willusly the boj -- what the boj say about this?o: it's within the boundary of around 6 trillion yen. when the stock is down, they will have leeway to buy more. when stocks are strong, they will go back to self tapering with not buying as much. purchases too. kathleen: i know that is on your mind in a big way. --re was a big week in july tweak in july. to moveicials want it to ed lee 0.25 to help the government bond market function better. masahiko: i don't think it will be today. i don't think the board has reached that conclusion yet. there's something that might happen next year. bond marketom a perspective, has it made a difference in the last three months? it has been quiet and the volatility has been low up to the july meeting where they tweak the tenure target by as much as 20 basis points. it's a positive act from the boj. shery: it seems there no longer targeting quantity but rates. what should investors be watching at this point? masahiko: it's evident that they are walking away from that and they should be watching the ev

the second thing i am looking presentsway the boj the possibility of the banking i- or, how boj proceedsink those things are important. one thing was the tweak he made. learnsrg news there are some officials that would like to move to 0.25. will that help the regional banks? i don't know how much it will tweak itself. suddenly, the boj has to be theful about investors -- risk in the global economy is emerging. also, -- yen has been pretty well-behaved. what could the boj do that could change that sense that a somewhat weaker yen is where it should be? time to buy yen. trying notitself is to send any communications with regard to the exchange rate. as i mentioned, any communication with regards to this could affect the sentiment in the market. i think the boj will try to strike a balance between the possibility of tweaking and also -- their hands completely tide? it seems like there is a contradiction between concern about the regional banks, and one of the former managing director said, new norms, riskier loans, more losses, versus the risk of what you said. tightening, but also causing

tweakimportant the boj ed the rate in july.s assumed it was more ifut stealth tapering, possible. correct,es continue to the market will be watching if the doj will continue buying etf's. >> that may bring you the latest industrial production numbers breaking. year on year falling 2.9%. it is a thicker fall than estimates of 2.1%. for is preliminary data september. month on month, industrial production falling 1.1%. much bigger than the expected .3% fall. a bigger fault than the previous month of august. this has a lot to do with the fact we had some natural disasters, including typhoons, earthquakes, some disrupting factory operations and supply chains. let me get back to you. the boj is saying market volatility, and that because if this we won't see significant changes. there is a consumption tax hike coming next year. can we expect anything before the hike, or does it have to be after that? >> right. that is a good point. the boj presumably wants to enhance the jgb market and improve the functionality of the market. it is po

it's time for the boj to take steps for normalization. in ank the boj is caught dilemma.has to look at the financial sector and this sanctioning in the stock market. at the same time, at of market participants, especially in the stock market, they count on the doj continuing any decision and then they look at stock prices. that's why i think governor kuroda has to be a bit ambiguous about the future direction of policy. they yenif appreciation comes up, the stock with depreciation could gather more speed. >> yes. what happened last weekend this is bloomberg. ♪ expected a future trade diligent and -- [indiscernible] dealted a future trade with japan. becoming very is difficult for the boj to take the next step. at the same time, when we think about when is the best time for the boj to do the normalization, i think it is best for boj to do it when the u.s. dollar has a strong appreciation pressure and the us economy is strong and stock prices are very high, like today. boj misses the opportunity to take steps to normalization then i think it is difficult for the u.s. to tak

it will be much more interesting the boj normalize. that would be a big deal. i agree with you.re is a level of uncertainty about how this works. shockscertainly these like the trade war in recent selloff, we are comparing the odds of a december hike against what is going on with the s&p 500 which is teetering on the edge of a correction. you can see expectations of what happens in december have edged lower. --tainly while the market the question is should they be looking at what happens to the market and tailoring their approach to that? tony: the markets have quite a big response considering the effects of the downturn. in bank of america we think the u.s. economy is very strong. the hurdles for the fed are pretty high. maybe some of those inflation risks, they have to stay the course. we are penciling in a december hike. a lot of things happen before the fed meets in december. midterms,s, th -- the the xi, trump meeting. maybe the fed will be more confident. latest gdp report we saw solid growth for the u.s. economy but we also saw business spending slowing down, now the weak

