hsbc reaffirm its destination point of terminal values in all these different markets that are set lower, l

north and south korea hold nuclear negotiations and the boj on stimulus. >> the doj would be lookingher any criminal fraud laws were broken. >> the brexit summit produces little progress. the ceo of ubs says his bank is planning for the worst. >> you don't know what is going to happen, how can you invest?

the higher yield could explain that by the tapering by the boj last week. --you have a tapering bmg boj, that does not make sense with yen weakening. people saw that still tapering moreking a policy sustainable. it makes it more likely we can continue with aggressive abenomi cs. equity mean a stronger market and a steeper yield curve, but not closer to policy tightening. matt: elsewhere we are seeing a weaker dollar. the euro is trading almost up to 1.18. the pound is getting toward 1.132 -- 1.32. could it change when we hear jay powell speak? >> i think absolutely. the recent divergence between u.s. yields in the u.s. dollar may continue. there has been a theme the last few weeks. we have seen a surge in u.s. yields and get the dollar has stayed to the bottom of its multi-month range, looking soft. that divergence is likely to continue. people will be lot -- will be watching for a couple of things. a commentators will be removed. i think it is unlikely to remove that word, but it is one thing to watch. and of course the dot plot. those are the big issues p

when you start pricing in what the ecb and boj are going to do.ields were close to 2% on a u.s. 10 year, the first week of september. we have had a big turn over the last 12 months. >> we have. i would agree with diana. looking backwards we have been short on duration. we remain moderately short. we think the fed will tighten twice this year. i don't think december is a pause. there is a risk of a pause next year. we think the macro and monetary policy factors all point to higher rates from here. watching the show, it is interesting to see how many of my colleagues and other firms are getting more bullish on rates. i think it might be a little early. that said, i am not expecting the 10 year to hit four or anytime soon. fivewhen does the rate cycle peak out? jonathan: what is interesting is how comfortable the fed appears to be to invert the yield curve. the new york fed president cannot and essentially suggested it's not stumble -- it is not something that would stop him from rising interest rates in inverted the yield curve. if you have a fed th

. >> the boj would be looking at whether tesla broke any fraud laws. >> the ceo of ubs says his bankning for the worst. >>

north and south korea hold nuclear negotiations and the boj on stimulus.ns a probe into tesla. >> the doj would be looking at whether any criminal fraud laws were broken. emma: the brexit summit produces little progress. the ceo of ubs says his bank is planning for the worst. >> you don't know what is going to happen, how can you invest?

you get a magic number, that to go bad for stocks because people are pricing in the support for the boj. if shinzo abe wins in a lesser way, that could be bad for japanese equities. in the asia-pacific, mostly higher when it comes to equities. south korea leading gains up .7% after we got the joint declaration from the two korea's yesterday but the talks, wrapping up today. if this lot of question falls short of commitment to denuclearization. we are seeing the peace dividend. australia, down one third of 1% but seeing a decent week in chinese markets. china, up .75%. eight shares coming back in a big way. the hang seng, as well. we are watching that. .8% higher today. the timing could be pretty good. ceo of thek to the company, pretty bullish. shares up around 6% right now. compareddecent showing to the ipos in the tech sector in hong kong of late. rishaad: let's get to the first word news in sydney with paul allen. paul: the white house says president trump will nominate economist nelly yang to one of the three seats on the board of governors. in financial stability and credit markets

by the fed, ecb, boj, it has created significant distortions.haad: operation twist in particular. signal is asat clean-cut as it used to be in previous cycles is highly questionable, and a number of fed officials have question the signaling effect of the yield curve. we are not throwing this but weor out right away, are scrutinizing it more than usual when we look at the inversion as a signal to market peak and recession. yvonne: could there be a breather for em? we are seeing as steepening of the curve, but have we seen most of the hiking when it comes to asian central banks? pathe markets have a clear for the next six to 12 months. that should be helpful in terms of the banks and where the dollar will be. part of the em route was on the back of a strong dollar and pressure on current account deficit countries like turkey and indonesia, india. the market is starting to have a clear picture of what the fed will do over the next 12 to 18 months, that should help to cap dollar strength. it is significant for the current account deficit for the u.s