Misleading the investigation. Were live in washington. Yvonne, good morning and good morning to all our viewers across asia pacific. Markets. Ng a look at last night, i was writing to myself, we made 66 in terms of u. S. Markets. To it seven . Hop on the board because we didnt. S p down sixths of one percent. That w down 1 , we saw huge u. S. Treasury yield, a lot of folks going into that. Billion there. Hop into the bloomberg terminal. Want to show you whats happening in terms of yields. We can see that these lines twoyear te for the treasury yield, blue, fiveyear treasury yield and yellow for sevenyear treasury yield all hitting highs not seen since five and 011 for the seven and not since 2008, as i said in the intro, in terms of yield. Year so were seeing some decent demand as weve been reporting t, but, you know with these rising yields people are higher can wemuch go. We get used to these kinds of things. Off 258 billion worth of those government bonds of days or couple certainly deluge will rock some markets. New zealand, were seeing stock gains close to 1 right now. Quwi. For the well see if it sticks. Trading in australia getting under way as well. Of e seeing stocks down 1 3 1 . Were also looking at bhp just after its half results. Were seeing those shares down and that right now 289, e 10year yield at yields slightly onbid. N japan and korea, checking futures in chicago, were expecting just a little bit of a 1 drop here after if we saw yesterday. A lar, yen, were seeing little pickup with the greenback strengthening, 107. 31. That we have lows seen, 105, we saw just a couple of days. Meantime, well get you in new p with jessica york. Thanks. Theresa may is under even more hard lineners her party set out their brexit demands. Letter from 62 tories challenging the transition deal deal ys the and says the uk must not bow to e. U. Regulations. Opposition leader Jeremy Corbyn announces labor will campaign to eep the uk inside the Customs Union with the e. U. Saying its necessary for trade and to border with d ireland. Are being questioned as part of the inquiry into an alleged 2 billion fraud. The Center Bureau of investigation says five bank staff and an employee at celebrity have been arrested for conspiring. Are being questioned as part fake bake guarantees to get loans. They fled india before the fraud month. Light last and in north korea, a spy group is seen as a global threat attacks since the report of kim just one uns military and economic interests. As jeeper, up known has now attacked japan, vietnam and the middle east after having its southern neighbor for years. Target add range of industries from electronics, automotive and healthcare. First half net income came in million, down 44 . And theys 3. 7 billion, see Capital Expenditure of 900 million. Dividend per share was 11 aussie cents. Lobal news, 24 hours a day, powered by more than 2,700 journalists and analysts in more countries. Im jessica, this is bloomberg. Jessica, thank you very much. To the first u. S. Market close in this holiday shortened week. Stocks definitely under pressure to disappointing results from walmart as well as hat big shift in focus to treasuries we mentioned earlier. Bloomberg sue keenan. It grabbed everyone attention, bond auctions. Youve got rising yields on treasuries that sparked a selloff a couple of weeks ago. On that and then there is the size of the auction, what the interest is. Lets go into the close. Mentioned, we did not make it 77. T also is a halt to that six day rally. If we go into the market snapshot the eye on the dollar, stabilized has after a series of losses, and 179 s. Treasuries, billion in treasuries auctioned off in a number of different enominations in this latest session, 250 billion plus for auction at the end of the week and surging rates clearly an issue. If we go into some of the big in stocks well come back to the bond story. What we have is as a result, disappointing, in a very big way taking a bruising blow in its battle with amazon. Get to that but investors fleeing the stock and semiconductors in a group that one of the strong spots in a weak market, qualcomm sweeping really oble energy blowing it out with an earnings of rt that was just a slew positive news, boosting their earnings projections. Cashare getting a lot more in hand because of rising price in oil. It may even put some of towards dev denied as investors push the stock higher. To 1193, still in range is what this chart is called. Talking about is the yields. They havent posted a big threat to stocks. Are , thats what invests keeping one eye on. These are 10year tips. Place, protected securities, very popular. High. Otice in 2015, it was were going back towards the high but not there yet. Pretty close to breaking that, fiveyear range. Weve seen, su. Down, tioned the stock plunging after a battle with when it king a toll comes to ecommerce. We saw those markets squeeze to a record low. Su they are reporting slowing online sales that stunned thought they were building up to go headtohead with amazon. Ets go to bloomberg one more time because clearly online, etailors like amazon. This is ecommerce takeover. Looking at in blue is Department Stores. Again, walmart, not just a Department Store because they put a lot of money into their online operations, but stocks. Ook at the what happened is, they are reporting its not really working. Expand pushing to online and cut prices, has contributed to record low operating margins slicing pricesre and having to transport as a shrinking adding margins. Walmart was down. Amazon benefiting from the pain up, but there are other discount huge retailers like target down in sympathy. Does not bode well for them in their war against amazon. At how walmart stock has been year to date and you can see the huge drop off that resulted in this latest report, which, again, was and theegative outlook, biggest plunge in the stocks 2015. Su, thank you. ll talk more about the wuerl walmart earnings later on in the show. Prominent law firm has admitted to lying to federal authorities. Ets bring