thank you, garfield reynolds.itigroup met with top wall street executives to discuss the government's fiscal plan amid a plunging pound and surging bond yields. we got a statement from the treasury about what's happening so far. what are we expecting? what's going to happen behind closed doors? >> it's been a big week for the chancellor. he is slated to meet with executives from the top banks and those executives are going to have a very simple question. what happened? this was a government that was supposed to be pro-business. this was a budget announced on friday that was supposed to be pro the city. we have seen one of the most dramatic weeks on records -- on record in recent memory. the questions are going to focus on whether this chancellor takes the impact of fiscal policy on markets seriously and what he can do to try to regain the trust of investors who really are concerned about the level of government borrowing that would be needed to implement some of these policies. dani: 1 wall st or that might be hap

bloomberg's garfield reynolds. along with u.s.ields that are pushing to 3.5% and the 10 year, a lot of pressure for japan which had inflation rising at its fastest pace in more than three decades. that excludes tax hike extortion. it creates this headache for the central bank this week as it seeks to explain why it needs to continue with monetary stimulus. for more, let's get to bloomberg's chief asia economic correspondent, endo curran. we have higher than placement -- higher japanese inflation. at what point do they blank with the pressure emanating from u.s. yields? >> this is the big question. japanese inflation, core inflation at 2.8%. the increase in energy and food prices. some evidence that the inflation story in japan is becoming more broad-based. that is raising questions about how long japan can remain as a holdout in terms of negative rates, and the massive money they put into the economy. the bank of japan decision is due on thursday. most people do not think they will change compared to their peers. with inflation he

garfield reynolds breaking down the global impact for us. let's break down key things we will watch out for, at :00 a.m. u.k. time we get spanish cpi and german inflation in the afternoon. for a p.m. huw pill will speak. the cleveland fed president is a participating in an inflation panel. mary daly will give a presentation later this evening, we are watching u.s. job claims and gdp. there is a huge range of ecb officials due to speak in lithuania today, that includes mario senteno. but first, we have more reaction to the rally sparked by the bank of england's intervention as the follow-up from the u.k. mini-budget continues. porsche is set to pull off one of europe's largest ipo's in a decade, it started trading today. we are live in frankfurt later in the show. this is bloomberg. ♪ dani: welcome back to bloomberg. i'm dani burger in london. 10 year yields fell over 100 today. one who is transfixed is william hobbs, the barclays cio, a double var shock, boe steps in the other direction and then this happened, is this a broken market? willia

garfield reynolds outlining this conundrum.t's almost like a vacuum cleaner sucking money out of ems. i think it's four weeks? here we go. yvonne: basically you are starting to see that play out and you will not see that outflow story really change unless we see policy clarity from the federal reserve, not just today and 75 or 100, but the dot plot. i think the situation might not change that much considering how sensitive asia is to a strong dollar. david: exactly, inversely co-related. joining us to talk about one part of the em, asia equity story is ramon monzon from the philippine stock exchange. good morning. are you blaming the fed for the underperformance of your market? ramon: i am not blaming anybody. the underperformance of the market is really caused by -- i mean, uncertainty. uncertainty in our foreign-exchange, it is preventing foreign investors from investing in our market. there is risk. it is not so much the rate but the volatility that is causing some investors to shy away. having said that, for the month of se

let's bring in kathleen hays and garfield reynolds. we were talking about a potentially smaller than 70 point -- 75 point basic -- basis rate hike and what would a 100 point hike mean? kathleen: they thought they could do a 50 point basic that -- basis hike. 75 seems like the safest bet, but before i tell you why the reasons on both sides, i will tell you at the end so we can run through the reasons. there's an idea if we do a hundred basis points, they will start talking about rate cuts next year and this could mean financial conditions and that's what they -- not what they want to do. etsy opposite of what they are signaling. if you want to keep things tight, you have to keep bond yields high. all of these things could work against that. on the other hand, one of the number one reasons i'm hearing why they could and should do something more aggressive is either that or restore their credibility. now it is terrible, so that's the number one thing on the list. consumers are still spending, so you've got to move because good times at th

