Transcripts For BLOOMBERG Bloomberg 20240703

Welcome to daybreak australia. Im haidi stroudwatts in sydney. Time Annabelle Droulers in hong kong. We are counting down to asias major market opens. Shery fed chair Jerome Powell signals rates will stay on hold while leaving open the possibility of a neuter hike. It does not feel like policy is too tight right now. I would say the evidence is no. Haidi traders digest remarks in the potential escalation of the conflict in the middle east. The s p 500 notching its Third Straight loss and 10year treasury yields approaching 5 . Shery israel shifts its approach to a ground war in gaza as the u. S. Warns of civilian losses area President Biden set to speak later on the israel hamas war and ukraine. Take a look at futures, really continuing the dissent into negative territory. We saw the s p 500 falling in almost every sector. It did swing between gains and losses, at one point hovering near the 4300 level, and at one point turning green. That came after fed chair powell talked about for suggested that he was inclined to hold rates steady again at its next meeting, but at the same time he said there is evidence the policy is not too tight, not to mention we had a mixed set of data. U. S. Jobless claims dropping to the lowest level since january. Existing home sales falling to the lowest level since 2010. Have a tight labor market, at the same time affordability worsening further. Oil prices rising slightly in extending gains we saw in the new york session. Interesting because reacting to the middle east tensions and really upsetting offsetting the fact that the u. S. Has limited some sanctions on venezuelan commodities. We continue to watch the treasury space. It is mixed. The 10 year yield any ground for a fourth consecutive session, and we are talking about approaching close to the 5 level. At the same time, when it comes to the policy sensitive two year rate, it fell. We have a bit of a curve steepening happen. It has been about the rise in longterm yields. Chair powell reacting to that. Take a listen. Markets have been volatile. You have seen the rates moving up and down a lot. I think we have to let this play out and watch it. For now, it is clearly tightening financial conditions, so we will be watching it carefully. Haidi i have heard chair powell said he would rather move gradually to give time for monetary tweaks in that data. I think the pause, even if we do see a november pause, it could still be temporary. But there was still encouraging feedback from chairman powell when it comes to at least how it elation is doing. After peaking at 7. 1 in june 2022, 12 month headline pce inflation is estimated at 3. 5 to september, core pce inflation , which omits the volatile food and energy components, provides a better indicator of where and nation was heading, and 12 months core pce inflation peaked at 5. 6 in february 2022 and is estimated at 3. 7 . Shery inflation still at the mercy of what happens in the middle east, especially given the impact on inflation. Israel now shifting approach to a ground war in gaza, with the u. S. Influencing the way an assault will be conducted to limit civilian casualties. President biden also set to deliver a primetime address outlining washingtons response to the conflict. Lets get more from Jodi Schneider. What message are we expecting from the president , especially as we are seeing this shift in what israel plans to do . Jodi first of all, he will reiterate the u. S. Support for israel, a message he has given has been giving ever since that october 7 attack, and the necessity to fight terrorism. We will hear that strongly again and probably somewhat passionately. This is something the president has made clear. We also are starting to hear more about concerns about what the extended ground war into gaza could do to civilian populations. This is something that has been increasingly a worry for the administration and something the president i am sure will address tonight in terms of sympathy for civilians who are not connected to hamas, who are not connected to terrorism, and also the humanitarian crisis that could develop their. He will also call for restraint in terms of other countries getting involved. There is growing concern about hezbollah from the north being funded by iran, by others, and that this could really develop into several fronts of a war, which is something the administration does not want to see, nor do u. S. Allies. We are also going to talk about ukraine and the need for continued support from the u. S. And its allies there. Maria besides offering haidi besides offering more support for israel, what do we expect biden to say about the conflict . This is not the only conflict the u. S. Is directly involved in. Do we expect commentary on ukraine . Jodi yes, we do expect them to talk about ukraine. The funding bill that is expected to be sent soon to capitol hill could be as much as 100 billion, and we expect almost half of it, or certainly a very large portion of it will be from for ukraine. This is something the administration has tirelessly spoken about since the invasion of ukraine by russia, and there has been growing reluctance among republicans and even some in the president s own party at