Overnight we had the big spike in treasuries. Certainly putting Dollar Strength into the story and putting pressure on a lot of asian currencies. The japanese yen is a true standout. We had seen the weak in helping some of japans exporters of late. Today though, that story is not translating. Youre seeing them move in the wall street session, weakness in the s p 500, closing down 1 . The nasdaq dropping, in turn, you see that reflected so far in the session. We also have to open for korean equities. We can see in the open here, a drop at the open. Its not just a story of you the u. S. Inflation print that came in hotter than expected. We also saw south koreas president suffered a big loss in the parliamentary vote and that is playing into the dynamic given the opposition gained slots. The president is looking to be in a weaker position for the last three years of his term. We just had some trade data. The first 10 days of april. We saw exports rising more than 20 22 percent, actually, on the year. Imports gaining five point 8 . Certainly the strand in the export story is a positive sentiment for the sector given that career is very much seen as a leading indicator. Also, the big move you are seeing for the korean won, weakening more than 1 against the greenback. You do typically see bigger moves at this point in time. Also note, the japanese 10year yield. We have at about five point 8 , the hottest since november. It is that big repricing we are seeing coming through, haidi. Haidi the repricing story is really what we see from the fed for the rest of the year, belle, its what is running through the rest of these asian markets. Australian stocks, we are down on the asx 200 just about zero point 1 . We had a decent day in the previous session, extending that win streak. Australian equities are pretty close to that record high as well. Core related moves when it comes to australian, new zealand bonds , hit by that u. S. Inflation print. We saw them falling from the open. Just tracking the declines in treasuries. We have also seen the aussie dollar and kiwi dollar holding the bulk of that plunge after the greenback saw its best rise in the year. Again, being fueled by the feds repricing narrative. Brent crude is still over 90 a barrel. It could be feeding through to the uncertainty of that stickiness in inflation. U. S. Intelligence seeing a possible iranian strike or iranian proxy strike on israel, according to the latest intelligence. These concerns have escalated hostilities in the middle east, helping to support crude. Take a look at where we are when it comes to u. S. Treasuries after the big reaction that we saw a fresh round after a third consecutive month of hotterthanexpected inflation sending yields dr. 2024 hides again. Lets kelvin tay for analysis, he is cio at ubs wealth management. What do you expect the fed to do this year . Kelvin we have not changed our estimate for the fed to cut three times since june, but after last night data, we have to review it. Core inflation has turned out to be more stickier than thought. But what is giving us more comfort is that headline inflation was moving up sharply. That is largely based on the fact that Energy Prices have moved up in the last three months of last year. Nevertheless, coal has been strong and we need coal inflation to moderate further before we can be certain that the fed will cut in june. Haidi how does that inform your position in treasuries . Where do you think yields are going to go this year . Kelvin we have a long position on the u. S. Bond market. We preferred bonds over equities last year because we think the Federal Reserve will cut in june. But that has come under a lot of scrutiny because of the fact that if treasuries continue to move up that way, obviously, it will put pressure not just on the bond market, but also on the equity market as well. We dont think u. S. Treasuries will move a lot higher, from here we think they are likely to stabilize at current levels before heading towards the 4 level when the Federal Reserve and berks in its first cut of the year. Annabelle how does that thinking can your strategy for the asian trading space as well . Kelvin what we noticed recently is that asian credits, even with investmentgrade issuance in the u. S. Yields have not moved very much despite the fact that the u. S. Treasuries an attorney or bases have moved towards the 4. 5 percent level. The spread wide and is not because of investment or, asian credit moving it is because of treasury yields moving. So the market is actually thinking that perhaps the fed will have to cut. They are taking into consideration that we shouldnt be too lax with where our positioning is concerned. With a tremendous amount of issues with regards to the new issuance of treasuries by the u. S. Government, it could put upward pressure on u. S. Treasury yields on its own. But if the market is still expecting two or three woodcuts this year, there is a certain level of stability with regards to asian credit or investmentgrade credit issuance. Annabelle i am curious. Because in this sort of market environment may be some shortterm volatility shortterm market risks, but still we have got really elevated levels in commodities oil, bitcoin, some equity benchmarks, as well that are at multiyear highs or around that point. How do you treat in this sort of environment . Kelvin it is a very tough environment to trade in because of the fact that, you have your bond use increasingly moving. The trajectory of bond use and equity markets have been different this year compared to the last two years. Whenever treasury yields go up, the bonds fall. This year the trajectory has been different. If the Earnings Results in the next couple of weeks, and weaker than expected, that will put a lot more pressure on the equities market at this point in time. Its interesting to note that in the