kathleen hays is here with the latest. how optimistic should we be?pressing some optimism today. you know the debts also started off. by thursday, they said things seem to be progressing. we will meet next week. today, before they got on air force one, the president said i remain optimistic because i am an optimist but i really think the desire on their part, he means the republicans involving negotiations as well as hours to reach an agreement, i think we will be able to do it. you think -- he says things are constructive and moving forward but just not there yet. so is the president talking things out? is he trying to make it other than we think? we don't know. we know the issues on the table are very different. the start of the republican side. they want the federal debt the federal spending part of this addressed everything from the debt limit. let's pass a budget and decide on tax hikes and spending and then we'll get the debt limit done. they want to keep everything in the inflation reduction act. a lot of it is very stimulative. the republicans

kathleen hays is back with more of this, and we are keeping you really busy on so many policy decisions expecting out of your? kathleen: the european central bank is a big one, and they are expected to hike their key rate. they were late to the rate hiking game a couple of years ago. they did not move to zero off of a negative rate for a long time, but they have done a lot to catch up. they have that key rate of 3%. expected to raise it to 3.25%. the hawks have not been making as much noise, i have not been squawking as loudly. eurozone core inflation went down 10%. the other thing watch very closely on tuesday was the quarterly bank lending survey from the european central bank itself, and it does show bank lending is starting to contract. if you have inflation behaving better, bank lending looking like it is starting to cool off a bit, and of course this is something to federal reserve will be watching closely in the weeks to come as it heads to his june meeting. they european central bank, the hawks had the lead for a couple of meetings. now it looks like a move to .25% increase. som

kathleen hays is here with more on the federal reserve. we have three fed officials speaking today. did we get a little bit of a mixed sh? kathleen: it is mixed, because i don't think any of them is 100% sure exactly what they are going to decide at the next meeting in june. every day getting closer, just like that debt ceiling limit. he said if he had to vote today he would probably just sit tight and see what happens next. he also did say that he does not see any rate cuts until well into 2024, although he cannot rule anything out at a time when everything is still so uncertain. >> in today's environment, where there is so much uncertainty in the economy, i don't think we can rule out anything. if i had to have about right now i would probably vote to hold, but as you noted, we have the jobs number, jobs report will come out. there's a lot more information we will have as to what is going on. kathleen: it doesn't sound like a guy who has ruled out rate hikes all together. what everyone is focused on at the fed is inflation. it has improved a bet -- a bit. the headline is down to 5.

global economics and policy editor kathleen hays here with the latest. w does the inflationary picture looking australia? kathleen: faster than expected, far away from the target but phil lowe paused last month that he's expected deposit again, keep the rate at 3.6% and you can see how so far. cpi well below the peak headline. deutsche bank switched from a hold for another hike after they saw this inflation report. bank of america saying it's a high bar when many more rate hikes. looks like what phil lowe is signaling is he is ready to trade a faster return back down to the inflation target to ensure a soft landing and hold onto that three and a half percent unemployment rate, the jobs growth. that is where his focus is right now. and i think that it is interesting that the barbie index has fallen, mainly because the prices of see, work and wine have come down. food prices have been a big source driving inflation higher in australia. i think it is important to a lot of people, that index. but overall to look at the important part, phil lowe is in a positi

our global economics and policy editor kathleen hays has the details. there is so much uncertainty out there, for the u.s. economy now with this fitch announcement but at the same time fed officials seem divided in their latest meeting? >> i wish they would put the word skip in there because that is the newest lingo. from the federal reserve we are looking at these minutes of the may 2 and third meeting and they do seem to be looking very closely will we pause or not? we have heard that in many recent comments. raphael bostic saying how important the data is going to be, the federal reserve board governor saying the same thing. the skip of course is when you don't hike rates but leave the door open to the next hike. in terms of what they see next, several participants, more than half of the effingham see members note if the economy evolves be on their outlooks which means inflation getting lower and the labor market cooling off, then maybe they don't need more tightening. at some participants, that is going to be less than half but a substantial amount.

