the pboc was looking close at what they could do for the economy.t the details of what they have done here, as the economist in beijing says, five hundred billion of the targeting is specifically towards the debt for equity swaps. it is a very specific support for the domestic economy and the deleveraging and china. it looks as though the pboc is aware that this is a long-term situation. they need to continue on this path of cleaning up the domestic base in china. they are probably preparing for a fairly drawn out trade war. there might be short-term relief, but this rrr cut is not designed to say yes, everything is beautiful and china again. it is part of an ongoing process. it might not be that long-lasting. mark, strategist joining us from singapore. you can follow more on this story on our markets live blog. you can get a market run down in one click. there is commentary and analysis from bloomberg's expert editors. the markets is market strategist joining us here in hong kong. focus more on china here with this rrr cut. we finally got it and it

also seeing the pboc staying put on its rate decision.: we waiting for the press conference out of seoul where mike pompeo has been there to debrief when it comes to the developments and achievements in that singapore summit between president trump and the north korean leader kim jong-un. they're waiting for him to take the stage. you're looking at a live picture of seoul and the foreign minister there delivering her remarks. we have heard from the u.s. theetary today saying that repair a significant steps taken in singapore but a great deal of work to do when it comes to north korea. after this, he will be heading to beijing to do another debrief on the developments of this historic week. we will be getting those lines to you as soon as he takes the stage. in the meantime, let's get to first word news. >> president trump says he will confront china very strongly in the coming weeks as the administration prepares to follow through on its tarrif threat. he said china could be upset at the clampdown while also praising his personal relation

theill make people think pboc will loosen further.rtantly as you just said, the move will be widely anticipated. the impacts will be smaller this time compared with the rrr cut in april. cap doesrtantly, a rrr not change the pboc's long-term goal to control financial leverage and control that growth in the economy, and does not change the plan to crack down on shadow banking. those cash-strapped small and private firms which cannot make enough money to repay the debt will still face refinancing pressures in the future. policymakershina's want is more defaults because they want to attract more foreign investors into the onshore market. it wants the credit rating to be tested. rishaad: very quickly, how would this affect some markets out there, government bonds and stocks in particular? >> the last time the pboc did a reacted a lotonds because it was unexpected, but this time it will be smaller because it is pretty much everybody expecting to see a rrr cut. for stocks it will provide a much-needed boost to the equity market. rishaad: th

is the pboc in a better spot? is interesting to see what the pboc is again trying to follow, action of the fed. if the fomc is going to raise rates based on what they did the past two times in less december and march that we saw the pboc follow 5%, five basis point increase in the u.s. repo rate as a jester -- gesture and signal that they will not the monetary policy. at the same time we know the pboc is trying to can use the market by cutting the reserve employment to support liquidities, condition of the bank markets and show they are stable in the bank market, liquidity, not to trigger any major financial risk. this is a kind of package the pboc's engineering. we are not talking about a major monetary policy using of china. we talk about the leveraging, the monetary policy and authorities that still consider financial risks and banking the priority they need to crack over the next two or three years. sticking with the pboc, do you see any impact with the forecast for another triple archive? raymond: we are expe

what comes next from the pboc?whether president trump is paying attention to these particular developments, whether he will tweets on the subject anytime soon. i reminder not to miss out on our exclusive interview with the prime minister of greece. we will you that on 2:00 p.m. london time. everything you need to know about the state of the greek economy. this is bloomberg. ♪ manus: good morning from divide. -- dubai. anna: i'm live from london. these are today's top stories. manus: china's currency slump continues. the yuan hits a record losing streak. tensions,trade investors await more clarity from the white house as trump takes a less confrontational chinese techng investments. the u.s. is pressing allies to black iranian imports. saudi arabia and russia make up for the shortfall. ♪ manus: warm welcome to the show. a couple of big issues for the markets are grapple with. the demolition derby going on with the yuan. is the yuan a canary in the global risk gold mine? is it just a slow death? politics, the united

do you have an idea with the pboc's goals are here?hinking it was going to happen last friday and it came late on a sunday. it goes into effect july 5. it's a very targeted injection of liquidities. you said hundred $8 billion, 700 billion yuan. you're looking at the top banks of the big five, plus about 12 joint stock commercial banks. they have strict marching orders what to do with the 500 billion yuan, that's going to be freed up. further on the path of reform in this equity swap at trouble larger state owned companies. it's something the banks have reluctantly had to comply with given this is policy lending, these state-owned banks. the authorities need to inject liquidity, cut back required amount of reserves that these banks keep at the central bank, but at the same time participate more in the equity swap. this going to be another 200 billion yuan, $30 billion at smaller local lenders to inject into small to medium-sized enterprises. the concern is growth concerns. trade friction and signs of slowing economy with deleveraging.

