shery: let's bring in our global policy editor kathleen hays and ruth carson. 's a busy week for central bank decisions. let me start with kathleen. the question seems to be whether the fed will come out with a pause, a hike or even this thing called the skip. kathleen: the skip or you don't hike rates but signal you might raise them again after the meeting. it's not a pause indefinitely, it's a pause where you figure out what you need to do next. jay powell the fed chair definitely opened the door to this very clearly in a may 19 speech when he said the fed can afford now to look at the data and make careful assessments. so, again, he did not quite say pause. but he said that chris waller the fed governor may 24 he followed up saying he could see waiting a month or two to do the same thing. see how much impact rate hikes have had. see how much tighter. -- credit conditions have been spurred by banking turmoil in the u.s. and cautiousness on the part of bankers now. then, we have the doves like jim bullard from the st. louis fed. and lori master from the clevela

haidi: kathleen hays there. turning to the banking sector, ubs has completed its acquisition of credit suisse, the biggest merger in banking since 2008. bloomberg intelligence thinks the deal brings challenges to the near term investment. for more let's bring in analyst alison williams. you have been looking at the risks in particular for ubs. how does that scenario shape up for you? alison: there is obviously a lot of opportunity combining a bank, especially in the wealth management use meant -- even though that unit is slated to shrink under ubs. but there's sizable execution risk, especially due to the cultures. and can ubs retain the talented wants? these are -- talent it wants? these are people, not businesses. these are businesses everyone wants to get into. so they have a positive outlook but it is not a secret, especially the franchise in asia. there are banks, deutsche bank, citigroup, very aggressively looking to go after parts of the business. goldman sachs and morgan stanley have also talked about re

let's ask kathleen hays. s policy decision is this particular cpi report? kathleen: you said will this mean they pause? ethic it's very important to note that for the last six weeks, federal reserve officials are on the fence. let's talk about rafael bostic from the atlanta fed, he has said i think we can pause, but if there is another move, it will be a hike. they fall said important reports will determine jobs and inflation. we have more improvement than expected on the headline cpi down to 4.0%, the lowest since march of 2021, core cpi, less improvement due to the base effect, the comparison to high inflation last year. when you look at the monthly levels you see the story clearly. on the headline there is improvement. on the core it looks like it has flattened out. we can look into the report further and see things encouraging. energy prices, yes, that's why the headline fell by 3.6%. when you look at core goods and core services and other things happening that are optimistic. used car prices have been dri

kathleen hays is staying with us. joining us again from outside the bank of japan building is the executive economists at nomura research institute. it's also a former boj policy. but your thoughts on this, markets expecting a tweet -- hoping for a tweet and why cc but on the other hand we see the boj say, it is ready to add stimulus, how are you reading what's coming out of the boj today? >> the markets expect the tweet over why cc in the near future. a complete implemented in the full scope of this year because currently the timing could modify within increase. i think that japan depends on the difference of the u.s., not that it's the federal reserve, but it continues to increase. at this time you've got the boj modifying, i think that will increase a longtime yield. i think the u.s. economic stretch has changed changed in e additional rate hikes may decline. that could be good timing for the boj to modify the moveout of fluctuation. that will be the first quarter of this year, that's my speculation. cufflink: they

as our own kathleen hays pointed out this morning, it was almost a month ago that powell mentioned it might be an opportunity to afford to take some time for a more careful assessment of where they're at, where they need to go in terms of hiking. this sort of skip mentality has commendably about continuing the hikes at some point but maybe pausing this week. we heard from other fed speakers about supporting this idea of a potential pause this week. others like lori logan are still harping on inflation being very high. too hard to do this sort of skip this week. there is a real debate going on. there could be some dissent here that would be a huge outlier. we do get cpi as well on tuesdays. we are expecting cpi to be fairly strong. over 4%. >> that is exactly what i wanted to ask you about. cpi. even if it is strong, does it make a difference? will its way the fed one way or another? >> as we have seen so many times before, this inflation data, even when we are expecting moderation, you still here chair powell say we are not done. it is a complicated interview time to decide policy. yo

