Its the bond market where we getting all the interest. Weve seen upon rally tech place, a quick look at whats going on. The bond rally has been pleading out of lake. Still were seeing a move upward and indonesias 10 year yield ahead of that third decision, looking for yields. There you go. The 10 year yield, a bit of a selloff in the bond market. Yesterday there was a zero coupon bond offer in germany. Eurosing like 2 billion worth of that, only one third of the allocated bonds. Thats a look at whats going on at whats going on it bond markets. Lets look at the first word news with su keenan. Budgettart with the u. S. Deficit, its going faster than expected and the Congressional Budget Office at President Trumps trade war is a drag on the u. S. Economy. Up from an estimated 960 billion in the year ending september 30. In january the Budget Office forecasted deficit of 980 billion next year and did not seek topping 1 trillion since 2022. China is threatening retaliation against u. S. Companies following washingtons approval of an arms sale to taiwan. Marks a for the f16 shift in u. S. Policy in beijing had warned against it before was given the goahead. It will take all necessary measures in response including the imposition of sanctions on American Companies involved in the deal. China is warning that Global Business should toe the line on hong kong as protesters mark one commuters were finally attacked by gangs in the subway station. Protestged a sit in in of Police Failing to arrive in scene arrived at the before the attacks. There is a protest at u. K. Consulate in hong kong to demand that britain step up efforts to free the staffers detained by china. Theing has confirmed that employee was given detention while violating local regular regulations. Stoking fears in hong kong that beijing is extending its judicial reach across the border. You think you could spend 20 hours on a plane . Commercial longest direct flight could be put to the test as soon as october when it plans to start practice flights from new york to sydney. The payload passengers includes mostly employees who will undergo medical checks and assessments once they land. Qantas says it will use boeing streamliner but it may still switch to airbus for future research flights. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. So much payment ahead of jackson hole, lets have a look at the fed. An annual symposium among central bankers this week. Point cut is an insurance movement they argue on the need to lower rates. You no longer have anything anchoring the markets. You no longer have the feds ability to affect financial volatility. The answer is more progrowth policies to live structural impediments. Importantly, that is unlikely to materialize. That is the big concern moving forward. Theyre going to cut rates and they know it. One not get as much bang for the buck, do something very fast to rip the bandaid off and move on. That would send a clear signal to the market that the fed does not going to allow recession to occur. The fed has to do this, theyre being pushed into this by the market. Rates have gone down pretty dramatically. That is our concern that they will have to start looking at qe and then fiscal policy. Do we expect any thing significant from jay powell . He has to get the optics right after that last performance when he didnt look like he was in command. What are the expectations . I think the big issue for powell, it will be quite a shock if he doesnt signal to the , does he see a Recession Risk on the horizon . He comments on pressure from the white house. Bignow the trade war is a power dynamic. See how many rate cuts he thinks are coming. We were looking for some hope that they were on the same page. There were three Key Takeaways yesterday. First was Business Investment, business manufacturing has been getting hurt by the trade war. Was negatingint risk. That speaks to how Central Banks around the rest of the world and what position they can do to spur growth. [indiscernible] the feds word about the trade war, given that it is only escalated since last meeting, then all indications are that another cut is in the cards. Dont miss our extensive coverage of the jackson hole meeting, later today will speak with the Kansas City Fed president. Rishaad those interviews coming up. Including the cleveland fed president as well. Event,ahead of that big ts adding to reasons why we have two trading dates left. Volume has basically been as thin as the air in everest. I guess joins us, good morning, janet. Does the fed have to cut . Janet they have embarked on synchronize easing this year. 100 basis point cut in the next 12 months. This is perhaps more than suggested. We still have trade talks ongoing. In asia, most of the sin banks have already started easing. We expect more to come, particularly for countries that have higher Interest Rates. As well as weaker economies. Indonesia or even china. I think the overall environment has become more accommodating. Should the dollar strength. Should provide some downside to the market. This is very good that asian equities react on the movement of the u. S. Dollar. That unless youre in a , therisk off panic mode u. S. Dollar should remain pretty stable in that should be useful to the markets. Yvonne we were talking about that bond auction. 