157 here. lots of different currency crosses we are having, the pound versus the yen one of the key ones today, giving levels we have not seen in about 16 years. the boe being amongst the g10 countries that could be the last to cut rates, a bit of a laggard there. what else we are tracking is the move so far for equities, fairly steady, quite range bound. u.s. stocks overnight did not really move much. the action more in the bond space. speaking of bonds, you are still seeing the japanese 10 year yield itching higher past 1% mark. quick check on what is happening in korea so far. the action fairly muted, a little bit of downside coming through. watching the korean won as well. just a little weaker against the u.s. dollar, but we are watching for any sort of details around the fx trading hours in korea, because we are expecting a joint statement for the finance ministry and the bank of korea on an extension to that pilot program. and their future plans. haidi: this is what we are watching as we head into the first couple of minutes or so of trading in australia. bhp will be want to watch. they seem to be at a stalemate when it comes to negotiations. but more broadly that sector could move. we have a trade deal signed with the eu when it comes to the mining of critical minerals. linus could be want to watch as they get a boost. this is all kind of piling into the move by the west to try and loosen china's grip on supply chains involving critical minerals. that is one to watch. bhp is another. we are seeing a bit of a downside as we get started with a staggered open in sydney. the aussie dollar is flat at the moment, .6648. we could see a move when it comes to a small slow down with expecting inflation to move lower but still some upward bias coming from the likes of rent, insurance, utilities costs that will complicate the view for the rba. but we still could see some resilience from the aussie dollar at this point, given that we still see some key minerals ranging pretty strongly. it was largely the treasury story overnight, as we see the idea that hikes are still on the table. a couple of weak u.s. no sales did not help either. securities about the pre-auction level. he did see weakening in an earlier offering as well. take a listen. >> i have been asked many times when we take potential interest rate increases off the table. i don't think anybody has formally taken them off the table, even me. i think we could sit here for as long as necessary until we get convinced that inflation is sustainably going back down to our 2% target. i am not ruling out potential interest rate increases from here, but i think sitting where we are for next and did time is more likely the outcome. but if we get surprised by the data, we would do what we need to do. annabelle: joining us now is the head of equity strategy, daniel lam. kashkari is one of the more hawkish on the fomc. do you see that risk, though, of a possible hike the and very much overblown, or do you see rate cut expectations really being sustained through the end of the year? >> right now, i believe that we are actually somewhere stuck in the middle. because the inflation data, the latest one, has been slumming somewhat, but do not forget that over the previous few and most of the inflation data has been higher than expected. so right now, i believe we are probably looking at that castle between the zero to one rate cut at this moment in time. but depending on the data, it could swing the other way. therefore, you see the equity markets actually aren't able bit stuck right now after all the earnings have come out. we have a few quiet sessions. asia is not really getting a lot of cues from the u.s., and that is the reason why. people are deciding what to do at this moment in time after the earnings. haidi: one of the metrics they are looking at, what would be the next catalyst if earnings are in the rear view mirror as well? we are not expecting any big moves from the fed. >> by and large, if you look at the mega caps stocks in the u.s. , the future guidance overall has been pretty decent. if we do get a milder fed, a little bit less of the hawkish speak, we can get more upside in the growth stocks in the u.s.. we are just waiting for that queue to clear. annabelle: more upside in the growth stocks. which ones are you looking at, and are you also concerned about valuations? daniel: the ones we are looking at are the ones in the technology space and the communicative services space. the mega caps group stocks, those should be looking pretty good, given the fact that even the ones that have been showing some wobbly results after the announcement, they have been bought ready well. we are looking at those. but in terms of valuation, there have always been relatively expensive, but the numbers have been delivering, so we are not too concerned about that. haidi: what are you looking at specifically for this next leg of potential gains in japan? daniel: japan right now, as you know, the yen is under some kind of pressure, but the earnings so far have been pretty good. also, you are getting a record amount of share buyback in japan. all of that is looking pretty good for japan. at this moment in time, though, i would still say that the ones that, in the financial space, the banks, those we quite like, because we believe that the yield curve in japan, the trend is that it stevens at is going to favor those, so look at those. haidi: interestingly, you are not ignoring china. there is a lot of concern about how you invest around the kind of rebound or at least the bottoming out of valuations. what do you like selectively? daniel: in china we had quite a strong rebound since the middle of april. that had to do with the fact that the chinese economic data has been surprisingly on the upside. they have been beating low expectations, and compared to the u.s., the u.s. had high expectations and they are barely beating or sometimes underperforming that. you see at that time chinese equities depart from u.s. equities. it is all about the low base effect here. of course, it has gone from 16,000 to nearly 20,000 for the hang seng index. right now it is pulled back by nearly 1000 points. we expecting that we can get the hang seng index consolidating around the current levels for quite a few sessions. but we do believe that the ones you should be focusing upon are the internet stocks, because the