we are at levels where we could see some boj action here to step in. renminbi, 6.90, weakening 1/5 of a percent. this will dictate what we see for the rest of asia fx. david: 2.70 on your aussie 10-year. speaking of australia let's head over there to sydney. paul allen has an update of our first word news. the wife of the former malaysian prime minister has been formerly -- formally charged. he faces 17 counts including mondor -- money laundering. she was detained after more than $250 million cash and luxury goods were found at her home. her husband denies corruption and abuse of power and says the investigation was politically motivated. reports from washington say the fbi hasn't interviewed supreme court nominee brett kavanaugh or the woman accusing him of sexual assault. sources tell us the white house hasn't given the bureau clear authority to speak to them. saying the senate testimony is sufficient. it is not clear the fbi wants to seek explicit approval from the white house to interview both. mike pompeo is backing away from the goal of north kor

watching for with the boj does.ng declines and underperforming the rest of the markets. here in sydney, we see about 7/10 of 1% as the aussie 10-year also reacts. shery: the china open is next. ♪ ♪ you produce some of the most famous movies in american history. barry: first we failed. in order to figure stuff out, you are going to make a mess. i have certainly been successful. but, none of this is mine. david: how did you gravitate towards the internet? barry: it was interactive, and it intrigued me. david: is that how it happened? barry: that is what happened. then they said i was crazy. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪ david: i don't consider myself a

let's get to live pictures of boj governor kuroda.we are keeping an eye on his pat.h after the boj stood they are to keep low rates for an extended time. he said the price momentum toward 2% inflation is maintained. to the risks are skewed downside. i would say this is a dovish tone after the central bank stood pat. let's get to our guest for the hour. from royal london management. what is your takeaway away from what we have heard from the boj? we are digging for the nuances. >> it is not a horror show. interesting for me, much of the dovish tone. showing inflationary pressures started to come through. albeit wage inflation, real wage inflation, is benign. what we are seeing, having been in japan, is a structural change in terms of employment. the workforce is as great as i have seen it. they have absorbed the utilization of domestic labor force. a lot of industries saying, we are short of labor force. ng to see net inward migration to japan. that suggests inflationary pressure. it is relatively benign. i'm surprised he is as dovish

when it comes to the boj, they have to keep a clear idea of economic data in japan.l provide a lot of cues for what is to come. we will have industrial production this afternoon, breaking. we also have the trade balance coming up and exports expected slowingyear on year 2%, from 6% in the previous months. it is important what will happen to trade tensions. japan, a key member of the east asia supply chain. this will decide what happens to prices as the firm decides whether they will spend on wages. and yield it gets a clear it look at cpi data friday. haidi: with inflation around 1%, pretty stubborn. all this talk of potential exit from the boj policies pretty academic at this point. governor kuroda saying it is at 1%. we will keep things where they are. yearen it comes to the 10 jgb. interestingly the imf and world bank meetings in bali. we had more information about this u.s.-japan trade talks. competitive to devaluation is anotherthis, so indicator of currency trade, how the collateral damage is being wrapped up, and japan is one of the most vulnerable nations giv

especially in a week when we see a boj policy decision.willecting that leave the policy setting after they back their two-day meeting on wednesday. forstors are watching out bloomberg -- for this. this is an extraordinary stimulus and a critical role of wages. what would you say about the latest numbers. ? >> he would be clapping. marketut it, the labor has gotten even tighter when you look at these numbers. 2.3 percent on the jobless rate, it keeps falling. that job to applicant ratio is rising. this is very important. it is widely expected, even though inflation is far from the target. these markets are going to increase wages in japan. told me that this is probably his biggest focus. let's listen. >> basically, i think wages , sustainablemain factor of inflation. this is in recent months. whether this continues or not will be very critical. >> of course, seeing these numbers, knowing it is tougher for companies to find the right worker for the job sounds like the united states. that does not mean that the wages automatically rise. japan

the boj had to cut its inflation forecast in its monetary policy report.rtant to do these ,weaks to yield curve control the range has been widened, but don't expect any big changes on any aspect of the program, the governor made it clear. that's what the story is for now. >> i have no intention of changing the current gold of guiding around 10% right now. we will keep taking necessary measures to improve market functioning. kathleen: there's been conjecture that one of the reasons the boj might want to allow the yield to move higher is because banks are struggling to make money. the flatter the yield curve, the concern is there taking on riskier loans to boost profitability. the governor said the bank currently have ample capital and he sees no immediate problem on this front, downplayed global market turmoil saying the global economy is still growing but if the risks materialize from overseas, they are ready to deal with them. risk to theide price in growth outlook stems from overseas. if the risk materialize and have a big impact, the boj would naturally