yvonne: kathleen hays, are global economics and policy editor joining us. let's bring in joshua crabb, head of asia-pacific equities at robeco. do you think at the end of the day the fed is not done yet when it comes to cooling inflation? joshua: you see different opinions from even people at the fed, and that is because you have mixed data coming up. you have the jobs data, but also the unit cost is slow, and that is why the fed is deliberately stepping back. if we look to pre-volker, which is the last time was on this activity, you saw the mistake of backing up too early, and as inflation expectations become more embedded, we have a bigger problem long-term, and that is why the fed is playing this cautiously. that being said, we are closer to the end than the beginning on the short end of the cycle, but we think there are probably lingering issues and we see that in the labor market. if you work in finance or technology seeing the headline job cuts all the time, but for blue-collar labor, there is a strong backdrop. rishaad: when volcker did it, he was st

rishaad: kathleen hays. one central bank taken away at the punch bowl.s china of course. more interest rate cuts of more -- of one form or another. what is the scoop? it is being seen as a done deal, 10 basis points. do they get more hawkish or dovish? >> i think the signal is a. the pboc told us yesterday with an unexpected cut to the repo rate that we are in easing mood and we are serious about this. financing is cheap, the problem is there is no demand for it. sentiment is incredibly weak. the broad package of stimulus measures could be a little bit more effective. if we do get fiscal transfer to consumers. when it comes to the property market, i love that j.p. morgan analyst said there is a bit of fatigue in having hope for the property market. that shows how much expectation there has been around the sector. this is the scepter that still contributes an enormous amount. -- sector that still contributes an enormous amount. when it comes to reviving growth , you cannot really get people spending if they are not confident to spend. if we get more detai

haidi: let's bring in our global economics and policy editor kathleen hays. thleen, a busy week for central banks but let's start with the fed. we are not just talking about a potential hike or pause. talking about the skip. kathleen: the skip. maybe it is just you need a third category when it is so hard to decide after the fed has hyped rates meet -- month after month meeting after meeting for 15 months now. on may 19, this was one of the first -- he did not say skip, but he said very clearly it is time for the fed to pause. he did not say pause though. it can afford to look at the data, make careful assessments. of course, that is after they have done 525 basis points of rate hikes. the market had been pricing in a hike. so after powell spoke and chris waller the fed governors spoke may 24 and said he thought the fed could take time to assess the data, patrick harker from the philadelphia fed has been arguing ardently for this. raphael bostic says they could definitely pause but if there is another move it will be a hike. he seems to be in that count -- cap

let's get to kathleen hays who is joining us. while cost of the data that we got. before we did that let's talk about markets. david: kathleen is in green, so we are seeing that on the gmm. we are in red. that is gmm for you. kathleen, let's talk about the data. kathleen: stronger than forecast. is it recession, resilience? yes, it is true, look in the weeds. 525 basis point of rate hikes will take a while to work through the economy but right now, you see housing, a key sector. manufacturing, a key sector. consumer, a key sector, all showing stronger-than-expected numbers. new home sales up 12.2% and a third rise in a row. if you are not confident or maybe that shows you are confident about your job and income and everything else because you are willing to put money down on a new house. speaking of consumer confidence, the highest since early 2022, jumping in june. u.s. business equipment orders, durable orders beat forecasts. things look good enough for you to do that. i love this chart. it always speaks so clearly because now you can see the bloomberg economic u.

our global economics and policy editor kathleen hays is here. kathleen: there will for sure be more tightening. that comes with this powerhouse policy panel at the ecb forum in central portugal had jay powell, kazuo ueda, and christine lagarde all on stage. jay powell in particular saying policy in the u.s. is somewhat restrictive but not yet restrictive enough, and he sees more needing to be done. >> we are going to move the decisions a little bit, make them a little bit with a little bit more time in between them in an effort to see how much restraint is really coming from rate hikes we made only 6, 8, 9 months ago, but i would not take moving consecutive meetings off the table at all. kathleen: decide being open to what would be consecutive rate hikes in july and september, powell says he does not see u.s. inflation getting that down to the 2% target until 2025, suggesting that at least holding on to restrictive policy will last for a while. christine lagarde spoke a lot about why the ecb needs to do more, suggesting that a rate hike in july i

