Central Bank Governors a, the boj will reexamine prices and the economy at its october meeting after holding rates. There was a bank of england decision today and is nordisk bank the first hock standing hawk standing . Matt a lot of headlines last night out of the fed. First diving and then recovering, although not setting new highs again on the s p 500. Nejra i did find it interesting because yesterdays meeting and the press conference engender debate. I said it hawkish cut with a question in my voice because i am not sure it was hawkish. He saw division on the fomc but te tuesday 10 curve twos ns, but the equity market is key, as well, perhaps signaling something more balanced. And we almost got a whatever it takes moment from powell during the presser. Policymakers lowered their main Interest Rate for a second time chairman powell saying moderate policy moves should be sufficient to sustain the u. S. Expansion. The overarching story was one of division on the fomc with updated quarterly forecast showing officials split over the need for rate cuts this year. Nejra how left the door open to a more extensive sequence of cuts, if needed but stressed this is not what officials expect. Pricing and other cut in 2019, donald trump took little time to jump on the announcement, saying the fed chair had no sense, and no vision. Overshadowing the announcement was the feds decision to calm money markets. Powell said the central bank could resume alan she growth earlier than thought. He touched on concerns in a money market to negative or us rates and risks on the horizon. We are not on a preset course. We will make decisions meeting by meeting as we see this and we will try to be as transparent as we can. If the economy does turn down, a more extensive sequence of rate cuts could be appropriate. We dont see that, it is not what we expect that we would follow that path if we deem it appropriate. I do not think we would be looking at using negative rates. If we experience another episode of pressures, we have the tools to address them. We will not hesitate to use them. It is possible we will need to resume the balance growth of the Balance Sheet organic growth of the Balance Sheet earlier than expected. We are watching carefully and they will come a time when we butk we have done enough there is also a time when the economy worsens and we would have to cut more aggressively. We dont know, we will be watching things carefully. Far as to went as refer powell as the artful dodger and said he dodged all questions regarding the course of rates going forward. Us, head of fixedincome. Great to have you with us. Matt and i were just discussing what sort of message powell was delivering. Did he manage to come across as not to hawkish in that News Conference . I guess the response was pretty muted. For powell, it was fairly mixed commentary. He talked about a lot of things that could change direction. There is no plan to cut rates immediately but they are looking at data, how the Global Economy is reacting and what the dollar o going forward. I think they will look to cut rates again looking at trends are for the love lower growth. They will need to, i think so. Matt weve heard from big names, from stephen schwarzman, jeff gundlach, negative rates are bad for the system and they all talk about the reason being, it dissuades banks from lending. Jerome powell said he doesnt think we should go to negative ates, but is is a positive, least for financials that the fed doesnt necessarily look like it is on the path to continue these cuts deep into 2020 . Lead to at was to steeper yield curve or something banks can use to maintain healthy growth in their Balance Sheet, it is a positive thing but the market has priced in a lot of rate cuts going forward. Fairly flat yield curve, which is difficult for banks. It is certainly healthy they are not talking about moving to negative rates, which does penalize the banking sector, slows down the ability to lend but all in all, the fed are doing the right thing. Of rate cuts lot to get even close to negative Interest Rates. Unless they accelerate the path of cutting, we will have a flat curve because the data suggests a weaker outlook if inflation doesnt pick up and start to decline he will stay with a flat curve which is not great for the banking system, not great to help them build their profits. Nejra is this why you are looking to build up government duration again . Is it in the u. S. , as well, you are looking to do that . Paul we felt the market had got ahead of itself. The central bank never moved as fast as markets predict. The markets get overexcited by the activity and meet on a regular basis, and take a longer time to make a decision. The data in the u. S. Isnt has weak as the data in the rest of the world, so there is a strong base in the u. S. Economy that suggests rates should stay where they are go up of the outlook is definitely interior deteriorating. Having taken some out, we are happy to see building once again. Matt where do you want to build those positions . The message i got was we dont need, they dont need to be seriously aiding the economy pretty the economy is in decent shape. What does it mean for you as head of fixedincome . Paul hes focusing on good employment, pretty full employment and pretty good spending from the consumer. ,he concern is the outlook driven by business investment, slowing down quite fast and the overseas global effect. Will bethose two inputs reducing employment gradually over the next six months and changing consumer sentiment. Change with the potential to keep jobs. We would be positioned, we are not too worried about inflation in the nearterm. Curve,happy to go up the between five and 10 years is a good place. We owned the long and already