May be over. Money markets and economists split as the rba policy tightening cycle nears its final stages. Haidi china criticizes the biden administrations latest arms deal with taiwan as the latest military footprint in australia expands. Shery Standard Chartered doubles down on earnings buybacks after an earnings beat. We hear from ceo bill when terms. Futures in the Asian Session, the start of the trading day under trading week, not necessarily seeing any movement at this point. This is after u. S. Stocks rose friday. The s p 500 gained three consecutive weeks. We are talking a 19 gain this year already. It was helped friday by key gauges of inflation showing further easing. Americans grown more optimistic about the Economic Outlook and we have plenty of earnings this week. 160 nine S P Companies reporting. 11 trillion of my get cap included market cap including apple, amd. The 10 year yield finish and just below 4 on the friday session. Yields fell friday after jumping toward an eight month by an eightmonth high the previous day. Concerns around the boj. Low yields shifting in an urban global bond markets. Oil prices at the moment still above 80 per barrel after five straight weeks of gains. The longest run of weekly gains in more than one year. Tightening global supply, not to mentions expectations fed tightening may be over has helped that rally. Lets dive into the fed. A top official expects further rate hikes that will allow job losses and Slower Growth ahead. Our Global Economics and policy editor Kathleen Hays is here with the latest. We heard from the minneapolis fed president. What did he have to say . Kathleen youll kashkari is a hawk, one of the people getting out front aggressive on the need for more rate hikes with the likes of jim bullard from the st. Louis fed. Today on cbs face the nation, one of the leading sunday morning programs in the u. S. When it comes to news, because obviously, everyone in the u. S. And around the world is concerned about inflation. Is it coming down . It is interesting he is more upbeat on the outlook, he said. He does see progress made on inflation. After seeing all that in more ways than one, saying it is not realistic to think you can continue to bring down inflation without some kind of cost to the labor market, bring down inflation closer to its 2 target on friday. We got the personal Consumption Expenditure report. That includes what spending is doing and what consumers are doing. This terminal chart also shows you that inflation, these are what the markets are watching so closely now. What you can see happening here is that the core pce cut down to 4. 1 yearoveryear. That is great progress. The headline got down to about 3 . On a monthly average, this is important because yearoveryear, look at the latest few numbers. What is the trend now . Even lower, as you can see there. The problem, as youll kashkari said, it still above the 2 target. The fed will hike rates more if needed and that is what they are watching now. So, a beat. Is the fed closer to the end of rate hikes . We dont know. Neel kashkari did not say. But it is data by data. There will not be anymore until september and jay powell said last week the fed chair, after the fed met and raised by 25 basis points, two more jobs reports, two more big inflation reports before the september meeting. When it comes to jobs, we are in fact expecting the payrolls number on friday for the latest month up to hundred thousand for about the third month in a row, showing resilience in jobs in spite of the rate hikes. Unemployment staying near a 50 year low at 3. 6 . Will that be enough coolingoff to the labor market to reassure the fed it can stop hiking rates . At this point i would say probably not. Like jay powell says, that is what we will get over the next few weeks. Haidi the rba this week has one more hike left in its back pocket. The question is whether it will deploy it this week. Kathleen that is the big split. Freighters are more inclined now to say they will not hike rates now, they will pulse again. But look at economists. They are more in that they are going to do more camp. 11 economists out of the 26 we surveyed see a hold. Look at retail sales. They sell a lot. 0. 8 in the latest report. That has been something chugging along nicely up in positive territory the last month. And most of the previous months. But rate hikes are starting to take their toll. The fact that Mortgage Rates have gone up. That is Something Else that eats into their pocketbooks. In terms of what happens next and what you are going to bet on in this meeting, 4. 1 has been held steady for this will be the second meeting in a row they do that. But inflation, while it came down in the latest quarterly numbers to 6. 0 yearoveryear from 7. 0 yearoveryear. It is still well above the rba target. That is why so many are still betting that at least one more hike. Then you see what all of the numbers do after that. For now it will be an exciting meeting. Thats what it looks like. Shery Global Economics and policy editor Kathleen Hays. We are watching the developing world. Talking about rate hikes in developed markets. Already in emerging markets we are seeing this jumbo rate cut by chile friday. The expectation was not for such a big rate cut of 100 basis points. It was decided unanimously by the chilean board. We are expecting a rate cut given that latin america has been really aggressive and much faster than the developed world when it comes to the rate hikes. Chile is now sending a powerful message after we saw traders cutting inflation forecast near the 3 target in just 12 months. The government is now forecasting growth near zero. Starting with july, these economies hike fast and much more than the developed world, seeing the benefits already of their economy stabilizing. We have brazils Rate Decision this week as well. Haidi peru and mexico seeming to follow suit by the end of the year and columbia is not far behind as well. As you said, the jumbo move sending a