if they had raised rates, it doesn't mean the pboc is titening.e seeing divergence there as well, anna. matt: i will pick it up there if you don't mind. breaking news coming across from germany in the form of inflation consumer price index rising 2.2% year over year, the same as the previous breeding in the same is the estimate as well. still high for germans, 2.2%. one more piece of information that helps mario draghi and company make their decisions today. at warservative party is over leaving the european union. british lawmakers have rejected proposals intending to lock the u.k. into the single market after brexit. the house of commons of his a victory for prime minister theresa may for now. is cio at st. james place still with us. let me get your take on, every week it seems like there is a really big piece of news for brexit, although it doesn't seem to matter much the following week. how do you invest around this? when do something really make a difference to you? a really good question, and it is very difficult for anybody to have clarity

we look at the pboc is calls for calm., how business is reacting to the trade but with jessica parker, the u.s.-china business council -- jacob parker. this is bloomberg. ♪ ♪ this is daybreak asia, i am remy innocence you in new york. yvonne: and i am yvonne man in hong kong. beijing promised to retaliate forcefully against president trump's pledge to slap duties in another $200 billion in chinese imports. we bring in. jacob parker, from the u.s.-china business council, joining us from beijing. thank you for joining us. what are you hearing on the ground at the moment? other actual negotiations to try to diffuse these trade frictions, or is it going to escalate further? jacob: when we speak to companies, they were somewhat surprised by the new threat of $200 billion in tariffs that could be lobbied against chinese products to the u.s. when we talk to our colleagues in the u.s. government and the chinese government, we understand that there are no current ongoing negotiations between the u.s. and china, no are their plan fo

the pboc with a stronger fixing, weakening that reference rate by .5%.ly a battle to take place there. the fed looking at trade tensions closely. they could result in higher inflation in the short-term least. the open is upon us. here is sophie. today for red mainline markets. the shanghai composite off by .6%. x under pressure. this for the brunt of losses from the mainland market along with the shanghai composite. in hong kong, gaining .3% with technologiesac seeing gains. optical seeing losses. today's fix stronger-than-expected, perhaps an attempt to stop depreciation. we saw the offshore yuan reversed earlier moves, now around that handle. keep an eye on the yuan throughout the session. moves, set for the first gain in five sessions in hong kong. check out the day-shares falling by the daily limit on the mainland. rishaad: thanks a lot. trade tensions and how they are playing out at the moment. a bit of a rest bite today, a as the war of words has quieted down, at least for the time being. the head of equity strategy at j.p. morgan with us now. we h

the pboc would manage it one way.sia are the most hard-hit. language what kind of would powell need to use to unsettle asia central bankers? what he have to be quite sharply on the hawkish side, signaling more rates than expected into next year? what sort of a tone would surprise the markets, do you think? think there would be two aspects. one is active language. that has to do with inflation. it becomes more focused on the inflation pick up. he suggests he doesn't see wages moving in line with inflation, and there are consistent components. i think that would rattle markets, particularly if the dot plot were to complement what he says and we would see a more hawkish dot plot. the other one is the omission o. if they were to omit any references to the transitory nature of fiscal impulse or the risks in the uncertainty around global trade, and focus a lot more on sure, i think em markets would become fearful again like they did in 2013 about a fed that focuses only on the onshore up cycle and not so much on the wider g

do you see a level where the pboc intervenes?l: if you are looking at how the pboc has been acting, they have been weaker. they are comfortable with allowing currency depreciation. the trend has been they are not fighting at this point. i do not think they are closed to intervening at these levels. you need to see further weakness from here and ultimately it has to be in a disorderly manner as well. us,: thanks for joining head of fx, commodities, and rates at j.p. morgan. stay tuned for more on bloomberg radio. the italian 10 year bond futures ticks.up 37 text -- the other side weaker as you would expect. markets take comfort from what we have seen -- heard overnight from brussels. nejra: the euro gaining as well. on that note, coming up, the former greek finance minister john -- joins the bloomberg surveillance team. go to tv and ask them a question. that's it for "bloomberg daybreak europe." ♪ morning and welcome to "the european open." cash trade is less than 30 minutes away. holding back the bears. asian stocks are set

we had the lowest fixing from the pboc since december.e bank intervening yesterday to keep the yuan above , below that 6.6 level. we have to watch out for how much weakness we get in hong kong, the currency extending losses. hang seng futures largely positive. ftse china up .2%. the end of the first half of the year, the first quarter, and it has been a harrowing part of it especially emerging markets, stocks on track for their worst quarter since october 2015. ♪ . ♪ rishaad: there we go. of the quarter and the first half of 2018. we have a lot on her plate, emerging markets versus the of uglytates, a tale ducklings versus wants with emerging-market equities at the lowest level in 10 months. mind you we have swans in the shape of the nasdaq, the s&p, continuing their lurch upward. the hang seng could be down today. fix ae a yuan in focus, a short while ago, 6.61, the lowest since december. meanwhile, oil prices rise, pressure on credit markets in china, then as we have been reporting, a lot of pressure on equity markets too. let's get to