the boj might end the growth, but maintained projections for the following two years.ab, but now there is shohoz, taking to the streets of bangladesh. now, its name literally means easy. i asked the company founder why she plans to expand in the challenging transport environment bangladesh, and where she aims to take the firm next. the idea is to make life easy, easy by offering all kinds of online services, so we began as a ticketing company, and as we go forward ridesharing is the core service, we will have tickets, long—distance tickets, we will launch a food deliveries soon. you say it is easy, but certainly it must have been challenging starting something like this in bangladesh, which is a huge developing country, so what were some of the struggles he faced? the struggles are multiple, one is attracting foreign capital. we have had wonderful investors, now we have finished series a and b, and it is challenging because bangladesh is a new market. people don't realise it isa new market. people don't realise it is a country of 160 million people with steady gdp grow

it would not be surprising to see the boj widen the range next year.is the expectation that the boj will move what is keeping the lid on the 10 year? don't think they have a big interest in creating a lot of volatility in bond markets. i think it will be very carefully orchestrated. it feels like a dam that would break, and i do not think that would be constructive for the japanese economy or indeed their stock market. i think they will continue to have this control piece. i think that is a very important part of their political and economic toolkit. haidi: are rumors of the demise of the u.s. economy, we are nowhere near late stage, but it seems like this late part of the cycle is elongated. should we stop talking about it? anne: i think that a lot of us commentators spent a lot of time looking for the end of the cycle, and there is nothing magical about the duration of the cycle. it has been one of the longest in history. late cycle and then start quitting the equity market, quitting credit, you will have left a lot of performance on the table. andin

you think about the boj and the difficult position they are in? andrew: use the right word, difficult position. this is the problem central banks will have to navigate. the agendal set that, at some point, you have to move away from liquidity. i think the u.s. has done it the fed is, actually often criticized, but it has been a good role model. in europe and japan, where we have had negative interest rates, the problems become so much more entrenched. it is difficult to move them to a normalized regime without spooking the market. part of october was in a reduction of liquidity. if we begin to see qt elsewhere, that will create more -- in the market. kuroda saying that the big picture on inflation is basically no change. the inflation picture has been picking up. andrew: the inflation we have been seeing is a more of a cyclical phenomenon. it is not a surprise we are beginning to see labor rate pick up. middle income and, i think labor costs are still contained. we are not worried about ,nflation over the medium-term this is just a bit of a normal

rate decisions from the boj and bank of england. friday, the u.s. jobs report. up next.oming italy escapes another downgrade. standard & poor's does lower the y's creditr the countries outlook. ♪ manus: petrochemical giant of saudi arabia has delivered their quarterly report. is in the business petrochemicals. much justs pretty above the estimate, $6.1 billion. of course they are subject to the bid from aramco. is the jewel hands in the chemical crown. if you go by the ceo at aramco. getting one in in terms of sales and profit. >> you have the material sector, which is whe other stocksre sabic -- performing better. trading at about 50.7% written earnings per share, you compare that to 11.3 for comparable companies. to see how the market reacts to this latest move, 6.2% on high-volume. let's get back to another important story we are following. italy, they have avoided a second reading downgrade in a -- rating downgrade in a week. from the united, the chancellor plan as his budget britain prepares for life after europe. charles, the story out of italy and the lik

you wonder if the boj can handle it. the euro is unchanged.ng lower as we go to the market open. >> good morning, welcome to "bloomberg markets: european open." we are live from the european headquarters. i am anna edwards, the cash trade is less than 30 minutes away. anna: bonds selloff from the u.k. to japan off the treasury yields spike. asia, what will this mean for european equities? even as thee rout, government makes concessions on the budget deficit plan.

