Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis
Speaker 2: along with Doug Krisner join us each day for the
Speaker 2: stories making news and moving markets in the Asia Pacific.
Speaker 2: You can subscribe to the show anywhere you get your
Speaker 2: podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and
Speaker 2: the Bloomberg Business App. Joining us now for some discussion
Speaker 2: about the FED and inflation and the markets is mister
Speaker 2: Steve Sosnik, chief strategist at Interactive Brokers. Steve, great to
Speaker 2: have you in the program, and thanks for doing this
Speaker 2: on a Sunday. We do appreciate it. I want to
Speaker 2: talk to you a little bit about the FED. The
Speaker 2: stance that we heard from Jerome Powell. It seems to
Speaker 2: be part opium, part rational analysis. It's to be fair,
Speaker 2: and maybe just part patients. I'm curious your take on
Speaker 2: where we are now in the ballot between inflation and jobs.
Speaker 3: Well, first of all, good morning, Brian, and sorry to
Speaker 3: hear you were at a sweaty weekend. The there's definitely
Speaker 3: there is definitely that hopium element in this whole thing.
Speaker 3: You know, uh, you know, you have Larry Summers on
Speaker 3: Bloomberg TV, you know, on Friday night our time, basically,
Speaker 3: you know, saying that he doesn't understand where where the
Speaker 3: FED thinks that the neutral rate is. And I really
Speaker 3: I didn't express it quite so eloquently, but I've been
Speaker 3: I've been getting at the same point in some of
Speaker 3: the work I've been doing, which is, you know, we've
Speaker 3: got all this fiscal expansion. You know, you look at
Speaker 3: you look at rollicking stock markets, you look at bond
Speaker 3: markets doing fine, still pricing in big cuts. You look
Speaker 3: at heavy speculation and things like bitcoin and gold and
Speaker 3: other things that are non interest bearing assets, and you
Speaker 3: have to wonder, why do we actually need interest rate cuts,
Speaker 3: especially if the if the summary of economic projections is
Speaker 3: now up two point one percent, which tells me a
Speaker 3: recession isn't in the cards either. So yes, there's rational analysis,
Speaker 3: but I do have to think that that you know,
Speaker 3: he's feeding into this idea of this urgency that we
Speaker 3: need to get to a more neutral rate without willingess
Speaker 3: what that neutral rate is.
Speaker 2: Yeah, back to Larry Summer, is the one issue I
Speaker 2: would take with his comments is, you know, he's saying,
Speaker 2: why is the Fed in such a hurry. And actually
Speaker 2: the Fed did not say they were definitely going to
Speaker 2: start cutting rates by the summer. They said that they
Speaker 2: were watching the data and that they thought that the
Speaker 2: two months January and February.
Speaker 4: Were a couple of months. That's it, a couple of months.
Speaker 2: Just like they didn't overreact last year when disinflation was
Speaker 2: happening over a period of seven months. They still, you know,
Speaker 2: they still hung in there with their rate hikes and said, well,
Speaker 2: we'll see. That's still what they're saying, right, we'll see.
Speaker 2: So that's why I think the patience comes in. And
Speaker 2: should we doubt his word that if the inflation stays
Speaker 2: hot that they'll wait longer, or that they could even hike.
Speaker 3: I don't doubt his word. I'm not going to say
Speaker 3: that about Chairman Powell. But the thing I don't think
Speaker 3: he appreciates is if he says, maybe the market here's yes, okay,
Speaker 3: And that's I think really where it really stems from.
Speaker 3: Think about the reaction to the December meeting. He confirmed
Speaker 3: that we would that we you know, three rate cuts
Speaker 3: would be in the cards potentially for twenty twenty four.
Speaker 3: The market heard six, and you know, so this is
Speaker 3: I think what he doesn't necessarily reckon with when he
Speaker 3: speaks publicly. Or maybe this is what he wants because
Speaker 3: it just keeps confidence high and maybe actually reduces the
Speaker 3: need for the FED to do anything. Maybe.
Speaker 4: Yeah, I think that's where you got a point from. Yeah,
Speaker 4: you definitely got a point there. And well there's this too.
Speaker 2: I'm curious whether the FED and even the Biden administration
Speaker 2: should be getting a little bit worried about the oil
Speaker 2: price here. It has been creeping higher. We heard from
Speaker 2: the IEA about ten days ago they increased their demand
Speaker 2: for cap and they reduced their supply forecast. And you
Speaker 2: know that could become an issue too, right.