different points, about this large level of continued funding. He will talk about that, and he will tie the two together, i am sure, in talking about the need for the u. S. To stand by its allies and those who are trying to fight against terrorism and attacks, and to hold onto, in the case of ukraine, their own country and sovereignty. We will hear that as well. I expect the president will also make some remarks about the need for the countries along with the u. S. Who have been continuing to support ukraine to do so because there is worries now that this fatigue is not only showing itself in a house of congress in the u. S. , but in other countries as well. Shery Jodi Schneider there with the latest haidi Jodi Schneider there with the latest. Xi jinping is calling for an immediate ceasefire in the israelhamas war. In his first public remarks since the conflict began, he said beijing is willing to work with arab countries to push for a solution. China is facing pressure to use its influence to calm tensions. Lets bring in seth jones. Seth, i do want to start off with china, because this is interesting to me. Xi jinping has really attempted to position beijing as being able to feel this fill this role of peacemaker. Do you have an expectation that beijing has a role to play here . Seth there is no question that chinas role in the middle east has grown over the last several years, particularly in the gulf. At the same time, china does not have a lot of weight it can throw around. It is not trusted by the israelis as a major ally. I think china can play some role in some of the diplomatic discussions that are going on. The russians will play a major role. They have a bigger security presence in the middle east, but i do not think the chinese one could easily overstate what the chinese are going to be able to do to try to negotiate over the next several weeks and months. Haidi the view on the conflict in the middle east at the moment is that a ground incursion is almost inevitable because of the way hamas infrastructure is set up. There is limited possibility for how israel can address that. For the u. S. , what do you make of the military, security, political bandwidth for getting involved more directly in another conflict . Seth two things. The u. S. In general is not going to want to get directly involved in the conflict in israel and gaza. The u. S. Has deployed strike groups to the region. It can collect intelligence from assets on those carrier strike. Carrier strike groups. It can also contract strikes from aircraft. The second issue, where things are starting to get concerning, we have seen multiple attacks by groups linked to iran in the region over the last 24 hours, two separate ones in syria, one at out of for a, another at the conoco oil fields. Two separate ones, one in iraq and two at airbases that hold u. S. Air forces and contractors. The final one, the u. S. Intercepted rockets and missiles coming from yemen. We have multiple locations in addition to firing across the israelilebanon border with hezbollah. There is escalation across the region. Shery that was surprising, coming into the office today and looking at the headlines. The spokesman for the pentagon saying you have to look at those attacks individually, but what are the chances they will escalate into a broader regional conflict . And what would you say is the motivation behind those attacks happening now . Seth yen radians do have groups linked to them, particularly the iranians do have groups linked to them, particularly a proof that can force a paramilitary organization. Yemen shut the rockets that the u. S. Intercepted. In addition, Popular Mobilization forces were involved in some attacks in iraq. The iranians do have militia groups that operate in syria. It is not clear to what degree the iranians ordered any of the strikes. They do generally operate independently. But it does raise concerns, particularly if the u. S. Response at some point to those attacks. Shery how much of the conflict that we are seeing now, and really, we dont want to get into attaching blame at this point in time when there is still geopolitics and a war raging, but at the same time, when is it time to look at what was happening inside israel in the sense that we have seen judicial reforms by Prime Minister Benjamin Netanyahu really take away a lot of the attention. We have also seen a lot of the attention veering away from the Palestinian Authority into giving hamas more say when it comes to regional politics. What led to this moment, is my question. Seth it is not entirely clear. We dont have sufficient information about the decisionmaking within hamas that led to this, but i was recently in israel and i spoke to Senior Israeli Defense force officials. They did express growing concern about hamas activity while i was there. The israelis went into northern parts of the west bank to target hamas. There also were concerns about hezbollah activities along the northern part of israels border with lebanon. The israelis have been increasingly concerned about escalatory action on all sides. In addition, as every militant and terrorist group knows in that region, there has been significant domestic unrest in israel directed at netanyahu and the