kathleen hays has the details. >> we got a more comprehensive view with nuances because the fed wentnto the main meeting with -- the may meeting with a big debate as well. they decided to hike rates again , some people were opposed to that. they were looking at the fact that inflation is too hot, the job market is still hot. bank stresses could be controlled. what everyone's looking at is the language of the minutes. the fed uses particular words to send certain signals. they talk about the divide not so much on what happened, but further rate hikes. several disciplines, that probably means more than half of the members noted that if the economy turned out to evolve the way they thought, maybe it -- cooling off, then further policy firming may not be necessary. some participants said based on our expectations the progress of getting back to the target of 2% could be unacceptably slow and that means they will probably have to do more rate hikes. they all agreed inflation was too hot and many, so that's probably not quite half officials focused on retaining optionality. so that means w

kathleen hays are global policy editor.founder of avm capital. do you think they will go 25 basis points? point being, should they? >> yes. i think they will do 25. if they don't, the markets will get scared. they have to reassure the markets that things are under control. with the markets pricing in more than 80% chance of a hike they will go into that. what they will do is keep their options open. they have two sides of the coin. you've got the banking crisis, that is led to tightening of credit conditions. on the other hand, inflation is trending down, but very slowly, they are worried inflation remained sticky for a long period of time. rishaad: sticky inflation. but we've got a banking situation which is thought to be over with. but it is also sticky. how does this play out in thinking? -- in the thinking? >> we will start with the inflation front. if they hike this time and may be one more hike, you have real policy rate at 1.5% which is restrictive. that should take care of inflation in the medium-term. it may not co

our global economics and policy editor kathleen hays is here with the latest. is optimistic on the budget deal because republicans want one as well. where are we at? kathleen: well, that is where we are. we are getting a lot of optimistic talk from the administration that things are moving forward and that progress is being made. we hear braden saying that the that limit talks moving along over the weekend, adding, we want one and so does the gop. that is a good thing. lael brainard, head of the national economic council, biden's chief economic advisor, saying the same thing, that dogs are serious and constructive and if they don't do it, the rates will go up on your mortgage and your car loan, your small business. this is a perspective of where we have been to get an understanding of where we are now and where we have to move forward. last tuesday biden and house majority leader mccarthy kicked off. it was a budget deal they were first talking about. biden said it had to be separate from boosting the debt ceiling. mccarthy and the republicans are saying, we wa

here to discuss our top stories is our bloomberg policy editor, kathleen hays. let me start with you, with eco-data we had today. i mentioned how the first quarter gdp numbers were revised higher. there seems to be contradiction within the numbers. there is gdp versus gdi, gross domestic income. what do we know? tom: you put it nicely. there is a contradiction in the numbers. the first course gdp numbers were revised up, pointing to continued growth in the u.s. economy. the u.s. gross domestic income numbers, which conceptually should match with the gdp, pointed to a contraction. what's the signal we should take? frankly, it is hard to take to clear her signals from numbers pointing in different directions. if anything, my feeling is that it indicates this is a movement of heightened uncertainty for the u.s. economy, perhaps, there is more weakness than the headline gdp growth numbers indicating. bloomberg economics is sticking with our call, the 500 basis points of fed tightening is set to tip the u.s. economy into a shallow recession in the second half of the

let's bring in kathleen hays joining us now.t look like real kate was getting closer to the end of rate hikes, and then maybe not. >> maybe not, is that not interesting? don't we love the press conferences central bank governors, president's hold after their press conferences? because when we looked at the initial headlines, statement from the bok, that they did exactly what was expected. the cap policy on hold, 3.5%, and then in their forecast they are looking for somewhat slower gdp and inflation still continuing to potentially stay in the downward trajectory. then you get to the press conference, and yun saying six members are still open to a 3.75% terminal rate. they have been at 3.543 meetings, so you still think you might have to do one more rate hike? that is the message year. there are seven board members, the governor and six others. clearly on majority that are still watchful. it is not that they are signaling anything about this is the pause that leads to the end, though it could be. i think it is also interesting the