Speaker 3: Oh, absolutely, you know that that when when I I've
Speaker 3: tracked this several times where where I look at the
Speaker 3: consumer you know, expectations for consumer expectations for one year
Speaker 3: on one year inflation, it pretty much tracks the price
Speaker 3: of gasoline at the pump. Yeah, you know, almost perfectly.
Speaker 3: And so yes, that's the problem. If prices at the
Speaker 3: pump go back up, that's not good for the Biden administration.
Speaker 3: And a strong economy lists gas prices because there's more
Speaker 3: demand for energy.
Speaker 2: We we do have a story on the terminal that
Speaker 2: suggests that investors are back to putting on trades now
Speaker 2: that will benefit from a cutting interest rates, and not
Speaker 2: just citing the FED, but also the ECB and.
Speaker 4: The Bank of England and others too.
Speaker 2: How are you positioning for, you know, the sort of
Speaker 2: play over the next few months.
Speaker 3: Well, one of the things that I'm that I've been
Speaker 3: referring to because I've seen this trade to a large extent,
Speaker 3: and I call it fomo insurance. What we see in
Speaker 3: the options market is definitely options priced in pricing in
Speaker 3: it works more aggressively purchased to the buyside than to
Speaker 3: the downside. And yes there's a lot of speculation and options,
Speaker 3: but still the options market is the best place for
Speaker 3: institutions to put on hedges put on hedges, except the
Speaker 3: thing that they're hedging is they're fomo. They don't want
Speaker 3: to miss a rally. So if you've got Nvidia adder
Speaker 3: near aal time highs, or pick your product added near
Speaker 3: all time highs, you may not want to be putting
Speaker 3: a lot of putting a lot of capital into it,
Speaker 3: but you may want that upside. And we're seeing a
Speaker 3: lot of traders and investors basically buying the upside so
Speaker 3: that they don't have to put a lot of money
Speaker 3: into products that are added near all time hids but
Speaker 3: are performing so well that you really can't afford to
Speaker 3: miss it.
Speaker 2: We've got some time to circle back, but I want
Speaker 2: to get a question in on Japan and China and
Speaker 2: then if we if we have some time, we'll come
Speaker 2: back to the general thrust of things on investing in Japan.
Speaker 2: Chris Wood's a guy that I have read for twenty
Speaker 2: odd years. Jeffries used to be at CLSA, and he
Speaker 2: spent some time in a peace out late last week
Speaker 2: talking about how all of a sudden you're seeing interest
Speaker 2: from domestic Japanese investors in their own stock market and
Speaker 2: they've been net sellers for like twenty years. And you know,
Speaker 2: I ask you the question now because the ni Ka
Speaker 2: has rallied a lot and people are wondering, well, you know,
Speaker 2: I don't know, is it has gone too far?
Speaker 4: Your thoughts on Japan.
Speaker 3: Well, I think what what you're discussing seeing in Japan
Speaker 3: is human nature as it refers to the stock market
Speaker 3: at work. I mean, you know, supply and demand has
Speaker 3: a different as an upside down curve. It's the only
Speaker 3: it's really pretty much the only thing I can think
Speaker 3: of where the demand goes up as the price goes up.
Speaker 3: It's completely the opposite of what we learn in economics
Speaker 3: one oh one. And I think, you know, after twenty
Speaker 3: years of being beaten down by the stock market and
Speaker 3: it's lack of performance, I think it's quite encouraging to
Speaker 3: see Japanese investors looking at their domestic markets, although it
Speaker 3: probably would have been nicer if they've been looking at
Speaker 3: twenty thousand and starting to look at forty thousand. The
Speaker 3: other piece of anecdotal evidence i'd heard, and I can't
Speaker 3: put a number on it, but I think it was
Speaker 3: Eric Belchunas who reported that the Japanese government, thanks to
Speaker 3: all their quantitative easing, owns about seventy percent of the
Speaker 3: ETFs in Japan. And that's going to be interesting because
Speaker 3: at some point you'd like to think that the Bank
Speaker 3: of Japan would sort of take the profits on this
Speaker 3: and release those back into the market. Does that put
Speaker 3: a ceiling on things or do they let things get
Speaker 3: a little euphoric If that institution is that international and
Speaker 3: domestic investors coming back.
Speaker 2: In Okay, now a place that hasn't gone up and
Speaker 2: we can't talk about the greater fool theory is China.