16hat a signal here that trillion of negative yielding debt, perhaps the bond rally is finally coming to a halt, or should it not matter as much . Janet the economies had their asia, if youbut in look at most of the countries in are enjoying them relatively high yield rates. We believe theres room for the Central Banks to cut, but not very aggressively. So far we have seen the pace of the cutting by asian Central Banks is quite gradual so were not very worried about that. Real if the cut rates rates that keep the dollar strong . Janet i think the u. S. Dollar movement is stable, then it is fine. Back to your question on the right now wement, dont see any Sharp Movement in either the u. S. Dollar or the asian currencies. Rishaad what is the biggest mistake the Federal Reserve could make at the moment . Think theres quite a lot of cuts going forward. Usefed maybe could opportunities to readjust market expectations. Holes why the jackson meetings are so important, but right now we have seen the fed has done a good job in adjusting the market expectation. I dont think we will have short movement in the yield or the u. S. Dollar again. Yvonne you dont think we will see that much upside . How much higher could they go, actually . Janet i think the movement in the tenure treasury or the yield to factors,s due to one sentimental, one technical. If you look at growth in the u. S. , inflation or even the thetary policy outlook, movement in the gilt, there are and the risktors sentiment can change dramatically over a short time. Move, why the yield may but there are other factors. David apart from china, what is your favorite em market right now . The valuation, support is there right now. In particular the valuations and some of the asian markets. Is trading at a very attractive level. We could see some upside opportunity. You for doing that. Janet will be staying along here. If you have a question for her, send it to tv. Hong kong is staring at the worst earnings recession since the 2008 crisis payment we will discuss. Yvonne weve been talking about hong kong quite a bit here these days. Analyst not too optimistic about where earnings are going to go as well. They are forecasting earnings and saying an average 19 19 slump this year, the biggest drop weve seen since the Global Financial crisis. Toking for the earnings i say hong kong stocks. Janet, you were just talking about how cheap korea is. I just wonder how the valuations are shaping up in hong kong to offset the earnings. Janet i think for the Hong Kong Market as a whole, it has found shortterm support. Mainly from the iu asian support. If you look at some of the property names as well as retailers, they have rebounded quite meaningfully over the past week or so. We do think there are some existing opportunities in hong kong, mainly through some regional names here. I think the key is really to focus on the longterm. Rishaad you bring up the strength on the hang seng. It is not even neutral currently. What does that tell us, have got further to go . Janet i think compared to other markets this year, hong kong is in the middle. Previously, summertime has been more difficult for hong kong. What we are seeing is a disconnect between the shortselling turnover and chinese mainland investors coming in. Who do you think will win out . Janet hong kong is an open market, so as long as people focus on the longterm structural opportunities here there is still interest in the Hong Kong Market in the immediate term. David chinese thanks a reporting, they are a big part of why hong kong is cheap. From a broader perspective, looking at different sectors, some sectors will be more subject to policy changes in china, maybe due to some financial monetary changes. We would like to focus on the longterm structural opportunities, mainly in the consumption space. We believe this part of the economy is more resilient and presents more longterm opportunities. Equity, the return on ,ood yields, pricetobook people are not buying. Janet there are different investors out there. Somewhere growth investors. For investors in chinese banks, they really need to focus on what the pboc is going to do. Some of the policies may hurt their earnings. Thats why i think people are taking a more longterm focus to analyze the earnings. Investors prefer structural growth and quality growth as well. Thats why perhaps people are more interested. Yvonne in terms of the low next rate, thats the headwind for some of these banks. Are you concerned about their margin compression stew to what weve been seeing here and that there leading the new Interest Rate lower . Its possible to see more to come. It may impact chinese banks earnings growing going forward. Staples, we were showing this chart the other day. Can we get the chart up . Are buying into consumer staples, is that a defensive strategy or a longterm speculative strategy . I think it is a longterm structural opportunity in china. Many of the condiments, some of the vinegars, they have done pretty well this year. That people still have the money to spend and they are willing to pay a little bit more to buy better quality products. This is one area we have been focusing on. Its a liquidity strategy. Todays Consumer Discretionary becomes tomorrows consumer staple. Lets tell you what we have on the way. Plan will helpa ensure business in singapore. This is bloomberg. Rishaad heres the latest business flash headlines. Jp morgan closing the chase pay app in the third reversal on digital offerings in three months. Customers were being told they would not be able to use the app to pay via smartphone. The app was launched four years ago to compete in the growing instant payment sector. The Goldman SachsTrading Division is planning its biggest hiring freeze with the effort coders. On staff would be based in new york and london. Altering the way business is actually done. Yvonne the chinese car market is suffering a double dose of the doldrums, feeling the blues after firsthalf profits missed analyst estimates. Sales are expected to slow electricith cuts to vehicles. Boost the efforts to man in the sector have had little effort so far. This is how the stock prices going to look, taken off. Heading for the biggest gain on record since it was listed. There talking about how that outlook is not too great, but the likes of nomura raising the price target was a strong beat byd, we talked ut how analysts are david importing the bar cap your earnings in a decade. Some of the big movers in hong kong. Its a big earnings day as well. These were yesterday. Yvonne you have rishaad were heading to the japanese close. These are pictures of the japanese palace. Lunch break . There we go. