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Speaker 1: Let's get to our guest for the half hour, Ni

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Speaker 1: Raj Seth is with us. He has head of Asian

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Speaker 1: Credit for black Rock, joining from Singapore. Raj, thanks for

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Speaker 1: being with us. We're bracing for the inflation ratings for

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Speaker 1: China at the bottom of the hour, and then obviously

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Speaker 1: in the States tomorrow, it's the CPI data. Where are

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Speaker 1: we in this inflation cycle in your view? So, I

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Speaker 1: think we're still in the midst of the high inflation

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Speaker 1: and backdrop globally, less so in China, I would say,

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Speaker 1: compared to rest of the world. So in case of China,

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Speaker 1: I would expect we'll see a little bit of an

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Speaker 1: uptick on CPI and maybe some cooling off on the

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Speaker 1: PPI front, but not a significant voluctarly in inflation terms.

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Speaker 1: Coming in next thirty minutes. On the U S front,

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Speaker 1: we might see some rispite, specifically on the non code,

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Speaker 1: given we have seen the gasoline prices over the last

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Speaker 1: five to six weeks drifting lower, but one data point

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Speaker 1: doesn't make a trend. We're still, obviously are in the

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Speaker 1: inflation environment which has been mostly even what people expected

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Speaker 1: coming into the US. If we do say a high

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Speaker 1: China's CPI print. What does that mean in terms of

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Speaker 1: the PBOs is willingness to kind of ease interest rate policy.

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Speaker 1: So overall, I still believe that BBOC will stay more

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Speaker 1: on a neutral stance than necessarily easing very aggressively here

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Speaker 1: And in fact, if if you look back last twelve months,

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Speaker 1: despite low inflation in China, we have not seen any

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Speaker 1: aggressive easing from the central bank. We've seen more liquidity

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Speaker 1: measures and a little bit more of a focus coming

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Speaker 1: through on the fiscal front, alongside some slowdown of tightening

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Speaker 1: on the regulatory side. So overall I think PBUC stands

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Speaker 1: will stay more neutral to maybe on the margin accommodation

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Speaker 1: through liquidity measures to support the economic growth going forward. Yeah,

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Speaker 1: the export data was pretty robust. I think if there's

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Speaker 1: a concern on the mainland, it's domestic demand, right, and

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Speaker 1: we know the problems with the property market. Should they

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Speaker 1: be addressing um kind of the lack of domestic consumption,

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Speaker 1: So there certainly should be a focus, and I do

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Speaker 1: expect that will take certainly take attention from the policymakers

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Speaker 1: in the government. But to be very clear, I think

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Speaker 1: one of the very important aspects which still remain a

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Speaker 1: big part of the constraint is the zero COVID policy,

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Speaker 1: so as and as and when we see easing of

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Speaker 1: that policy, that will be a big stimulus for the economy,

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Speaker 1: alongside any physical impulse or supporting the consumption aspects that

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Speaker 1: will come through. So on the credit side, then when

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Speaker 1: you look at the credit in China very quickly near Raja,

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Speaker 1: are you are you willing to take risk with some

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Speaker 1: of the let's say less than stellar credit ratings very quickly.

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Speaker 1: So we are cautious on China high market at this point.

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Speaker 1: And that's a combination of the technical backdrop as well

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Speaker 1: as well as the fundamental concerns that we have obviously

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Speaker 1: seen over the course of last twelve months. Curious to

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Speaker 1: get your thoughts about what you're seeing across and as well.

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Speaker 1: We've heard from primnisily here in Singapore saying that rates

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Speaker 1: and inflation are expected to remain high. Sure, so I

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Speaker 1: think that's a backdrop which is actually common across most

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Speaker 1: of the markets. So most of the economy is right now,

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Speaker 1: which will keep the policymakers on the margin on removing

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Speaker 1: some of the accommodation that we had for a very

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Speaker 1: long time from a credit perspective. We've seen some expansion

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Speaker 1: of risk premia opening up some of the attractive opportunities,

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Speaker 1: but broadly from a top down perspective, we still remain

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Speaker 1: on neutral too cautious. Specific markets, we like the Indian

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Speaker 1: high investment grade corporate in India, parts of Indonesia, Middle

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Speaker 1: East more from the investment grade perspective, but overall, a

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Speaker 1: very clear til or a bias towards quality. I think

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Speaker 1: that's an important element that will stay with us for

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Speaker 1: at least near them. Okay, so quality, I get that.