haidi: garfield reynolds joins us now. feel like you're going to tell us i told you so, because here we go again. garfield: here we go again. it helps with the dip because we are in the quiet period before the fomc. central bankers cannot be there telling as how concerned they are by cpi readings and whether or not the ppi that came in weaker has much of an impact. it is interesting how ready the market was to jump on the apparent signs of a weaker inflation print, when most of the indicators that underpinned the upside surprise in cpi are not very much connected to the producer prices. you think services, rents, food prices, those are less obviously tied than if it was manufacturing goods that were leading the charge up in consumer prices. so we have a situation where the market is determined to believe that the market is going to team inflation rapidly, and therefore, every jumbo rate hike brings us closer to what the markets are still pricing in, which is rate cut to the end of exterior. -- which is rate cuts by the end

more on tonight's stories, let's get to garfield reynolds and su keenan. i want to start with you, particularly with u.s. treasuries we are seeing some interesting news on london yields. garfield: this is heading distorted by a slow investment sales -- bond sales which goes to the trading of sales on the hedge, getting exposure. that's probably five basis points. that's the main area where companies are looking to add. companies are borrowing because they are very certain that the fed is going to hike rates by at least 50 basis points this time, probably 75 and keep making large rate hikes. so, summer is over it is time to get back to business on wall street. the business we are getting back to is selling corporate bonds. that is having an impact on treasuries on top of all of the other issues, strong economic data, the situation in europe, with russia effectively halting gas supplies through the main pipeline, energy prices, and more concerned about what is going on with energy supplies and prices within the u.s. and globally. all of that means inflation i

let's bring in garfield reynolds. such as china. we're seeing the rise of dollar vigilantes.ter: given there does not seem to be any reason for the fed to be concerned about the stronger dollar, it mostly works in their favor. that means the onus is on other central banks to adjust. that's why you have the pboc for something like three weeks pushing back to try and restrain the yuan slide against the dollar, you have japan, concerns about what that might mean. you have the pound on what went on. that is three major currencies and a large portion of turnover and major concern. that puts the risk of asia and a lot of currencies that have to deal with these very sudden moves of the open. shery: it's a tricky situation to adjust. you are interfering with freedom of the market. how do central banks adjust to the reality and will we see more action? reporter: we will see some words and actions. a lot of governments have done work, less 25 years or so to improve current accounts to maintain credible policies. now, those defenses are being tested. some of them are doing a pretty good

rise is leaving some emerging markets exposed to capital wealth let's bring in mliv contributor garfield reynolds. we continue to talk about how this is different. it is not the taper tantrum. the vulnerabilities of emerging asia are different this time around but there are vulnerabilities there. garfield: definitely, haidi. when it comes to a capital outflows, most markets are seeing capital outflows right now. the question is how well can you cope with that and if you are a developed market by definition, you can cope better with capital outflows because you have your own currency and you don't borrow too much on u.s. dollars, for example but for emerging markets, that is always the concern. what is your -- what does your current account look like? what do your foreign exchange reserves look like? how well can you cope with those outflows? emerging asia has a lot of potentially surprising resilient economies on that basis because they are terrified by what happened back in 1997 and they have done a lot to shore up those fundamentals i talked about. when you look at some of the more vulnerable p

. >> for the latest in markets let's bring in bloomberg's chief rate correspondence for asia garfield reynolds. garfield, when you look at how this is stacking up, the currency moves seeing very big, i think, in all asset classes now. i am always watching this. what you think about this set up for tomorrow, actually, friday, in terms of the jobs report? >> well, i think the jobs report will definitely have a very strong impact and potentially a volatile impact. we have strong expectations percolating through the market. that jobs numbers will come in strong. if they come in week, this may lead to some bad news for markets. the said is -- the fed is perhaps less likely to hike 75 basis points. it will be very key what happens with wages here. if we have fewer jobs than expected added but wages jumped more than expected, that would probably be in many ways the worst possible situation because the fed would be looking at that and seeing it is less likely that jobs -- the funds rate is still low. we have wages picking up. here comes another wage price spiral. we have to be harsh. there is also the

that is garfield reynolds and themos fiotakis, head of fx at barclays, who will stay with us. liz truss' government has had a traumatic start. labour has said it would keep it cut in the basic rate of income tax, but would reverse changes to the top right. lizzy burden joint is from the labour party conference in liverpool, what has truss been saying over the weekend and what has been the response? lizzy: quieting has set over the weekend that he would add to the fiscal event announced friday with even more tax cuts funded by borrowing, and that is offensive to market since the fall in the pound this morning. he said markets will react as they well, that is what is happening, ignore at your peril. boe traders now seeing 150 basis points of hikes in november, which implies an intra-meeting hike. our forecast now sees 100 in november if we don't see an intra-meeting hike. it means the bank of england and treasury will be pulling in opposite directions. there is also the question of whether the bank of england will put the brakes on active gilts sales to stop an overwhelming of t

