Equity futures a mixed open in asia. A flood of corporate debt sales before the fed decision. Oil surge adding to inflation worries as saudi arabia and russia extend output cuts through the end of the year. Lets get a quick check of u. S. Futures doing nothing right now. We are well into september, but it has been the Labor Day Weekend in the United States so we only had two trading sessions in september. To say session was basically the s p down for tens of 1 . Traditionally some timber not a great month for markets. It is the worst generally unless they have already rally between 10 and 20 . Given that we have rallied, may be able not be so bad this year. We will have to see. Mike wilson says 3900 is where we will end the year. There are bears out there. Nasdaq futures pointing lower. We had bonds seeing yields rally 15 basis points partially because 40 markets Companies Went to market and sold bonds, so a massive amount of issuance that would have depressed prices somewhat. We had a mess and move in crude oil as well massive move in crude oil as well. Annabelle when you have Higher Oil Prices there is upward inflationary pressure. A firmer dollar will be weighing on asian equities. Futures here range found. Feeling flat so far. The outlook for chinese, chinese economy. A lot of the moves given the Dollar Strength playing out of the fx space. The aussie and kiwi dollar printing new daytoday lows against the greenback. We had pmi data tuesday weaker than expected, but also showing further deterioration. The japanese yen back at the level at which officials first intervened in the market last year. We will be on watch for any further jawboning to come. This is a story abroad greenback strength and perhaps we will not see any formal intervention coming through. Some traders betting on a shortterm rebound for the currency. Haidi treasuries have tumbled. Billions of dollars of issuance, wanting to get in before the next fed decision. Lets get more from mark cranfield. Her weight passed the peak when it comes to yields now . Is it about the timing when it comes to debt sales . Typically, straight off of labor day, we get a rush of issuance around the world. Asia also had a huge day in terms of new bond supply. It takes a few days to settle down. The markets have to chew through fresh supply. With yields at the levels they are, there will be plenty of people targeting specific areas. That will probably not be a major problem. What is more of a concern is oil prices because at these levels it is a problem for the inflation story. Central banks around the world are probably relaxed and thought they did not need to do much in the way of tightening. If Oil Prices Stay and 90 plus, they will have to rethink whether or not to tighten further. That is a much much bigger issue for the whole risk assets in our in general. With the fed meeting coming up, they will have to factor in the fact that Energy Prices are back to the highest level we have seen in a year. Vonnie these are coming back right now. She was talking about the ministry of finance in japan jawboning. Fx moves should reflect fundamentals, but the ministry is watching for a high sense of urgency and will not rule out any options if these moves continue. The ministry of finance in japan will not rule out any options if fx moves continue. There is nothing really different in what he is saying. Traders will not be surprised. It may not the dollar yen down a little bit. They would probably be more interested if he said it becomes more onesided. It typically means japanese authorities have run out of patience. As for intervention, there has been research on the timing of intervention from japanese authorities and they often go for the weak spot in the market, which is after tokyo markets have closed. If they are going to intervene, we could expect it to come during london or new york trading hours when liquidity is thinner and they get a bigger reaction from the market when they go in heavyhanded. Whether they wait, fridays definitely a day when they like to do intervention because by then the market has built up positions and it is easier to get the reaction they want. We are probably not far away from the japanese authorities doing something, but the verbal intervention will probably go on day after day. Watch out for when they say onesided. A good signal for when they run out of patience. Haidi it is not just the yen. The strongest in june when it comes to dollar euro and dollar pound. Is there vulnerabilities you are looking at if what we see is expectations of policy divergence and how economies outside of the u. S. Are performing. Definitely. The Central Bank Divergence is a big story. Yorty have shortterm rates around 5. 5 . You already have shortterm rates around 5. 