Speaker 2: And we had the premier Lee Chong opening up this
Speaker 2: key Development forum. A lot of big time CEOs there,
Speaker 2: including mister Cook at Tim Cook at Apple, but his
Speaker 2: basic mess is to play down the concerns the Chinese
Speaker 2: economy is okay, how are you playing that?
Speaker 3: You know, I'm not one of the people who believes
Speaker 3: that China, you know, Greater China's uninvestable, but it's certainly
Speaker 3: you know, since the world is in love with momentum
Speaker 3: trading right now and momentum investing, you know, China's basically zagging.
Speaker 3: Well the rest of the world zigs moving sideways. You know.
Speaker 3: On the one hand, I guess if you believe in
Speaker 3: international diversification, you're diversifying if you invest in Greater China.
Speaker 3: The problem is, it's really the one set of you know,
Speaker 3: Hong Kong and Mainland of pretty much the one set
Speaker 3: of markets that are not at her near all time highs.
Speaker 3: And so you know, if you're a value player, yeah,
Speaker 3: there's definitely.
Speaker 2: Good time, right, there's some possibility. Okay, Steve, thank you
Speaker 2: very much. Got a homebrew coming away one.
Speaker 1: Of these days.
Speaker 2: Steve Sosnik from Interactive Brokers take a closer look at
Speaker 2: the FED and interest rates and the US economy with
Speaker 2: Mark Heppenstall, President and CIO of Pen Mutual Asset Management. Mark,
Speaker 2: is it safe to say that the FED is well
Speaker 2: into now starting to think about jobs more and a
Speaker 2: little bit less about inflation And how do you think
Speaker 2: the balance is at the moment?
Speaker 1: Well, Brian, good to be with you this evening.
Speaker 5: I do think that last week's FED meeting where FED
Speaker 5: Chair Pale I don't want to say he necessarily dismissed
Speaker 5: the recent uptick in inflation, but I will say it
Speaker 5: is hard to reconcile. I guess three rate cuts this
Speaker 5: year in light of the projection that the FED made
Speaker 5: last week that inflation wasn't going to hit their two
Speaker 5: percent target until two twenty six. So, you know, there's
Speaker 5: been a lot of talk about whether the inflation target
Speaker 5: may in fact be more of a range now as
Speaker 5: opposed to a precise target at two percent. But I
Speaker 5: do think that, you know, last year, they seem to
Speaker 5: be willing to sort of accept the fact that there
Speaker 5: was going to be some pain necessary in the labor market,
Speaker 5: and thankfully that has not at all been the case
Speaker 5: with more than five hundred basis points of interest rate hikes.
Speaker 5: But I do think that I would say that sort
Speaker 5: of dynamic between inflation and employment in the dual mandate
Speaker 5: is much more in balance than it was, let's say,
Speaker 5: at this point last year.
Speaker 2: Well, we had seven months last year of disinflation, pretty
Speaker 2: strong disinflation. We had rates coming or actually inflation coming
Speaker 2: down pretty solidly. It wasn't at the target, not even
Speaker 2: near it, but it did come down a lot. But
Speaker 2: I'm curious why so many people now think that the
Speaker 2: two months that we've seen here, even given seasonal you know,
Speaker 2: seasonal changes and everything, bad weather in January, why are
Speaker 2: those two months like swinging everybody on what the trend is.
Speaker 5: Well, that is that is a good point, because you know,
Speaker 5: we've obviously come down a long way, depending on which
Speaker 5: one of the inflation metrics that you want to use,
Speaker 5: but clearly we've made a lot of progress getting back
Speaker 5: closer to the FEDS two percent target. And I do think,
Speaker 5: especially as you mentioned that, you know, the seasonal in
Speaker 5: January tends to be I would say, maybe distorted a
Speaker 5: bit to the high side. I think it was two
Speaker 5: years in a row where January was somewhat of an outlier.
Speaker 5: But it does seem as though, you know, the employment
Speaker 5: picture is still somewhat out of balance, where there aren't
Speaker 5: enough unemployed workers to fill all the open positions. Some
Speaker 5: of the service sector inflation appears to be moving higher
Speaker 5: if you look at the wealth effect with what's happening
Speaker 5: within the stock market, it does seem as though even
Speaker 5: residential real estate, it seems as though buyers are now
Speaker 5: a little more willing to accept seven percent mortgage rates
Speaker 5: than maybe some of the sticker shock they had last year.
Speaker 5: So I just think there are a lot of factors
Speaker 5: that could keep inflation above the two percent target.
Speaker 4: Surely there's so much that we don't know.
Speaker 2: Patients may be their key position here at the moment.
