boj in particular. yousef: thank you. still coming up on the program. theill take a look at, it investment proposition from palestine. we will keep you abreast from all the latest from japan. stay tuned. this is bloomberg. ♪ angie: welcome back. you are watching bloomberg. yousef: a quick check of the latest business flash headlines. is way toiran building a consensus on stabilizing prices. the country has agreed to do everything possible to reach an agreement with both members and nonmembers. he comes ahead of next week's informal opec meeting in which algeria says may become a formal session depending on how discussions progress. angie: qatar has sold $1.2 billion worth of local currency bonds as they seek to reduce the deficit. -- it faces a budget gap of almost 5% caused by the slump in energy prices. other exporters including saudi arabia and kuwait are tapping the bond market to cover shortfalls. meci group has signed a deal to build a wind farm costing $840 million. it will be located in t nort

the boj central policy decisions of late. what's your take on the policy changes made today? >> yeah. i think this was generally productive and constructive and also that the market will come to this decision. >> but we're hearing some new terms here about yields. >> yes. the problem was people considered too much flattening of yield curve means long term interest rate was too low. this could actually have a detriment on the bank's profitability and mediation and also people who have a funding the insurance company may also suffer from long term yield it's very, very low. actually this green line was very low. after ten years minus 0.2. now the current yield curve is around here and boj decided today to generally maintain today's yield curve going forward which means that they generally say don't worry about it, this will never happen. so actually this gives more confidence to pensioners and older people and generally households and banking sector. so take out any possible side effects. i think it is constructive. >> so there

it is on the boj website. thanges, but it says more half a year since they introduced negative rates along with qe. they concluded that it works. they managed to get japan out of deflation, bring them short-term yields. down short-term yields. they have managed to bring that down as well. i have come out with a tweak because it is flattened up until maybe a month ago when it started to stephen. guess started to -- started to steepen. the boj did not take rates further below zero. anna: thank you very much, david ingles. don't forget we will have the press conference in around a half hour time. governor kuroda giving that press conference at the boj. you can watch that. we will be digging into that. let's get to bloomberg first word news with tom mackenzie. ♪ iran is building a consensus on stabilizing the oil market. that is according to the mohammed bahr khiem do, he spoke to bloomberg in rome at the future of energy conference in collaboration with any. >> i met with the minister as well as the president.

boj monetary policy. david ingles joins us. breakdown the announcement for us. i think the key takeaways from what we heard on the bank of japan in terms of the announcement and the press conference which was behind me. the tweak to the current framework should not be misconstrued as tapering. the governor said this new framework is better. it is better equipped to deal with certain conditions and the other key take away leading to that was this move away from this target of how much they want to expand money supply, the monetary base here in japan to something that allows open market operations to give them more control over the yield curves. they want a yield curve that is appropriate for the japanese economy. to most people it means they want to prevent the yield curve from flattening further, like what we saw between january and a month or so -- a month ago. boj. david ingles at the let's welcome stephen king. ask for joining us. -- thanks for joining us. david ingles using the twist term. stephen: tw

the boj owns 55%. by the time -- what if the market was to sell of more gigi --s, are they willing to go more gigi beas, are they willing to go 90%? there is a limit to what the boj can do. this is not a blank check. question.e ask you a when will the boj in your mind hit the 2% inflation target? mind, i don't think they will. they might be able to hit it for a few months or a quarter to, but on a sustainable basis, like what they have put into the target today, i don't think they are able to do that. demand is notm is blowing enough to achieve that. -- demand is not growing enough to achieve that. caroline: ken, what about later today? where in the middle of a sandwich of central-bank policy -- we are in the middle of a sandwich of central-bank policy? ken: the fed is interesting. we had a boj move that propped up the u.s. dollar. that moved up in u.s. dollar may be taken away in the fed comes forecast --the feds the fed upon forecast is going to show fewer than three hikes next year, and a lower term

the white really ticking upwards in and around this boj meeting. but it's not just the boj. we have the fed meeting of course as well, a real short as boarl smorgasbord. what is your expectation with barclays and bnp sticking their heads in saying that the fed will hike? >> we think there will be a hike, most likely, just not this time around. there has been some recent softening in the u.s. data at the manufacturing level and services level. that combined with some of the uncertainties we are seeing, we expect them to hike, but further down the line. anna: they must be very mindful of the political events in november and how that could change, or might not change, the outlook. it's a big unknown.they don't know what markets will look like in december. if they wanted to do a hike, isn't it now or maybe later? >> there will be a game theory of saying that to do it before the election, if you assume they will do one and wait for longer, then yes, it could make sense. that said, we have been here many times before. i see expectations of the next hike to go up. 40% as of are at