end already. We have recently put money into the front end of the curve because it backed up so much but generally five to 10. Nejra your long dollar, short euro call is under review. What might make you change that . Little nervous that have gone too far but recognizing that it was worth holding. After last night, it is still us. The dollar is going to be one of the stronger currencies and as usually with currencies, it is a mixed bag of things you dont like. You have to find things that you much. Dislike that the u. S. Is in that category with the highest Interest Rate. Matt is that because you didnt see the fed has been terribly dovish and you see other Central Banks leading in that direction . Chinesenteresting the didnt take advantage of the fed, the boj didnt take advantage of the fed to make their policy more dovish. Paul the reason it is under review and moving away from the short term it is under review because the next 12 months, it is the fed that will be cutting Interest Rates if the economy continues to slump. The other Central Banks are nearly exhausted all her Monetary Policy firepower. Ecb t see the boj or but thats priced in. If you look at the forward curve and what the market was looking at yesterday, it was looking for further rate cuts. A lot is priced into that just in the, so shortterm, the technicals will support the dollar. We need to review that because isr the next 12 months, it the fed that would cut the Interest Rates in most if the u. S. Economy slowed. Matt please got to get more from you today. Paul brain, head of fixed income at Newton Investment management and he is our guest cohost for the hour. Lets get the first word news with Annabelle Droulers in hong kong. President trump says new sanctions against iran are response to an attack on a Saudi Arabian oil facility. Secretary of state mike pompeo was in the state to coordinate the response. Saudi Defense Ministry explain what were their weapons involved. In the u. K. , a final day of hearings in the u. K. Supreme court for the suspension of parliament. Or as johnsons lawyers had promised the government would put out a statement on what it would do if it loses the case. The court hasnt given a date for the ruling. It has the potential to derail Boris JohnsonsBrexit Strategy or cut short his premiership. The bank of england looks set to keep rates on hold. Came at noon london time but lawmakers are looking for clarity on the timetable for the governors successor. They have written to the chancellor after it was reported carneys term could be extended. The bank of japan has left policy unchanged, calling for prices and the economy at its next meeting. The decision comes as Central Banks moved to support their economies and speculation japan might follow suit. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more. Han 120 countries this is bloomberg. Inra Annabelle Droulers much. Ong, thank you so lets check on the markets and we are pretty unchanged on the msci a asiapacific where u. S. Equities and it. Ended. Concernse front foot, in the region on possible sanctions on iran. Dollar strength is what we saw yesterday but pretty flat and the yen, the best performer in g10 against the dollar after the doj. To see the yenng strength when the boj did nothing and the fed actually cut. Look at the 10 year yield, 1. 78 is the number you will get. 1. 4 weway off from the saw a couple of weeks ago but also from the 1. 9 on friday. Euro stoxx 50 futures are falling, although very little. Are telling that s p falling and the asian trade, looks like the thumbs down to the feds seemingly hawkish cut. I agree i dont think it was a hawkish cut. Coming up, the last hawk in the room . We speak to the governor of the norwegian central bank. Olsen after 10 30 london time. This is bloomberg. Matt this is bloomberg daybreak europe. Im matt miller in berlin. Nejra im nejra cehic in london. Juliette saly has more in singapore. Juliette we are seeing the msci pacific, japanese stocks paring early gains. Fromange coming through policymakers that they did say they are willing to add further stimulus if needed and youve seen a big reversal in the japanese yen, which was holding at a sevenweek low. Hong kong stocks under pressure today, led by the banks on fears they may not pass on rate cuts, the Hong Kong Monetary authority matching the cut but we heard from the Monetary Authority saying they are still seeing downward pressures, particularly in the thirdquarter growth forecast due to the effect of the trade war and protests in the city. Mainland china pretty flat but you are seeing aussie stocks higher. Areg rally in bonds but we seeing the aussie dollar sold off with yields after the jobless data came through. We had backtoback rate cuts from the rba in june and july. They are really trying to get the jobless rate to four and a half percent. 4. 5 and it has ticked up to 5. 3 . We saw 37,000 jobs created in august overall that there was a big drop in the number of fulltime jobs created. And youf fulltime jobs saw Participation Rate pick up, so it will have the rba scratching their heads and have money markets suggesting are we going to see another rate cut coming through from the reserve bank of australia . Matt things very much, Juliette Saly in singapore with a look at the markets. Lets get an update on the aramco attacks. The saudi military has displayed what it claims are parts of iranian drones and missiles, saying the strike on the oil to see in that facility came from the north. They added the attacks were unquestionably sponsored by sensex. President said new sanctions are. Oming sponsored by tehran start. S easy to we will see what happens. Matt lets go to riyadh or yousef gamal eldin joins us. After 24 hours of international diplomacy, what