strong message this is the point of readiness when it comes to a lot of these may specially latin american, emerging market economies and Central Banks. That this is the point in the cycle are you are starting to see a turn. It is a powerful sign that the region is now benefiting from very early and aggressive rate hikes cycles that began early in the pandemic as price pressures continued to wane. Of course, the contrast is, center banks in developed economies including the fed, there is a question as to how much further we will need to see the fed move, but certainly, when it comes to the ecb, its a really tough place for Christine Lagarde to be. In between at germany already on a recession, most economies already showing very severe levels of weakness when it comes to data. Of course, inflation still staying high. Shery the bank of england is also expected to hike rates thursday. Of course, we are watching geopolitics this week as well. The u. S. Will be supplying taiwan with 340 5 million in defense equipment, services, and trading 340 5 million in defense equipment, services, and training. In the past this has been criticized by beijing. Vonnie this is a step further because it is the first time the u. S. Is providing arms directly to taiwan. Previously the u. S. Approved the sale of weapons to taiwan. The mechanism is basically the same mechanism as allow for the passage of weapons to ukraine. So, a president ial drawdown of authority. Essentially, congress authorized the divide into use as much as 1 billion in u. S. Inventory come already existing weapons, for taiwan, for the night island Democracy NationalDefense Authorization act. This year alone, so far, as anticipated, we have had a response from china, from the u. S. Embassy spokesperson. I quote china is firmly opposed to the u. S. Military ties with arms sales to taiwan. The spokesperson urged the u. S. To stop creating new factors that could lead to tension in the taiwan strait. We will see if there is further action this week. So far, criticism and efforts to get the u. S. To stay in its own lane and mind its own business, something we have heard before. We are not sure what will be in the package. It could include antiarmor and air defense capabilities. The stated intention for a long time now for the u. S. Is to bolster taiwanese selfdefense capabilities. The u. S. Said its not expect in china to invade taiwan or anything like that eminently. Lloyd austin the defense secretary repeated that this week. It said it is very concerned about chinas military capabilities, how quickly it is building them up. It has warned that president xi jinping wants at least the capability to do that by 2027. Shery this comes after a. Of improved efforts at communication between washington and beijing. Vonnie it does seem a little odd the two trucks can coexist. But the u. S. Administration would say no, its completely normal that we would have one stance on taiwan and one stands on where we want to be with beijing. Just the other day Antony Blinken was in new zealand talking about managing the incredibly complex and consequential we all have with china. I mean, the u. S. , again, has not expect long expect of expressed a Firm Commitment to support taiwan selfdefense and it also wants better relations with china especially when it comes to trade. Sanctions on individuals, action on taiwan, they would say this has nothing to do with the timing of this particular aid package to taiwan and the type of relation it wants with china in other spheres. Interestingly, heidi, early august of last year nancy pelosi taiwan unannounced. Really just this is arriving on the anniversary of that visit. That created ruptures. We will have to watch next week to see if there is any more reaction from china. The United States expanding its military footprint in australia. Both countries will step up integration of japan into military planning as well. Military exercises known as the talisman sabre got underway in northern estoril you. Northern australia. Paul allen joins us with details. This has been called strategic convergence. How much is about china . How is the relationship getting closer here . Paul we had the u. S. Army secretary on the eve of the operations saying its a significant deterrent effect by china if it is considering taking taiwan by force. The relationship between the u. S. And australia gets closer and closer. Of course, we had the signing of the subs deal. It now over the weekend lloyd austin talking about more frequent and longer visits by american submarines to australian ports, a regular rotation of the u. S. Navy, collaborative guided missile production, the Australian Defense minister mr. Richard miles says the u. S. China relationship has never been in better shape and lloyd austin was there too. Lets listen to what he had to say. Secretary austen we are about interoperability, about working together, about promoting a common vision of a free and open indo pacific. So, we will continue to stand by our allies. I and and it does exercise helps us strengthen our unbreakable alliance. Paul this is the 10th anniversary of talisman sabre. It is held every two years. The start of a just u. S. Australia. There are 30,000 troops involved from different countries, japan, france, germany, and other smaller Pacific Island nations as well that china has been courting. Shery four australian aircraft crew were killed during those exercises in a helicopter crash. Paul it cashed cast a shadow. The search goes on for the wreckage of the helicopter. There were helicopters over the area over the weekend. Looking for them, 50 pieces of debris were found so far, but nobodies yes. This is the second incident this year involving those type of helicopters. You cannot see them there. That type has been grounded while an investigation are underway. The taipans were due to be retired in 20 when he four. Now there is a real question mark over the future this year. Haidi paul allen with the latest. Lets look how we are shaping up at the start of the new trading week in asia. Looks like a pretty positive open in sydney futures. We could see a bit of a pickup in sentiment on the back of what we saw in the u. S. In the previous session. Futures relative to fair value look like an early gain of may be. 5 particularly, the sentiment boost coming after u. S. Equities saw a rise friday of inflation data showing some easing spending also picking up as well. Of course, quite a bit of caution going into what is a really split rba decision. The policy tightening cycle clearly nearing the end. The question is whether the rba goes for one more hike this week. 15 seeing the move. 11 predicting a hold. Money markets are pricing in no change at the cash rate to stay at 4. 