let's get more from mliv contributor garfield reynolds. have had several weeks of warnings of intervention. what is the market seeing? garfield: the market is getting nervous that japanese authorities are willing to back their words up with some sort of action. yesterday we had the boj calling their trading desks to ask for what they are quoting the yen at, taking the safety catch off. that is as close as you get to intervention without intervention actually happening. now, it is not as though there is a strong expectation that japan will come in to intervene, but the way that it happened as the yen approached the one 45 level, which it has not breached since the early 1990's, that makes it clear to the trading desks that that is a line that japan is not willing to see cross. so that is the level you could get intervention at. when you have a pullback, that creates a pullback, and you have a lot of people who have been shorting the yen, betting it will go to 146 and beyond. they have been taking profits now, because they cannot see a breac

let's get more on what is going on with markets with garfield reynolds, joining us is su keenan. talk to us about some of the movement we have seen in u.s. treasuries. garfield: part of this, as you say, is the services, extremely strong number. the way that feeds into the narrative with the fed is more likely than not to raise basis points next month. we have very strong debt. that is the call that is expected if you look at rates markets. we are waiting to see what cpi brings in the coming days just in case -- that seems unlikely. more importantly for treasuries, it adds to the narrative that it is going to go higher and stay higher than the market has been expecting. we saw some wages in euro-dollar future overnight on a 4% said rate by the end of this year. that is hedging against the extreme version. we also have a lot of corporate issuance. deals coming to market. that helps to send treasuries up in the immediate response because of the hitching flows that occur. it also speaks to the way that companies that need to fund or refinance are looking at what is going on and sayin

the chief rates correspondent for asia, garfield reynolds. in your recent piece that this was -- you used the word transitory dollar strength. garfield: a lot will hinge on the u.s. cpi that is due on tuesday. there might be too much focus on the headline cpi which is expected to slope a mere 8% or so, for the fed, they keep might be the core cpi and that is expected to accelerate. we know the fed will go up 75 basis points again. the question becomes whether or not that represents the high watermark for her digression, or if they will keep going higher and keep talking about taking the rate higher. a lot depends on how the fed response to whatever the cpi brings. there is also the wildcard for a number of currencies, especially the euro, which is the most traded currency against the dollar, on what is going on in the russia-ukraine war. does it ukraine's apparent battleground success mean you're optimistic because we might get towards the conclusion of the war, or does it mean you are pessimistic because of pressure might be more willing to c

shery: garfield reynolds and stephen engle with our top stories today. . was good to vonnie quinn with the first word headlines. vonnie: thank you. ukraine is calling on western governments for more weapons, as it presses ahead with his counteroffensive against russian foreign's -- russian forces. then i russia any strategic advantage. >> sometimes being asked whether there is enough weapons that we have received, and i always say that i will be able to say it was an of only after ukraine wins. until then, we will be asking for more. vonnie: a typhoon is expected to dump as much as 400 millimeters of rain on parts of southern japan, as people return to work after a holiday weekend. the flood warning is in place for tokyo. the storm ripped through the southwest island on monday, killing two people, and leaving 70 others injured. queen elizabeth ii has been buried following a state funeral of more than 2000 global leaders at westminster abby. crowds on the streets as it made its way to the restingplace. the funeral was described by government officials is on

here in sydney, garfield reynolds also in sydney talking about what's going on. and we did hear from opec-plus, a very modest 100,000 barrels a day. what is opec thinking here? >> it is hard to say exactly what they are thinking is because what we're seeing from their own outlook is that they are forecasting demand coming in a bit higher than supplied toward the years end. reversing the increase they had implemented earlier, they are preparing for an even tighter market than what we were already anticipating. some analysts are speculating that this is really a bid to keep prices high and protects the price more so than balancing the market. >> what does that hundred thousand barrels a day reduction signal to you? that they are protecting on the downside in case we do see a price cap on russian oil? >> i think that is part of it. strangely enough, there has been some concern from opec-plus and from saudi arabia that oil prices in the futures market, too low considering the supply and demand set up. so there's a ton of that going on. and it's a situation where they