can we expect this afternoon . Night, it was a dramatic the press conference went underway in the later part of the evening in riyadh and the evidence was presented that suggested iranian sponsorship but it fell short of what many observers would argue should have been a clearcut accusation that iran was behind this attack. It almost seemed the kingdom was giving itself some diplomatic wiggle room. They dont know for sure where the missiles were fired from. They say it could have been iran, iraq, but they are excluding the possibility it could have come from yemen. The iranians for their part are holding the Global Economy hostage. It is a key theme that has emerged and they have gotten a stronger hand in any potential tops going forward. You look at a lot of the key metrics in the local markets from equities to bonds to credit default swaps and currency forwards. At the moment, no signs there is an imminent escalation, but you know better than i do the markets got it wrong in the past. On that point, we didnt see much of a moving oil overnight, either. What are you hearing in reasons behind that . Yousef well, the next milestone will be this tour that appears together. Ng we are expected to get an invitation from the ministry of guidedfor a bit of a tour of some of the damaged facilities to get a better impression of the extent and scale of some of the infrastructure that has been attacked. In terms of the oil market, there are two important forces pulling in Different Directions because overnight we had inventories from the United States that came in with a surprise bill, the bloomberg consensus was for a construction contraction in supply. The iea stepping out yesterday and saying they expect saudi arabia to resume 11 Million Barrels per day capacity and they do not see the need for an emergency stockpile release at this time. Again, we will have to see how the politics play out because that is the wall of wildcard. Nejra another push and pull in oil markets is the physical markets versus the reserves he referred to. Yousef gamal eldin in riyadh, thank you. Lets get a first word business flash with Annabelle Droulers in hong kong. Tiffanys is planning more stores in china. They want to attract greater demand to offset a fall in chinese luxury shopping overseas. In an interview, the chief executive told us he is streamlining operations to cope with the trade war. The effect on Mainland China, so it is something that is beyond our control but we want to deal with it, but not just by increasing prices so we will act on efficiencies in order to mitigate this factor. Has cost Brexit London only 1000 Investment Banking job so far according to a report. Estimates of hundreds of thousands of positions shifting to the eu and the firm says it is down to some firms waiting for clarity on brexit. Microsoft is buying back as many as 40 billion of stock. The Worlds LargestSoftware Maker boosted its Quarterly Dividend to . 51 a share. Flush with cash, microsoft has been a market buyer of its own share for nearly 20 years. Its market cap remains 20 million 20 trillion. Matt ill pick it up. Annabelle droulers in hong kong. Turning to another central bank and another policy decision, the boj has left monetary stimulus alled for and c reexamination at its october meeting, raise it raising expectations of further easing next month. Paul brain, head of fixed income cat Newton Investment is still with us. What do you make of the boj decision . Is it more of the same . Paul it is more of the same. The bank of japan has limited firepower so why would they use it now when for japan got a lot has changed. The things to watch are the effects of the trade war, the effects of the global slowdown in trade for 12 months now which really affects japan. Room to do more on Interest Rates but what theyve done so far they think is working for the domestic economy, keeping rates close to zero but across the curve is the right strategy, they think. They are doing enough in terms of providing liquidity. There is not much more they can do. There is no need to tweak the front end of the curve. Dollaryenyou short given what you said about the fact the fed has more room to cut than other Central Banks and what you have said about the boj . Paul with the dollaryen, we are sitting on the fence. From a punitive interestrate point of view, you would be in favor of the dollar and short the yen, but too much is priced in was priced in to rate cuts so we will probably favor the dollaryen more because of that but given the geopolitical risks out there, given the uncertainty thet the trade situation, yen could do quite well on the safe haven basis. It is a bit like sterling. It could go either way significantly. No need to take the risk, so sit on the fence for the time being and we prefer to use the euro as our shorting currency, the currency that is the cheapest one too short. Nejra paul brain, head of fixed income at Newton Investment stays with us and later, a conversation you wont want to miss. We will hear from the reserve bank of india governor at the India Economic forum in mumbai. Lots of Central Banks to digest. Weve heard from the boj, the fed, we look ahead to the bank of england and the nordic bank, too. Matt looking forward to the other central bank decisions. The currenciesng are reacting the way they are considering the fed cut and we didnt see action from the two major banks we have heard from so far. China and japan. By the way, i want to remind viewers they can become listeners traveling to work. Tune in to Bloomberg Radio live dabour digital of eyesore digital in the london area and nejra cehic will be hosting the 8 00 hour, i will be hosting the 9 00. This is bloomberg. Im disappointed by what the fed has come out with here, b