judicial forms, including that has impacted the military, reservists who have said repeatedly that they may not serve if israel continues to go in that direction. A lot of that has died out with the recent terrorist attack, but that may have all contributed to what we saw hamas conduct in southern israel. Haidi seth, we see this played out perhaps more than ever when it comes to the availability of these images and videos on social media. I do wonder, given the atrocious footage and content we have all been seeing, do you worry about how much this is going to contribute to future radicalization and of populations . In both populations . Seth absolutely, and it does not just populations on the israeli and palestinian side, but as we have seen in multiple countries and europe, in asia, in the middle east itself. We have seen huge demonstrations in oman and beirut and a range of other cities and capitals. We have seen across the board tensions rise, and the groundwater has not even started yet. That will be a prime opportunity for social media videos, photographs of atrocities committed by all sides in such an urban environment, which is bound to have civilian casualties. This type of rhetoric is almost certainly going to increase. Haidi cap jones, good to happy with us. We will have special coverage of President Bidens address at 8 00 p. M. New york time, 11 00 a. M. If you are watching from sydney. Domicile exclusive interview with washingtons top diplomat in china on how the conflict in the middle east is adding to challenges to ties between the worlds biggest economies. That air was later on daybreak asia. That air was 0 airs later on daybreak asia. Annabelle there is still haven demand we are continuing to assess in the light of the hamas war. Of course, it was jay powells address and when he said in that speech, taking the idea of a rate hike off the table and off the back of that we have seen money markets starting to price the chance that we will see rate cuts around the midpoint of next year. It previously had been around the third quarter. We have seen market moves in treasuries off that, yields moving lower at the front end, higher at the longer end. It is still pretty subdued as we get early trading underway. Lets change on, because the other thing to note is that the wall street session has had dollars office start to come back in. Japanese yen was still very close to the 150 mark, but was even closer, around 149. 96, close to the level we monitor for intervention. Offshore yuan very close as well to the 7. 35 mark. That is down to the ecoissues within china because property weakness is still a story there that is putting pressure on the aussie dollar, given it is linked to the chinese economy. When they put these factors together, the israelhamas war, what is happening in china, no surprise you are seeing troops pointing lower seeing futures pointing lower. Haidi annabelle looking ahead to the start of trading. Still ahead, fed chair Jerome Powell is leaving rate hikes on the table. We will get more Market Reaction next. That first you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Wearable rates settle at . What will be the normal rate . If a typical fed tightening cycle will leave you at 5 or 6 , before the lowinflation period, you would have had fed rates at 4 or 5 or higher. Will we go back to that . I dont want to speculate. I suspect it will be somewhere in the middle. Shery volatility gripping wall street as traders try to away when he was seeing, looking out for signs of a potential escalation of the middle east conflict. Emily joins us with the latest. At one point, the s p 500 turned green because he suggested he was inclined to hold rates steady, but we finished the session down. What were traders watching . There was a lot going down, almost a little bit for everyone in powells remarks. On the more dovish side, that was a statement he made people took more dovish lee. A lot of colleagues have stress lately that the latest runup in bond yields is doing the feds latest job for them. They dont have to raise rates as much. But on the more hawkish side, he talked about how the economy is still fairly strong, but he did not rule out the possibility of more tightening. I think that is when investors realize at the end of the day. At the yield curve movement, we saw the front end come down, but the longterm reflecting we could hold rates higher for longer. Stocks do not really like long end rates moving higher. Haidi i do wonder what that means for central allocation. Emily i think there is a big question on wall street of just how much longer can stocks tolerate the rise and long and yields. In long end yields. We are still pretty decent on the s p 500, but the 10 year keeps creeping up higher. There is the question of how much further is it going to go, and are we eventually going to see stocks buckle under that pressure . We also have the market reacting today to further geopolitical tensions. I have spoken to a few Portfolio Managers who have said it does not look like the market is fully pricing in the risk that the tension in the middle east will escalate. One p. M. Said he is buying calls on long dated treasuries to hedge the fact that somehow the market has not yet