valuations are still cheap versus the u.s. counterparts, and they have been beaten down. with the potential more upside in china market, those can rebound the most. annabelle: with that in consideration, your views on the chinese economy, how does that play into investing on the -- in the bond space? and also em as well? daniel: if the china market does recover more, it is beneficial for the em space. we have seen some fund rotation out of markets like taiwan and korea into china amongst the em rotation. so that could happen further, but like i said, if the china economy stabilizes and risky assets are looking better, been it is going to benefit the em space as a whole. haidi: daniel lam there with us. take a look at some of the movers. bhp is want to watch. time is running out when it comes to the extension in its talks with anglo. there are still a lot of concerns over the structure and the two sides still seem to be at this impasse at this point. we are watching that, given that there are still risks being seen by anglo. 5:00 p.m. wednesday is the deadline for bhp to commit to an offer. watching some of the aussie minuses, the steel signed with the eu when it comes to collaboration investment across critical minerals. we have been looking at this potential kind of improvement when it comes to apple's iphone shipments, up 52% according to some data from the china academy from information and communications technology. that rebound could play through to some of the upper suppliers in this part of the world. get a roundup of the stories you need to know in today's edition of daybreak. bloomberg subscribers can get it on their terminals. it is also on the bloomberg anywhere app. you can play around and get the news on the industries and asset classes you care about. this is bloomberg. ♪ do you want to close out? should i? normally i'd hold. but... taking the gains is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management. haidi: israeli tanks have reached the center of rafah. residents have been reporting clashes between israeli and hamas forces in the center of town. marco heath joins us now for more. in an operational offense, it looks like we are getting pretty close to a declaration of this offensive being done for netanyahu's kind of purposes. does that mean that the goal of eradicating hamas has been achieved. >> it is hard to say that. even if they do wipe out the remaining militants there, hamas is more than likely, the fighters, the leadership, even the hostages are likely to melt away. as real has destroyed some of the tunnel networks, but they have had a couple of decades -- israel has destroyed some of the tunnel networks, but they have had a couple of decades to build the tunnel network area. that will likely melt away if they have not moved to other parts of the gaza strip. the fighting will go on, but netanyahu has political imperatives as well. on one hand, he wants to be able to tell the public that yes, rafah has fallen, they have eradicated these remaining militant units, but it is difficult to see that is the case. outside of hamas, there would be new groups that have popped up. hamas has offices in other areas that can move to other nations that are sympathetic, but outside of that, they are more than likely to move to other parts. it goes to your perspective of rafah falling. >> clear learning more about this strike that killed dozens of civilians. -- we are learning more about this strike that killed dozens of civilians. israel pointing to some signs that perhaps they did not intend it to be quite as deadly. is there much weight being put on that? >> that's right. israel is insisting that he used a very small munition in this strike. we are not talking about it being a precision strike that killed these two senior hamas officials. i think they were quite taken aback at the devastation, and it was horrific. 45 died, more than 200 injured. children killed as well. the spokesman for the israeli military has been saying they are picking up signs that perhaps there was a secondary explosion. the notion being that israel had fired this weapon and it caused this inferno that killed so many people. the u.s. seems to be on board with that to some extent. they have been very strict about what they expected in terms of rafah, and they said this attack is not going to change their view and they see what israel is doing as reasonable in terms of not bringing in really heavy weaponry. but this is a real fog of war situation here. hamas obviously says this is a war crime. when you look at the pictures, they are horrific. you can understand where everyone is coming from. but israel also played a tape of two gazans talking in referring to a second explosion. but until there is an independent investigation, we are not going to get to the bottom of this. there is too much at stake for both sides for us to get a clean picture on it. >> a lot of reactions from the international community. a lot of condemnation, and a lot of soul-searching in terms of where the red lines are after the images from the refugee camp. we also had countries like norway and ireland and spain formally recognizing the palestinian state. how much fracturing of positioning is there on an international scale? the u.s. obviously still wants a two state solution. is that likely to play out? michael: the pressure is certainly growing, and there are reports that other countries in europe are going to follow that lead and recognize a palestinian state, which is real does not want to happen. -- which israel does not want to happen. as real is going to file -- israel is going to find itself reasonably isolated, the government in charge. it is extremely right wing, and it is, really, they would be more than happy to be isolated. it relies on those people to stay in power. he had a court case against him as well. in government, it is easier to manage that court case in a position of power. but the pressure is only going to build for some sort of solution. what we have seen in the past eight months is horrifying, from the hamas attack in the first place, which was devastating, what took place there, and then tens of thousands of innocent for billions -- of innocent civilians being killed here. it is not one where the war ends and everyone forgets. there is too much that has happened now. with netanyahu in charge, it is difficult to see israel stepping up to