haidi: that was garfield reynolds.ry: we can see all of these stories and all of the day's trading on mliv . you can get a market run out in one click. commentary and analysis from bloomberg's expert editors. sticking with the dollar strength, morgan stanley is concerned about risk assets, let us bring in annabelle for morning calls. what are they saying? >> one of the most vocal individuals from wall street, the u.s. equity strategist, what he says is the dollar rally was unsustainable for risk assets. he is looking here at the impact it will be having on corporate profits. their calculation is everyone present pain juicy in the dollar index has a negative 15% impact on profits in the fourth quarter for the s&p 500 earnings. they are predicting a headwind of 10% from the king dollar in line with other issues like import costs. in terms of what that means, let us bring up the terminal. morgan stanley's wilson says his will early around -- this will end around early next year. the downside from where we are today, t

dani: let's get to garfield reynolds from our mliv team.ing out more spending that we are going to see, potentially 130 billion pounds at a time when the boe is talking about frontloading rates and foreign investors have already fled from the gilt market. are they going to be any buyers left in the u.k.? >> one thing bond markets have shown this year is that there will be appetite for bonds that can give hefty yields. i think gilts will qualify after what has been going on. one factor is u.s. treasuries are already selling off as traders get ready for wall street to get back in after the labor day holiday. and as well for the u.k., concerns about the extra fiscal stimulus. also, concerns about opec announcing its supply cut. and what russia is doing with gases driving up energy prices there. central bankers are determined to raise rates to tamp that down. we just had the australian bank sticking with its 50 basis point hike pace for at least another month. there are not reasons to see yields come down anywhere in the developed world, and of

shery: for more, let's bring in garfield reynolds.tarting with the stock markets and the fear we are seeing, the vix above 30 all week. what is that telling us about where we are headed? >> i think actually the equities relative -- [indiscernible] when you look at bond volatility, that has had levels -- right around the peak of the pandemic. by some measures, it has exceeded pandemic levels. equity volatility is elevated, but nowhere near as elevated as -- the pandemic. the bond market has been obviously more directly affected and also has something of a bias -- longer-term than the stock market. [indiscernible] rate hikes take a wild to work through into the real economy. we've had a lot of rate hikes very fast. those are going to be hitting real-world conditions over the coming months. that is going to her to the earnings outlook for equities. there's a lot of concern about earnings downgrades and other uncertainties about the u.k., ukraine and china. that signals a very strong chance that it is going to get more volatile land equit

let's get to garfield reynolds and mark cranfield who are waiting in the wings. then we will have lizzy burden as well. let's get straight to you mark. moves in the pound happened during the asia trading hours. how much do we read into it given it is very thin liquidity? >> it might be slightly exaggerated. clearly what has happened to the u.k. with the risk of an extremely large fiscal deficit now, a wide current account deficit. and with talk of more tax cuts to come in the future, people are very nervous that the u.k. has put themselves in a very risky situation. it is going to take time for the u.k. government to achieve these goals. financial markets are not patient. they want to see results straight away. they are making the easy way out, which is -- even the bank of england would be expected to raise interest rates, but are they going to do it by a sizable amount that would really make any difference? we have u.k. rates about 2% at the moment. the implication friday is that rates would be 5%. it's going to go higher today. the bank of england is going to n

shery: garfield reynolds and kathleen hays with our top stories. one other factor supporting markets could be the reopening of china. chengdu is set to ease lockdowns. 21 million residents will be allowed to resume aspects of normal life. a managing editor for asian business joins us now. there was a concern this could be under there very long lockdown like we saw in shanghai. what is different this time? >> they lockdown sooner than they did in shanghai. that meant this being a 2.5 lockdown rather than a two month one. a lot of issues around food shortages, medicine, which led to unrest and protest. they did not want that sort of thing so close to the communist party congress in mid-october. this will probably serve to reinforce xi and china's commitment to the covid zero strategy. just because chengdu is exiting does not mean we will not see lockdown in another city, another mega city as well. china has lockdown more cities this year than at any time during the pandemic. this description will continue even if they are getting better at it. haidi:

let's try to get through all of these markets, take a deeper dive, we will be joined by garfield reynolds and enda curran to wrap up the main market themes. we have seen unprecedented daily swings in u.s. interest rates, swap markets might be flashing a warning that it is draining from the world financial system. we heard from larry summers likening the array of risk in the global economy to be pre-crisis summer of 2007, and as just one example of potential breakdowns. let's get to bloomberg's rates correspondent, garfield, the things we're seeing from u.k. pensions to the quickly drying up amid higher volatility, to what degree is this more than a typical selloff? >> is definitely more than a selloff. it feels redolent of 2007 and 2008 where a range of different markets are at breaking point. that's what happens when the quibi finishes, that drives -- liquidity vanishes, that drives extremes. it looks like it is the bond market more than anything else that is cracking at the moment. which is understandable, it has been the focus of massive central bank easing and then extremely rapid tig