but this assessment, it's stronger for boj to achieve 2%, boj has to show additional action. otherwise it's not consistent to raise boj's communications. >> reporter: so certainly no consensus ahead of this decision coming down tomorrow. we actually conducted our own poll going the banks asking them what they believe the boj will do and banks including goldman sachs, barclays and deutsche bank coming back saying they don't expect the boj to do anything at all. everything is on table here. one consensus consistently in the analysts and economists we've been speaking to is the boj is slowly reaching their limit. >> thank you so much. head to cnbc to find out why bank of japan could over shadow this super wednesday. >>> while we're in waiting mode our european equity markets are slithering sideways. they are a couple of point to the upside. we're look at flat markets as these two day meetings kick off. that's reflected on our broader markets as well. relatively lackluster in terms of big board performance. we still have quite a bit of news flow especially moves in the oil and ga

kuroda.rnor c the boj do inf the next couple of hours. it looks like we have given some back, the nikkei 225 down. a big, ugly print for august trade numbers. could the boj take that into decision as they make that decision today? giving back gains, kiwi stocks as well. trading flat at the moment. weakness from singapore, malaysia, and taiwan open. sydney stocks rebounding, a nice gain and leading the region higher. in the last few minutes, we are seeing a little move to stronger 101.76, but still pretty much range bound. volatilityied spiking in the overnight session as we tend to do a head of boj decisions. we have had that reaction ahead of the last three meetings. absolutely. investors anxiously await that policy decision. some disappointing august trade data. data,start off with this imports and exports show this losing streak. what on earth is going on here, david? exceedingwe call it, expectations to the downside, a horrible set of data for august. exports down for an 11th straight month. it does not tell you that part of the econo

i think the boj is a technical. i think inflation and investors have not heard the term premium for several years in the treasury market. treasury yields fell earlier this year because of flight to quality and concerns about china. that fadesat concern you would expect some upward adjustment in treasury yields. alix: he saw investor demand come in. why is that not right? >> we want to wait and see. the boj has a lot of options. but it also has a difficult challenge ahead. there is a technical factor behind this deepening. there is a more fundamental factor which is higher inflation risk and evaporation of concerns about a crash landing in china. jon: looking at a steeper yield curve and prospects for more inflation, why do you think there has been an aggressive give it away from long yields being lower is a good thing and now we need to do something, particularly in japan? >> in japan, the boj has been getting a clear message from the banks and insurance companies that the flat yield curve is hurting us. we have ame

the boj loves bonds. i think it is the right move to take a little bit of the load off the shoulders of monetary policy and loaded onto fiscal policy. little foreign debt, like china, so it is not an issue. i am not too worried about that. >> we talk so much about the fed in japan. i want to talk about something different. you continue to like emerging-market that. what market should investors be putting money into? >> our favorite market in the last 4-6 weeks is india. after getting a new governor for the reserve bank of india, who mold, acally in the same ol well-liked and together guy. that has given everybody the confidence they will not blow out the fiscal situation. i think it is very good and positive. indonesia,iland, basically the same reason, fiscally conservative, but not a stranglehold on fiscal policy. should not be concerned with currency exposure at the moment? indonesia, india? >> i don't think there is an issue there at the moment. the indian currency has been appreciating. currency has b

have -- as the boj have over that? >> it's a question of what they are willing to do to get the control. it's entirely feasible for a central bank to aggressively by lots of stuff and affect the price of securities. that does not affect the underlying long-term interest economy.the whole real if anything, it might create a wedge. the bank ofof japan, especially given where the currency is to keep buying bonds as much as they need to is pretty high. the by theve seen dip mentality and even with the yield curve steepening, there was strong investor demand. did change that investment strategy for bond buyers? >> no, i think not. attention to steepening the yield curve was made in consideration of the stress of the financial industry. japanese bank lending margins are among the lowest in the developed world. the move to negative interest rates was putting more pressure on those. in addition, the insurance industry in japan really only came out of their crisis, the banks of the crisis in the early and mid-90's but the insur

the boj is definitely in the drivers seat. do you buy this theory that the primary dealers of the united states are going against the market? it is right to do this in advance of going against the market. their argument is that the fed is going to reassert its independence, that refers to the government and not the market. they will be interesting to see whether they make that decision that we are in charge. the dog like the tail, not the other way around. >> i think the fed will be very worried but the negative consequences of not informing the market sufficiently beforehand. i think everything is in place for the fed to hike. thereinancial conditions, -- if the fed doesn't doin it now, it is running out of time. december will be the next opportunity, quite late in the cycle. i understand the arguments. guy: i just have to show you a chart before we wrap this chunk up. this is usd, three-month libor. chartit has been rising quite aggressively. financial conditions are tightening. discuss, discuss, discuss. the things i look a