felt the full brunt of that pressure. Shery Emily Griffey of their with the latest. The oil market was very much watching what was happening on the geopolitical side of things. It was a volatile session. The u. S. Yield that would bring more Venezuelan Oil to the market failing to ease fears of a possible supply interruption from the conflict in the middle east. Su keenan joins us with the latest. One analyst saying the venezuelan deal where we were basically lifting some sanctions on oil, gold, and other commodities, calling that a bandaid solution. Su yeah, because the question is how quickly venezuela would be able to ramp up its production. It could be many months. Caps off set the overriding concern. Lets drop in to the bloomberg to see how it is playing out. There could be a bigger disruption in the oil market more immediately because of the conflict we are seeing. This was a volatile session in new york trading where we saw west texas intermediate swing at a three dollar range. It was up 2. 5 , down 2 . As we just heard in the market, that was there was briefly a risk off sentiment in the market, but risk on has been the overriding sentiment because of these concerns. We are seeing new york crude continue to catch a bit, now above 90 a barrel. Analysts are estimating the venezuelan deal could indeed help. It is a suspension of some restrictions that the u. S. Has had on Venezuelan Oil. This is in return for for your elections in the country. Many say it will enable venezuela to pump about 200,000 more barrels a day, roughly a 25 jump in output. That said, traders are trying to run the calculus of would not a wheel would hit the market. Are u. S. And in the u. S. Our u. S. Inventories are at a nine year low. That has put a bullish bid on the whale and not an intermediate solution to the tightening oil market. Haidi bullish options for oil and gold are in big demand. Su yeah, but we have seen with oil options in particular and gold along with it is a jump, a calls few where the majority of the options are for bullish higher bets, jumping to the highest of april 2022, around the time we some russia invaded ukraine. Gold calls also very bullish given all that is happening in the middle east, and it is getting more intense with each report of a conflict, such as the drone attack earlier today that pushed the market higher. Haidi su keenan with the latest. Plenty more to come. This is bloomberg. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Haidi fed chair jay powell signaling he will keep future rates on the table. We are seeing the aussie dollar losing ground, just above 63 u. S. Cents. Weakness with the kiwi, and always watching when it comes to the yen. The yen. The dear moms and dads, what you have achieved here today is going to help us and our futures. It is why were coming up on stage to collect your diplomas. Mom, love you always. Vo when you graduate, they graduate. Visit finishyourdiploma. Org to find free and supportive Adult Education centers near you. Haidi fed chair Jerome Powell has suggested the u. S. Central bank is inclined to hold rates steady at its next meeting. Speaking with david westin, he also left open the possibility of a future hike. There is a lot of uncertainty around legs. One of the reasons we have slowed down is to give Monetary Policy time to work. You can find academic support for different speeds and duration of leg. We have to use our eyes and a little bit of Risk Management and patience in slowing down the pace that we are seeing. That is part of why we are slowing down this year. We moved quickly to catch up to where we need to be, and that we are moving forward with these decisions. You spoke with us in 2020, you said in terms of anticipating growth, which has gone from 2. 5 to 1. 8 , where are you now . Where is the fed and where do you think the long run growth is . Longrun potential growth is not something that moves around a lot over time, but my own guess is it is around 2 . I think the standard mainstream view would be a little below 2 , but i would say to percent real growth over time. What causes growth is growth in hours worked versus growth in productivity. That is a function of growth in the long run, and labor force participation, many things that affect productivity. But if you look at hours worked growth in productivity, which is output per hour, productivity growth, you get something around 2 , higher than most other advanced economies. Shery that was fed chair jay powell speaking with david westin. Speaking on asian markets, we are expecting the week to finish off with quite a bit of risk aversion. The prospect of higher rates for longer in the u. S. , as we just heard. Asian stocks looking to extend losses on top of the potential for broadening geopolitical risk with the conflict in the middle east. We are seeing futures up by about zero point 6 . Volatility across the board. We saw that in the session with traders looking for signs to stay out of this market or at least to sell. Jay powell probably needing help when it comes to the clues. We are looking at losses in the early part of the session when it comes to the japanese market as well. We are also seeing new zealand already trading lower by just about 1 . The aussie dollar