油价因伊朗局势上涨，RBA决议在即

[music] Bloomberg Audio Studios podcasts radio news. [music] Welcome to the Daybreak Asia podcast. [music] I'm Doug Krer. Crude oil prices are trading higher in the Asian session on Monday. This is after President Trump rejected a proposal from Iran to reopen the Straight of Hormuz. And later in the day, Trump told Axios the conditions Iran wanted were something Washington might have agreed to about a year ago, but he said tan has overplayed its hand.

Even so, Trump is expecting negotiations to resume this week. Now, for markets, elevated energy prices are only reinforcing inflationary pressures and at the same time supporting bets for further Fed tightening. That's where we begin our conversation with Julia Wong. Julia is North Asia CIO at Namura International Wealth Management and she spoke with Bloomberg TV host Sheran.

At what point does the inflation concern actually become a growth concern and how should markets look at this?

Yeah, good morning. Uh thanks for having me on. No, I think that's a really interesting question. uh you know as whenever the market start contemplating uh you know serious rate hike or rate hike cycle uh that question inevitably come through which is where's the neutral rate and how how how quickly will rate rise will that derail the economy I think at this particular moment uh we're not really seeing a sign of economic crack really uh coming through in the US if you look at the health of the consumer despite really split sentiment uh the actual consumer consumption activity has been particularly resilient.

Uh the AIdriven capex booms uh also seems to be ongoing uh uh as as well. So and fiscal policy is loose and could potentially be even looser after the midterms. So it's not particularly clear to me at this point that we are you know the mark the economy is at this tipping point where one or two rate hikes will really tip it over into recession territory. And in fact, I think if we anchor off where 10 years and even 20 30 years are at the moment, that suggests to me that the market think that the front end rates can actually rise quite a bit.

Uh maybe even retesting 2024 levels before uh we get to this point where people start thinking about rate maybe having risen too much and the curve start in uh inverting to kind of tell that story. But I think we're still uh you know a very uh a few good rate hikes away from uh being in that position.

In the meantime with the yields of multi-year highs, at what point does it become problematic for the equity side of things when artificial intelligence that trade I mean has gone through a roller coaster ride just last week.

Yes. Yeah. No, I I think I think that's um you know something we are watching uh as a point of concern more near-term uh and that is uh definitely the rising bond yield with long and bond yield. We think it's partly driven actually mostly driven by structural factors. Uh we don't think the bond long and bond yield have actually settled equilibrium yet. Uh just from a term premium perspective let alone you know the volatile geopolitical backdrop at the moment.

So given that we do think that uh actually um you know the equity market could continue to feel the pressure of higher yields which mainly come through the valuation side and that is why we think that uh particularly equities that are smaller cap or higher valued could already be at risk. Uh what we are watching as potentially uh a more nefarious outcome is if this ris rising bond yields is no longer driven by the market but start to be cooperated or even driven by the Fed uh as they lay down a more explicitly hawkish playbook and I think that is the moment of scenario in which maybe equity will actually come under more broad-based pressure.

Is that's also sort of the case for what's happening here with JGBs? I mean, we're at multi-deade highs and the BOJ continues to tighten.

Yeah. I think I think Japan, you know, with the BOJ meeting last week, they actually showed us that, you know, they continue to want the market to be in the driving seat for long and bang and the BOJ kind of playing the catchup uh through shortand rates. So, I think Japan is where I actually feel that there is still uh more of a reflationist policy uh uh bias still. uh what I what we do worry a little bit more is in the US because there's obviously a lot of uh you know there there's much less transparency now with regard to the whole reaction function but if you judge by the September rate hike action itself there's a possibility that this actually could pivot into a more proactive rate hike cycle depending on how much inflation risk is being perceived by the Fed uh and if that is the case and I think we could start to see a Feddriven uh steepening at the long end or rise in the long And in which case I think it could put more equities in the more into under more pressure because um you know there's one thing for yield to be driven by the market and the market can feel comfortable that they know where it is but when it's driven by the fat then the market can be caught off guard particularly the equity market.

To be fair here in Japan I mean government officials keep insisting that they're not reflationist. So um let's talk about China US two-month trade truce. I mean does it make a difference for the markets? we still have so many unresolved issues.

Yeah, I think you know it's a it's a very short-term extension. It makes me feel that maybe um you know the the biggest takeaway I have is that may both side recognize that they cannot afford uh a bigger confrontation at this point for whatever reason. So they're kicking out all the all the difficult issues maybe after post post midterms to discuss um and maybe that's because they haven't just haven't had the bandwidth or resources uh to devote the you know to these discussions uh in the leadup to this meeting.

So they have to kind of uh punt it to to to over to after November. So it's it's a short-term extension. I think it's not, you know, quite what we were expecting if you follow the playbook from Busousan and all the way earlier to uh to the May uh to the May meeting last year in Beijing. So I do have a you know slight worry that maybe this trade worry or tariff tension could go back to become more short cycle, more volatile, more unpredictable.

That certainly is a risk uh depending on how uh which way midterm goes. That was Julia Wong, North Asia CIO at Namura International Wealth Management, speaking with Bloomberg TV host Sheran, bringing you their conversation here on the Daybreak Asia [music] podcast. Welcome back to the Daybreak Asia podcast. I'm Doug Krer. The Reserve Bank of Australia has a rate decision this week. Policy makers are expected to raise the cash rate given the fact that they are dealing with persistently strong inflation.

And that's where we begin our conversation with Ilana Jane. Iliana is international economist at Westpak. She spoke with Bloomberg TV host Heidi Stroud Watts.

So let's kick it off with the RBA where the pricing expectations of the rest of this tightening cycle has changed track quite dramatically even just over the past few weeks, right? What are we looking at in terms of the signaling?

Yeah, so we are expecting that the RBA will hike tomorrow. A lot of that's going to come down to the inflation print and the their expectations for inflation. So we saw in that July print that inflation was not only high, but that inflationary pressures were broadening. So it wasn't just one part of the economy that's showing quite strong growth in prices. It's more broad-based. We saw that the percentage of the CPI basket that's growing beyond the RBA's target band is much higher than it was previously.

And so that puts the RBA in a bit of a tricky spot because it adds risk that that Q3 number will come in stronger. And if they aren't seen as taking inflation seriously, it might show complacency on their part. So this hike