on the boj. boj is the problem with the , and it has nothing to do with the yield curve. my problem is this church, the employment, unemployment figure for japan. it is below 3%. alan'ss is the boj sheet. the matter what it does with negative rates, the problem is structural. that a lot ofing european countries and the fed would dream about. you have to get immigration through and put women back to work, and it is structural, taxes. you have to make sure that the economy works. more important. it is structural, get people back to work. david: immigration in japan is a tough one. alix: rates are going up. this is one-month libor, that purple line. these are kind of interchangeable. the blue line is prime money market fund assets, and the white line is government money market fund assets. a huge they versions in selling. new regulations coming in mid-october. that has put a lot of up pressure on libor, a two-basis point move and libor can be as much as $14 billion in extra interest payments for com

up next, the boj's big day. kurodaroda -- cu roda -- 's policy announcement could steal the feds thunder. ♪ mark: let's get the bloomberg first word news with nejra cehic. nejra: authorities have charged the man they believe responsible my the new york, attack, condo homage -- amman con brought me. he is facing five counts of attempted murder of a law enforcement officer. they do not believe he operated as part of a terrorist cell and are not actively seeking other suspects. the central bank left foreign costs unchanged saying the record low rate is helping the economy absorbed a fall in business. he paid tribute to glenn stevens, saying he made exceptional judgments during a challenging period. john stumpf will tell congress --t the bank's failed without authorization. he will say he is deeply sorry and layout a timeline showing how the bank will tackle misconduct. wells fargo's stocks have tumbled as a result. global news 24 hours a day powered by more than 2600 journalists and analysts and more than 120 cou

francine: boj did try it. there was a day where they said this is what we are doing on when you went into the detail, a lot of it was already planned out. gilles: fresh stimulus is the issue. francine: in europe? right. are you expecting more stimulus? gilles: i think we're putting too much hope. we already have a fiscal push in europe. [indiscernible] there is a change in the fiscal stance. and as longomentum as germany clearly doesn't want to reverse its fiscal stance and -- ing as other countries don't think we'll see a lot more than what we have seen. francine: is there any doubt in your mind that they will not raise rates given that the market is only pricing in a 20% chance. them.: we are considering francine: y? because of the uncertainty, lack of wages and the presidential election? gilles: the fed seems to be a glass half-empty mode. they will always care about the risk and they are taking, where they are in the cycle and where [indiscernible] it makes sense to err on the side of caution. the market l

so they're looking really for any signs or moves by the boj. i want to touch on rebounding crude oil prices as well after word from venezuela's president on sunday that an agreement between opec and non-opec countries is close to reaching a deal on price stability. that sent crude oil prices higher. >> you did mention the holiday for stock markets here on monday. we did at the same time see a drop in the dollar. give us the levels this tuesday morning. >> we've seen a continued volatility in the dollar/yen right now at 101.88. it's gone through some volatility, not helped by conflicting words from fed officials, either talking down a rate hike as we heard from lyle brennard, or talking it up from hawkish officials. data has dampened expectation forth a rate hike this week as we saw last retail sales report showing slowing growth for august. let's have a look at asia-pacific markets that are open right now. seoul's kospi is in the negative. sydn sydney's s&p asx200 in the negative. a technical glitch halted trading in sydney on monday. china mar

it's steepening a bit this morning on the boj. but we would look to fade that steepening. >> 1.7%, that doesn't scream a rate hike should be coming soon. shouldn't we be closer to 2% 2.2 when it comes to the ten-year yield? i know this is a result of qe by many banks, but it doesn't gel, does it? >> rates are very low. they have picked up. they will go higher, but i have to say this conviction is less strong after the boj this morning, as i said, rather dispiriting. after the fed, the focus moves on to the u.s. election. i think that will participate to that debate that worsening a shift from monetary policy to fiscal policy. it's something that is flattening for bonds. you could get some trade deals which may be undone. so this will be a bit of a threat for treasuries depending on the polls. >> you think there could be that much of a reaction in the markets if we see a trump win? couldn't we see the opposite reaction, take care of your own economy, more protectionist angle, you see more domestic growth, organic growth? couldn't i

investigators are looking to see whether the boj will expand monetary easing. it's been more than three years since the boj launched thehe massive easing strategy to boost the japanese economy but consumer prices haven't risen. the negative interest rate was introduced in february. some economists say t that caus profits at b banks to fall and confidencece to weakaken. kurodada said earlierer this mo there's s still sample scope to push the interest rate further into negative territory. policy makers are also expected to discuss whether they should set a new time frame for chaefing their 2% inflation target. their current goal is about two years. >>> checking the markets, tokyo stocks ended mixed as investors await the outcome of the boj and fed meetings on wednesday. giang nguyen reports. >> investors are firmly focused on the two central bank meetings but we're seeing a lot more moves causing the swing in and out of negative territory. the nikkei 225 lost 0.2% closing at 16,492. but the broader topix endsed higher by 0.4%. trading volume was low as investors