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Speaker 1: What about duration? I mean, given a lot of the

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Speaker 1: volatility that we have seen in you know, sovereign markets

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Speaker 1: right now and the inversion that we have in the U. S.

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Speaker 1: Treasury curve, it's not clear where the global economy is headed,

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Speaker 1: and the inflation story seems to be a little uneven.

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Speaker 1: Would you be more inclined to go long shorter duration?

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Speaker 1: So overall from a duration perspective, again probably on the

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Speaker 1: margin on the cautious side, because I do believe the

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Speaker 1: markets are still fluctuating between the whole idea of the

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Speaker 1: inflation policy hikes versus a risk of recession, and you

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Speaker 1: will see that back and forth with somewhe in the

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Speaker 1: range here, and as we've seen some of that inversion

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Speaker 1: and the bare flattening of the curve, I think we

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Speaker 1: have a little more room to go here as we

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Speaker 1: go through the data points and the upcoming heights. So

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Speaker 1: more inversion potentially, is that what you're saying on the

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Speaker 1: two stands, Because we're looking very closely to that U

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Speaker 1: s CPI data. So I would still expect this possibility

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Speaker 1: of more inversion here given the combination of fundamentals and

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Speaker 1: the technical backdrop here. So near rush does that mean

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Speaker 1: are you basically saying that the global economy is headed

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Speaker 1: to recession? It is not immediately going into recession, but

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Speaker 1: there's certainly signs of slowdown which are quite clear. I

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Speaker 1: would say, in fact, US economy right now still despite

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Speaker 1: the technical recession, data still seems fine. If you looked

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Speaker 1: at the job report last Friday with five and twenty

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Speaker 1: eight thousand jobs and average really and in still looking strong.

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Speaker 1: But it is slowing down, and globally, I think we

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Speaker 1: have been seeing the data showing signs of slowing down,

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Speaker 1: which will obviously manifest itself going into next year. Europe

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Speaker 1: obviously slowing down much faster and going into recession before

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Speaker 1: rest of the globe. In terms of the slow down,

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Speaker 1: I mean, we've been looking at consumer spending and that's

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Speaker 1: been holding up quite well across a number of nations,

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Speaker 1: even with rising prices. At what point do you think

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Speaker 1: that starts to buy it and play into the overall

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Speaker 1: picture too. I think we're getting close to that. One

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Speaker 1: of the solutions for higher prices is high prices, and

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Speaker 1: I think we're starting to see the consumers starting to

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Speaker 1: become a bit more cautious around the spending patterns now

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Speaker 1: most economies. Again, going back to the labor market aspect,

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Speaker 1: we've seen tight labor markets, low unemployment and earnings, which

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Speaker 1: have the wage growth which has been stable. As we

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Speaker 1: start to see the softening in that labor market, which

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Speaker 1: is I would say in the very early stages the

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Speaker 1: data has been mixed. That's where you would see the

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Speaker 1: slowdown in the consumer behavior and the consumption patterns. And

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Speaker 1: he right very quickly about thirty seconds or so. We've

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Speaker 1: got indications that the top auditor and China is reviewing

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Speaker 1: the trust industry ostensibly because of potential potential, and I

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Speaker 1: want to highlight that word of financial stability. Is this

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Speaker 1: anything you're concerned about. Not concerned, but certainly focused on it,

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Speaker 1: and to some extent China had a big d leverage

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Speaker 1: in focus on the shadow banking in back in which

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Speaker 1: did reduce some of the risks in the non banking sector.

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Speaker 1: I do think it's important to keep an eye because

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Speaker 1: of all the crisis issues and defaults in the real

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Speaker 1: estate sector. So this is more of a financial stability question.

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Speaker 1: Not overall concerned, but certainly focused on it all right,

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Speaker 1: Near Ash thanks as always near our Seth head of

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Speaker 1: Asian Credit at black Rock