the plate. there is so much history there and so much desire among those coalition members. they want to settlers in the west bank, in gaza, and they do not want palestinians to have their own place. annabelle: some other stories we are tracking, saudi arabia's crown prince, mohammad bin salman mss's father has recovered from a recent illness. the saudi government announced earlier this month that the 88-year-old monarch was being treated for fever in a lung infection. questions over the king's health came as -- hong kong's national security police have arrested six people using a new security law for the first time. among them is a former organizer of a now banned annual visual to commemorate the 1989 tiananmen square crackdown. police say online posts were made with seditious intent, asking people to join unlawful acts. she is currently in detention for a separate charge. taiwan's parliament has passed legislation that could curb the authority of the new president. the new measures allow lawmakers to summon the president for questioning and give access to confidential documents. thousands of protesters gathered to oppose the changes. the bill was backed by the opposition kmt and tpp, both of which have backed closer ties with china. china's biggest cities have ease requirements for home down payments and mortgages. it follows china's moore's faux scroll -- most forceful rescue package with 41 billion dollars in funding to buy unsolved homes. for more, let's bring in our shanghai bureau chief. how much do these moves from megacities set a precedent for other ones in china? charlie: good question. it remains to be seen. as you mentioned, the chinese government is doing a lot, doing -- it is going all out to revive buyers' interest in the housing market, which has seen sharp declines in prices and transactions. but from the people we talked to on the ground and state media reports, the impacts seem to be fairly limited at the moment. they are seeing a lot of viewing of properties over the last two weekends following the announcement of the central bank funding to buy unsold homes by the local governments. the transaction volume remains limited. anyway, it is still early days. we will not see the official date until may be weeks later. the reality is chinese households don't have a lot of confidence about their job security, their future income. that is why they are not rushing to buy homes. and to get them to open wallets for property purchases, you need to make sure the economy is recovering and the income prospect is back to the track. but the official data show recently a lack of confidence about their future, as reflected in the increase in savings and bank accounts. households account for 70% of the nearly 300 trillion yuan in china's banking system. that is up sharply, 10 percentage points from a few years ago. haidi: as you say, it is the competence slump. have we seen any more optimism from economists in light of these measures? charlie: we did a flash survey of some 12 economists. the estimate is the impact would be fairly muted. it ranges from 0.1% to 0.4%. the reality is to get the economy going, to get the property market, to get people to buy homes again, you need to make sure that people are confident about their job security, which is a huge problem at the moment. unemployment among china's youth is still at very high levels. the official rate is 15%. xi jinping just held a session yesterday saying that chinese governments should prioritize job growth, especially among the youth. haidi: more to come here on "daybreak: asia." this is bloomberg. ♪ >> if we stipulate that we want to inflation to go down lower, there is still the question, should we be happy with the process where this goes down gradually, or do we need to go there right away? the fed has not been clear. my argument is we have seen steady decreases in inflation, so there is no reason to be more aggressive and risk causing a recession. wherever the fed funds rate stabilizes, it is going to be at a level lower than we are now. annabelle: cap was the boston college professor paul roman on the fed's invasion flight. certainly the uncertainty around numbers is casting a shadow on the markets, because we saw u.s. stocks range bound in anticipation of the fed's preferred inflation gauge you later this week. the future set coming online, they flipped overnight because of the uncertainty coming in from inflation data from germany and a host of other euro area nations. watching as well the pound. her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for. haidi: take a look at how we are tracking when it comes to the first half hour of treat in sydney. it is cpi day. very keenly watched reading today given we are expecting this is one of the last key pieces of data the rba has to mull over before their middle of june meeting. we are expecting some progress to be made when it comes to the inflation fight but some elements like rent, utilities, insurance costs as well are elements that could remain sticky in this reading. that is one to watch. seeing a bit of downside and we didn't get much of a read from wall street other than a big move in bond yields. of course we are seeing that play out today as well. the 10 year breakeven rate also for australia, inflation rate rising to 2.443%. mining shares today, we had that trade deal signed with the eu as well as a concern that time is running out on that wednesday afternoon deadline between bhp and anglo-american to seal that deal. critical minerals is in focus in particular in today's trading session. 6644 is what we are trading, some weakness for the aussie dollar but it is seeing potentially the resilience we have seen in trading and the aussie can withstand even a small move in that inflation number. but the broader picture of the less certain for the aussie, given some prolonged weakness and the fade we are getting from the policy measures out of china. we are of course getting the westpac leading index seeing just a marginal decline at this point. mostly unchanged, 0.03% month on month. annabelle: fairly quiet so far in parts of the equity market but more of the action coming through perhaps in bonds. as well as moves around the dollar. here we are tracking the japanese yen around the 157 mark but take a look at this chart here because you are seeing th
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