yvonne: boj will cut. talkinge also been about a steepening yield curve, particularly focusing on the long end for the boj. do think that will of the fears that the market has right now? be in i said, it will conjunction with a larger package, which is difficult to predict, because within the boj there are nine board members, and some of them have basically said they would like to cut rates, so that's why i say they will probably cut rates, but the broader package will be in conjunction with the government, and there is a lot less accord. markets,ll impact the i think we have to wait and see. , as youall right mentioned about that divided fed , we do start to talk about the bond markets when we see steepening yield curves not just in japan, but also the u.s. and europe. do you see any movement of the thishat could spur movement in the bond market, where we see a steepening yield curve towards the longer end? their bond yield was the one that started to rise first rack in july. in retrospect -- first back i

this is new territory for the boj. a lot of economists are septemb skeptical that 2% will be reached at all. >> akiko, thank you very much. >>> in the u.s., the fed takes center stage today. policy decision due at 2:00 p.m. eastern time followed by a press conference, news conference from janet yellen a half hour later. you can catch all of it playing out right here on cnbc. >>> also on the agenda today, a few notable earnings reports. we'll hear from carmax and general mills before the opening bell, and bed bath & beyond after the clothe. > close. >>> fedex shares rising yesterday. landon downedy hdowdy has the d. >> fedex posting first quarter earnings of $2.90 a share. that's nearly 10 cents higher than analysts forecast on revenue of $14.66 billion. the shipping giant considered an indicator of economic decisions citing strong revenue in its express, ground and freight business. fedex offering an upbeat assessment for the holidays saying they will benefit from e-commerce transactions and ceo fred smith addressed th

not to mention the boj statement toing that the boj will try look at the yield curve control at every meeting they have. still, japan consumer prices fell for a sixth consecutive month. all sectors in the red right now. financials leading declines, falling more than 1%, 2.4%. this is despite the fact that the yen has been weakening. it has seen its longest losing streak in almost a month there, losing ground now for a fourth consecutive session. we had some boost for the yen after we heard that news from the financial sector in the u.s., concerns over deutsche demand for safe havens, but now weakening slightly and continuing the downward trend. also that day to jump out of japan. we are taking a look through these numbers. inflation still a long way from the boj target. still, we are a long way from that right now. sixther prices fell for a straight month. withown 0.5%, in line estimates. also fill 0.5% year on year, more than expected. inflation facing headwinds from a strong yen and lower oil prices. gains have heard corporate profits and push down import prices, making it harder to

fed and boj meet this week. markets are closed. we have despite the convoluted title, the overnight interbank yuan rate, increasing the most since january. speculation that pboc intervening in the chinese country. that is the second biggest gain on record. let's put the markets to one side. authorities are continuing the hunt for those behind a bombing in new york city's chelsea neighborhood that injured 29 people on saturday evening. the cityk came as prepares for a united nations general assembly. >> for all new yorkers, the messages be vigilant at this point in time. because we are going into united nations general assembly week, be vigilant because the police need your help. if you see anything that might be pertinent, we need you to call it in. will see aknow you very substantial nypd presents this week. bigger than ever. anna: bloomberg news su keenan joins us now from new york with the latest. reportstand there are that some of arrests have been made. what can you tell us? of reports,r including abc news, our that five indiv

the boj has a very hard times, but i think the boj at least addressed concerns about the sustainability by shifting yield targeting. anna: we will talk a little bit more about japan, thanos. >> difficult times for the central bank. manus: thanos, stay with us. highlights from the day ahead, it is friday. anna: in less than one hour, we get a snapshot from the u.k. property market. then, it is french inflation data. we are back in the u.k. at 9:30 for gdp. personalen, it is u.s. spending, the consumer, anna. that is what it is all about. anna: u.s. businesses are flying blind almost 100 days after the brexit vote. we have more on british investment, next. yen's strongest rally ine ighn eight years has hit a psychological barrier. anna: divisions at the central bank persist. we will have more from patrick parker. this is bloomberg. ♪ manus: welcome back. it is 1:20 in hong kong. you are looking at a very dull and gloomy shot of hong kong. ang seng dropped 1.2%. small numbers of hedge fund clients reconsider holding their collateral of deutsche bank. rosalind chin is with us for the bloo

the boj would take rates to. that is scale back slightly at the moment, .16%. in simple english what this means is that while the market still expects the boj to take rates down at some point, it is not as much it was back then in july when they disappointed. .his is the function mipr you get that across central banks around the world. japan is right here. you're seeing rates at about the same level. much forthank you so that. right, the singapore listed commodity trader noble is sharply up in the singapore session, 4.7%, although it is a very low base. the company announced it is still seeking a strategic investor and the return to profit maybe two years away. let's get over to haslinda amin. noble is looking for this new capital, something like $2 billion. haslinda: that's right. a smaller looks to be trader with fewer assets, it is searching for a new strategic investor, capital, finances are not where they should be despite plans to raise $2 billion on track. shares,ut jobs, sold assets, even holding back cas