Speaker 2: They do have the math working in their favor, and
Speaker 2: it's working in the favor of the American worker as well,
Speaker 2: because inflation levels are well below the Fed funds rate
Speaker 2: at the moment, and the longer they wait, the more
Speaker 2: the lag effect comes into effect.
Speaker 1: Right, Yeah, I.
Speaker 5: Mean that is very true. And I was listening to
Speaker 5: an interview earlier this evening on Bloomberg with Larry Summers,
Speaker 5: and he was really calling into question the neutral rate
Speaker 5: projection by the Federal Reserve and the fact that they
Speaker 5: kept it basically at near two and a half percent
Speaker 5: with last weeks dat plots and his estimate that it's
Speaker 5: somewhere above the four percent level today. So really it's
Speaker 5: it's just a question of how restrictive the Federal Reserve
Speaker 5: is today relative to.
Speaker 1: The neutral rate of interest. And I think there are
Speaker 1: a lot of secular.
Speaker 5: Forces that are that are at play here.
Speaker 1: So again, I think even if.
Speaker 2: He's right, even if he's right, and you know, that's
Speaker 2: pretty high four percent, I think the Fed's at two
Speaker 2: point six up from two point five. Even if he's right,
Speaker 2: the math is still working in your favor. Right, FED
Speaker 2: runs rate is five point thirty seven and a half, and.
Speaker 4: So you know, it's it's going to be it's going to.
Speaker 2: Be a sort of tightening measure that stays in place
Speaker 2: as long as they don't actually start cutting.
Speaker 1: Well, that is very very true.
Speaker 5: However, if you sort of look at where the ten
Speaker 5: yere treasury is today, for example, that that's awfully close
Speaker 5: to a four percent neutral rate.
Speaker 1: If that is indeed the target.
Speaker 5: So, you know, I think the slope of the yield
Speaker 5: curve is you know, clearly making longer term borrowing costs
Speaker 5: a lot lower. And if you just look at how
Speaker 5: easy credit conditions are today by certain metrics, and we
Speaker 5: spend a lot of time investing in the corporate bond market,
Speaker 5: you know, investment grade and high yield spreads are really
Speaker 5: near the lowest levels since the financial crisis. So again,
Speaker 5: there are a lot of signals today that says that
Speaker 5: sort of this fed forward guidance, this communication that's tilted
Speaker 5: clearly towards easier.
Speaker 1: Money, has in fact already ease credit by s.
Speaker 2: Do you feel pretty comfortable with Do you feel pretty
Speaker 2: comfortable collecting those seven percent or so yields on corporates?
Speaker 5: Well, I will say we you know, I think if
Speaker 5: you look at the absolute yield levels today, we think
Speaker 5: they look attractive, even if you think that let's say,
Speaker 5: inflation sort of stays in that three to four percent range.
Speaker 5: So I think there are a lot of attractive opportunities
Speaker 5: in the corporate bond world today.
Speaker 2: Yes, Mark, thank you. Unfortunately tied on time. Mark Hepenstall,
Speaker 2: President CIO of pen Mutual Asset Management, Let's get to
Speaker 2: our guest, Maja Bean Zaman, who is head of FX
Speaker 2: research shit A and Z. Maja Bean, thanks very much
Speaker 2: for joining us. Let's talk first about the Bank of Japan.
Speaker 2: It seems like what they did it didn't quite work
Speaker 2: out because we've seen weakness in the Japanese yet, and
Speaker 2: I mean, perhaps we can argue that it did work
Speaker 2: out and they sort of threaded the needle there. But
Speaker 2: then this morning you had the top currency official in
Speaker 2: Japan warning against speculation, saying that the action that we've
Speaker 2: seen here with yen is not in line with the fundamentals.
Speaker 2: How do you see the yen moving against the dollar,
Speaker 2: for instance, over the medium term.
Speaker 6: Look, I think over the medium time we do see
Speaker 6: a little bit of strengthening in the end, but in
Speaker 6: the short term, surely we think it will remain elevate. Dollar.
Speaker 6: En will remain elevated above that one fifty marks we
Speaker 6: have seen previously. You know, over the past year, even
Speaker 6: verbal intervention usually doesn't have much much of an effect.
Speaker 6: And at the end of the day, it's really those
Speaker 6: you know, dollar and rate differentials that are the key
Speaker 6: driving factor of this currency pair. And we have seen
Speaker 6: the dollar stronger over the last week, and that'speeding into
Speaker 6: dolly en.