the pboc reduces rrr by 50 basis once, unleashing billions of dollars in the quiddity.t may not be enough. and president erdogan wins. the lira rises but for how long? we are live in istanbul. matt? matt: less than a half hour away from the start of european trading. futures are down across the board here after we saw a drop in japanese indexes, drops in hong kong, drops in china. here you see the biggest damage looks to be done on cap futures that also ftse futures are taking a hit. take a look at treasuries also for just a better picture of the risk off mood. investors continue to buy tenure debt. -- 10 year debt. this is the chart. , very interesting as the fed continues, or at least looks set to continue on its right path higher and the u.s. tax reform gives a big boost to the economy. why would the yields be contracting like this? guy: it's interesting. a bunch of fascinating things going on. interesting the german market is in down as much as the other markets. you would have thought the trade narrative was dominant, it would be the german market most under pressu

beijing officials and the pboc will do a lot to keep it. think the issue around the bond influx is more to do with the currency given that it is really bonds in the u.s. dollar being impacted. stability in the u.s. dollar, the more we see the interest rates being priced adequately in the currency market, that will stabilize attitudes towards china. are we near the bottom? kerry: unfortunately, until we see this trade conflict start to or havestart to wane some alleviation, there will be negative sentiment toward chinese equities. that might bubble over the northern summit. i think it is an early call we are at the bottom. things become self-fulfilling in terms of sentiment. even if we don't get trade war, investors start to work on the basis that we do, you see corporate spending fall and a move away from risk assets. where is the money going? as we bring up this particular graph, having a look at this, this is suggesting -- this track the s&p 500 and it seems to be seeing a lot of inflows. are we going to be developed markets and primary t

a very small from the pboc.t exactly does this tell us about the level of concern about the amongst china's policymakers? tom: it is significant that he came out and made these comments at all. as you said, it is a message of, don't panic. that the market moves yesterday and today were sentiment driven, that investors should be rational. saying that the pboc has the tools at it disposal to protect the markets and the economy from the continuing trade headwinds. that the pbocay putting liquidity into the economy, the most liquidity in the month of june that we have seen since december of 2016. it highlights that steps they are taking. there are also views from many economies that you will see cuts , that may come in the short to medium term as well. there were also hints at changes to the de-leveraging campaign. that raises questions about how china tackles its debt. but as he said, this is a message from the central bank governor to try and soon the nerves particularly amongst china's market participants as the

the pboc decision came as economic data came in worse than expected.he world's second-largest economy showed signs of losing unexpectedy with an slowdown in factory output and lackluster retail sales and investment. was a surprise. they could still move. they don't have to move the morning of the fed, but that aside, there is a view we had a soft numbers out of china, indicating some moderation is going on. at the same time, the pboc governor speaking to shanghai, making pointed remarks for the need for financing smaller to medium-size companies. the pboc could yet move, but perhaps the broader focus is not on overextending or over tightening too much and making center -- sure there is enough juice flowing through the wider economy. russian president vladimir are discussingn a game plan for next week's opec meeting. the oil minister expressing optimism that oil production will be reached. he said they will come to an agreement that satisfies, most importantly, the market. i think he will be a reasonable and moderate agreement but nothing outlandish. >>

it is not managed actively by the pboc. usually, the pboc on the affects the dollar cmy. of the other currencies as close to market price, so i would not look at basket. fe ago,: couple of minutes that was said that the currency can is a weapon in terms of -- you could use it if you are trying to battle currency depreciation with another country, but that is not the case here. what can beijing do? if you look at the levels of threatened, they cannot retaliate with more tariffs on more goods, because it is just not the nature of that trading relationship. what do you think they could actually do? iris:. they could do a few things first quotas. they are actually stronger than tariffs come at a off the number imported.o be they could impose quotas on u.s. goods being imported to china. and other thing they could do with unexpected for a long time, is that they could do something similar to what they have done otte department store in china, administrative measures pinpointing some u.s. companies operating in china, not only on the retail level, but they can also doin do it o

with the pboc confirming a cut for many banks. haidi: the u.s.nd china going -- that you warns of a breakdown in global trade. yvonne: production increased close to one million barrels a day. haidi: hello from sydney where it is fast 8:00 a.m. -- it is passed 8:00 a.m. we are a few minutes from the first major market. yvonne: it is past 6:00 in hong kong. after a volatile week in asia, we are starting muted. pretty much a lot on the docket when it comes to the trade front, president trump threatening the e.u. with auto terrorists. -- tariffs. we also have a focus in turkey. haidi: as you mentioned, we had that move from the pboc as anticipated, a reserve requirement for some of the big banks to unleash liquidity, watching up for that and the impact. when it comes to the u.s., it was about that lead, expectations out of opec. yvonne: it was, reaching some type of agreement. iran caving a bit but still implications on what this means for the oil markets. can they raise production by $1 million? -- one billion barrels? -- million barrels? rallying .