in joe with a little more detail. How does he fit into this whole investigation . Well, its clearly part of paulnvestigation involving manaforte and rick gates, two associates who did a lot of work then ukraine with the russianbacked government and for both went on to work the donald trump campaign. And this relates to their work ukraine. They are both charged with money evasion and ax lobbying violations. Has to do with a very discreet act, a conversation did not disclose with gates, and another person in september of 2016. Content know what the of their conversation was, what the subject was. They have whats alleged to be a recording of it. Puzzle ant we dont even see all the pieces of the puzzle that are still in the box. It seems to be a lot of questions still regarding his contacts with rick gate as well manaforte. Where to next in this Mueller Investigation . Do we even know what direction look at next . Well, there have been four quite a few and indictments. The manaforte case will be moving along. Los Angeles Times has getting that gates is ready to plead guilty which would, therefore, cooperate with the investigation, so that may some other trails. Ut honestly, the Mueller Prosecution Team has been quite good at keeping their secrets, not indicated which way they are going or what next. Come this , stepping back from looking at midpoint lehman brotherses, can we draw a line into how this might be securing elections . Well, this is a big problem for the u. S. Officials from 50 states were briefed this weekend by homeland security, the and intelligence services, on threats, potential what they can do to secure their elections. But you have to keep in mind the elections are run by the states. All 50 of them. Oversight offederal that. They choose their methods, their eans, and the best the u. S. Government can do at this point is provide some advice and protection and warning. I want to switch gears really quick before we let you go. A couple of hours ago President Trump made a move on gun control hes going to address bump stocks. Tell us about this and what he talks about. Right. Are the devices that are attached to semiautomatic rifles an onvert them to fire like automatic weapon. Las vegas sed in the massacre, and there was some talk at the time about regulating them. So hes asked the attorney eneral to draw up some Legal Framework that would classify those modifications under the the ownership and use of machine guns. Administratively, the bureau of alcohol, to come tobacco and Firearms Agency had said they authority to regulate them, so now hes asked the attorney general Jeff Sessions out a way to make that work and make it stick. Very interesting that there some move on that, especially coming from republican administration. Editor in ongress washington, thank you very much. Optimism in the oil markets as the glut drains than expected. Were ask if higher prices are here to stay. New world of higher volatility, lower stock prices, prospects for he a power led fed. This is bloomberg. Were counting down to asias first major market opening. Futures are falling further from down, 1 s fall of. 7 down for the nikkei. Futures looking further down, percent. Erly a half a this is day break asia. Coming to you from new york. Coming to you from hong kong. Bond markets around the world for release of the feds january meeting minutes. Looking to hike Interest Rates more aggressively this year. Lets go to our policy editor, with a preview right now. Kathleen, word in that january further. T was what was the message that they ere trying to send with that wording tweak . Of course, with the markets it must mean they are four hikes instead of three. Policy janets final statement. The next fed chair taking over. They add and in what context . They expect with further gradual monetaryts in terms of policy, see that work further, atnomic activity will expand a moderate pace. Later, it states, economic onditions will evolve in a manner that will warrant further gradual increase in the federal funds rate. That, in or so afternoon asked, why did you guys add that word further . He said to me it just means we more confidence in the economic outlook. Speaking of more confidence in the outlook, i think in these looking to see tax cuts, how much are they mentioned. Last year, maybe they are going difference. Bill has raised his forecast by a half to 3 4 of a percentage point. Of that increase is due to tax cuts, so it makes a big difference. A lot of people are talking about stalemate because there is a new fed chair. Occurred after the minutes and we got a big jump in earnings two days after is fed met so all of that adding up to saying, maybe they are not that important. We know there is a big day oming up that will be very important. Well talk about that more in a minute. Stick with us, because were bring in our economics editor peter. Thank you for joining us. Looking ahead at the minutes, what are you looking at . The same thing kathleen is looking at, which is putting some color on what we got in the statement. For,s what the minutes are is to dig deeper into. We dont have names of the what, but, you know, with a majority of people that, its , saying also true, of course, that the minutes are stale to a degree. A lot has happened since then, but in the same way historians data to get an idea of where things stand. I think thats what economists these doing with minutes. Terms of inflation, of ourse, weve got a surprise number recently. In terms of the ceiling of 2 or ceiling what oft kind of wording might you be looking at in terms of that . Right. Ceiling, nically not a right . Its a target, and yet, a lot of ceiling. Erceive it as a they are afraid as soon as the mean, as soon as the inflation hits 2 , the feds will do everything it can to it from shooting past that. You know, if its truly a target, then they would be equally worried about going over s going under and yet the history is, they have been fine with it being under for years and years. You know, peter, thats nteresting because is a former fed