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you preorder a new samsung note. Click, call or visit a store today. Yvonne is 1029 time a. M. In hong kong. I have the first word headlines. Policymakers reviewed the rate cut and insurance against weak inflation and the risk of a slump in Business Investment triggered by the trade war. The fomc said they wanted to improve their policy stance to counter the effects of uncertainty and slowing level growth. It was the first fed rate cut since 2008, the President Trump says its not enough, and he is calling for a bigger cut. The Federal Reserve has let us down. They missed the goal, they raised it too fast and too high and they did quantitative tightening. They shouldnt have done the tightening and they shouldnt have raised it to that extent. They couldve had some races, but nothing not like they did. You came germany both say they favor a negotiated brexit, but neither side can say how it should happen. Boris johnson and Angela Merkel adopted an optimistic tone after their talks in berlin, both repeating the wish for an amicable split. Johnson now heads for talks with president Emmanuel Macron in france, with paris saying a new deal brexit is now the likely scenario. The unrest in hong kong is said to have caused more damage on with housing rinsing in decline. Were World Institute of chartered surveyors said rents will fall 2 next year, a complete reversal from the 3 in the Previous Report just as the protest began back in june. In officear high rates since last month. The singapore Prime Minister has one Online Support over his salary from none other than his wife. U. S. Rmed 1. 6 million according to the government website and has faced criticism amid a widening income gap. His life took to facebook pointing out that other leaders enjoying enjoy many more onks including free flights airlines. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Bank of indonesia expected to leave its rate unchanged at 5. 75 . Our next guest expects another cut early in the fourth quarter. Thanks for joining us. Will they cut because they need to, or because they can . The bias is quite clear. The have space to reduce the policy rate further because of inflation. They have argued that growth momentum needs to be sustained. I think the timing will be dependent on external developments and if external risk or high, i think that would be a justification for them to stay on hold. Iwant expect them to respect him to have a pregnant pause today taken into account the external backdrop. Bond markets have priced in a cut for today and weve seen some surprise moves from the bank of tylan, even the r. B. I. Im just wondering what do the traders have wrong here or are the economists missing something . Euben one thing markets are arguing in indonesia, bond lds have been a little its still relatively high, the 10 year at more than 7 . From that perspective, given what weve seen in global bond markets, there is an argument to be made that the markets should be expecting some form of support from the central bank. But i would argue that the theyal bank is clear that have to tread the current environment cautiously. I think the timing has to be determined by all these factors that they need to consider. The currententioned account. Can you expound on why that is important . Why is it important in this case . Is very think it important in the sense that if you are running a current deficit and it is widening, you would need capital inflows to fill the gap. If the current environment persists, having a deficit would make it difficult for indonesia to attract more inflows if they were cutting rates on the Interest Rate differential at that point. I think one thing that would drive them to see a justification for meaningful rate cut would be the deficit coming down. Weve seen the q2 number widening and i would expect only a gradual narrowing and becomes much more meaningful in q4. Thats why im basing my next rate cut in q4. There are things in play including the backstop. Yvonne we just learned about the budget 2020 last week with a smaller deficit. Itit desirable, and is actually achievable . Euben im actually forecasting a wider deficit, not just next year but actually even this year. The argument there is revenues have been undershooting a little bit what is being budgeted. That in itself would require a higher deficit. Thehe other hand, they have objective of trying to support the economy just like b. I. Does. Will have to keep up according to plan. That has been going well and i will accelerate that the second half of the year. If you put it all together, i. Hink it makes sense these are still prudent numbers because they are lowering the fiscal limit per year. Need fiscal policy that is consistent with the fact that growth need some support and there are external headwinds that are facing them. If it does suffer from lower growth, does it have fiscal room to obviate some of the yields that come from it . Euben is not insulated at all, just from that perspective, in the sense that exports have come down a lot, the Global Growth slowdown is affecting th