joining us is dennis lockhart and kathleen hays.reat to have you with us, especially during a busy time with so many things happening. almost every time we talk to you. how different is this time around? is this different from the past or is what we are seeing right now -- just more of the same, like chair powell seem to suggest? dennis: it is different in the sense that it is the smaller banks, the regional banks under stress, not the "too big to fail" banks. it is different from what we experienced in 2008. they are smaller and to some degree have fewer resources to defend themselves. i think it is worrisome that we have this pacwest information that came out after the press conference and after the markets closed. it just looks like the markets are moving from one bank to another and the vulnerable deer in the herd are being picked off. i worry about this but i would like to believe that jay powell has information that suggests the situation is contained or containable. shery: in this environment, does it make sense that the fed

haidi: kathleen hays. let's look at how markets are contending with all of this. you see the range? not when it comes to u.s. stocks. annabelle: six weeks on the s&p 500 not breaking out of the 1% range, but the fed in focus. pboc, first quarter monetary policy report, this one very closely tracked because there is so much debate among economists and investors where further support is needed to boost china's economy. we have been tracking how uneven the pace has been. pboc is planning to keep its monetary policy. what it calls an appropriate level. i exactly what this means, they are focusing on inflation. they are saying inflation is marbled. they are exciting that the pickup slowly in the second half of 2023. really stressing this report, this is not a picture here, even though not a cyclical downtrend, pbo says we are not in deflation. what else i focused on was the gap between economic expansion, inflation and brought monetary growth. they are saying that is the result of the delayed hiccup in consumption. goldman sachs among those saying we could get a rrr cu

david: kathleen hays there for us in new york. the crux of what camping was pointing out showed up in the treasury market really in a big weight these last two weeks. 17 basis points on your two year yield, nominal yield. this melt up also pushing no real yield back to the highest of the cycle. let's bring in a rates strategist at ocv bank. it is nice to speak with you. what do you think was behind this latest turmoil or pressure we are seeing on the short end of the treasury curve? >> the two year yield has been moving mostly in line with changing expectations. the recent commentary from fed officials have been mixed, and the data has been mixed as well. the latest fomc minutes we feel are of this view. that is why the market gets a little bit excited to care hawkish comments. we do believe the fed can afford to pause at this juncture especially when they themselves are uncertain about the inflation outlook and their own policy rate outlook. rates are already at restrictive levels, so it can continue to work its way through witho

i will broom -- bring in kathleen hays in new york to talk about the fed speak we've heard of as of late. bruce, where are we in these charts? bruce: on the two sides, president biden and speaker mccarthy met for about an hour, more than an hour yesterday as speaker mccarthy said that they will continue discussions and the president and he will talk about this daily. they did, both of them, express cautious optimism coming out of it. speaker mccarthy set the tone was the best of any of the meetings that they had had so far. so there is still quite a bit of difference between the two sides, they disagree over spending caps because the democrats are saying if there are going to be spending caps, they have to apply to defense spending, something republicans opposed. democrats also say they need to look at the revenue side. president biden said that the democrats believe that there should be moves to tighten tax loopholes and that something that speaker mccarthy said is a nonstarter for republicans. so the two sides are still fairly apart, but they both said that they are getting there. rish

in cross asset reporter emily graffeo, enda curran, and our global economics and policy editor kathleen haysit was really about the debt ceiling negotiations and the fact that there seems to be some optimism, but at the same time, they keep saying they are still far apart. what is going on? enda: seems to be a new sense of urgency in the stocks. all leaders make the point that the u.s. must avoid a default. kevin mccarthy thanks ideal could be done by the weekend, he says it is not that hard. we are not getting much on where the common ground could be. there is a significant gap in both sides, republicans want deep spending cuts and changes in the area of spending on social welfare. we don't know if democrats will come to the table. nevertheless, the officials at the white house and congress will keep talking to each other. there seems to be a sense of urgency now. we saw an increase in bond yields across the curve. heightened expectations perhaps of a deal on the debt ceiling in the coming days. haidi: there is already collateral damage when it comes to the geopolitical situation, the cance