what does it mean for boj policy?ames: i think the bank of japan will want to raise rates, surprisingly. simply because japan's consumer is now reacting negatively to the low rates. but the rates up, interestingly i think japan's consumers would spend more money. francine: are we now on uncharted territory? elsa: i agree with james. we also have a call for u.s. rates at the end of next year. is it uncharted territory? , it's still a relatively low inflation environment with good growth. francine: overall does it change actually the perception that the chinese have for treasuries or not? is there a link with trade? james: i look at the portfolio composition of china and they have an overdependence on domestic deposits. they will continue to want to export money. we know that in 2017 they exported about $1 trillion of capital. i think those trends to export will continue. i think the u.s. treasury market will continue to be a destination of choice. if you look at the handbag it'st levels into china, very clear that the

bae is saying this could be some insight on the potential of any further tweaks we could see in the bojhat could be interesting to watch. >> and bonds, looking ahead to the other events this week, after 150 basis point hikes, what will it do? investors are i think that decision, hoping for a boost to its nascent recovery. there has been quite a difficult time for them. saudi's fii, davos in the desert, there have been a string ofthere has been quite a diffict time for them. pullouts, including christine lagarde and techs. asian earnings as well. -- a busy sands china week ahead. that's it for bloomberg markets: asia. "daybreak: middle east" is next. ♪ comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business.

getting back to the boj threshold, around 0.2%. coming out with earnings, keeping their forecast.t led to a negative impression for some analysts, down 5%. softbank, in talks to take a , downty stake of wework 3%. this is bloomberg. ♪ comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. headlines.irst word president trump has renewed his criticism of the fed, saying policymakers are moving too fast with rate hikes. he dismissed concerns about inflation and repeated his lacking for low rates. expecting another hike in december. greetedt trump septembers increase by saying he is not happy. ,ndonesia has a blunt message warning they must be more mindful of spillover effects on policies o

we have quantitative tightening from the fed, the ecb, and the boj in the future, so you are taking awayuge support for the market. i think that did worry markets this month with the fed sounding ratesawkish, concern that are going up. david: if the spectacular results were the result of the , it isnetary policy clear that will toughen around the world. we will we have to rerate equities across the board given the monetary situation? extent. to some in europe, a lot of those concerns are not yet being considered. there are some things we can't ignore. that is the post mario draghi .ra with a few more hawkish and try to normalize policy and decrease that balance sheet earlier than targets are expecting? that would be one area i would be concerned about. the boj are still in such loose monetary policy come at they are not in position to move to active tightening, so there is some value in japan for the time being. alix: this shows the individual sectors and performance over the last month. think utilities and consumer staples would not be the stocks you would buy, but that is what happened

japan is battling deflation. >> i agree but on margin boj is tighter.e in japan has gone from zero to 20 basis points doesn't seem like a lot but 20 basis points matters ecb went from $30 billion to 15. they're threatening to stop which i don't think they'll do pboc, i agree, they've been stimulating but relative to their slowdown probably not enough. >> david, what about the china question 65 65.5% gdp. the bulls say that's great growth the bears say china hasn't seen growth that slow since the financial crisis how do you interpret it? >> i think china borrowed a lot of dollars when we did qe i think they levered themselves up and they're in a tricky position as we tighten because we're tightening up for them they're pegged to the dollar they tried to unpeg in '15 and '16 and it didn't work out so well this is not an easy time for china. add trade negotiations and it gets more complicated so i agree there are international concerns slowing global demand even with the stimulus because there is a marginal bit of tightening and u.s. tightening is feeding

boj plans to signal a net it from its long-running program of monetary stimulus. ♪ what should marketing for? when you are waiting to exit -- what will the signal be? changing interest rate? bond purchases? it is no more monetary operating target. it is cost control. it is cost control, it is current monetary easing. discuss exiting, exceeding monetary policy, when 2% target is met or is close to we can change the target, monetary operating target of interest rate in do force. ,ut at this moment, it is at 1% so we will continue the current control at the current level of interest. ♪ haslinda amin said down with the imf managing director christine lagarde. they spoke about the risks of a future financial crisis, and whether central banks still have room to respond. ♪ >> if you compare the situation today with previous crises, there is still now a limited policy space. but there a much stronger banking system. in the meantime, there has been strengthening of the capital base of many banking institutions, better supervision, better regulations, less nonperforming loans, and the leverage