the boj owns. ite looking at how much ,wns, 326 trillion yen of bonds 3.1 trillion dollars. that means there's a difference of $84 billion. gap has been exacerbated by the boj negative rate policy. gap does nothe look like a big one, but it is increasing. the boj's income can cover losses, but as it widens, it throws up questions about the sustainability of policies. rishaad: tell me something, this gap exist? rosalind: the boj marks down its bond holdings as the purchase price minus amortization. is increasing because of the boj policies, bond buying program, and the negative rate policy. research reach institute says the boj's distortions are highlighted. it will consume boj profits and a risk that it does affect the bank's financial stability. rishaad: very quickly, the boj has been putting some money a side for when it does exit stimulus. what are we talking about? rosalind: more than ¥2 trillion million, and that has been set aside and it is adding to that. profits fall, it may not continue t

ds rising, so taking the positive lead from wall street and putting aside what the boj is going to do next week. the wall street journal saying the bank of japan is split on how it is going to potentially push more money into the japanese economy through stimulus. boj officials telling bloomberg that it could be more in terms of buying more government bonds, but the yen stronger. it is another day, another headache for samsung. u.s. officials joining the recall. samsung urging users to replace phones immediately. it is a new body blow. what is the latest? recall,t is an official one million phones, 97% of phones sold in the u.s. essentially if you bought your , you before september 15 are covered by the recall. take your phone back and have it change for a free one. they had a conversation with samsung. they found the battery was too big for the phones's case. it created space and pinch the battery, creating overheating. incidents of overheating batteries, resulting in property of earnsd 26 reports two people who were using the phone. we have a graphic that shows you that. burns to pe

isn't probablyis the only issue the boj is mindful of, but at the same time, the boj is definitely keen that the inflationary mindset has taken place. they will conduct a comprehensive review next week. the next step for the boj would be to decide on how they can thisback -- reel deflationary mindset back. rishaad: some are saying out the picture for deflation is likely to get worse before it improves, so what gives? of course this is just one industry we are looking at, but at the same time, this isn't the first time this deflationary from thehas taken on fast food industry. in the 1990's, when mcdonald's cup prices specifically strategically, it also triggered other fast food restaurant chains to cut prices. analysts and economists say this triggered other industries to lower their prices, worse than the deflationary pressure, so only time will tell if this price cut will affect other industries as well. right.: thank you very much joining us from tokyo. right. let's look at some other stories we are following. president obama lifted u.s. sanctions with myanmar after talks with the de

ewen: look at the boj will be a short one. i think what we will see today will be the moving down of the dot.term. -- long-term a signaling that the terminal rate is lower. a weight andybe seahawks statement. -- maybe a wait and see caucus statement. francine: what will they tell us? ewen: no change. the long-term expectation for inflation are probably diminishing. in so doing, while rates will rise over time, it will be a bit, not a lot. any textbook proof of our new economics, whether it is boj with their original economics today? or maybe the idea of janet yellen not working in a vacuum of a global slowdown? are we in a land of new economics? ewen: i think we are. -- japanhat moving moving into the era of regulating is is rates, the next stage it will regulate recredit goes is a kickback to what you had in the u.s. in the 1940's and 1950's and the nationalization of financial markets is taking place. we have seen during wartime. the textbooks will be written after the events rather than before. tom: i look at this, francine

in tokyo and the beginning of what could be a boj decision. there is a lot of anticipation, but perhaps we will see an extension in the broader topix market. we are entering the last 90 minutes of trading there. ♪ angie: the top stories on bloomberg markets middle east. egypt says it is making good progress for securing the financing needed to seal a $12 billion with the imf which would be the largest ever in the region. ypt hopes this will attract investment as there is a shortage of funds, 50% below their levels in 2011. yousef: japanese stocks have been swinging between gains and losses as they wait for the boj to announce its latest policy decisions tomorrow. the meeting is already underway, unsureaders remaining about what new actions will be taken. bets on a september hike now down through 20%. takata shares tumbled as much as 50% this morning as there are reports bidders for the small aircraft -- air bag maker will not be doing that as they are desperately looking for suitors. almost 7 million airbags will be replaced in the next few

