美财长指责中国致G20公报流产，中东冲突推高油价与美债收益率

YVONNE: 9:00 A.M. SHANGHAI, SHENZHEN, AND HONG KONG, YOU ARE WATCHING "THE CHINA SHOW." I AM YVONNE MAN WITH DAVID INGLES. OIL ADVANCES FOR A THIRD SESSION ON HEIGHTENED CONCERNS OVER IRAN. U.S. TREASURY SECRETARY WARNING TEHRAN. SCOTT BESSENT ALSO TAKING AIM AT THE G20, ACCUSING SEPARATING A CONSENSUS AT FINANCE MINISTERS SUMMIT. ALSO A TAG EXEMPTION REMOVED THAT HAS BEEN IN PLACE SINCE 1994. STEPHEN: I'M STEPHEN ENGLE, LIVE AT SEMICON TAIWAN.

WE WILL BE SPEAKING WITH THE CEO OF CHIP SUPPLIERS. YVONNE: ALL RIGHT, YES, WE WILL GET STRAIGHT TO SEMICON IN A MOMENT, AGAINST WHAT WE ARE SEEING HERE, RIGHT? OIL PRICES WILL SOON BE ELEVATED AND BOND YIELDS RIGHT NOW. DAVID: YEAH. ONE SEEMS TO BE EXACERBATING THE OTHER, AND WE ARE TAKING OUT MOST OF THE HIGHS ON THE YIELD ON THE LONG END. WE WILL CONTINUE TO TRACK THAT. WE HAVE A 30-YEAR BOND OFF THAT MAY BE A SEPARATE STORY IN CHINA.

WE WILL SEE WHAT THAT IS. WHEN YOU LOOK AT THE ENERGY COMPLEX TODAY, IT IS NOT JUST BRENT, WEST TEXAS, YOU LOOK ACROSS THE GAS SPACE, YIELDS ON YOUR SCREEN, BY THE WAY, THE KIWI 10 YEAR YIELD NOW 4.8% GOING INTO THAT. BY THE WAY, YES, WE HAVE A 4.8% HANDLE ON THE U.S. 10 YEAR YIELD WHICH WOULD TAKE US BACK TO 2023 LEVELS, AS FAR AS THAT IS CONCERNED. WE ARE CONTINUING TO SEE THE BONDS ACROSS THE ASIA-PACIFIC. WE ALLUDED TO THE ENERGY COMPLEX AND WHAT WE ARE SEEING THEIR, RIGHT?

WHEN YOU LOOK AT WHILE PRICES, GAS, SHANGHAI CRUDE PLAYING SOME CATCH UP, GAS FUTURES IN EUROPE OR UP 3%. YOU DO UNDERSTAND SWITCHING ACROSS MOST OF THE EQUITY MARKET. YVONNE: YEAH. IT'S BECAUSE OF THIS RELATIVE CALM THAT WE SAW ACROSS THE MIDDLE EAST, THAT IN SOME WAYS HAVE BEEN SHATTERED. FRESH STRIKES AGAINST BOTH THE U.S. AND IRAN, THE TIT-FOR-TAT WE SEEM OVER THE LAST 48 HOURS CERTAINLY ALARMING TO THE BOND MARKET COMING AT A TIME WHEN KEVIN WARSH CAME OFF A TOP.

YOU ASK THOSE TWO FORCES, THE LONG AND CONTINUES TO BE ELEVATED. IT'S NOT JUST THE U.S., AS YOU SAY, RIGHT? THE 10 YEAR IS AT 3%. WE HAVE NOT SEEN THOSE LEVEL SINCE 1996. YOU TAKE A LOOK AT WHAT MARKETS ARE PRICING, THE FED, IT LOOKS LIKE CLOSE TO 70% CHANCE OF A HIKE IN SEPTEMBER. THE ECB IS PRETTY MUCH HIKED IN. BOJ AS WELL, AUGUST-SEPTEMBER AT MOUNTING. DAVID: ENERGY PRICES, WE TALKED ABOUT THIS BEFORE THE SHOW STARTED, RIGHT?

FOOD PRICES, TOP COMMODITIES YEAR ON YEAR. YOU LOOK AT YOUR TO DATE, WE ARE LOW DOUBLE DIGITS, BUT THIS QUARTER, FOOD AND ENERGY COSTS, ENERGY OF 26.7%. BE A BLOOMBERG SOFT COMMODITY INDEX IS UP 17% THIS QUARTER, SO YOU UNDERSTAND WHY MARKETS ARE PRICING IT IN. WHEN YOU LOOK AT EQUITY MARKETS, IT IS NOT ALL BAD. THE RISING RATE ENVIRONMENT GIVING ROOM FOR BANKS TO PLAY OUT IN A BIG WAY. HAVE A LOOK AT THE BANK SIDE AS WELL.