kathleen hays has the latest. several fed officials have signaled they are ready to hold. could the cpi numbers play in? it's only the first day of the meeting. kathleen: it's the number they been waiting for. in the last meeting they made their move and many have commented that yes i might be open to pausing now but i will watch three important numbers. we got the jobs report and now we are getting the cpi report on the first day of the meeting. plenty of time for them to factor it in or finalize the decision. you could see on the monthly number a hefty drop in cpi. that used to be a normal number. if you look at year-over-year numbers which are effected by base effects, they have to look mellower now. -- have to look lower now. core cpi year-over-year expected to come in at 5.2% from 5.5%. one big driver is commodity prices, something that is coming down. energy prices fell 3.1% last month, a big part of what we are seeing here. it is good but you also want to look at core prices, services prices. core services. services prices have been coming down. it is the super core,

haidi: kathleen hays bear. the 23 largest u.s. banks have passed thefed's annual stress test clearing a key hurdle for returning billions of dollars to investors. let's bring in vonnie quinn for a look at the details. this has come as you know us as something of a relief after the turmoil across the sector we have seen. vonnie: a little relief for sure. they were anticipated to pass and indeed they did all ace the test, the fed's words, and this is a snapshot of the balance sheet on the criteria device before the most recent banking turmoil. there are more regular tory actions later in the summer so a little bit of relief and not too much relief yet. they were the 23 largest banks in the country as well with assets more than $250 billion according to the rules this year which came into effect during president donald trump's tenure as president and other banks will have to submit next year. they did all past and this was under the most stringent of scenarios so u.s. employment rising to 10% in commercial real percent 20 percent and

let's bring in bloomberg's kathleen hays for more and also vonnie quinn for this conversation. talk us through the numbers, does this give us an indication we are potentially back to the soft landing hopefulness here? >> it certainly raises that hope. certainly it remains to be seen how the numbers hold up. remember interest rate increases -- that the other side of the coin. take these numbers at face value. if we are heading towards recession, would you see new home sales going up at their fastest pace this year, third month in a row they've been raising, 763,000 is the annualized rate for the latest month. new home sales are a much smaller part of the housing market. there's a shortage of inventory and demand. the other big number -- one of the others is u.s. consumer confidence rising. over seven points to 109.7. what does that mean? it's the highest level since january of 2022. with two main components -- one of the two is the turquoise line. how people look at the economy right now. they call the current conditions. that number rose as well, about six points to 155. nearly

haidi: mark cranfield and kathleen hays. what a chart. the average policy rate in the bank of japan. you can see how that policy divergence is playing out in such a dramatic right and that dollar-yen trade. let's look at asian markets shaping up at this minute as we continue to see the move when it comes to treasury yields. traders jacking up bets on two hikes by the end of the year and this is the set up when it comes to broader asian markets, a little bit of optimism with sydney up when it comes to the futures session as we get into this end of the week. we are watching china in terms of regulators stepping up scrutiny as that selloff worsens as well and of course anything when it comes to uh china eco-outlook, it will be a good proxy for that submit aussie dollar trading just over $.66, so continuing to see that trajectory of weakness as we await stimulus measures yet to be announced by beijing. kiwi stocks down early in the session and as mark mentioned, we are watching begin in those rate differentials pretty close to that 145 handbo

kathleen hays is here. we saw three key sectors picking up steam. how saw -- strong is this a signal for the fed? kathleen: they cannot be done yet. we can only assumes. that is what jay powell signaled in the last meeting in june, that they were pausing. but they would probably do a couple of more hikes. this seems to put an exclamation point on that. if you start with new home sales they came in stronger-than-expected. for the third month in a row, the past pace since, let me see, it's third month in a row that they have done it. but, as you can see, they hit bottom. if you're not confident about the economy, if you're not confident about the prospects of keeping your job or getting a better one, why would you buy a new home, particularly with mortgage rates so high? speaking of consumer confidence, up more than seven points, 109.7. what you can tell is that it is not that it is soaring so much, it has a long way to go, back to pre-pandemic levels, but it is on the way up. present conditions, that is one of the two main indexes, up 6.5 points, to 1