we were talking about the boj. can the ecb take something from the boj? alberto: i think at the moment, they are not doing it. the ebcb will probably do something in december. the paradox is if they are dovish, if they say we are going to do more, then yields go down and have less to buy. and what they are already doing becomes harder to do because there is no more bonds with positive yield. actually what they did in the last press conference was march because they said we're already doing what is necessary. you have to give us time. yields went a little bit higher, which is good for lending and banks. the and limitation of the current program is ok. i mean, eventually, they will have to do a little bit more -- mark: december. alberto: if things stay as they are, they may keep the current program in place. mark: what is doing more mean? because they are looking into the scarcity of -- alberto: what i would do if i was the ecb i would stop buying negative yielding bonds. i would do something similar to bank of japan, which means a slightly steeper surve an

first the boj and then the fed. thursday, we will see the new zealand central bank make great decisions among several others. with fedof the week officials taking part in a panel in philadelphia. it is central-bank heavy this week and back to the big event, the boj -- there is so little consensus about what the bank of japan will do on wednesday that investors -- some investors are abstaining. guy: let us talk about the three months risk reversal. we are joined by our chief economic correspondent in hong kong. the distribution of outcomes when it comes to this meeting is wide and there is so much at stake. so hard to call. what is the black box? >> good morning. well.ve just laid it out it is a confusing outlook heading into the meeting. there are two reasons for that. on the one hand, we will get a big policy assessment they have been working on since august. a report card on how things have been working. on the other hand, we are going to get the typical policy statement or decision. and economists are not certain

will respond positively hopefully for the boj, so last week we saw the boj governor haruhiko kuroda and his deputy explain the costs and before usingpolicy similar language, something we have not seen in the past. they went one step further to try to explain their negative rate tool, and at the same time one of the dangers of excessively low yields and long maturity bonds. so we are now seeing the market starting to react to that. we are seeing that in the yield curve, a steeper yield curve, so take a look at this. central bankhe signal a preference for a significantly positive rate in that part of the long term, we are seeing that the yield curve is becoming steeper, that white line over there compared to the red line, which would be a month ago, and were seeing the 20 year yield above 0.4% after dipping to around zero earlier this this change in strategy by the boj may be starting to pay off. the bojysts are saying is changing its tactics to one that is more focused on dialogue with the market. importantlogue very from a governor who is notoriously keen on surprising the market. >

the boj, to answer that question, directly, the boj is the bigger issue, because if you believe in this whole flow of funds story that $400 billion, $500 billion of assets have come to the united states because of negative interest rates, globally, then any sort of change to that flow of funds is going to affect risk assets. both on the corporate side, treasury side and equity side. and that's what i'm most concerned about. that's a boj story, ecb story. >> so what you're talking about is what everybody calls the carry trade. you borrow and come over here and buy high yield, which is one of your specialty areas. >> it is. >> hyg is the etf. if the boj comes out and says we're not going to go to negative rates any more. and they disappoint does high yield hyg go down? >> ig potentially more than high yield, actually. because it becomes a duration story. and in a way, i would rather be in single b or hy g, high-yield credit than high-duration ig type credit. >> what's the worst-case scenario on boj? >> base case, they continue with stimulative action. they might go to a range to 70 to $90

look ahead to the boj and then of course the fed next week. both hands and can between one when they make their rate decision. that the virgins in policies one of their key issues in singapore. we have our southeast asian correspondent haslinda amin. what was the general consensus? after a quiet summer volatility is back in the markets in a big way. they suggest a 22% of the rate hike. investors back to mulling over possible move in september. the global equities selloff continues. some suggesting that perhaps markets have lost confidence, central bank still have ammunition to promote growth. there is a sense that markets are on edge. chairman of the milken institute said it should not matter whether the fed raises rates are not. rates are still very low. take a listen. manyr me it reminds me of -- 20 or 30 years ago when we used to wait for the money supply, is it up, is it down? whether it is 25 basis points are 50 or 75 for me, interest rates are still very low. low, yet rates are there is rising liquidated. what is happening? the pressure

after the changes announced by the boj, we may see a volatile session here today. the banking sector, the auto sector and some very heavily weighted retail sector stocks may see some increased activity, i'll monitor all of those during the morning session. >> and tell us more about currencies because we really saw a drop in the dollar after the fed announcement, what's going on this morning. >> exactly, we did see an increased volatile any currency market. dollar-yen, 1.0 as the dollar retreated down 1% against the yen, investors are expecting further volatility. the rate's divergence between japanese and government bonds is growing, wednesday the yield on the ten-year benchmark, briefly rose above 0%, but u.s. treasury yields fell on thursday, with benchmark lows hitting near -- year lows, crude oil prices, another big focus, they gained overnight on speculation that leading producers may agree to a production freeze later this month, and of course a weaker dollar, boosted dollar demom natured commodities. let's look at asian markets that are open so far this frid