you are more of a scholar than i am, adam, but as i read statements from the ecb and the boj, they have that flavor as well, given their circumstance. top scholar at this stage, but moving from academics into practice, in the latest round of announcements we heard you will be chairing a new committee of the fomc specifically to look at communications. >> yeah. >> so it is obviously not just forward guidance or not even forward guidance. what can we look forward to you and your colleagues coming out with? >> the committee was just announced at the september meeting, so it is early days. the committee is comprised of myself, eric rosengren, and rod kaplan from the data -- rob kaplan from the dallas fed. so we are really beginning the process now to assess the priorities that the committee should be focused on. i do not have anything for you on that today, but maybe in the future. >> i would love to have a future visit. presumably there is some reason why you have the committee, right? the communications subcommittee has been in place at the fed now for some time. it takes on a range of is

massive squeeze in martins because they have had to park excess reserves. , to beu look at the move o -- bojs tapering underneath, there is a self tapering going on and they are getting worried about the financial stability. it is more of actually fighting off maturity within qe and you are seeing pressure go in bond yields. a possible look around .5, there is a lot of givenality in that sector domestic growth in japan is also improving. the demand for loans are picking up, animal spirits are picking up and the big handbrake, which was qe and negative interest rates are dissipating. same thing for european banks. david: two tie-in your earlier thet in the segment, when dollar starts to turn, does that precipitate a u.s. correction, which we then feel in the markets you point out you want to be present in? do we have to get out of the way or would you still say ib and em? nader: you make a good point. that is the biggest conundrum for us right now in managing portfolios is volatility in the complacent. the rest of the world, volatility is high, a lot of the bad news is priced in. the risk is

kathleen hays asked him how the boj plans to signal a net it from its long-running program of monetary waiting for? when you are waiting to exit -- what will the signal be? what kind of thing, a change in interest rate? bond purchases? >> i think the amount of bond purchase is no more the monetary operating target. it is cost control. it is cost control, it is -- the rate is around 0%. it is cost control, it is current monetary easing. from theiscuss exiting current exceedingly, extremely accommodative monetary policy, when the 2% target is met or close to being met, we can change the target, monetary operating target of interest rate in due force. but at this moment, inflation is at 1%, so we will continue the current control at the current level of interest. rishaad: also in bali, haslinda amin sat down with the imf managing director christine lagarde. they spoke about the risks of a future financial crisis, and whether central banks still have room to respond. >> if you compare the situation today with previous crisis episodes, there is still now a limited policy space. but there a

kathleen hays in tokyo for boj week. midterm elections a week away now.o presidential campaign policy director next. this is bloomberg. ♪ . this is bloomberg. ♪ shery: i am shery ahn in new york. .aidi: i am haidi stroud-watts president trump has another is a week of campaigning ahead of him with nine days to go until the midterm elections. violence is increasingly dominating the narrative. the attempted pipe bombings and mass murder at a synagogue synagogue in pittsburgh. it is the president doing anything to lower the temperature after the recent spate of incidents? ros: it has gotten quite nasty around here. we looked at president trump last night doing a rally in southern illinois. he seemed subdued and said to his supporters, i will dial it down. they were not happy, but he did not quite push up the rhetoric to the level we expect. he is all about getting out the vote. he knows to motivate a lot of his voters, the republican party doesn't expect to pick up a lot of new support running up, but they want to maximize their current supporters. can presid

i don't think that the boj will deliver any major surprises, at least in the short-term.'t think that's really on the radar, from a central bank that can deliver a major shock or surprise. that i think will leave dollar-yen largely driven by forces outside of the country, and that is really going to come back to what happens in terms of developments of u.s. interest rates and equity markets. yousef: jonathan, always great to catch up. jonathan cavenagh, executive director and head of e.m. and fixed strategy at jpmorgan. angela merkel steps down as party leader and will not seek another term as chancellor, the end of an era for germany and europe. we will discuss the effects on markets. this is bloomberg. ♪ ♪ yousef: 4:25 in the afternoon in sydney. the sydney opera house there. australian dollar, rallying against a group of peers. investors saw what the u.s. president said about trade, intensifying a bold missed move on. even though he put the comments in context, the market is hanging onto the upbeat sentiment. let's cross to a different story in europe. after nearly 13

we will hear from our exclusive interview with the boj's kuroda. a blow to germany's political stability for which will offer the greatest trading opportunity. manus: welcome to "daybreak europe." after $10 billion worth of losses, sears files for bankruptcy protection. this has been something which the market has been speculating a great deal about. our headlines talk about the issues for sears. they are a company mired in debt, deserted by shoppers. it is official, they are gone. the chief executive and hedge fund manager has been trying to prop up that retailer. years of realty -- of retelling history, it is gone. whatyou think what is -- it is happening from the amazon side and online delivery side, this is what the challenge has been for sears. it is the number one shareholder among the largest creditors. you just think what is happening on the u.s. retail sales. it is over. it is toast for sears. what stock about these markets because we are reassessing geopolitical risks on a wide variety and broad-spectrum. the message from the pboc is that