5 . The European Central bank data has been horrible. It looks as though europe is going to go into recession. They meet next week. The chances of them recent rates now does not look very high. The market knows that. Wherever you look, there is a huge yield advantage to dollar based investors and that is playing out in the currency market. If the fed sounds hawkish, that will push the dollar further. Central Bank Divergence is a big thing and the dollar is playing that out. Haidi mark, thank you so much. Oil is Holding Gains as asian trade opens after two key members of opecplus says they are extending their voluntary cuts until the end big year. Su keenan joins us. It seems traders were caught by surprise. This is a more aggressive move then what was expected. Most traders expected opec what extend their curbs by a month, now they are extending to the end of the gear. As one veteran trader said, this is why you do not short oil. Saudi arabia continuing its unilateral Production Cuts of about one Million Barrels per day. The lowest level in the several years for a total of six months. Russia is extending export production by about the same period of time. Market observers are saying the saudis are guaranteeing that an already tight market becomes even more tight by the end of the year. The saudis introduced their voluntary supply cuts, deepening the reductions that already existed, back in july. Most members of the cartel cannot join because they have their own output losses. Saudi arabia will make a largely solo investment. In their efforts to what they say adds stability to the oil markets are working at this point. Brent hit 90 per barrel, the highest since november. We are Closing Holding close to the level as we get into asia trading, but you are seeing this sharp spike as the news hit the tape. This really was a surprise and setting up for a much tighter end of 2023 in terms of Global Oil Market. Haidi setting up more to satisfaction from the government too. President biden has vowed to keep gasoline prices below before dollar mark and we are edging perilously close to that level, even as we end the summer driving season here in the United States. Gasoline prices are at the highest for this season in more than a decade. The average National Price for regular is 3. 81 per gallon. A lot of concerns about the inflationary impact. A spokesperson for the Biden Administration saying they are in regular engagement with the saudis. Traders increasing their bets that west texas and brent are going to move toward 100. We are knocking on the door right now. I really need iranian crude has come back on the market, but has peaked. We are looking at a very tight market. The Global Market was set for a deficit before the latest move. Vonnie c s will get backing from southbank in order to buy Groceries Stores that kroger and albertsons are selling in order to win Regulatory Approval for their merger. Sources are telling bloomberg that if cms c s will buy these grocery stores. Southbank once again has its hand in the action. Still ahead, a first default but investors are putting on a restructuring or liquidation. An update on chinas property sector prices coming up. This is bloomberg. Vonnie lets get a at yields, strange session in the u. S. , with 40 businesses tapping rate hike markets around the world. There was a drop in this post jobs report. The twoyear at 495, regained a lot of ground. The 10 year f4 9528. What is interesting is that many strategists are looking for the curve to steepen again which is what happens before recession. That is the indicator people are looking for, that the inverted yield curve actually this inverts. The bloomberg dollar index looks like it will had lower. Our next guest says the latest jobs report is predicting a recession. Joining us now is eric lynch. Is that right . Are we going to see the yield curve discs disinvert . Central banks have been working hard around the world. There are still low Approval Ratings for the administration in the United States. The low income consumer is voting with its wallet. Samestore sales were down. There is still a tremendous amount of pressure on the fed to lower price appreciation. Higher for longer Interest Rate environment will last. The only way to crack this core inflation and now we have oil coming back is to continue to focus on the economy. Vonnie you actually want out the big United States because of the reasons you mentioned. Give us some geographic and Company Names you are interested in. When we talk about opportunities, a lot of it is relative. You have the single factor return worldwide with these megacap ai and i. T. Stocks. Nasdaq is up. Russell 2000 is up. While the rest of the world is probably over indexed to manufacturing exports, those economies look worse off than the United States, there are ways to get the valuation outside of the United States that is cheap. For companies that are indexed to the postpandemic. Things like elective surgery resumption or the consumption of alcohol with your friends worldwide like with netherlands heineken. They are actually modeling made earnings growth. You can get growth for a lot less than the multiple on the infotech sector. Haidi you are also not discounting shouting out china exposure. When you take a look at results from perp. Com there is still momentum there even if the broader economy is not looking so great. That is right. If you look at the history of bubble like experiences, the further you get from the epicenter, investors can still make money. If it was tech in 2000, you actually made money outside of tech really well. As it relates to china, same thing. You have interesting opportunities there with the bounced back postcovid. Things like baidu that saw other education and Health Care Businesses plummet during the pandemic, those are returning. Price they just 14 times earnings, baidu is actually growing its earnings