thank you so much, garfield reynolds.n is looking to raise as much as $9.4 billion from the ipo of porsche, it could be its first listing in more than a decade. for more, let's bring in our bureau chief. what do you make of this price range they've in giving us? is it too conservative? >> i think it is safe to say they seem to be playing it rather save. we've seen valuation numbers of about 85 billion, some even hoping to get somewhere near 100 billion euro valuation for porsche. the more narrow range between 70 and 75 ilion does seem to suggest they don't want to go into the market to aggressively from a pricing perspective. dani: how much of that is tied to what we've seen in terms of market turbulence? there's been plenty of ipos delayed or not gone ahead because of what happening in the equity market falling. christoph: it does were flecked to some degree the somewhat difficult market conditions. at the same time, it seems to be the logic behind this that because they price it in a conservative or safeway, it does giv

let's get more with garfield reynolds joining us now in sydney. rfield, there is so much to process at the moment. perhaps not a lot fundamentally has changed. goldman sachs says they think we will be further downsized. that the bear market is not likely over yet. garfield: one of the things about the combination of elevated inflation switching central banks into rapid rate hikes, even those like australia who were may be considering slowing down, they have still already put a lot of monetary tightening into the mix. so, you have that downside. you have inflation hurting companies' outlooks and demand coming off and a promise from central banks that if they see demand is not coming off fast enough, they will move further and keep rates higher for longer. so, in that set up, it's difficult to see a sustainably higher path for a lot of equities. broadly, there might be particular equities that could do well, but, the broader indexes, a lot of metrics say they can't go much higher. what you are pointing out was commodities, that is obviously a big par

david: garfield reynolds. the rba rate decision, plenty more ahead.his is bloomberg. ♪ david: we are continuing to track this typhoon. the understanding based on some reports, it has made its way back to water after skirting parts of chinese mainland and of course south korea. power outages there and thousands evacuated. haslinda: that's right. a massive radius, 400 kilometers, big enough to cover seoul to busan. korea electric power has been impacted. halting operations at a plant at the moment. nissan motor down. let's look at energy stocks on the back of what opec did, cutting hundred thousand barrels -- it will be cutting 100,000 barrels a day. some say it is a slow gesture but the impact has been quite big. we continue to track power outages and shortages in europe as well. as wel- [announcer] imagine keep having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match

shery: are stories and bring in our senior asia reporter, and su keenan and garfield reynolds. this week we are very much watching the inflation numbers in the u.s.. the cpi data, what impact will they have on the fed? >> we have been debating 50-75. things are pushing more towards 75. they signaled they would support such a move, we have heard more hawkish rhetoric from jerome powell. we heard from esther george, a longtime hawk, cautioning against moving too quickly. we do keep hearing the references where they are not really talking about winning the inflation viper warning about what happens when you let up too quickly. fed officials pushing, saying we will see this through to the end. 22a75 basis point hike. we are entering a blackout period. we will get a break from the fed officials talking. have a cpi up report -- we have a cpi report in washington. not a huge step down, it is a meaningful step down none the less. 8% is still skyhigh, pushing on track for 75 next week. paul: assuming we are hearing eu energy ministers calling for measures to monitor gas. >> yesterday, t

haidi: is the prevent now off the table, or is there an argument as our garfield reynolds is arguing,get 100 basis points, it takes us closer to that being the last jumbo move and being closer to a recession that can mean moving us closer to a rate cut cycle? >> i have some sympathy with that. it has not necessarily been right. i think the irony is that whatever it does now, the fomc, it's likely mean that rates remain on hold, and i don't think that's necessarily the news that the equity markets wanted to see. i think paradoxically you might get a spike of 100, but the way the yield curve is performing is saying that these rates are going to remain quite tight for quite a considerable amount of time. and i think, therefore, we are not going to get those relief rallies that people had anticipated, including myself, i have to say. haidi: does china become a good alternative as inflation remains slow and stimulus remains forthcoming? >> i think if you could hedge the chinese currency, i think that's a very reasonable assumption. we have to take into account that this is probably one of