sitting software. We have primates today on top of bearish needs when it comes to the property sector, home prices continuing to fall, the correlation driving the aussie dollar. Not many good reasons to be buying at the moment, it seems, after we did have a pretty strong couple of sessions on rallying for the aussie earlier this week on the back of labor market numbers. This is what the union is doing we continue to see division for expectations on that outlook. They yen looking to potentially find support as the boj looks to tackle these high yields. Shery i mean, we have seen the 10 year yield gaining ground for a fourth session, approaching the 5 , which would be a 2007 hi. Two year rates falling. We have now a sort of reaction to chair powell suggesting the fed is inclined to hold rates steady again. At the same time, noting that policy is not necessarily too tight. So we saw u. S. Stocks under pressure again. Almost every sector in the s p 500 was in the red. You can see futures extending those losses. But really it was that next a signal we got and treasuries ending with the long end of the yield curve really higher, the curve steepen to. Our next guest says that while many have focused the curve steepened. Our next guest is among many have focused on the signal, it is the race deepening that tends to be the red flag. Great to have you to be a with us. You are expecting a recession. I have been saying that for a while and i have been wrong, but it is not that i think i am wrong that there will be a recession, it is that the timing has been difficult. But anytime you have this kind of attempt to squash growth, which is exactly what you are doing when you are trying to bring inflation down, is to bring some land demanded to librium. Demand to equilibrium it. Demand is going to put pressure on the economy, and economic slowdown means a recession. Shery do you stay away from consumer exposed assets . Shana it is interesting, the u. S. Consumer has been remarkably resilient. For that reason, consumer stocks have done ok i personally have stayed away from them, especially stocks like target and walmart, stocks that typically are catering to a lower end consumer and the mid consumer. Those are the consumers that are starting to feel pressure today. It will be interesting to see how the Holiday Season goes, because i think that will give us a real indication of consumer health. Consumer sentiment surveys have been largely negative, but Consumer Behavior has been resilient. The u. S. Debt resilient here in the u. S. Resilient here in the u. S. Haidi how do you feel about tech Going Forward . Shana i am not bullish on technology, per se. I have, however, like nvidia, a stock i have talked about with you here before, and i remain bullish on that name in particular, but i am not bullish on tech as a sector. Another rate sensitive sector that is interesting, though i am staying away, is financials. Financials would typically do better in a higher rate environment, but we are not seeing a lot of consumer or even corporate demand for any sort of lending, which is where, especially in the regional banks, they make the majority of their revenue. That is where prop people have become used to lower rates, and they are not willing to refinance or do anything where they would have higher rates that they will be paying, especially because we do not know for sure if or when we will start to see rates fall. Haidi how do you assign geopolitical risk at the moment . Clearly the oil risk on inflation is front and center. Shana oil risk is putting pressure on the consumer in particular. I actually think geopolitical risk is being underappreciated by the market. I think between tensions between israel and palestinians and the surprise attack there, the ongoing war between russia and ukraine is indicative of a Global Environment where there is rising tensions. I think there is a possibility to see things spread. There are concerns overseas as it relates to americans traveling. That indicates there is pressure in other countries. I am concerned about geopolitical risk. I think it is being underestimated by the market. Haidi what are you watching when it comes to the receiving of the yield curve . Shana the race deepening in general, we talk a lot about an inverted yield curve being an indicator of a recession, but what the real indicator of the imminent recession is is the race deepening of the curve. We are starting to see that, which suggests to me that the likelihood we will see an economic slowdown or potentially a recession is much higher going into the First Quarter of 2024. Haidi lets stay with the fed outlook for rates and what it means for the markets. Annabelle joins us with morning calls in hong kong. We are paris seeing how the reaction is playing out. Perusing how the reaction is playing out. We had an interview with blackstone coo jonathan gray. He says the fed is having success on bringing those levels back down. What that means for rates in the near term, they are likely to pause, and that does echo what we heard from jay powell, taking the november rate hike last year out the table, and we have seen money hikes set enterprising cuts. Andre also says the fed is likely to keep rates elevated for a