what the pboc step and? the pbocoice -- will step in?rude president trump's plan depends on saudi arabia to pick up the shortfall. onna closed deep in the red fears of a global trade restriction. morgan stanley says that traders should prepare for a rolling bear market. good morning and welcome to "bloomberg daybreak: europe." here in berlinr alongside guy johnson at bloomberg's european headquarters in london. guy? guy: 30 minutes into the trading .23%.nd europe is down by 0 let's take a look at what is moving this morning. we see some moving markets. penalized because somebody put it this morning. stocks,e a bunch of oil are trading higher.anies that . did interesting what g.e yesterday. some of these stocks continue to rise. the old story is definitely represented at the top end of the market. the data out of the united states on infantry's and what the president had to say affected the markets. iwg is down by nearly 4% this morning. that could potentially come in and hit margins. it is part of this kind to just of wework story. how d

how much further does the pboc tolerate year when it comes to weakness?we are back to where we started earlier this year. 6.5 is a key level to watch out for. i would not be surprised to see depreciation here. depreciation is a boost to the domestic market and the chinese government still has relative the flow and what to control the flow, you can do a lot with your currency. i would say, given monetary policy having very little leeway, i would not be surprised to see chinese currency depreciate much further. our: one more question, for investors this friday morning in asia, in terms of positioning and strategy, what you recommend moving through with the headwinds we were talking about? hao: i would say people want to be defensive and don't be so hasty to go into catching falling knives. there's so much complexity we have to look at. even if you catch a temporary bottom and there's a rebound, it is not enough to produce a sustainable rally given limited leeway monetary policy can have and also the trade war situation. yvonne: record we, we learned that xi

how much power does the pboc have any way to control the yuan?s with capital control. they have the cut in reserve ratio requirements for the banks . they have got to deleverage. it is complicated to be trying to manage a currency and exchange rate. rob: they are as you point out trying to manage multiple objectives with the policy tools at their disposal. to be fair, up until this point they have done a good job. late in the currency weaken a little bit is reasonable to what has been going on. in the background, and you mentioned capital controls, there is always the worry in china that as you start to weaken the currency further or fast, you see capital outflows. you are seeing changes in legislation to try and encourage capital investment, to get firms to invest in new technology, the financial sector. they are trying to offset and balance that. the pboc is likely seeing those inflows coming in on the capital account and hoping that is going to be enough to offset any domestic attempts to get money offshore as they see the dollar-yuan moving i

if we see this ratcheting up of trade tensions, we haven't seen the pboc follow the fed.re we seeing a weaker phase of the chinese economy? >> when you speak to economists they seem to be coming around that the second half is going to be soft on the bank. the disappointing retail numbers. as you say the signals from this is a bank here seems to suggest they are cautious now about the economy. bloomberg economics don't think that the tariffs are going to dent the growth picture too much. you did this tit-for-tat action in it that leads to a trade war, it becomes more concerning. longer-term it seems you have and lawmakers both democrats and republicans focusing firmly on china's tech ambitions. that is going to be more of a challenge for these two countries as they negotiate. china has shown willingness to increase support around its industrial policy. it has drawn something of a red line. nejra: thank you so much. tom mackenzie for us. joining us now is jub hurren. thanks for being with us. as we have heard there is a longer-term picture. it is difficult to predict what m

pboc, we seeth the them holding at 4.35%.erally, if you look at how -- it just shows the overall diversions with central banks, and that is something we will be financial markets. anna: thank you. map we just showed shows that there is a lot of red, and those are banks tightening in the near future or are already tightening. given where we started these conversations, we wonder how much that tightening bias is important. if you look at that map, it is quite a binary picture, red rising, white not rising, but there are nuances within that, because clearly the fed is on a tightening bias. i think much of the rest of the world is on a much slower trajectory than the u.s. is. i think that divergence matters because it argues for a stronger dollar. when you look at places like the u.k., japan, europe, they are going to be tightening at a very slow, almost glacial rate. we live in an environment with lower interest rates, and that is going to continue. manus: we are going to get the pce over the next couple of days, in the u.s. 2.2