Speaker 2: One of the issues seems to be that a lot
Speaker 2: of central banks elsewhere around the world looking to cut
Speaker 2: their rates at the same time that the FED may
Speaker 2: be cutting its rates. And so, you know, the strength
Speaker 2: that we saw on the dollar that we thought might
Speaker 2: turn into weakness with the FED cutting now seems like
Speaker 2: it's actually keeping the dollar strong, and so it's hard
Speaker 2: for the end to really rally against the dollar. Is
Speaker 2: you know, We've got a lot of variables there, but
Speaker 2: do you see that that other central banks and the
Speaker 2: FED moving and sync keeps strength in the green back.
Speaker 6: Look, I think in the short term, especially over the
Speaker 6: last few weeks, as you said, everybody's looking to cut,
Speaker 6: it's going to be the race to who cuts first
Speaker 6: and who cuts last, and possibly that's probably going to
Speaker 6: have some impact on the way the dollar moves. Of course,
Speaker 6: last week we had the SMB surprise. I think we
Speaker 6: had a little bit of that driving that dollar strength.
Speaker 6: We also had BOE now looking to sort of turn
Speaker 6: a little bit neutral. You could argue RBA similar language.
Speaker 6: I think all of that has lend some support to
Speaker 6: the dollar. CNY again, the fix was wider, so all
Speaker 6: of this lending support, but I think that's not going
Speaker 6: to be long lasting. We continue to maintain the view
Speaker 6: that into the year end, we're looking at the DXY
Speaker 6: at ninety eight to that's above four or five five
Speaker 6: plus percent from here, and there are many different drivers
Speaker 6: for that.
Speaker 2: I guess the basic math is the FED raised more
Speaker 2: than everyone else, so it stands to reason that they'll
Speaker 2: probably eventually have to cut a lot.
Speaker 6: Yeah, definitely, And I think it's a lot of things right.
Speaker 6: I think we had us exceptionalism helped the dollar over
Speaker 6: the last two years, particularly, and you know, as you said,
Speaker 6: they've gone stronger as well on the rate side, so
Speaker 6: they have to cut more. But also I guess, you know,
Speaker 6: the rest of the economies. You know, you could argue
Speaker 6: about China where maybe the green shoots are not really
Speaker 6: there yet, but then you know, in Europe they're starting
Speaker 6: to see green shoots. The rest of the economies are
Speaker 6: now starting to look better. Sure, we've had technical recessions,
Speaker 6: so called Japan was not really there. You know, England's
Speaker 6: behind the New Zealand, but that's all backward looking stuff.
Speaker 6: Going ahead, I think the growth differential between US and
Speaker 6: the rest is narrowing, and so I think that will
Speaker 6: help the currencies of the other economies as well going forward.
Speaker 2: How do you see bond yields moving, particularly at the
Speaker 2: short end.
Speaker 6: Look, I think bond yields front front end hels are
Speaker 6: moving to the tune of what the FED says and
Speaker 6: what the expectations are. You know, we were at technical
Speaker 6: technical levels before. We're moving a little bit over from there.
Speaker 6: And look, I think fects markets, which we look at
Speaker 6: dollar is very strongly correlated to what front end shields do.
Speaker 6: At some point we think that should be moving south.
Speaker 6: As you know, we get more data, we're getting PC
Speaker 6: this week that should give us some idea as well.
Speaker 2: I'm a little surprised to see that you expect the
Speaker 2: FED to cut four times one hundred basis points this year.
Speaker 6: Yes, so we do. We are a little bit more
Speaker 6: you know, I would say dovesh shirt than the FED themselves.
Speaker 6: And I think, you know, inflation is coming down. Of
Speaker 6: course we've had two months of higher inflation, but clearly
Speaker 6: power has clearly pushed that back from where we see,
Speaker 6: you know, the communication coming from the FED and the
Speaker 6: way the direction of the inflation on allo underlying data,
Speaker 6: and the job market is starting to look a little
Speaker 6: bit softer, and all of that will warrant you know
Speaker 6: that that that hundred business points of easing this year, you.
Speaker 2: Know, given the dovish stand that the FED had, and
Speaker 2: admittedly you're a little more dubbish than the Fed, but
Speaker 2: still in sticking with the three rate cuts, I would
Speaker 2: have thought that Powell might have been talking a little
Speaker 2: bit more about slight weakness in the jobs market, but
Speaker 2: instead he seemed to be pretty confident in job creation
Speaker 2: and the fact that you know, it's pretty steady and
Speaker 2: pretty strong.
