the reserve bank of australia front and center, looking ahead to the fed wednesday, and the bank of england thursday. let's check in on how things are shaping up, the spanish ibex down 0.5%. the ftse 100 down 0.2%. cop 26 continues in glascow. the market is pricing in a if you percent chance of a rate hike by the blb on thursday. cac quarante is down by 10 points, over a 0.1%. that's check in on the cross assets. iron ore is back in focus today, falling more than 5%, close to 6% on the back of the news that supply in terms of steel production in china is likely to be curtailed. weak demand for iron ore. on the back of that decision from the rba to drop its yield curve control. you see demand for the three year yield -- i should say bond, the yield slightly lower. we have commentary from the head of the reserve bank suggesting it is unclear when the bank will look to raise rates, focused on the fundamentals of the data. that is the aussie dollar now, lower by 0.7%, $.74 per u.s. dollar. let's get the bloomberg business flash. laura: a rise helped boost profits in the third quarter, the londo

the drama started when the reserve bank of australia last week, there key inflation gauge popped intoheir 2% target at 2.1% year-over-year. traders saw the three year yield target, they were surpassing it, pushing it higher. the reserve bank of australia did not push back to buy more bonds. that is why it spiked to well over 1%. it has come back down, but the bet is that today, still low. -- will say look, we are dropping the yield curve control target. we are seeing inflation rise. they are also betting there may be a signal of a pledge to not hike rates until 2024 when inflation is in the sustainable target. phil has been insisting he wants sustainability and he wants to see regis -- who wages rising because wages need to rise to keep inflation in the band where he wants it. haidi: our economics team is arguing the rba is going to look past this recent spike and figures this is going to come down. one thing they are looking at is the fact that the international border reopening is going to allow an influx of foreign workers. that is going to a wage momentum. that is going to put dow

we're going to hear more from the reserve bank of australia later today. we will hear more about the growth and inflation outlook. the markets already pricing in three rate increases for 2022. the rba is not quite at that point, although it did walk back some of its language on tuesday's meeting signaling it might be willing to move earlier than 2024. markets seeing a number of pressures including a rapidly improving vaccination rate which suggests maybe the recovery is going to be faster. shery: there was a reason why markets were pricing and faster action from central banks. inflation expectations soaring as oil prices continue to gain ground. opec-plus now rejecting the white house demands for more supply. perhaps inflation concerns will not go anywhere. it seems to be on the hands of president biden whether or not he wants to dip into the strategic reserve. paul: it might be a bit of good news on the trade front with china. xi jinping saying that china is open to talks on the industrial subsidies that it gives to state firms. this has been a long issue

the bank of england expected to move this week and a big question about how the reserve bank of australia. ". we are 2 -- close call.s lisa: how closely our central bankers watching stockmarkets? stockmarkets are giving them a green light. michael: they want stockmarkets to gauge market reaction but it does not influence their decision as much as the economic data. you saw the reserve bank of australia. they had an interest rate yield curve control target which they let go on friday. you saw the two year rates skyrocket there. they are all getting ready because inflation is high and we are getting a little bit back to normal. they are getting ready to start moves. it will be a question of how hard lego and went winter they feel they have to go. i do not think stockmarkets will have a big influence on that. kailey: does it not matter where the inflation is coming from? we have had a lot of commodities related inflation. on the wage front we saw the employment cost index on friday. is that the kind of inflation central bankers have to pay attention to? michael: it is the kind of inflation c

australia this week. we are seeing stability in the 10 year bond yield. let's bring it chief economist. is he this reverberation of what the reserve banka does with regard to the rest of the world bond markets, but that's what we are seeing so far this week. what is the lesson learned on the rba having to bow to market moves? >> the lesson learned is that all of the central banks are finding themselves needing to respond to what i think for them is a very rapidly changing environment. in particular, what one sees with the rba announcement is something that has not been acknowledged by our fed in the united states. the markets getting ahead of them. in this case, the market is saying we understand how you want us to think about this, but we are going to think about it differently. the central bank is finding they have to respond. haidi: we are also starting to see a theme of stagflation. data shows the extent of how the supply shortages globally are starting to weigh into the dynamic of parse pleasures. -- price pressures. >> i have said to many people this might be an analogy that doesn't play too well in australia, stagflation is like

the reserve bank of australia has bowed some would say to market pressure, signaling they are open to raising rates earlier. i have a problem with this guidance. in the words of the rba, conditions may take some time. and get the have abandoned yield curve controls. how close are we to rate hikes? the markets is 175 basis points next year. -- the market says 175 basis points next year. where are you? >> nowhere close. there has been a complete overreaction to the markets in australia. throughout the conference, they stressed time and again it is all about wage growth and there is no wage growth in australia. he talked down concerns about core inflation. he is quite sanguine about the supply chain crunch story. a lot of that can be ironed out as people move from buying goods to buying services. there is a headline that they moved away from yield curve control, but recovery is well underway. they are focusing on getting wage growth. raising interest rates would be counterproductive. there will not be a rate hike until 2023 at the earliest. >> interesting you have april 2024 bonds back o