the boj meets next week as well. have show you where we been on assets over the last 24 hours or so. boosted, the s&p 500 up by more than 1% on that change in expectations here i. bad data equals good moves kind of story. many markets in asia are close, and this does not go all the way returning to billion dollars lost in recent days. , a weekly loss in oil prices, the glut set to continue, less applied irruption from nigeria and libya on the radar as we head towards that meeting in algeria. let's get to first word news. payeutsche bank says it on $14 billion sought by the u.s. justice department to settle an investigation. that's more than triple what some analysts had estimated to be the potential worst case scenario. ,iscussions are just beginning and they expect it will lead to a lower amount. the doj declined to comment. deutsche bank shares lost 6%. donald trump has dropped a major tax cut for businesses from his presidential proposals. muchhange makes his plan less favorable. such entities don't pay income tax

markets are calling the boj's bluff. are going in the opposite direction from what policymakers wanted. david, what is happening now? opposite ofomplete what they wanted. have a look at the yield curve. between comparison september 19, meeting on wednesday, wrapping up, and this is where we are at the moment. the longer end is falling more than the short end. at the leftmost side of your screens, we are inverted again on the short end, which speaks to this note coming to control the yield curve is an error for the boj. can control -- p contro they are looking at the wrong thing, at least pulling on the wrong levers. i mentioned, we are looking at the complete opposite of what the boj wanted to see. haidi: the yen looking to retest 100. officials say they are ready to act, and were talking about intervention again. every time we get near 100, we will get these verbal warnings. level,ested the 100 there was an emergency meeting the financeboj, ministry, and the securities regulator on the japanese yen. they are ready to ac

guy: let us talk about the boj and what is happening. the bank of japan has signaled a shift away from policies that surprised the market according to analysts. we had been sifting to get sifting through recent speeches. just to talk about transparency. there is a behind closed doors meeting happening today. --are they talking about regulations? everyone wants to know what the boj is doing next. michael metcalf is with us. is waiting for general kuroda -- governor kuroda. we will wait and see what the boj is going to do in the review coming up. if they start changing the way that they do things, maybe we will follow suit. michael: it was interesting that mario draghi of adopted the same will dos the boj -- we a review and come back to you. and the bank of japan does the same thing though they are one step ahead in the process. you also have to remember that in contrast with the fed, the ecb and the boj have made it part of their policy to get the right market impact as a price the market. both central banks have done that and perhaps tha

you have the boj and the fan. the boj could miscalculate what the fed is doing. john: absolutely. who knows how much they talk behind the scenes? clearly there's a lot of moving parts on wednesday. dollar-yen is likely to be the key battleground. francine: john wraith, thank you. up next, we bring you our weekly show, "brexit: what's next," with all the news, analysis, and conversations around the u.k.'s vote to leave the eu. we are live from bratislava. we also have an entrepreneur benefiting from weaker pound. this is bloomberg. ♪ francine: welcome to our weekly brexit show from london. i'm francine lacqua. every friday, we round up the news, analysis, and conversations that will make you smarter about what is next for britain and europe. let's get you some of the brexit news with nejra cehic. nejra: the bank of england kept its key interest rate at a record low of 0.25%. policymakers indicated there's still a chance of another rate cut this year as they assess the potential longer-term fallout from britain's decision to leave the union. the u.k. unemployment rate stayed at an

don't miss this, the boj decision tonight. we will have the outcome of the company has a policy review, no changes to the qe. 1:00 a.m.. matt: i will also be looking at mylan's ceo, forever's -- oversight committee, price -- four --r epipen for epipens. we will have full coverage, a special report at 1:00 p.m. new york time. you won't want to miss this. scarlet: and janet yellen live at 2:30. thank you for watching. ♪ mark: i am mark halperin. and i'm john heilemann. with all due respect to donald trump, we know what type of candy he is not giving out at halloween. ♪ john: on our show tonight, new details emerging about ahmad khan rahami, the man suspected of setting off homemade explosive in new jersey and new york this weekend, i

iswhy do we expect the boj changing the way they communicate? j.p. morgan chase thinks they are adopting a different communication strategy. last week, when governor haruhiko kuroda and his deputy highlighted the cost and benefits of boj policy. they used similar language. they talked about the negative warningl as well as about excessive low yields on long-term maturity bonds. we are seeing them to be more open with the markets, not surprising given that we saw these there he volatile moves that were not intended by the boj. december, equities tumbling, yen soaring after they tweet their policy. it was perceived as more easing, then it turned out it wasn't. the same thing with negative rates in january. analysts thought they were running out of options. they are trying to be more open. take a look at this chart here . we are seeing a steeper yield curve today than a month ago. the line in white, the 20 year , sort of above 0.4% reacting to caution from the central bank that it may not be too happy to see the excessively low yields and they may prefe