in that is what has been a couple of years ago when the pboc unleashed 100 billion u.s.t to try to shore up the economy and shore up the problems in the economy. so i think it is still playing out. it is still early days, so any kind of bounceback may not be sustainable. i think that as long as a trade spat continues, there remains our dark cloud hanging over the chinese economy and stock market. yvonne: is this a much different asian market than we were seeing back in 2015, everyone is quick to point the finger that it is reminiscent to what we saw then. but what is the biggest change you have seen since the casino days three or four years ago? , yes.no doubt things are a lot better today compared to back then, but having said that, the economy has done well in china for the last one year or so. it is slowing down. clearly, they are de-leveraging, and trying to deleverage a economy is weighing on the asian tokets as well -- trying deleverage the economy as weighing on the asian markets as well. there are micro-headwinds, something that investors should be cognizant off

to pboc says the aim is support small enterprises and further promote the debt to equity swap program move a targeted and precise fine-tuning. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg. thank you very much for that. let's check in on your market moves. sophie kamaruddin standing by. the markets are absorbing this play by the chinese. it is not really doing a great deal for equities, nor for the yuan. reporter: that is the case. large caps under pressure off by 6/10 of a percent. the shanghai composite set for the week of close in two years as traders weigh the trade risks after the pboc move. let's take a closer look at some of this key segment when it comes to what is falling in hong kong. chinese carriers under pressure breathing -- being dragged by carriers. we can check in on the stock movers across the region. we do have the hang seng under pressure today. i want to highlight the key. -- zte. sinking ine shenzhen. over in singapore, noble gr

[laughter] david: no, you never want that'm the pboc as well. dahank you.ven'talkingbout rising bitcoin going the other way, plunging 20% lower. certainly no shortage of bad news. we have been talking about origins of manipulation after the surge last year, the south korean hack. losing almost 70%. take a look at this gtv chart, 70% since we reached that record high in bitcoin in december. it is bringing everyone else in the crypto space lower. take a look at number two, number three purple has dropped 20% this week already. it is really tough to see any kind of let-up in sight. it seems the euphoria is not there. something has fundamentally changed in the crypto world. during these periods of consolidation, there is no one willing to buy. it is hard to see a reversal anytime soon. ramy: one analyst said they are waiting for consolidation just to sell, so they don't lose as much as if they sold right now. this is a conversation i have been having a lot of crypto folks. they say bitcoin is the first generation of this cryptocurrency. moving ahead, like in th

maybe we will see communication from the pboc.m chinese economists, they want to see the central banks being more up front about policy decisions. maybe they should do that. they had the stocks at their disposal and this was the message from the minister to say don't run it just don't panic. investors, stay rational. many are still mom-and-pop investors even as the institution plays a larger role in china. haidi: a lot of those investors are watching zte and the fate of that company. are we getting more details as to whether trump is managing to garner any more support you are back his initial decision on that company? met with senators and those in the house and remote inside at least in the white house to talk about this controversy over the zte, and there was progress coming to a deal with he does stay in business but where national concerns of republican lawmakers are addressed. it was trump who stopped this or end of this ban on zte to ensure the company could remain in business. he said he was doing as a favor to president x

what the pboc has said is that they are deleveraging. that means credit tightening.y are in a way following the five. guessing that the credit think it is not turned off. -- we're seeing that the credit spicket is not turned off. shares spiraling has not moved. credit is still flowing to firms. this dynamic.ing if you start seeing higher rates -- the end of last year and beginning of this year, this is the time to do it. you are not seeing that. the chinese government does not so comfortable that their firms can with a hand these rate hikes -- withstand these rate hikes. there might be a rate hike here or there that they can dance, but the economy cannot withstand , butat they can withstand they cannot withstand all of them. yvonne: plenty more to come on "daybreak: asia." this is bloomberg. ♪ ramy: as last month g7 summit wrapped up in turmoil, vladimir putin was putting on a different show. tom mackenzie asked the secretary have the group has managed to maintain harmony. >> shanghai cooperation organization has their own roadmap. looking to another structure or ano

traders are on tenterhooks as anticipation grows to the pboc. deliver a rate reduction?re the chinese weapon rising their currency? and the odds of an open deal increase. an opec dealight ope increase? talk of trade the worries you would think that they would be negative, but they are not. eurostoxx futures keeping their heads out of water. ftse futures up .25 of 1%. after the vote yesterday ahead of the boe meeting, cac futures up .5 of 1%. take a look at treasuries. you do not see any risk off concerns in that market as the rates continue to climb. investors selling off treasuries %nd now we're looking at 2.94 on the 10 year. about what isk happening. will the rank of england take august off the table and how will the pound react? we will deliver that news for you at 12 noon here in london. russian market had a solid day. reasonably well bid. we did not get much of a sense of direction from the close of the s&p into what we are seeing an europe this morning. we could see an issue into the car stocks given what daimler has said. it will not be just a daimler story. daim