this year and next. Apple is flat. That is a weird disconnect in the market where the china risk is seemed seen to be too great. Baidu is 25 of its market cap in cash and shortterm investments. It has this option for the investor with the chinese Regulatory Approval of the ai commercialization that came out in the last few days. Haidi the outlook for further Dollar Strength seems to be pretty strong. Is that what you consider when you take a look at companies that might suffer with the stronger dollar . You always have to factor that into your analysis. It is usually secondary because long run if your investing, to the extent that you are buying the bus businesses, they have supply chains and revenue footprints where there are a lot of puts and takes. Currency exposure is the fundamental strength of the business. It is important. Oftentimes we see wall street sell side modeling things late to the game so we take a careful look at it. Earnings power is the companys competitive position. Haidi great to talk with you, eric lynch. More to come here on daybreak asia. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates, exemption certificates or filing returns. AvalarAhhh Ahhh Ahhh ahhh how can you sleep on such a firm setting . Gab, mine is almost the same as yours. Ahhh almost is just another word for not as good as mine. Save 50 on the sleep Number Limited Edition smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number. Country garden has avoided a first default with the payment of bond. For more, lets bring in our shanghai euro chief. A brief respite in this case. There is a lot of other downside pressure. Country garden narrowly avoided a default again. If it defaults it will be an ugly one. It has four times as many products as evergrande. Evergrande defaulted in 2021, sending a shockwave to the industry. The company is sitting on a debt mounting. It has 2 billion maturing in the next six months and the company has said there is no guarantee it can fully repay its debt. He said in its interim report recently it will have problems meeting its financial obligations if the financial situation deteriorates. The companys payment ability depends on the supply and demand in chinas property market. We are not sure whether the recent recovery in the real estate demand in big cities will be sustainable. Investors are not that optimistic. They are very pessimistic. If you look at the share price and bond price of Country Garden. There bonds are trading at . 14 a dollar and investors are pricing in a liquidation or a restructuring of some sort. The Company Stock is a penny stock now, down by 60 from its peak a year ago. Vonnie 914 cents on the dollar. Which is pretty stunning. Thank you so much for the update on Country Garden. Lets take a quick look markets wise in sydney. Down about a quarter of a percent on futures. We will see if that holds through the open. No change in new zealand. Nikkei futures in chicago pointing to a lower open as well. A pretty mixed day in the United States although the session had indices lower. The s p 500 down for tense of 1 . 4 10 of 1 . We have plenty more to come on daybreak asia. This is bloomberg. So. 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And take advantage of our low Monthly Payment financing. This is daybreak asia. We are 30 minutes out from the open. In tokyo, the focus is front and center on the currency market. Japanese government officials intervened in september of last year. That really was the state of play as we entered the morning session. Weve already heard from japans finance chief, saying he is watching these moves very closely and he is prepared to act, wont rule out any fx options given the trend does look set to remain intact for some period. The japanese yen has been a little bit firmer against the greenback this morning but still we are seeing the trend of weakness continuing. Really the signal that perhaps that will be the status quo given that Dollar Strength story plus the signals of japanese economic weakness we saw yesterday for instance in Household Spending that is continuing to drop off, telling us the boj is likely to keep its easy policy settings in place. The question of course is how long the Dollar Strength continues as well. We have a chart that shows perhaps the dollar, on fire, could be at risk of fanning out the fire. Essentially here this chart, taking a look at the invesco u. S. Dollar index bullish front. You can see investors really pulling back in this major currency etf fund. What that tells us is the dollar, having a great run. It could possibly have trouble keeping up the pace. Part of that, we are seeing more fed officials starting to signal perhaps we are nearing the end of the fed tightening program and thats really whats cap the rally in place. Haidi weve heard from a wall street bear, jeremy grantham, warning the slowmoving influence of rising rates will end up torpedoing the u. S. Economy. In a conversation with david rubinstein, he told us this could trigger a recession by year end and take the stock market down with it. The deflationary faucets from the tech stocks breaking in 2021, probably. Too big. The power of Interest Rates rising and depressing the real estate market, very negative, slowmoving influence. I suspect they will once again dominate and we will have a recession