economist, very well known currency watch, he put in note saying that this is the surprise he doesnt expect although he thinks it would be do see that inwe the minutes. Hes also talking about the ossibility that these minutes are going to show more, you know, not just a few but more policymakers e looking for inflation to hit the 2 target faster. Tough thing is, that this is 16 pages of wording and and so hard to parcel it come up with conclusions that are definite. Oh, yeah. Its not like there is a bell when you read the minutes and say, oh, now we know what they meant. Draw ifferent people that different messages from them by emphasizing different statements. Else. Like anything its like reading the quran. You can find anything you want in it. An interesting analogy. Bible, many religions. Just real quick, i have a chart that shows the dilemma, getting closer to that neutral rate. See the federal funds target rate inching that much closer. That icymakers increase estimate, the neutral Interest Rate, now that we see fiscal stimulus in the u. S. . Yeah. I mean, the neutral rate, of course, is not necessarily a thing. It changes with economic conditions. That you one thing would expect the members of the really, wheresay, are we on the neutral the real Interest Rate . One thats neither overly stimulative or overly restrictive . Is there a thing as a powell put . From ent heard too much him yet but does that translate from janet when he took the helm . Always going to be a bit of a fed put because the fed, indeed, doesnt want to see markets crash. They will argue that they are not focused on markets themselves, that they are the real economy, but ecause markets affect the real economy they cant ignore markets. Were not were just trying to preserve financial stability. I want to come back to the bond market because this is something reserve is eral obviously watching in addition to the stock market. The 10 year yield over a very long time. 1980, 1984, 16 , right . Down to 1. 4. 1. 6. Now were at 2. 9. Held pretty s steadily. How is this, when you look at cocktail of the bond traders, fed trying to make its next step, how is that part play out . Yields, true that the where they are at now arent super high. They got as le as just over 2 , september. As last thats a pretty big move over year. So, bond investors, you could i think there is a desire to see there is a push in the market to sell off the bonds and past three ds push and i think that there are traders out there who are ooking for any excuse to sell bonds at a time like this. There will be that push in the market. There will be a push back in the other direction. Its an interesting contest. Talking about these yields, up ourse, i want to bring whats been happening, the massive 179 billion bond auction there. In terms of seeing any, you know, push to the yield there or any demand . Yes. That was a lot of shortterm months, old three sixmonth treasury notes, the yields came in higher in many since they have been in 2008 but only marginally first all. Secondly, as big and deep and u. S. Treasury bond market, the most liquid in the world, on they can sometimes digesting le trouble such an enormous issue that ere getting, now that weve gotten past the debt ceiling, the feds putting a lot of issuance out there. All right. Have to leave it there. Peter, thank you very much. Ur Global Economics and policy editor. Here. En hays lets keep on going here. A roundup of the stories you to get your day going in todays edition of available on mobile, in the bloomberg anywhere app. You can customize your settings get the news on the industries and assets that you care about. This is bloomberg. Youve now had to follow bill message. Nding a clear dont try to be like us. If you do this well, beal happy. Good job, you do a maybe youll have another job. If not, you wont. A quick check on the latest business flash headlines. Wider news industry is being hurt by the climb traditional advertising and circulation. Theatar airways used handover of its newest plane to attack the arab states that have isolated the country, saying those measures have failed. Taking delivery of the new it posted0 once, annual loss with the diplomatic standoff. The ceo denounced saudi arabia and its allies, saying they have achieved nothing. The main purpose of the blockade has failed. Yes, it has increased our operating costs. It has also put financial strain on the airline, and this is why i mentioned to you last november that our bottom line will be effective, and Qatar Airways will post its first loss from the last seven years. Sprint is selling junk bonds for the first time in three years to fund a wireless upgrade. It is selling 1 billion of unsecured junk bonds and we are told that yields may be around 7. 3 . The collapse of talks alone in an increasingly competitive market. Coming up next, walmart is feeling the bite as amazon gobbles up customers. More on that just ahead. Plenty more to come leading up to the market open in japan as well as south korea. We did see a pullback inequities and the s p snapping at six day winning streak, and we are seeing continual losses in nikkei futures here this morning. Plenty more. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. ; 30 a. M. Wednesday in hong kong. A soggy morning. We are 30 minutes away from asias first major market open. David it is this ramy it is 6 30 p. M. In new york on a clear night in manhattan. Markets close down. 6 . Positivity in the weather, yvonne, up 16 degrees fahrenheit. I will take it. I am Ramy Inocencio in new york. Yvonne i am yvonne man in hong kong. Youre watching daybreak asia. First word news with jessica summers. The u. S. Treasury has full 100 79 billion worth of securities to rebuild its cash balance with your that auction rise yields at auction rising. The offerings with decent demand given the market facing a daily use of sales. The treasury will sell fiveyear and sevenyear maturities in the next two years, but both larger. S bitcoins recovery continues as regulators and south korea signal they will support w