period to come. In terms of the reaction from treasuries, the longer end of the curve has accepted that in terms of slowing growth, but as well, tracking some of these really wild swings in the treasury space and in yields. Spoke about that as well. Take a listen. I think long rates have moved quite a bit. That is going to lead to tightening, further tightening, but what investors want is a bit of stability. I think ultimately we will find at some point some stability in the marketplaces, particularly in treasuries. When that happens, i think you will start to see transactions pick up again. They are at a muted level, but it does not stay like that forever. Shery at this level, with this be a good entry point . Annabelle that is one of the big debates, how much further rates can rise from here. We are seeing yield on the 10 year getting close to the 5 mark. You were talking about that earlier. And a lot of debate on how much further they will rise with the fed pledging to keep them high for longer. There is also the timing question, because you have haven bids coming through with middle eastern tensions or the israelhamas more, and also the conflict in ukraine. At the same time, youve got that swelling u. S. Deficit to sting the supply securities, but there is a big debate amongst investors of how much further we will see the 10 yield right attached 10 year rising. This is something we heard from Morgan Stanley investment about. Essentially they are saying that at this level, yes, they are a by. They are saying it is attractive and something they will be looking to add even more to their portfolios. Shery be sure to tune into Bloomberg Radio to hear more. Now broadcasting live from hong kong, listen through the App Store Bloomberg ado. Com. Stay with us. Haidi we are seeing risk aversion. We are looking at a down side of almost 1 when we get to cash trading in about 15 minutes time. Here in sydney, we are seeing the return of volatility in the wall street session as well. Fed chair powells commentary about higher rates being on the table for longer not helping either. The aussie dollar pretty steady at the moment. We are seeing a bit of a pullback in line with falling short data deals. Lets take a deep dive into australias housing challenges. Bloomberg intelligence expects supply shortages. Where are we seeing as a source of the shortage, and what comes next . We have had a prolonged. Of low prices, and combined with the population growth surging back after the governor reopen borders, now at 2. 2 . To make matters worse, we are in a situation with housing costs and construction surging. We are now looking at a 30 rising Construction Costs since june 2019. It is making Construction Activity noncompetitive. There was something put out recently to suggest a third of Construction Companies are now losing money, and with the economics that bad in the construction sector, we think we are going to be looking at a severe shortage over the next couple of years. Haidi it is interesting because this is the first rate cycle in a long time. They are also looking to the government to introduce 1. 2 million homes over the next five years. Is that all a feasible kind of scenario for you . If you are a renter or landlord, it is kind of unmissable. Unfortunately, the situation we are looking at is not necessarily in the governments control. The State Government and the low margins in the construction sector is really more related to prices and to the price of housing and construction material. Unfortunately, it would be a great thing to happen and a nice promise, but it seems a bit fanciful at this point. Haidi how do you get this resolved, then . There are a couple of ways this is likely to be resolved. Firstly, you are starting to see a slowdown in commodity pricing, and that is going to help with further rises in the cost of things like lumber and steel are you secondly, there is likely to be somewhat i guess what we would call shrinkinflation. You can see some developers now developing on smaller blocks, also reducing the cost and quality of things potentially. Thirdly, this is not really welcome news for people in the printing situation, but it is likely to be a demographic change. What i mean by that is more people moving into shared accommodation and more people moving back with their parents. Shery staying with us really a, a global icon synonymous with the country, Sydney Opera House, open 50 years ago this friday. Its jeremy from a bold idea to becoming one of the worlds most iconic buildings was not an easy journey area paul allen reports. Is 50 years since this land on Sydney Harbour became home to one of the worlds most iconic buildings. The Design Contest attracted 233 entries from around the world. 