you have jobs, you have boj, you have boe, a whole host of data to come through.lde hourly earnings cause a re-rating in the bond market at the end of the week. jpmorgan turns bearish on treasuries, they are at the bottom of your board. one hunt -- 119.04. the recent rally is an opportunity to sell. morgan stanley says to buy. steve said you needed another 5% drop in a kiddies -- in equities . italian government bonds at the center of your board are up this morning. outlookal cutting their to negative. that's worth a bounce this morning. the government may get some more insurance is about having a special fund for the wage rise in italy. it sounds very complicated and concocted. the market is taking a bit from s and p. markets, weto your have the agent side in context. , china slide continuing really dragging most of the region down. down some 3% right now so extending further into the bear territory for asian stocks. under pressure again despite some big moves from the government launching new measures for share buyback which should help some of these companies r

the boj will stay where it is and let the ecb and the fed move ahead.: coming up next, it was a wild day for tech and earnings. the newsp all surrounding alphabetic, amazon, and much more. this is bloomberg. ♪ haidi: this is daybreak asia. officiallyave entered tech earnings season and things are looking interesting. amazon and alphabet reported disappointing results after the bell and both stocks fell significantly. let's look lows are at that with a senior research analyst. daniel, great to have you in the studio. thank you so much for your time. are we overreacting to these earnings? was the expectation way too high? back, someke a step are saying growth potential is still there in the long-term. daniel: the revenue data for amazon was ok overall. evil world are worried about the guidance. stepping back, if we look at what's happening inside the ,ompany, amazon web services growing over 40% remains very healthy. we advertising business, think they're significant growth potential there over the next several years. while we will certainly see how the n

because there's no growth in japan it also means the boj will not stop easing.ch also means because you have weaker yen helping giant exporters. ben: we think the yen is in the right place. you are right, if it were to weaken it would help japanese corpus a lot. the all-time high is the yen weakness. again, it is very difficult to see how you get much more earnings growth out of japan. obviously there are risks for that. it is coming from industrials, tech, things very exposed to the trade agenda potentially getting worse. shery: you were neutral or selectively -- you saw selective opportunities in mexico. now that we have the usmca deal, does that change or outlook? ben: obviously has done very well as a relatively defensive market. china,ooking at russia, because it performed so badly and valuations are solo. and places like brazil. a lot is going on. 20% earnings growth this year and next year. we think some of these high markets are worth a look right now. haidi: thank you so much for joining us. ben laidler there. let's get you a quick check of the latest b

what we are expecting to play out over the next several years, as the boj starts their very gradual slowath toward normalization of their policies -- by normalization, we think it will be a very gradual resetting -- at some point, should japanese bond yields rise to a level that makes it more attractive for japanese assets, weis-a-vis could see an environment by which demand on the margin for government bonds in the u.s. pullback right when the federal budget deficit would resuscitate a greater supply of issuance in a few years time. at the beginning of the year, we were talking about what happens when a 10 year yield goes closer to 3.5%. what is your view on how the market reacts? is that a sort of milestone level we are looking at? one could argue there are technical thresholds that could push yields up to our net 2.5%, 3% level. yields,, at current u.s. treasuries are trading .loser to the top of our range while we could see shorter in the shortields term represent value for us and we believe our base case, which is in contrast to a lot of other strategies and firms, is that we are li

we do not have a government option or boj predicted operation this week. commodities.aining ground amidst rising tensions between the u.s. and saudi arabia. central bank is considering a range of policies. the pboc governor spoke exclusively to bloomberg on the sidelines of the world bank meeting in bali. joins us now from beijing. it sounds like the pboc is doing some disaster preparation for what is to come. tom: some stress test. he said they were preparing for all scenarios including the worst case scenario. and pointing out that people in china are increasingly of the mind that this set of trade tensions between washington and beijing will be prolonged. that echoesder -- what i've heard from business leaders last week. he also said that in terms of the imf forecast that he concurs with those views. take a look at what he had to say on a panel discussion at the bali summit among the imf leaders. >> the downside risks from the trade tensions are significant. , the imfst few days presented their model and they predicted what would be the fores for the trade tension t