month of april, Energy Stocks actually outperformed tech stocks where the s p 500 is concerned. And we see Energy Stocks continue to do well given the fact that Energy Prices have been quite steady at an elevated level. We dont see that coming off dramatically, in fact we think brent will likely remain where it is that puts pressure on the bank of japan because if you have high Energy Prices, it means the ministry of finance will probably have to intervene in the market at some point. We are all looking at the young right now, it is very close, 153 to the u. S. Dollar. The yen. Haidi how are you playing china at the moment . Kelvin we are neutral china. We think where valuations are concerned obviously, it is very attractive and cheap. But we do see a turnaround in the basic part of the economy, for example, industrial production, in exports of industrial automation. That is about 20 of the gdp. But basically 50 of. The growth if that stabilizes and continues to trend upwards, then i think sentiment towards investing in china could change. But we have a very, very big event towards the u. S. Elections, and the saberrattling will come up in the next several months. That, in turn, will dampen Investor Sentiment towards investing more. In china in the last couple of months we have actually seen International Investors increasingly reducing their underweights on china and will be closer to a neutral position on china at the moment. Annabelle that was kelvin tay, regional cio at ubs Global Wealth management we are looking at some of the movers so far with just under 10 minutes into the session. Tokyo and also seoul trading. You have the u. S. Scope the white house posting a state dinner for japans Prime Minister kishida. Live pictures there from washington as that event continues. Some of the names we are tracking off the back of this visit from japans leader is tech names in particular. We had actually seen an announcement that amazon and nvidia are going to be funding a new joint ai research project. At that focused on the emerging technology from both the countries. They will be providing nvidia, amazon, arm, microsoft along with a group of other Japanese Companies 110 Million Dollars for ai Research Partnerships between two universities in the u. S. And japan. A tourist taking place, even though we do see chip stocks so far, under pressure. Another thing in the spotlight in this visit, nippon steels takeover bid for u. S. Steel, that as japanese Prime Minister kishida is having a state dinner at the white house. Live pictures right now. This is bloomberg. Haidi alright, as we hear that the u. S. Department of justice has launched an antitrust investigation into the nippon steel takeover, nippon steel is down by 0. 75 of the moment. We continue to monitor what was clearly a key issue that has been hanging over this visit by japanese Prime MinisterFumio Kishida at washington. We are seeing him in the formal state dinner. Tokyo bureau chief isabel reynolds, and are dear chief, and Stephen Engle also joining us from hong kong. This is obviously an issue that i dont know if it is the elephant in the room and if it has been properly addressed throughout this entire trip. Clearly it has been kind of an overhang. How does this impact the visit . The japanese stance has always been that they want to be treated fairly, its a commercial deal and they want things to go ahead according to the normal rules of commerce. But to have this news come out at this moment while Fumio Kishida is on his official visit to the u. S. , just turning his state dinner with biden, and they are trying to show that tides are stronger than ever before and there is no daylight between them, to have this new piece of negative needs at this point doesnt look good in that respect. Annabelle there has been some positives, from the meeting, a lot of different agreements and asked so far, particularly with regard to emerging technology, it seems. Isabel yes, we have seen deals on ai research. We are also seeing a deal upon offshore wind, which could be very positive for japan which has sort of glad Renewable Energy pledges partly because of its inability to use its nuclear plants, to a large extent. The overarching theme really has been concerns about china. They issued a strong statement with language about china and its actions in the East China Sea and the South China Sea calling them dangerous and escalatory and they are set up for the trilateral summit with the philippines later on. In that respect they have also stepped up defense cooperation and see the military is working closely together. So that has been for the top take away from the summit so far. Haidi and biden and cane sugar are headed to this trilateral meeting with the philippines president next. What are the expectations from this . Manolo i think tensions with china are expected to be the center of the summit alert readers will discuss ways to incorporate more on Maritime Security group given the tensions growing in the South China Sea. President marcos before he flew out of manila yesterday said he expects there will be an agreement between the three leaders in terms of boosting cooperation, Maritime Security, and keeping the freedom of navigation in the South China Sea. He says it is because there have been frequent clashes between the philippines and chinese ships in disputed waters, including a instances of chinese ships using water cannon on philippine boats. Annabelle so is this something that will be shifting the philippines assertiveness in the South China Sea . Especially off the backup we are hearing that president is leaning towards an agreement of his predecessor obsessed with china . Manolo it strengthens philippine to boost its relationships with other countries including longtime ally u. S. , in terms of its posture in the South China Sea. I think president