kathleen hays is here with the latest. are getting more creative around what they will do next and what they will do with the june meeting, hike or not. philip jefferson making the case of the doves, it is time deposits. he says it can take a full year for the impact of interest rate hikes to work through the economy. he talked about that you need time to assess how much banking turmoil leading to consumer households not getting the loans they want and what that will mean for the economy. let's look at jim bullard. jim bullard is saying that disinflation is moving slower than i would have liked. and that he would like to see rate hikes as insurance against inflation. our main risk, he says, is that inflation does not go down or it even turns around and goes higher as it did in the 1970's. in 1982 they stopped hiking rates and thought they were done, they were not. in 1984 they push the economy into the deepest recession since the great depression. lori logan is shifting more to the hawkish camp. she is the president of the

haidi: bloomberg's kathleen hays.hat is not reassuring is levels of household spending that we are seeing, a big contraction when it comes to the month on month number falling 4.3% to 114.3 from a month earlier according to the index released. if you want to break it down we saw homebuying down almost 14% month on month. health and fitness falling by 14%, transport down over 1%. cars rising 5.3% and a whopping almost 40% rise year on year. this comes on the eve of the delivery of the australian budget. we are expecting to see the first budget surplus in 15 years on the cash search windfall from taxes as well as elevated commodity prices. were watching australian assets. we've seen weakness when it comes to australian bonds. yields have been rising on the back of that across the three in 10 year. we've seen support when it comes to the aussie dollar as well. the 67 level is above the april 20 hi. we will see if we can find support for the aussie dollar after an 2% last week. the biggest weekly gain since early november

pauline -- kathleen hays joins us with what the hawks have to say. how did they differ from the doves and are receiving an even split, what is the deal? >> it is hard to say what the split is. and a lot of gray area. hawks are saying inflation is too high to pause. you're looking at loretto, president of the cleveland fed. what she said in her remarks today that the data shows the fed policy you quote sufficiently restrictive. she needs more evidence inflation is moving down. she sounds like she sounds like she could do one more hike and pause but i would say of her, jim bullard to, st. louis fed, those are hawks who have been hawks consistently. very interesting. i have long considered him a centrist. i think he thinks for himself and he goes to see how the consensus view is changing and where it is going on the fed. he is very much in step. he seems to be getting hawkish. one of the things if you look at the headlines, what stood out is he is waiting for demand to cool. he says it's cooling but not cold. the job market is hot. he wants inflation pu

our global economics and policy editor kathleen hays is here. what is expected, and how important will this jobs report before the fed? sarah: in reverse order, very important for the fed. a slowdown is expected. the april number forecast consensus at 185,000. down from 236,000. unemployment up to 3.6. average early earnings, unchanged. 4.2% year-over-year, nearly double of what it was before the pandemic. so still strong average hourly earnings, wages going up. now, layoffs definitely spreading out. still very big in tech. but when you start seeing them in industrials, it's of the broader. -- it is a little bit broader. other areas as well -- leisure, restaurants, services, those kinds of services anyway, still pretty decent numbers. this terminal chart is one of my favorite ones, and it shows how the actual numbers when they come in for 12 straight months, have been considerably stronger than the forecasts. so are we set up for a 13th beat, or is may be this the point where things are starting to call off a bit? that is what we will see. priva

kathleen hays is with us. let's kick things off with the rba.he inflation rate at the moment , is it enough to pause? they paused last month and inflation was a little bit higher. everybody is assuming that we will see another pause. two big banks switched their forecast recently after they saw better-than-expected inflation reports last week to know move, another pause. this seems to be the way things are going. i think what is important today is messaging because of the story here is he has to show he is still worried about inflation. it is off its peak, but still pretty high. you do not want to change inflation expectations. you have to keep that message on point. he has indicated he is ready to trade off a faster return to inflation to keep the jobs growing. he said he is willing to wait until 2025, so far so good, seems like that will happen today. the message and important for the markets. haslinda: it is going to be hard to sound hawkish when you are pausing for a second time. how about the fed and the ecb? >> the fed, people looking for