kathleen hays is here with the details. what exactly is chair powell saying? kathleen: chair powell is saying he expects at least two more rate hikes. i guess it opens a door to more than two. he was speaking today at an event in spain, one day after he spoke at the ecb conference in portugal. in his prepared remarks, he said that again, they are prepared, the majority of everybody at the fed is prepared to do more than two, or at least two. here's exactly what jay powell said. >> as noted in the summary of economic projections, a strong majority expect it will be appropriate to raise interest rates two or more times by the end of this year. kathleen: he is putting a lot of emphasis on the now, saying in answer to questions that it's not just about the number of hikes, it is our commitment to getting to a sufficiently restrictive policy. he made that statement, it has only recently got district event has to be definitive -- definitively restrictive. he said we could doit's going tl would like to see. different large from the president of the atlanta who talked

our global economics and policy editor kathleen hays joins us with the latest. pecting any change in the monetary settings. what should we be looking out for? kathleen: whatever governor ueda says at the press conference after this meeting. let's step back, this is an historical time for the boj. they had governor kuroda in office for 10 years. governor ueda himself was on the board of the boj in the early 2000 when he voted against the decision to hike rates, which helped pushed opinion back into recession. -- japan back into recession. it is the second meeting. this is something he's not ready to do, in part because that premature tightening. he is now worried that could happen again. he says the risk of premature tightening is far greater than the risk of letting it go too far. it is inflation one of the main measures, but the boj's forecast from the april meeting was that it was going to stay at 1.6, or come back down i should say to 1.6%. they cannot change their inflation outlook officially. but won't he get questions? how can you say you are not sure it wi

let's bring in global economics and policy editor kathleen hays. and kathleen, from the new dot plot to powell's remarks, what's the key takeaway? more rate hikes most likely are coming. now. the fed is data dependent. you don't get data that can dependent all that until until we get to july. powell tried to say it over and over. no, i can't tell you if we're going to hike then. but he certainly held the door wide open. now, they did hold the benchmark rate in the 5 to 5.25% range. they didn't hike and the vote was unanimous. somehow, despite all the back and forth we heard from fed bank presidents and fed governors, powell managed to bring them all together and get everyone on board, at least for now. the median forecast is for two more hikes this year. all nearly all, powell said, expects some further rate hikes. now, it's also interesting that he said all the risks are to the upside. he said the fed keeps saying inflation is going to come down and it hasn't. core inflation is still far too high. he seems very concerned and very hawkish. the dots,

our global economics and policy editor, kathleen hays. is here with the latest. rd from the philadelphia fed president. kathleen: he said the same thing that the new almost vice chair, fed governor for jefferson -- governor jefferson said yesterday. the fed has done a lot. it is time to sit back and see the impact. that is what they want to see happening at the june meeting. you can call it a pause, a skip, they agreed that is what is time to do. let's listen to what harker said earlier. well, i will tell you myself. basically he said it's something that is needed now. you don't want to do too much. let's bring up that chart on the jobs forecast. bill dudley who was a former head of the new york fed bank thinks that there go hug -- going to have to do one or two more hikes. he thinks wages will be very important, the number of jobs important, payrolls is expected to be at 195,000 -- 195,000. keep your fingers crossed on that one. unemployment up to 3.5%. still at a 50 year low. average hourly earnings, year-over-year, expected to be at 4.4% in may, again for the s

let's get to kathleen hays, policy editor. n the book of fed speak, a positive skip, there's a fine line and there is a distinction. kathleen: there certainly is. about four weeks ago, the president of the atlanta fed mention, we could pause or we could skip, and a couple days later, a couple of other fed officials said we could skip, so this is now part of the parlance, part of how they are operating. that is how it seems to me. president of the federal reserve bank of philadelphia, and member of the board of governors, let's listen to how they talk about it . separate speeches, separate locations today, starting with pat harker. >> we are getting close to a point where we can sit for a little bit with the policy. i don't know if we are exactly there yet, but i am in the camp increasingly coming into this meeting thinking that we really should skip -- not because. i don't like the word pause -- but skip an increase. >> a decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we hav