they think it could weaken as focus begins to shift abroad in terms of how quickly the ecb or the boj adjust their monetary policies. if the dollar pressure eases, that will give the fed more license to continue with their slow, gradual tightening pattern. alix: you mentioned credit spreads. you can see the lack of reaction in credit spreads. up, but let'ske be honest. we are not seeing anywhere we saw two years ago. do they need to be taking more risk rather than duration risk? evan: rather than duration risk, yes. the fact that we have not seen credit spreads widen signals this is less of a business cycle turning issue and more of a technical correction in the equity market. if that changes, it might change our view but really, as long as credit is hanging in there, it looks like more of a technical equity correction. we have not seen the top yet in the cycle. david: when it comes to the yield on treasuries, one factor is the amount of supply. which is that numbers out. $779 billion. it is going up, the u.s. deficit. evan: it is certainly something i think is already having a factor

remember, governor kuroda mentioned this at the last boj meeting.nected to the sentiment we have to tweak policy, let the 10-year yield go a little bit higher to support ranked balance sheets. how will he tie that together? what will it for their meeting a couple of weeks from now? the next thing on my list is bank indonesia. they are meeting on tuesday. five rentech since may. consensus is that they don't need to do more because the rupiah is stabilized. they talked about being preemptive. they see one more 25 basis point rate hike. the european central bank, no signals expected. continue tapering off their bond purchases, even though we have the italian budget battle in the background. it has been hitting bond markets. but they will look past that and i assume that they will have that settled long before they have to make that eventual rate hike next year. -- raphael bostic of alanna saying that the fed is hashogging the jamal k murder. he said, in case there was some thing like sanctions on oil that would hit that market, raise that price. and i

especially other banks in the g10 space, the ecb, the boj.hey put a lot of effort into making sure the market does not worry about things like a taper tantrum. you have seen this diversion in -- diversions in yields, and there is no sign of that not persisting. the fed even said one of the risks to their view in the long run is that diversions keeps persisting in the dollar keep strengthening. the market is taking this to suggest the dollar keeps going higher. david: the dollar has been pretty much range bound going back to june 2015 or so. this divert and's is not a new thing in terms of rates. will he keep going up? >> the market is taking it into account. u.s. rates are higher. the other problem has been other issues like trade wars, like emerging-market crises, problems with china, and some of these other factors have not been as bad recently. eu-u.s. we had the trade war tension come lower. that could flare up again soon. the point is you have had actual good news from other parts of the world the past couple of months relative to earlie

the boj has an important meeting tomorrow. no expectations that the target for jgb yields are going to be altered. it is a global story. chart, if youthis would. this is the high-yield credit default swap. it is a little obscure. angst. 2011 with some some more price to buy protection as they say. here is the nirvana of the beginning of this year. is high-yield finally unraveling? longer-term on a view deep into next year, i think we will see a meaningful top in equities and a bigger correction next year as the rate hikes spike properly. i think high-yield is vulnerable. hurt,as the first to get but beyond that, people are looking at u.s. high-yield as a place where a lot of companies have used debt for financial engineering purposes and ultimately nonproductive debt. i think european high-yield idiosyncratic risks abound. i am less concerned today about european high-yield than i am about e.m. or u.s. certainly something pros are watching. lots of good guests coming up in the next hour. this will be superb on risk in the syst

that's largely the ecb and the boj that have been keeping -- helping keeping rates artificially low nowsee the german ten year move from .3% to point six something in a matter of eight weeks. that's starting to untether the u.s. treasury tenure. >> we're going to leave it there. thank you so much. >>> all right, the white house commenting on the market sell off. >> reporter: the white house is, in fact, monitoring this market sell off, which was just around 500 points at the time i was talking to the senior administration official who said that the white house is not concerned about the sell off the white house is saying there are reasons for these things we're not concerned when it goes up 500 and we're not concerned when it goes down 500. the white house is much more focused at this moment on the in coming hurricane in florida, saying we're more concerned about the loss of life and the potential for loss of life in the state of florida than the markets. but the white house is monitoring, but not concerned about today's market sell off. >> thank you very much >>> all right. imf is send