there were some good news that the reserve bank of australia said inflation wasn't as bad in the nation due to cheap energy prices and strong labor participation. and in south africa, we have a green arrow for the all share on thursday, the country central bank raised key interest rates for the 1st time in nearly 3 years by 25 basis points. the rate now sits at 3.75 percent. the move was in response to concerns over that rising inflation. we've heard so much about now let's go over the bandwidth more from europe in the america brand. thanks. so that will, let's head over to europe where it was. let's face it a very rough week. markets definitely reacting to new lock downs that are being imposed across europe, including in austria. and as a result, as i mentioned, it's been a rough week for markets. so let's go to the u. k. first, where the foot c was down. this week the lennon exchange fell really pretty much all week long, but especially thursday and friday with much of the market responding to again that news that of austria of new loc downs and mandatory vaccinations for everyone in

there were some good news that the reserve bank of australia said inflation wasn't as bad in the nation due to cheap energy prices and strong labor participation. and in south africa, we have a green arrow for the all share on thursday, the country central bank raised key interest rates for the 1st time in nearly 3 years by 25 basis points. the rate now sits at 3.75 percent. the move was in response to concerns over that rising inflation. we've heard so much about now let's go over the bandwidth more from europe in the america brand. thanks. so that will, let's head over to europe where it was. let's face it a very rough week. markets definitely reacting to new lock downs that are being imposed across europe, including in austria. and as a result, as i mentioned, it's been a rough week for markets. so let's go to the u. k. first, where the foot c was down. this week the lennon exchange fell really pretty much all week long, but especially thursday and friday with much of the market responding to again that news that of austria of new lock downs and mandatory vaccinations for everyone in

this was the best we can nearly 5 months propped up by the mining sector, the reserve bank of australia revised it's g d p. forecast for 2021. expecting the economy to grow by 3 percent down from initial estimates of 4 percent. but expect the economy to grow by 5.5 percent next year. in south africa, the all share is up, the nation is the governing party. the african national congress based its worst election results. 1994, taking only 46 percent of the boat in municipal actions, raising questions about economic policies moving forward. the ran week and against the dollar on that news. moving to europe, we have a green arrow in london for the but the up about one percent for the week. as we have previously mentioned, the bank of england defied expectations by keeping interest rates near 0 to close out the week. oil major's b, p and shell both are significant gain amid rising oil prices. banks, however, did close the weak down on that central bank decision, the german dax and french cack. they're both up for the wake up around 2 and 3 percent, respectively. europe's largest economy could

move since 2020, is more compression to move -- >> yes, you did get some pushback from the reserve bank of australiaat had an impact on global markets. we saw two year yields dip. if i am right and we get to the middle of next year and a lot of the inflation pressures that we are seeing now that are making central banks nervous, those start to fade a bit, so we have lower inflation, and in the middle of next year, we are still not close to maximum unemployment, then i don't think we get the rate hikes. if that turns out to be correct, then to year yields probably have room to move lower. manus: i heard the fed will flop, which i thought was entertaining. live taper, rate hikes delayed -- not denied -- delayed. what does that do for risk? must be pretty good for risk. jeffrey: very bullish for risk :2:2:2:2:2:2:2:2:2:2:2:2:2:2:2:: that is priced in, if you will. the things to worry about for risk today, an accelerated taper timeline, meaning the tapering will wrap up more quickly. let's say by the end of q1. that is something to watch out for. a shift in tone from powell. he has been saying the fed w

the reserve bank of australia scraps its yield curve initial target after the recent tum alton the bond conditions for a rate hike lightly to take some time. fed officials prepared to meet as consumers and companies worry about the most widespread supply crunch

in the funds go up, it does impact through into the price of money in australia and new zealand, but not signs from the reserve bankay. rishaad: -- david: it looks like, based on what you are saying, your margins will freeze. how much do you think your cost of funding will go up two or three quarters? ross: members are getting a squeeze. probably, less impact on our bank than a couple of the other majors. mainly because we have it very strong business bank. in a slightly smaller mortgage than some of the others. but you have certainly seen our ability to reprice the deposits and they have become very limited, so there has been a contraction. for the last year, there were five basis points of contraction, that has to do with our funding and markets business . the core bank stayed flat the last six months, but the pressure is on. to what extent, i don't know. but you have limited ability to have the rates down to complement the increase on the margin. so there contraction will probably not be as much as the bank. yvonne: i want to talk to about the city retail assets. how are you feeling about that? do you have indic