and with the pboc pouring liquidity in the market, the bank sector will start to rally.e onshore side, there are aries affected by the trade tension -- areas that are affected. rishaad: you got this young japan which i don't think other people happy with you think inflation is going to make a comeback. if we look at the first quarter, it was disappointing in terms of growth. we see inflation is rolling over a bit. we do think inflation can stage a comeback in the second quarter , particularly if you look at wage growth, and cap taxes is growing at -- 17%. so get bullish on the yen. from ubsadrian there wealth management. let's get to the first word news and find out what's going on with paul allen in sydney. trumppresident dramatically raise the stakes in the trade tussle with china, asking for a list of another $200 billion worth of goods to face 10% tariffs, and is threatening to double that to $400 billion if china retaliates. he says beijing has no intention of changing its unfair practices. earlier secretary of state mike pompeo had harsh criticism for the world's n

than theding lower pboc set rate. pboc is trying to support above these levels.u would see it going down. it seems to be stabilizing. they don't want capital outflows, devo bosch -- devaluation risk. tom: thank you very much. on china this morning. an important moment in the equity market off the close near correction stage. this is bloomberg. ♪ tom: good morning. let's get to our first word news. president putin says the withdrawal of russian forces from syria is in progress as mike pence says he expects the subject of the kremlin's military incursions in the country to be discussed when president trump meets the leader later this summer. , mike pence said russian meddling in u.s. elections is likely to feature in the talks. john bolton says the time and place for the summit will be announced later today. european union leaders rather and brussel to tackle the challenges facing the continent. the increasing pressure in german coalition come immigration will be high on the agenda. the summit is likely to discuss trans-atlantic trade relations, the bailout fund, a

if bank indonesia can come up with a credit line with the bank fed, if or pboc or the need be, they willave a substantial amount of dollar liquidity when dollar would be at a premium. in addition to the rate hikes would be a demonstration of resolve. are there grounds for bank indonesia and the ipi to take issue with fed tapering? taimur: the issue is the following. if the fed is doing something only in the interests of the u.s. and is negative and the rest of the world, they are not looking at the big picture. asia alone accounts for the majority of global growth. by tapering aggressively or hiking rates aggressively, if the u.s. creates a major slowdown in asia, it will spell back into the u.s. this is an argument many emerging-market central banks have made. as recently as last week we saw governor patel make that argument. i am not sure if in washington, d.c. there is much sympathy to that point. the primary issues are labor market tightness and the fed needs to do those things with those in mind. rishaad: want to get your view as to policy credibility. keen to instill that quickly.

until then, the pboc seemed to be going along with us.er the weekend and last night they may be taking a different course, they changed the reserve requirements and -- is the chinese government consciously deciding as a tactical if not strategic matter to fire a shot across our bow? nathan: i think there are two things going on. the data suggests the chinese economy slowed somewhat more than they wanted ring the first during five months -- the first four or five months of the year and for that reason the pboc is taking its foot off the brake. in this environment where the united states is threatening china, is china going to use the monetary policy to defend the currency? no. is it going to use reserves to defend the currency? no. alix: there is no u.n. weaponization that you see? nathan: i would see this is a natural response. they will not use reserves to defend the currency and part of that is china, through this talk, is sustaining a real .conomic shock it will hit china more than it hits the united states. that does not mean that ult

is some of that data coming through from the chinese economy starting to weigh on the yuan and the pboc is seeing how far it goes. we have trade issues to worry about, and i don't think this is being used as a trade tool. david: it could feed back into the tr loop. if it is weakening the yuan, it will not help that balance trade deficit. is looking atrump a chart of this and probably not happy. this ishe things about i don't think this has as much with the potential, it is more of like than a potential cause of problems for china. if you look at goldman sachs financial conditions index, it a one-year tight. biggest driver has been the rise of the dollar. the exchange rate is the flipside of that. this is something that i'd be hurting the u.s. more than china right now. david: let's talk about the second story, which is cautionary. one is what is going on with european banks. brink of beare market territory with the european banks. is this an indication things are getting nervous >>? it has been -- nervous? >> it has been a horrible week for the banks. the richer bank at a record intrada

a statement on the pboc website is china's economy is currently sound and will be in reasonable range in the rest of 2018. a report $10.3 billion in corporate bonds. that is .39% of issuance. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. julie: let's get back to the u.s. market close and take a closer look. stocks did you race earlier -- erase earlier gains. the nasdaq ended up in the green. however, tech just cannot be stopped. su keenan has more. pointed out, even though it looks like we are closed unchanged, we came well off the lows. a 1% move. technical strength and sets up for a positive open on tuesday. a relativelyng narrow move. we did not see a risk-off kind of day here even though stocks did not move much. gold -- there is a seven-week high on the wall street t that gold ise going higher. a lot of bullishness in the outward position. let's take a look at the stocks. amd at an 11 year high as they come out with more competitive chips. analys