let's get more from kathleen hays. code the fed be having second thoughts about taking reince again this week? kathleen: we have heard about the resilient banking system in the u.s., former vice chair at the head spoke saying he thinks the fed will go ahead with the hike and signal a pause it will be tricky, how will they signal a pause without making markets think about rate cuts. traders have paired back there that's, last certain about the rate hike coming through on the second day of the meeting. doubting there will be a june rate hike. a couple of lawmakers saying to the fed in a letter that they should be careful because bank failures make the economy vulnerable to in -- an overreaction by the fed. let's bring in grommet -- robert kaplan. he was at goldman sachs, vice chairman. you bring a lot of skill sets the table. at such a difficult time. think the fed should cause, why? >> one is, i think we are in early stages, not the late stages of this banking situation this -- there has been a significant change the pro

paul: for more on today's top stories including the fed let's bring in kathleen hays.loomberg's eagan and paul dobson. you been reading it deep into the glossary. officials calling for a pause or a skip? >> we have to think what that means. a pause means you pause. a skip means you are not sure what you're going to do over time but for now you want to sit back, see what is going on and make up your mind about the next hike. let's listen to what top fed officials said today and that's the philadelphia fed bank president patrick and the fed board of, philip jefferson. >> we are getting close to the point where we can sit in terms of policy. i do not know if we are there yet but i think increasingly we have been coming into this meeting thinking that we really should skip, not pause. i don't like the word pause. but skip and increase. >> are policy rate constant, a coming meeting should not be interpreted to mean we have reached the peak rate. skipping a rate hike at a coming meeting would arouse the committee to see more data before making decisions about the extent of a

quest i was kathleen hays there. let's get to and about. >> river jp morgan is one of those saying that they have proved to be bearish in the direction for the dell as well. let's take a look at what this means for markets in asia. it is actually dollar weakness that has been one of the key factors. today, in terms of the set up, there were risk bound and range bound. a slight bit of weakness. kiwi stocks already in line. that is still sitting around that 1.3 five mark. really ahead of that u.s. inflation data. we have not seen the s&p 500 breaking out of his recent ranges of that. a lot of emphasis coming down in the data later this week. quest plenty to watch out for. >> thank you. china has confirmed a nationwide anti-spy campaign is on the way, targeting consulting firms. operations already carried out invasion, shanghai and shenzhen. canada has expelled a chinese diplomat. the finance ministry says it is accusing it of interfering. jeff had looked into penalizing it. china's foreign ministry says the trade with

kathleen hays is here with the latest. is the fed getting nuanced?it seems that way, you have to have another kind of decision to make. let's start with a fed board governor, philip jefferson who spoke to they. he is leaning towards the pause. inflation is still too high, he says, but he thinks maybe it is time to take a break. >> history shows that monetary policy works in variable lags and your is not long enough to -- a year is not long enough for demand to feel the full effects of higher interest rates. >> he singled out the fact that the fed more time to assess the impact of tighter lending standards at banks, pulling back on credit, businesses not being able to get loans. look what jim bullard said, known as being a policy hawk. he says disinflation is moving slower, then he would have liked. he is calling for more rate hikes as insurance against inflation. he says, our main risk is that inflation doesn't go down, or even turns around and goes higher, as it did in the 1970's, which led to more hiking and another recession. they thought by 1982

. -- kathleen hays. the bipartisan debt limit deal has cleared a major hurdle in the house. president biden was optimistic ahead of the voting. we going to do with the debt ceiling. things are going as planned. i will be landing in colorado tonight in preparation for my commencement speech tomorrow. thank you very much. shery: the next guest says to prevent economic catastrophe. thank you so much for your time today. this deal would restart federal student loan payments for some food assistance programs. what do you like about it? >> i like republicans were ready to head the economy to the side of the cliff and in exchange, they wanted to slash our budget with draconian cuts. they had serious rollbacks of budget for seniors, health care, children. we were able to avoid those cuts. we were able to make sure we have a continued health care funding for toxic exposed veterans. expand -- it's not the bill democrats would have written, but thankfully joe biden is an experienced negotiator and we will able to get to a place. shery: overall when it comes to the broader economy, econ