and of course, our global economics and policy editor, kathleen hays. coming up, we look at how resilient esg strategies are giving a boost to corporate bottom lines, and we will hear from the she-cession ability officer of ayala corporation but first africa's biggest lender talks about their role in development. an exclusive with our guest is next. keep it here with us. this is bloomberg. ♪ rishaad: alright,. we are looking at africa's biggest bankers. it is optimistic about the region's ties with china, this, after beijing played a critical role in debt restructuring in zambia. underbanked group chair nonkululeko nyembezi sat down with us in tianjin. nonkululeko: zambia became the grass on which the elephants fight. when that happens, you get trampled. so it has been concerning, the way the whole thing has been done. but we did not see that in ghana. ghana happened superfast because china was not a big bilateral lender to ghana. the multilaterals, particularly the i.m.f., led in that process. the rules were straightforward and i think ghana is very cl

. >> kathleen hays topping the agenda. also, just the broad enthusiasm. we are seeing these ai stocks rally. >> it has been in the same rally for the nasdaq. a lot of the stock market has been pretty good. this is moving out. that is interesting because for a while there, the narrative would embrace a rate cut. it wanted a rate cut. yesterday, when power clearly outlined they were not going to cut rates, i asked a portfolio manager why stocks are rallying and he actually said now, stocks are thinking if we don't get rate cuts, maybe that means the economy is better than expected. so earnings would like that. it is interesting to see how these narratives shift. >> jp morgan today highlighting that one risk to stocks could be rebalancing. what are the risks here that you see? >> the jp morgan strategists have a note out today, those real money investors speak to sovereign wealth funds. they could have to unload up to $150 billion worth of stocks during this quarter's rebalancing and that is because global stocks have outperformed bonds so much. in order to

our global economics and policy editor kathleen hays there.ine here to tell you about, if you bank lowering its price for models by 30,000 yuan and it has seemed to disappoint losses, sales have a cratering. an i/o has just sold a few thousand electric vehicles, this might be an attempt to encourage sales. 30,000 yuan. let's look at how fx markets are reacting to this big week of central bank policies, and rate strategies. david finney joins us now and this seems to be an inflection -- reflection of anxiety. >> were not sure what the fed is going to do. you see the dollar strengthening today as kathleen indicated, the key thing looking for to is what chair powell says. even if the fed skips today to july, the fed said that we will take time to evaluate. we want to look to july. if you don't do anything in july, and you have done something in june, if inflation is elevated by september are you behind the curve? so are you bleacher like they will address that. that is the dot plot, what is the signal going forward. are they going to push back ag

kathleen hays is here with the latest and the consensus right now is for a hold. it is a close call? >> it is one of those calls when people seem to be saying i expect a hold, it could be a hike or i think they will hike what they could hold. the rba, fellow, he surprised last month with a rate hike of 25 basis points when everyone was expecting a hold. he put it in context. 375 basis points of hikes since may of 2022. have you done enough? is it time to pause? a lot of big central banks are contemplating around the world the federal reserve is a couple of weeks who will make that decision as well. of course kluber abenomics -- of course bloomberg economics says there is flowing. negative employment, it has gotten higher. that is why one of the big reasons why two thirds of the economy -- economists we served urveyed see the pause and the hike. the majority. a couple of things to look at was inflation. inflation in australia went from year-over-year 6.4% to 6.8%. that is more than doubled the target of two or 3%. it is going over duration. minimum wage hike going

kathleen hays. t then chair powell seemed to soften the tone during the presser. kathleen: it did confuse some people and made them wonder what the messaging truly is. on many levels it's clear they didn't hike the key rate. they left it at around five and a quarter percent, and that part was what everybody thought. good for jay powell, a group is divided between the hikers at the very top in the let's don't do anything at the bottom. we've got awe've got a unanimou, tumor hikes over this year and more hikes expected. in terms of what the signal is, if you look at the dot plots and see what's there, you can tell that this move now, you have 12 of 18 fed officials who are on board with two more rate hikes. at the top you have three if you could get up to 6%. the bottom, a couple that don't want to move, and then there's for down there. it's interesting the consensus because we didn't see from all things ahead of time that they were that close on a to hike move. but look at this, this is really somethi