marcos, yesterday, that he was horrified to learn about the agreement between the previous government and china in terms of the philippines supposedly not being restricted to send Construction Materials to the outpost. It speaks to his continuing assertion that the philippines and 70 should be recognized in terms of its territorial claims in disputed waters philippines sovereignty should be recognized. Haidi do we expect any other areas of cooperation by the three nations, obviously Maritime Security is the major one, but what else can we expect to be spoken about . Manolo i think there should be also discussions in the areas of cooperation on critical infrastructure, critical minerals, semiconductors, and Renewable Energy. I think president marcos is also expected to have a bilateral summit bilateral meeting with biden on the fringes of the summit. Annabelle and steve, off the back of that, and sort of unrelated, but we have had china as president xi jinpingss meeting taiwan former leader. It is a pretty interesting development. Stephen this is more weighted on the symbolic site rather than the ushering of change across the taiwan strait. It is an effort by beijing to embrace a former taiwanese leader who kind of shares the vision of latching onto the common culture, the common identity of peter chinese nation. That is what he has really advocated for since he left office in 2016. But keep in mind, the former ruling party, now the opposition, he is the last president who was elected from that party, and they have left three consecutive president ial elections. He has been the power broker within the kmt, but he failed to get the two opposition candidates in the last election in january to join forces, that could have potentially beaten the tpp candidate who will then be president in may, lai chingte. The opposition candidates got 60 of the vote. Latching to got 40. If they had combined their efforts, they potentially could have won that election. So i think xi jinping in beijing is seeing an opportunity that people in taiwan dont want war, they dont want conflict. We are still leaning towards the dpp, that there is cracked, and opening for soft power to work and thats what i think xi jinping is trying to leverage. Haidi as much as appealing to the taiwanese people, it is also an outward projection given the timing of this meeting, given as we see the u. S. And japan meeting at the moment . Stephen absolutely. , again, xi jinping and his comments at the great hall of the people, as he shook hands with the former president , essentially said, external interference cannot stop the historical trend of national reunification. External interference, in not so veiled job at the United States against the backdrop of increasing tension, if you will, over the whole taiwan issue. In the past year or two years since nancy pelosi visited a here and a half ago, there have been ramped up efforts by beijing either militarily, economically as well as diplomatically to further isolate taiwan because of the rising bifurcation, if you want to call it, between east and west chinau. S. Relations over that timeframe. So, xi jinping has been able, since the taiwanese president left office in 2016, he has been able to port and nations that previously court 10 nations that previously recognized taiwan to beijing, further isolating taiwan diplomatically. The economic efforts that have been ongoing, and then militarily. So far, since the election of lai chingte in january, there havent been any wargames in the taiwan strait. He is using soft power to kind of get a pulse check on what the people of taiwan really want after that election. Annabelle that was over tokyo bureau chief isabel reynolds, manella bureau chief manolo serapia and, of course, cover chief north asia correspondent Stephen Engle. You can get a roundup of the stories you need to know to get your day going on this addition of daybreak. You can get it on the bloomberg terminal and it is also available on the bloomberg anywhere app. You can customize your app so you only get stories on the industries and assets that you care about. This is bloomberg. Wealthchanging question are you keeping as much of your investment gains as possible . High taxes can erode returns quickly, so you need a taxoptimized portfolio. At creative planning, our Money Managers and specialists Work Together to make sure your portfolio and wealth are managed in a taxefficient manner. Its what you keep that really matters. Why not give your wealth a second look . Book your free meeting today at creativeplanning. Com. Creative planning a richer way to wealth. Annabelle the heart u. S. Inflation data is refusing to cool as concerns grow that the fed will likely delay of rate cuts. In an exclusive interview with bloomberg,. Dells head of Economic Research says that central bank is still waiting for the fx policy to play out in markets. I dont think so. We have a strategy of higherforlonger. Or i for very long. One of those. We are in that process. Lets remember, i was last july. Soon it will be able to stay. Its a question of waiting for the fed hikes to appropriate to the economy. How do you think of those lag effects and how do you see them playing out . It had an impact on the housing market, housing activity came down. It had an impact on durable goods consumption. It hasnt had an impact on fiscal policy and investment, and that has been a surprise, because fiscal policy has been upsetting the tightening effect from the monetary. This is a new world where there are a lot of policies happening at the same time. We are just experiencing that. You wrote in a Financial Times opinion piece on may 2 that there is still a narrow path to a soft economic landing. Do you still believe that . It was a year ago after the svb crisis, and yes, i subscribe to that. We were one of the few places that didnt call the recession las