bulls who are expecting interest rate hikes, there are three rate hikes priced in for the reserve bank of australia2. shery: does this data move the needle for the rba? reporter: only yesterday the reserve bank governor said that he is going to overlook the spike in inflation if it is not accompanied by wages growth. that goes to show how important wages data has become for the reserve bank. philip lowe months to bring wages growth higher, and that is why he wants to keep interest rates at record lows for some time. if the number is strong, it will definitely embolden rate holes, but the reserve bank will probably wait for some more quarters, maybe two quarters or more, because it has said it wants to see inflation substantively within the target. just one quarter of data is not going to be enough to move the needle, but it will definitely point to the fact that the market is right on this one. shery: our economics reporter with insights into the wage numbers. don't miss the fourth annual bloomberg new economy forum happening here in singapore, we will share discussions among world leaders on topic

how are you expecting will be absorbed by the reserve bank of australia, and also by the markets?arah: it will be a negative on the headline number when sydney, new south wales were in lockdown. we're going to see a 3.3% decline in activity. that will sound shocking, but it won't be a surprise, and it is exceptional in the circumstances and that indication for what is happening right now and what will happen going into 2022. we already know the economy is recovering, we can see that in the high-frequency data, payrolls, some of the spending data. we know consumption is bouncing back, these economies are getting back to normal. it will be interesting on how big a hit was to the economy how far the country will go to catch up to the rest. kathleen: it might seem a silver lining is that they would get some relief in terms of investors backing away from emerging markets in the face of the fed tapering faster, going to raise hikes. maybe they will not get that relief because the president of the atlanta fed in an interview was asked about the omicron -- he said no it won't. >> i am ope

bank of canada, they said no more with regard to quantitative easing and in fact this timeline for rate increase is the beginning of 2022, it's on the table. you look at that time reserve bank of australiaontrol. this was a central bank the fed looked for when they were exploring yield curve control, basically said this week no more yield curve control. short end global yields have gone up a lot. the u.s. has gone up about 30 basis points so we're really interested to hear from the chairman here with regard to not just the taper, but what his views are on interest rates going forward. we have two priced in right now for 2022. maria: let me turn to the other issues that we're looking at in terms of inflation, spending, earnings and then we've got this governor's race and this governor win. what's your take in terms of the impact on markets? >> sure. so with regard to the inflationary pressures, they're everywhere. inflation expectations are extremely elevated right now. if you look at really all metrics of inflation across the board, they're extremely elevated. so powell certainly can't walk away from the fact that whatter we're seeing is real. with regard to the election today, i mean,

australia validated the move. the bank of england encouraged the move. the federal reserve has not on much.we do not get pushback, the market will see it as encouragement. let's finish on what it means for the currency. better to travel than to arrive. we may not hike interest rates through 2024 geared -- 2024. down under and up here in the united states, down about 0.8%. tomorrow at the federal reserve, it is about two things. tell me what is next, give me a better view on inflation and about how the latter informs the former. tom: i like how you have the all-star youngling go. the down under thing. -- the australian lingo, the down under thing. jonathan: do you like that. tom: frances donald joins us and she has written an important essay on all this talk about policy mistakes. let's folded into the word transitory. a transitory policy mistake. when a central bank screws up, what do they do? frances: it depends on who they are, but traditionally they have pivoted back. we are going to see central bankers who may be get a little too excited in validating those front and moves and you see t

bank of england where there could be an interest rate hike. also looking at the federal reserve and more immediately, the return' as well. -- return of australia as well. in hong kong, tech, a short squeeze according to morgan stanley. tencent up 1.3%. baidu, 5% up. after shenanigans of top management yesterday. 6.6% to the upside. tech. central banks at the moment. we're, what, 1.5 hours away from the rba. yvonne: it is a big day in australia. it is also the melbourne cup. they do these things at the same time which is interesting because they will be a lot of action here, or at least what bond traders are hoping for his clarity from the rba as well. are they going to have to scrap that yield curve target after last week not doing anything to defend that target? what is the point of having one? here's what this week is looking out to be. the rba first. the fed, we are expected to hear some tapering announcement. boe could be hiking this week as well. is this the week we are going to see a shift in global monetary policy? rishaad: absolutely. looking that chart we have the yield target being put to one side. we've got core inflation jumping ba

the governor of the reserve banks -- bank thinks that needs to be 3.5 percent. he needs lower unemployment for that to happen. paul: australialestone in the battle against covid. 90% first dose across the entire country. here in new south wales, we are 90% double dose. as states begin to reopen and things get back to normal, what is the look out for the employment picture? >> we can base our estimates on one happened last year. -- what happened last year. there was a snapback once they started to get back to normal. the same is happening at the moment. in october, it was a bit of a stop start process. new south wales started to reopen, schools went back and victoria was still largely in lockdown. from november to december, we should have more of the big east coast centers back to normal. we are already seeing the cbd in sydney coming back to normal. we expect unemployment numbers to snapback towards the end of the year. that is certainly what the central bank governors anticipating as well. all along he has been saying we should see a quick rebound once things get back to usual. shery: malcolm scott in sydney. with his insig