38yearold danish architect a 38yearold danish architect side and was picked off the reject pile by one of the judges. It was picked off with a budget of 7 million and an expected completion rates of 1963. It was not until 1973 that it finally opened, the cost having blown out to 102 million. By then, the artist tech with the project after falling out with the State Government. He never returned to see his masterpiece complete. But all the trouble was worth it. Unesco heritage listed and synonymous with australia, the Sydney Opera House has hosted 118 thousand performances and attracts an average of over 11 million visitors each year. Ahead of its time and now 50 years later, aging gracefully. Paul allen, bloomberg, sydney. At ameriprise financial, our advice is personalized, based on your goals, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice . I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. Shery republican lawmakers jim jordan says he will seek a third floor vote on his bid to becoming a u. S. House, after a backup plan to expand the interim speaker to get more support from lawmakers. He fell short of the votes needed in two rounds of balloting this week, amid objections to his hardball tactics and deep divisions within the party. The u. S. Says more drone attacks are targeting its bases in syria and iraq. Separately, an american destroying the red sea intercepted cruise missiles and drones fired toward israel by hutu rebels in yemen. The uptick in activity has resulted in minor injuries and fueled fresh concerns that israels war with hamas may spark further conflict. China is continuing its efforts to modernize and build up its nuclear arsenal. The pentagon estimates the country has about 500 operational warheads and will likely have over 1000 by 2020. A u. S. Military report says it expects china to continue expansion through 2035, in line with president xi jinpings objective achieving a worldclass military by 2049. Shery dont miss our interview with washington top the polenta china on how the conflict in the middle east is adding for challenges to challenges with ties between the worlds biggest economies. That it was later on daybreak asia. We will also have special coverage on President Bidens address in is really in ukraine on israel and ukraine at 8 00 p. M. Eastern time. Geopolitical tensions have roiled markets, especially when it comes to oil prices, topping 90 a barrel in the new york session. This is despite the u. S. Lifting restrictions on venezuelan commodities that might mean more supplies. But the focus on what is happening between u. S. And hamas is really markets. Futures extending the declines on the regular session. We saw it swinging between gains and losses, with the s p 500 keeping it at the 4300 level and briefly turning green. Chair powell said the fed is inclined to hold rates steady. At the same time, he talked about evidence that policy is not too tight right now, so we have pressure on u. S. Stocks. Also a bit of a mixed picture when it came to treasuries. You can see the curve steepening right there. 10 year yields approaching 5 , a 2007 5, but tenyear rates, more sensitive to policy moves, were actually down. Chair powell addressing the longterm yields, saying there could be less of a need for the fed to hike. Haidi you said it, the pressure is expected to be unrelenting as we get to the start of trading in asia. Aussie stocks coming online in seven minutes or so in the staggered start. We are expecting not a lot of good news for asian investors to hang onto today. The unrelenting surging u. S. Treasuries. We saw the stock session or in didnt the stock session ending lower in oil prices pushing higher. Even jay powells remarks on the yield the fact that the future rate hike is still on the table is likely to dominate in asia as well. We are watching for pretty low sentiment across the board. Futures from sydney to tokyo really suggesting we will see quite a bit of downside. We are seeing currencies not of a benefit. The aussie dollar sitting at 63. 24 at the moment. Could potentially see a move lower if we get more disappointment out of china. Really, it is down to, in addition to Everything Else that is going on that is sending risk to the downside, that conversation with chair powell that david westin had is really going to get repricing going, i think. Shery it was interesting, the comments we got when it comes to longer end yields continuing to rise and how it could mean less for the fed to do. At the same time , he kept the possibility of another hike open if policymakers do show further signs of resilient economic growth. With of science, it is difficult now to gauge that, because in the labor market with those signs, it is difficult now to gauge that, because the labor market dipping to the lowest level since january, and affordability is worsening, so existing home sales are falling to the lowest level since 2010. Take a listen to what chair powell had to say about the economy. Chair powell economy on our hands. Weve got the economy going growing strongly. Many forecasts called for the u. S. Economy to be in recession this year. Not only has that happened, growth is now running about the longer run trend. It has been a surprise. Haidi that is going to be front and center. It will be a lot for asian investors to focus on. Not a lot of is really positive in the friday session. We are continuing to see weakness across the property sector. We will bring all of that analysis in the next hour as australia comes on line with just about five minutes away from the start of trading. That is the Sydney Opera House. A bit of good news, it is the 50th anniversary of that iconic building. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network