request kathleen hays of bloomberg with the latest on the fed.ing china's economy. showing an expectation that growth will come in slower than previously expected. respondent also expected the people's bank of china to make a cut on the ratio. let's bring in james from beijing. are there is really that bad? a few months ago it felt like we were scrambling to keep up with the number of growth projections that had been upgraded. now it is all being reined in. >> if you are following what economists think will happen, there were investment decisions based on that. everyone was very bullish about what they were seeing. some very early numbers which came in stronger-than-expected pounded everyone to raise their forecast. we are seeing weaker numbers. >> if you look through that noise, the government set a 5% growth target. if the economy continues as we are seeing it right now, it will probably come out about that 5% target. if you're looking at a china's economy looked thinking should i invest or not invest, you should think about the targets the num

reluctant to run the risk of over tightening and bloomberg global economics and policy editor kathleen haysat do we hear. kathleen: we heard a lot of fed speak, that's for sure, and the question now is, as i think you are pointing out, where are they, is there a divide, how big is it? i don't think the divide is huge. everyone realizes they're closer to any rate hikes, but let's start with loretta. she's been consistently hawkish, i would say she is still hawkish even though she seems to be open to one more hike for now it's too high. inflation is too high to pause. she needs to see more evidence and inflation is still moving down. president has been a sensuous kind of guy, being open to whatever needs to be done, but i think his language, particularly today when he spoke to bloomberg television, he thinks the job market is quite hot, demanded schooling, he needs to see that to stop packing rates, but it's not yet cold and he wants to put inflation to bed finally and firmly but he's open to watching it all. >> gradual policy adjustments can be helpful, financial conditions can sometimes det

let's bring in kathleen hays in new york. you spent a lot of time on the ground in asia. the expectations toward the end of last year that china was going to lead to an inflationary shot. -- shock. >> whether or not it provides coverage to the ecb, it's not a problem. china has been in its own universe. when it comes to growth, i think is the issue. if china is slowing down, and past business cycles we have been able to look to china to step up. they have so much demand, the export so much. the situation has changed. it has debt constraints, a property market that makes up 1/5 of the economy that is still moving along but it's down from its highest as well. all of these drivers of growth may not be there. commodities like steel, copper, they are feeling this from china. alix: does that make the ecb's job easier? >> it's interesting to look at shape of inflation and how that has changed over the last year. in germany it was an energy driven story now energy is contributing to the disinflationary pressure we are seeing within the number. when you look at the number from ger

kathleen hays is here with the details. what are we expecting?we are not expecting a lot unless we get really lucky. this is a big conference, it's their annual international conference. there will be central bankers around the world. he is getting the opening remarks, he is not scheduled to give any kind of speech. there is a lot of this conference not open to the public, not open to the press. let's put this in context. the yen hit its lowest level since november versus the dollar just yesterday. then there was a meeting held by the ministry of finance, the bank of japan the financial services agency and the vice minister for international affairs, the chief currency official said after this meeting he noted it's the first meeting that has been held under the governor leadership. he said it's important the foreign exchange market reflect fundamentals when you look at this chart, that is the question. also the mof will take appropriate responses and necessary. it's basically currency intervention if needed. one of the big things hitting the doll

kathleen hays that.res route, david really sees that pricing, this is not so much doubting jay powell but telling him that he is wrong about the direction of the economy. >> certainly the market is very persistent on this one. he has been fighting the fed all year, and is even more convinced now that it appears that there is a small probability, around 14% that the rate will be cut. but the attorney five boys -- basis point rate cut ended at 60%, so that's a high populated. if you look at the end of the year, there pricing in rate cuts, and they're saying guess we are in not going anywhere as you say, but the markets disagree with you, and that's because of the banking crisis. we will be looking at the lending survey and the tightness that has gotten word the economy will go into contraction. the question from the fed though will say that there could be a potential recession, but the fed says we are more concerned about inflation and recession does that mean inflation will come down, we might see stagfla