markets teams is survey a number of traders and analysts. 18 of those that we surveyed, to bexpect the pbocng more the chinese authorities to be intervening when the dollar gets to about the 6.7 level. all, i only get closer and closer to that. this is a story about a domestic slowdown in china itself. and also deterioration in the currency market and also the equity market which is a very retail-based investor said. the possible tools now that the authorities have, given where things have gone, they could strengthen that reference rate for the onshore market. watching theosely daily fix again today. and also, they could tighten liquidity levels, start to ramp up capital controls again. , think key for some people showing up in the world right .ow, highlighted by the effects this is a great chart there. the risk reversal that shows, pretty much at this point, they have the slow decline in the currency. it happened back in 2015. concerned thans they did a few years ago. >> this emerging-market complex will hit so hard. recently catching one's attention. e.m. would be the trade of the decade

we have to look at carefy, the pboc signals coming out that they don't want to create a one-way expectationhat this will depreciate. that can be very dangerous for china is the local domestic will that the chinese yuan keep depreciating. mark: the turkish lira has had a couple of bad days, but it is inching gher and is up for a third consecutive day. is it time to take and constructive stance -- a constructive stance? salman: no. there have been too many policy theakes being made by turkish government. if they put it at the top of the agenda and show they are serious about it, that means hiking more, taking more economic pain and rolling back the populist measures, then yes. , but what we see is they keep making mistakes. then is to be credible evidence they will build back -- rollback the -- number of others haveust china. been affected. some are in correction ter which is a 10% decline. you are not spooked. you like the em story. surely you have been deterred a little bit? salman: we have become more cautious. ofare focusing on that idea a.m., because it is not homogenous. noy are countri

it is the also -- also the idea that the pboc did not follow the fed in raising rates so you would haveicipated little weakening in the one. mark: let's get to angela merkel, continuing on this momentum on this immigration story. leaders try to make -- reach a deal on immigration. antagonists dialback, saying they do not want to blowback -- blowup the party alliance. discussions are set to continue in brussels on thursday. between merkel as a coalition partners, what is the most likely thing we can expect from that meeting? tony: the most likely thing you can expect from that meeting is that all three parties will be very circumspect in saying right off the bat what they achieve, because it is really about finding a face-saving solution. as we know, face-saving solutions never leave anybody completely happy. that is not to be too flippin about it. -- flippant about it. i think the signals today have that theargely been bavarian party, which is driving this whole government crisis, is sort of backing away from the brink. of course, that remains to be seen in the hours ahead. then, what i

on its face, the fed move and pboc hold suggests that the balance has changed.be they are less worried worriede u.n. and more about supporting growth and offsetting the financial sector. vonnie: very interesting. what about the longer-term vision? does that stay intact no matter what happens with trade? the concern for china would be if the u.s. generally managed to turn off the flow of technology transfer. china's got this long-term industrial development plan. they want to be number one in robotics, they want to be number one in ai and number one electric vehicles. guess what? they can do those things on their own. ony need to continue to rely learning from the most advanced technology in the u.s., in germany, and japan. we saw a little bit of that dependence when the u.s. decided onentarily to put sanctions the chinese telecom equipment company, zte. when the u.s. imposed sanctions, they were basically going to go out of business. the concern is if the u.s. generally turns off the technology flow, china's long-term development for directory -- trajectory gets

this follows a meeting with pboc officials, regulators, the government and the company's biggest creditori: chinese state media site and electric vehicle maker is recalling 6000 cars to replace faulty takata airbags. the recall covers 10,000 models may between 2014 and 2017. last month u.s. transport safety millions and 42% of 20 airbags had not been replaced by the end of last year. ramy: japanese online market place is the first start of theed over $1 billion but successful push into the u.s. would make it a unicorn. this is bloomberg. ♪ it raised a lot next week -- ised a lot next week -- haidi: it is 8:30 in sydney monday morning. markets opening this week in 90 minutes time. futures looking flat. is mixed.e aussie digesting the potential trade war between the u.s. and china being back on. gloomy day in sydney. i am haidi lun. ramy: i am ramy inocencio where it is fast 6:30. -- past 6:30. first word news with haslinda amin. economy ishe global on the verge of a trade war after china counteracts on trump's tariffs. each nation has a detaedist of products to be hit with tariffs from jul

that advisory panel is overseen by the governor of the pboc. chinese officials changed their and said, we are causing too much stress in the markets, and that is an important shift for chinese equities. matt: one of the most important questions this morning is whether or not england did a good thing by losing to belgium last night. are you concerned they will have trouble with columbia next? or does this clear the path for them to play some easy teams until the final? mark: i think they will get to the semifinal. they should have enough to be columbia. after that, they could get through switzerland as well. they will going to the semifinals probably against spain, possibly croatia. i think that is the stage we will see england stumble. i not time for the english press to get very excited -- enough time for the english press to get excited. marketou can follow life insights from mark on the bloomberg, type mliv on your terminal. up next, what can central banks do to help their struggling currencies? how can that help your portfolio? this is