. >> the boj has shifted its focus to controlling the base. governor haruhiko kuroda said the base target which they previously fixed, may now fluctuate in the short term. policymakers seeking to control the curve. and talk us through the details that have been announced by the people in the room behind you. >> as far as the expansion of stimulus is concerned -- we're talking the two main levers -- negative rates and expansion of the asset purchase program -- they basically kept those things unchanged. they kept the policy rate at -10 basis points. but the key take away from what they did was the refocusing. their main focus now is on the yield curve. they don't want the yield curve to flatten. as far as the boj is concerned, they have said a flat yield curve is very bad for the economy. >> on the one hand, they have said they have given up this idea of a time frame of hitting a 2% inflation. they have lost credibility, so they are waving the white flag. but on the other hand, they are talking about taking enough measures to make sure they ove

does this increase the chances of the boj reaching the inflation target? they said they are willing to go past the target, but does that shift do it? >> there are chances it could happen. the most interesting thing, there are a number of papers from 10 years ago, were they listed out the different options you have in the situation and one option on the list, targeting long-term interest rates. nobody else has done that. and now the bank of japan has opened that door. you do not want the ages rates to go up too much -- interest rates to go up too much, or down too much. so there are a number of issues that go into it. we have opened a new chapter in monetary policy, mainly the point in terms of what of the options for the central banks that want to try different things. will it work? it remains to be seen. so far the market reaction unfortunately has not been on their side. matt: thank you for joining us. suchpreciate your time on a busy day. scarlet: coming up, it into -- and your love and -- andrew will be joining us to give us his interpretation of what

mark b.: the other biggie next week is the boj. interesting fx story because the best-performing, but the fx market is telling you a different story. what is going on? kristine: it is telling a different story. if you look at a one-week risk-reversal chart, you will see bear sentiment on the yen is thinking appeared investors are paying a premium to buy the dollar against the yen. that was not the case earlier this week. it is a reflection of what markets are expecting from the doj. we have seen a spectrum of expectations -- boj. we have seen a spectrum of expectations being built up into next week. julie: to get back to the fed for a moment, and the expectations thereof, we had inflation data -- the cpi -- showing inflation is heating up yet if you look at w rip and you have the expectations for the september meeting, november and december, you are still not looking at high expectations. so, is it a foregone conclusion, even with that information -- inflation data this morning? kristine: i think so. beatne inflation and that estim

how about the yen post-boj? >> we are seeing a little bit of strength come through the japanese yen. 194 on dollarelow yen. we will get more clarity later on. currencies, the kiwi dollar falling to a one-month low off the back of a surprise large tradegly deficit. we are also following the lira. 299. >> whereabouts stocks, specific stocks you are watching? two groups ofg stocks. 26 minutes from now japanese banks will be reopening. a 6% spike on wednesday, things were shot thursday. declines on friday about 1.4%, that is natural. 1.5%. lots of downs at the moment on the ability to bend it when you look at the yield curve. the other group i'm walking -- let me shift the chart. we're looking at more home purchase restrictions and china. a city announcing several rules that will come into effect today , so we are watching the property shares very quickly. that is how we did on friday. real estate, 1.5%. >> thank you so much. week was a big one for central banks around the world. the fed give us another eight by a r

and if it can't, then what can be the boj do? of course supporting asset prices is a key factor in central bank policy, and battling deflation here has been a monstrous task for the boj according to many analysts. regarding individual stocks, shares of fast retailing, operator of uniqlo fell more than 5% on saturday. speculation that the boj might review its stock related funds purchase led to a bit of a sell-off of the market heavyweight company. and takata shares plummeted more than 11% on media reports that its backers might be looking at bankruptcy proceedings to limit their turning back to central bank moves and the federal reserve, most are not expecting a rate hike later today, but there's been some confusion, ai, as several fed officials have recently come out with clearly conflicting views. some are even arguing if it has to wait until december, it might actually decide to fire a shot today. we'll see. >> we will see. and we've really seen different reactions in all different kinds of markets. not least of all currencies

that is only going to undermine credibility around the boj. it has been a day of mixed signals and disappointment that the boj has not taken new steps to keep the economy ticking over. it is more of a pat on the back for themselves that things are going smoothly. thereally, poor lending at half. scarlet: erik schatzker is standing by as get closer to the announcement. erik: no change in interest rates, no change, but a strong suggestion that there will be a quarter-point hike before the end of the year. you can see it, of course, in the dots. 14 of 17 fed officials expect to and 2016 with a benchmark rate of at least 50 points for the first time since december of 2014. we are talking about almost two years. three policymakers -- dissented three, from the majority. mester,engren, loretta and another voted to raise interest rates to half a point at the meeting. matt: did you think we got what we expected? >> i think the major breaking news is definitely the dissents. for a long time, we have been interpreting all kinds of fed speak. some have mo