our global economics and policy editor kathleen hays this year.r has been speaking for 30 minutes. what are the key takeaways? >> he is fighting inflation, worried about inflation and he said they will do whatever it takes to bring it down. it's interesting that the questioning -- i might've expected something more hostile. the opening remarks when it comes to the economy and inflation, what are you doing, what you watching closely? he's focusing on labor cost, unit labor cost and saying it is ok for people to get higher wages as long as productivity grows. if you have workers and they produce more output and you have to pay them more, you are fine. if productivity is low, that is when this is a problem. he things more has to be done on that front. he does say you cannot get to to have percent inflation if you got unit labor costs to 4%. that's what they're doing now. he talks about policy being in restrictive territory. rba is in a data dependent mode on rate moves, so we will put a lot of focus -- he did not say this but everyone is putting focu

haidi: our global economics and policy editor, kathleen hays. front and center of expectations in terms of how asian assets have been tracking. we will be tracking any further strength when it comes to the dollar index. that has repercussion for asian earth day. the dollar seeing its best day since march. the boe signaling the pause may lift the broader currency index. the pound seeing its worst day against the greenback since early march. this is the picture when it comes to asian currencies. a bit of upside when it comes to the aussie dollar, a top 67 u.s. dollars. we're watching dollar-yen, sitting at 134. when it comes to equity, muted start to trading. futures about .1%. kiwi stocks to the downside, following broader asian stocks falling in thursday's session. traders are weighing the inflation numbers out of china as well as the u.s., we are through the thick of earnings season as well. we did see the broader asian pacific index falling by about .5%. continuing to watch when it comes to tech, after we saw that is a major drag on the broade

. >> i'm kathleen hays from the headquarters in new york. beijing has authorized the purchase of microchips, the latest salvo in a -- the escalating tensions over micro conductors. >> and negotiators resumed talks in d.c. over the debt ceiling. >> markets are bracing for even more volatility as that debt deal seems elusive. and while, top investors to save japanese stocks are the place to be this year. get a quick look at wall street because the s&p 500 had a number of high and it stopped short on friday when president biden had to get on that plane without striking any kind of deal. not even an outline. that is when the s&p ended up a tent lower than the nasdaq. you can see on the future site we still have read on the screen and there's that sense that if there is no debt deal why would we buy equities. this also had an impact on the bond market and any concern about a debt ceiling rates not getting past means a default potentially happens and that could hit the global economy. that is one thing that drove bond yields higher on friday, and

policy editor kathleen hays has the details.rate hike is expected but it is a close call. >> potentially a close call. definitely not on the 25 basis points or the need for a rate hike. the rbnz has noticed -- is observing inflation is still very high. that is their main problem. they have hiked 500 basis points since late 2021. 12 meetings and a rope you would inflation is around 6.7% are above their target -- 12 meetings in a row. inflation is around 6.7%, far above their target. policy is not yet restrictive. there was concern these rate hikes might lead to a recession. expressed by rbnz officials. with this budget that has come in double what was expected to be in december, before the gabriel storm that devastated the north island of new zealand, repairs are going to be going on for months, it will need billions of dollars, that will be an expansion -- expansionary, it will add to output. along with a surge of migration, 100,000 or more migrants are expected, new people in new zealand, helping to fill job positions, etc. a 2

david: kathleen hays, our global economic and policy editor getting u.s. sense of what's coming up, mary daly, james bullard. we have lisa cook on deck these next 12 hours or so to maybe back against this. do we get a rate cut this year? joining us now, executive director and senior economist at the cme group joining us now. a pleasure to have you on the show and nice to see you here in the region. recession fears, do we get one or not, if we do, when and what type, if not, why not? >> it's also unlikely to happen in a very short-term. if you consider that perhaps last week was the last of the fed rate hikes and you look back over the last 35 years of history and you look at the previous tightening cycles, 1989, 2000 and 2006 they finished tightening cycles and in those three instances it took between 10 months in 17 months for the u.s. economy to fall into a recession. so, if we have that same lag, you might be looking at a recession in sometimes towards the early to mid part of early 2024. but it would also add one other thing. the fed raised rates 300 b