WHEN YOU LOOK AT WHAT IS HAPPENING WITHIN THE HONG KONG CONFLICT, WHERE YOU HAVE THE H BEEN INDEX VERY NEAR ALL-TIME HIGHS. SO ON AN INDEX LEVEL, WE ARE DOWN. WHEN YOU LOOK AT FINANCIALS, THAT SHOULD BE COMING UP ON YOUR SCREEN, .9%. ENERGY IS ACTUALLY HOLDING UP DECENTLY AMID THE SELLOFF WE ARE SEEING. PARTS OF THE EQUITY MARKET HAS HELD UP, REPRICING WHAT IS GOING ON WITH THE MARKETS. YVONNE: LET'S BRING IN OUR MLIV STRATEGIST FROM SINGAPORE.

MARK, IT REALLY COMES DOWN TO THE BOND MARKET HERE NOW. WHAT ARE YOU SEEING AT THIS POINT IN THE SELLOFF? MARK: IT IS GOING TO BE DIFFICULT. YOU HAVE ALMOST A VICIOUS CYCLE GOING ON HERE. BOND TRADERS ARE GETTING USED TO THE IDEA THAT CORE INFLATION AROUND THE WORLD IS HIGH AND STICKY, NOT GOING AWAY FOR A LONG TIME. THEY ARE USED TO OIL PRICES BEING AROUND $70 OR SO, BUT NOW WE ARE PUSHING TOWARD $100. WE HAVE RENEWED CONFLICT BETWEEN THE U.S.

AND IRAN INCREASING PRESSURE ON BOND YIELDS, ON COMMODITY, SO IT IS NO SURPRISE THAT WE ARE SEEING TREASURY YIELDS REACH THAT THREE-YEAR HIGH THAT YOU JUST TALKED ABOUT. BUT MORE SIGNIFICANTLY, THAT NUMBER IN ITSELF IS NOT SUCH A GREAT IMPORTANT FACTOR, BUT WE ARE GETTING CLOSER TO 5% IN THE 10-YEAR TREASURY YIELD'S. THAT REALLY IS A NUMBER THAT WILL GET A LOT OF PEOPLE'S ATTENTION, AS WE ARE ONLY 20 BASIS POINTS AWAY NOW.

THAT IS A TARGET WHERE YOU WOULD EXPECT SOME LONG-TERM INVESTORS TO COME IN AND SUPPORT TREASURIES AT THAT LEVEL, YET WHEN YOU LOOK AT THE COMPARISONS WERE ON THE WORLD, IS BECOMING INCREASINGLY DIFFICULT FOR THEM TO DO SO. THE GAP IN BETWEEN TREASURIES IS NARROWING IN FAVOR OF PEOPLE LOSING MONEY BACK TO JAPAN, AND THAT IS VERY SIGNIFICANT, BECAUSE JAPAN IS THE BIGGEST HOLDER OF U.S. TREASURY. THEY ARE NOW PLANNING TO MOVE THE MONEY BACK AND GET GOOD RETURNS.

THAT'S ANOTHER THREAT TO THE U.S. BOND MARKET. THINGS ARE NOT LOOKING GREAT IN ANY DIRECTION AT THE MOMENT. THERE NEEDS TO BE SOME KIND OF A CIRCUIT BREAKER, AND THAT WOULD PROBABLY BE A COMPLETE CESSATION OF HOSTILITIES IN THE MIDDLE EAST, A PEACE DEAL THERE, MAYBE SOME BIGGER SUPPLIES OF OIL COMING ON BOARD. NONE OF THAT LOOKS LIKELY IN THE NEAR TERM. WE ARE TALKING ABOUT HIGHER INTEREST RATES IN THE WORLD. MORE DOWN THE PIPELINE.

FOR THE MOMENT, THERE IS NO BREAK INSIDE, AND BONDS ARE THE WEAK LINK, TELLING THE WORLD THAT WE NEED SOMETHING DONE. IT'S NOT HAPPENING, SO WE ARE PUSHING YIELDS HIGHER. DAVID: MARK, DO WE LOOK TO THE U.S. TREASURY THEN TO COME IN MORE FORCEFULLY THEY MAY HAVE ALREADY OVER THE PAST TWO WEEKS? MARK: INTERESTING. I WAS AT A CONFERENCE YESTERDAY, AND THERE WERE SOME DISCUSSIONS IN THE COPY AREA ABOUT WHAT WITH THE U.S.