>> i think feflation in china, it's not on the pboc's radar.onsumer inflation 1.8%, very containing, higher energy but lower food. that rate is nice and steady. for the whole economy, it's sandwiched tbi together and that will give the whole economy reflation. a bit of reflation in the upstream industries helps because that's where the debt is. if you get reflation there, there's more profits and abilities to repay the debt. that's a good thing. what we will probably see this week is the pboc keep one eye on the external environments, the fed certain to raise interest rates. china does not want a repeat of the outflow scares. they need to keep in line with that. we will probably see a tweet at the alamo, maybe 10 basis points of rates and maybe some tweaks of the mls rates and the policy a little bit higher. rishaad: thank you so much, malcolm scott. bloomberg users can interact with the chart shown. you can look at our recent charts and save them for future reference. ♪ haidi: this is bloomberg markets: asia, i'm haidi lun in sydney. a quick c

with the pboc confirming a cut for many banks. haidi: the u.s. you warns of a breakdown in global trade. yvonne: production increased

we have this interview with the governor of the pboc. we are joined now by mark from our mliv team.s this a pause? mark: i think it is. people have gotten tired after last week. mosts supposedly brexit's important week, economically. people are waiting to work out the next direction. dollars come off the radar. people are unsure on equities. some traits have not worked out. people are waiting for more direction. guy: the desire to buy the pound has been a pain trade. we have a continue to slide and a key vote in parliament today. i really struggle to see how the downgrade that 50-50 estimate right now if the bank raises in august. >> i don't see where inflation is coming through. growth is important to the united kingdom and brexit is a mess. narrative last year, that the u.k. was underpriced in the market, it is going on this year and i think they will not come through like people think. it is hard to be bearish when hasn't fallen that much, but i am not bullish on the pound yet. of people are talking about the ability the fed has to raise rates due to trump's fiscal policy. there

china trade tensions, we are seeing futures pointing higher, perhaps optimism coming through from the pboc'sove on friday to relieve funding stress on smaller businesses and the country's cash-strapped sectors. this has been amid the concern desksing corporis default for it default, which pushed government debt to the highest levels since july 2015. that makes it tougher for companies to mature debt. it kind of came down this june. but investors should not panic over the recent default, given limited impact on the economy and stock market. corporate profitability remains robust. for china's low value manufacturers, this is the last thing they want. exporters are already struggling with shrinking orders, rising borrowing costs, and heavy debts. cicc is this week saying the market is bearish. shares likely to move higher unless china-u.s. relations improve and china unveils new riskies for credit concerns. it looks like there is further to go. we have offshore yuan trading above its handle. rishaad: thank you so much. now we will go out to sydney and look at what is going on with first wo news

top leaders have agreed to help hna group fund it follows the meeting last month involving a senior pbocir future bond issues. it could provide a safety net for the conglomerate carrying more than $93 billion in debt. rishaad: chinese state media says of vehicle maker is going to replace potentially faulty it coversbags, saying models may between 2014 and 2017. safety officials say as of the end of last year, 42% of 20 million defective airbags have not been replaced. disney's incredible comeback with its latest release, posting the best ever opening of an animated film, "incredible's 2." the million, blowing past records set by "finding dori" in 2016, which was also made by pixar. the results were good news for disney, after a tepid response to the recent "star wars" release. and we will be watching online marketplace when it debuts in tokyo on tuesday. and authority the first japanese startup to be valued at over $1 million, but a push into the u.s. would make it. here's our asia technology editor in tokyo. it is japan's biggest tech ipo in two years. says itney -- mercari is a flea ma

that as we've got the pboc cutting rates.on commodities, let's take a look at oil and gold, oil selling off, markets still digesting last week's opec deal. oiletty big surge the friday, giving some of that back today. gold, isn't that incredible? nobody buys gold on a day like this today, but overall -- julia already hinted at it -- the bloomberg commodity index, down 1.3%. those are today's market minutes. julie: for more on today's market action, let's bring in chief strategist peter koresh. something i forgot to mention when we were looking at the intraday chart, we just heard from peter navarro. he was on cnbc, and he said misunderstanding about the administration's trade policies. there were no plans to implement investment restrictions on china and others. could today's market action have dissuaded the administration from putting those curbs in place? peter: first of all, thank you for having me, and i am always so joyful. i seem to be invited on down days. maybe i'm going to have to change my name to peter beraish. joe