Speaker 6: Look, I think it's various indicators non pompios, of course,
Speaker 6: are painting a fairly stronger picture than the rest of it.
Speaker 6: When we look at the underlying data and we look
Speaker 6: at the wage tracker, Atlanta wage Tracker and a few
Speaker 6: other you know, the job openings and all of that,
Speaker 6: all of that has retreated quite a bit, and I
Speaker 6: think that will play into the data as we go along.
Speaker 6: But you know, whether they go seventy five or one hundred,
Speaker 6: surely you know, sorry, the FED will be moving pretty soon.
Speaker 6: We think June will be when they start June July
Speaker 6: or July is when they will start.
Speaker 2: I want to go back to the Bank of Japan
Speaker 2: because I've been thinking about this a little bit over
Speaker 2: the past week about whether or not it might have
Speaker 2: been smarter for them to say we're dropping yield curve
Speaker 2: control and we're going to stop the buying of bonds
Speaker 2: and you know some of the other changes that they
Speaker 2: put in place, rather than what they did, which is
Speaker 2: they dropped yield curve control, but they said they were
Speaker 2: still going to buy bonds as they saw a fit,
Speaker 2: and that's why the yen has weakened quite a lot.
Speaker 2: Do you think that would have been a step too far?
Speaker 6: Yeah, I think so, And I think, you know, it
Speaker 6: was a pretty dubbish hike. And as you said, you know,
Speaker 6: buj they continue to maintain to buy bond at the
Speaker 6: same things they were buying previously. Now they should keep
Speaker 6: its balance sheet steady, and I think Governor Yuieda had
Speaker 6: mentioned that, you know, again not to shop the market,
Speaker 6: but you know, they will keep financial conditions accommodated when
Speaker 6: that's important with regard to getting out of that negative
Speaker 6: right environment. You know, that was pretty much coming and
Speaker 6: it was I think to me, I'm looking at it
Speaker 6: as a one and done. The rage negotiations really fueled
Speaker 6: the move a little bit earlier that we were first
Speaker 6: thinking April, but came a little bit earlier now in
Speaker 6: terms of when they're going to move next. To be honest,
Speaker 6: we do see you know, I mean the economic conditions
Speaker 6: in Japan are pretty weak. You look at consumption, it's
Speaker 6: pretty weak. We're looking at services PPI, which is the
Speaker 6: BOG watches closely. That's also retweeted. And when we look
Speaker 6: at inflation that came out last week again it's kind
Speaker 6: of retreating. So we don't think there's going to be
Speaker 6: a sequential rate hikes story here. Maybe they might hike
Speaker 6: once next to the start of next year, but that's
Speaker 6: dependent on how data moves and also very difficult to
Speaker 6: be tightening when the rest of the world is in
Speaker 6: an easy cycle.
Speaker 2: And I guess the final question on the Reserve Bank
Speaker 2: of Australia a little bit less hawkish, but still more
Speaker 2: hawkish than many other central banks, what does the outlook
Speaker 2: look like for the RBA going forward.
Speaker 6: Look, I think this shift towards I guess, as you said,
Speaker 6: less hawkish was coming, and that's really because you know,
Speaker 6: they've had monthly CPI data coming out, which seems to
Speaker 6: be retreating. We look at you know, inflation from all
Speaker 6: elements and surely is painting the right picture for the RBA.
Speaker 6: Having said that, you know, locally here we are expecting
Speaker 6: some fiscal easing coming through in form of tax cuts
Speaker 6: starting from the middle of the year. We think that
Speaker 6: the RBA may want to see the result of that
Speaker 6: on consumption and GDP before shifting the doll and so
Speaker 6: when we look at you know, they're probably the most
Speaker 6: one of the most hawkish within the GPN, and we
Speaker 6: expect them to only start cutting in November the.
Speaker 2: Just briefly, yes, briefly, in twenty seconds, do you think
Speaker 2: that oil prices will continue to rally?
Speaker 6: Yes, I think so. I think the demand side of
Speaker 6: the story from China is picking up, you know again
Speaker 6: that's been supportive, and supply side is retracting, so that
Speaker 6: point to higher our prices.
Speaker 4: Yeah.
Speaker 1: Yeah.
Speaker 2: We saw China's oil demand in January and February those
Speaker 2: two months pick up six percent from a year ago,
Speaker 2: and that does seem to be adding to some of
Speaker 2: the demand pressures. Thanks very much to Muja Bean Saban
Speaker 2: from A and Z. This is the Bloomberg Daybreak Asia podcast,
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