TREASURY DO IF YIELDS REALLY BECOME -- IT LOOKS AS THOUGH THEY HAVE LOST CONTROL OF THE MARKET. AND PEOPLE ARE BEGINNING TO PREPARE THEMSELVES FOR EXTREME SCENARIOS. OBVIOUSLY, THE FRICTION BETWEEN THE CENTRAL BANK OF U.S. TREASURY'S NOT WORKING OUT WELL. WE COULD SEE THROUGH THAT, WHEN IT IS NOT ON THE SAME PAGE, THAT IS TYPICALLY BAD FOR THE MARKET, AND THAT HAS BEEN REFLECTED IN U.S. BONDS. ONE COULD BE U.S. TREASURY DO?

PEOPLE ARE STARTING TO THINK THAT RATHER THAN JUST BUYING LONG-TERM BONDS, THEY MAY EVEN THROW SOMETHING FAR MORE EXTREME AND OUT OF LEFT FIELD COME ABOUT THE MARKET WAS COMPLETELY NOT EXPECTING, TO TRY AND BRING PRICES DOWN AND STABILIZE THE MARKET. SOMETIMES THOSE THINGS HAVE A SHORT-TERM EFFECT. IN THE LONG RUN, THEY ARE NORMALLY QUITE DAMAGING. . THAT IS WHAT PEOPLE ARE BRACING FOR, FOR THE U.S. TREASURY TO DO SOMETHING WHICH IS NOT IN THE GAME PLAN AT ALL, SOMETHING NEVER TRIED BEFORE, BUT IT MAY BRING SOME SHORT-TERM RELIEF TO THE MARKET.

DAVID: MARK, THANK YOU SO MUCH. MARK CRANFIELD OUT OF OUR MLIV TEAM. ONE OF THE POINTS THAT MARK WAS JUST ALLUDING TO RIGHT NOW, IF WE GET A CESSATION, REALLY, A DOWNSHIFT IN HOSTILITY IN THE MIDDLE EAST, THE LATEST SHOWING THE U.S. AND IRAN DOING THE OPPOSITE. THEY HAVE EXCHANGED A FRESH ROUND OF STRIKES. HOSTILITIES RAMPING UP AGAIN FOLLOWING, AGAIN, RECENT RELATIVE CALM. SCOTT BESSENT, U.S. TREASURY SECRETARY, SAYS THE U.S.

IS ALSO TARGETING TEHRAN FINANCIAL CHANNELS TIED TO CHINA'S CURRENCY. SEC. BESSENT: THE REAL PROBLEM IS CHINESE PAGY IN RENMIBI, AND THAT COMES BACK, AND WHETHER IT IS SHIPPING SUPPLIES OVER OR BANKS SUCH AS THE ONE WE PUT OUT OF BUSINESS IN DUBAI ON FRIDAY OR WHETHER IT IS THE CASH HOUSES, THOSE ARE BEING CLOSED DOWN, SO WHEN THAT MONEY CANNOT BE CONVERTED TO DOLLARS, THEN THE REGIME WILL START. YVONNE: BESSENT SPENT MOST OF THE TIME TALKING ABOUT WHAT HAPPENED IN THE G20.

CHINA PREVENTED THE G20 FROM ISSUING A JOINT COMMUNIQUÉ DUE TO A DISPUTE OVER A GIANT TRADE SURPLUS. SEC BESSENT: IT IS CLEAR THAT. THE COUNTRY WITH THE LARGEST UNSUSTAINABLE SURPLUS, THE PEOPLE'S REPUBLIC OF CHINA, WAS THE DISSENTER. AND, YOU KNOW, I THINK THAT WE HAVE 19 OTHER VOICES, AND AS I SAID, MY CHAIRMAN'S STATEMENT WILL ECHO THAT. YVONNE: FOR MORE, LET'S BRING IN OUR TEAM. LIMERICK EDITOR JON HERSKOVITZ AND REPORTER AVRIL HONG.

JON, WE ARE SEEING THE RETURN OF STRIKES FROM BOTH SIDES. HOW DO WE COMPARE THIS TO PREVIOUS ROUNDS, AND WHAT DO THEY SIGNAL? JON: YEAH. JUST FOR THE MOST CURRENT STRIKES IN THE U.S., IT'S AN EXPANSION OF WHAT THEY DID ABOUT TWO DAYS AGO. TWO DAYS AGO, A COUPLE OF ROCKET LAUNCHERS. THIS TIME, I