1 . Watching the aussie dollar closely, 6657 there. Also watching kiwi stocks down pretty much flat at the moment. Watching dollars en close to the 141 handle. The boj surprised move was friday. The loosening of its grip on the tenure. The jgb yield could really see some reaction when we get into the start of cash trading in tokyo, particularly when it comes to developers and rate sensitive names in the japan session. I had, speaking ahead, speaking to the director of research at epfr at a big few days for central policy. What it all means Going Forward for markets. This is bloomberg. Etf are with everything you have on your plate, earning your degree online seems. Impossible. But at grand canyon university, we specialize in helping you fit a masters degree in nursing into your busy day. Achieve your goals with a plan and team behind you. Balance online coursework and inperson local clinical, practicum or immersion hours, as you work towards graduation while leaving room for what matters. Find your purpose at grand canyon university. Visit gcu. Edu haidi another big week for Central Banks. This is what we are looking for in the days to come. Now sleep. Asia turns the policy calls in pakistan, austria, and thailand. The rbas case tuesday bolstered by the inflation rate slowing more than expected secondquarter. When it comes to thailand, the bank of thailand decision is coming wednesday. The governor signaled more rate hikes. We will your from the bank of brazil that same day. In england, investors betting on another rate hike when the boe meets thursday. Its a tossup as to whether it is 25 or 50 basis points. Other data tonight. Chinas manufacturing pmi is out later monday. We will get Inflation Numbers from south korea and the philippines later this week. Plus friday, u. S. Jobs numbers to pass through. Shery in earnings expecting results from some big tech names as well. Qualcomm set to report its Quarterly Results on wednesday. Apple and amazon on thursday. Lets discuss what we are seeing in the markets with our next guest Cameron Brandt director of research at epfr. Great to have you with us. We have seen three weeks of gains for the s p 500 already. 19 rally this year alone. Are we seeing too much optimism when it comes to the stock markets and what are the flows showing us right now . Cameron the flows are short generally certainly confirming a rather bullish perspective. It does seem like people are willing if not to fight the fed to sort of tested them a little bit. You know, the fed has been fairly clear that it does not see inflation as having been defeated. But, certainly, the flows we are seeing are acting as if that is indeed the case. We are starting to see money come into commodity and Energy Sector funds. After a fairly lengthy absence. U. S. Equity funds are doing pretty well in recent weeks. And, the emerging markets picture is pretty supportive too. People really believe that china will ramp up stimulus in the second half of this year. Obviously, indias economy is a feelgood story at the moment. And, latin america is also getting much higher level of inflows of funds dedicated to that area that we have seen for quite some time. Haidi yet usually Cameron August and september are not great months for u. S. Equities. Over the past 30 years it has been the worst two months. Given seasonal patterns are we seeing some positioning . Cameron i think so. But as i said, there is almost, i think, slightly excessive, optimism at the moment. At the moment that the pessimism of earlier in the year was overdone. That u. S. Stocks, even with recent gains, still offer an opening. And, you know, the current earnings season where expectations were pitched pretty low, not, i think too many peoples surprise. We are seeing more beads than falling short. That is also adding a little bit of a tailwind. Haidi last week was really a milestone one for Central Banks and how that played into market volatility. When you look at the supplies from surprise from the likes of the boj, isnt there a sense investors are wellpositioned for potentially more volatility and surprises . Cameron i think all positioning at the moment has to sort of take volatility and surprises into effect. Really, since covid came down on us in 2020, the standard description of the current investment environment is one of the least predictable. And, easy to forecast that many experts have seen in decades. So, yeah, i think more surprises are coming. But, people seem to have adjusted to them. And, indeed, seem to be able to put them behind them very quickly. Two examples of that. We are starting to see money come back into cryptocurrency funds despite the pretty highprofile crash and burns this year. We are also seeing some interest in funds dedicated to u. S. Regional banks which, you know, in just a few months ago, they were widely seen as the next domino to go. Haidi are we seeing much in the search for havens at the moment . Cameron no. Be honest. You know to be honest. You know, i will qualify that by saying that, while the sort of perspective on the u. S. And emerging markets is really very bullish at the moment, europe is not included in that. And, we seem pretty we have seen a pretty relentless outflows from European Equity funds and i am