December 7, 2025 • 11 mins
Investors are looking ahead to the Federal Reserve decision happening later this week. Fed Chair Jerome Powell is expected to push through another quarter-point interest-rate cut this week. That is despite growing unease among fellow policymakers that inflation remains too high. In Asia-Pacific, the Reserve Bank of Australia's rate decision and a raft of Chinese data are the key events in the week ahead. We heard from Mark Matthews, Head of Asia Research at Julius Baer. He spoke to Bloomberg's Shery Ahn and Avril Hong.
Plus - in Japan, a slew of economic data was released. In Tokyo, labor cash earnings were released. Stronger wage gains in October bolstered the case for the Bank of Japan to deliver a 25-basis-point rate hike at its Dec. 18–19 meeting. However, Japan's economy shrank in the three months through September, the government confirmed in a revised report, giving further justification for Prime Minister Sanae Takaichi's stimulus package announced last month. For more on what the latest Japan data means for the BoJ, we heard from Bloomberg's Brian Fowler. He spoke to Bloomberg's Shery Ahn and Avril Hong.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm Charlie Palett. Doug
Chrisner has the day off. Investors are looking ahead to
the Federal Reserve decision happening later this week. FED Chair
J Powell is expected to push through another quarter point
interest rate cut this week that despite growing on ease
among fellow policymakers, that inflation remains too high, and in Asia,
(00:34):
the Reserve Bank of Australia's rate decision under raft of
Chinese data are the key events in the week ahead.
We heard from Mark Matthews, had of Asia Research at
Julius Bear and he spoke with Bloomberg's Avril Hong and
Sherry on what are.
Speaker 3 (00:50):
You expecting this week? I mean, twenty five is baked in,
but what else are you expecting to hear from the
US Central Bank?
Speaker 4 (00:57):
Well, everybody wants to see how hawkish of a cut
it is, because we know there are a lot of dissenters.
I can count basically six out of the twelve voting
members of the FMC who expressed some concern over inflation,
and so we'll have to look at how many dissenters
(01:17):
there were and how Chairman Powell handles the Q and
A session to see how guarded they want to be
about further rate cuts going forward. But for the record,
we still expect another rate cut in January and then
one more in March.
Speaker 3 (01:34):
What is this going to mean for Asia currencies including
the yin There's some expectation that the BOJ will have
to hike and then keep hiking for us to see
more sizeable appreciation in the currency.
Speaker 4 (01:48):
I think that's probably right because they have a significant
balance sheet they can also offload to help tighten monetary policy.
So we are looking for a rate hike in Japan
this month, then we're looking for one more in June
next year, so that would take them up to policy
rate of zero point seven five percent, which still leaves
(02:11):
real rates deeply negative because their inflation is at three percent.
So I would expect some exp appreciation in the yen,
but I wouldn't expect it to skyrocket. And if you
compare now to that last time there was a surprising
change in the BOJ and a big reversal in the end.
(02:32):
There were a lot of short positions back then that
needed to be covered, and now, in fact, people are
on average slightly long the end.
Speaker 1 (02:44):
Yeah, that's a good point, right, because what we saw
in July of twenty twenty four was that crazy unwind
when it came to yen carry trades, and in fact
that even hit US stock performance. Will there be any
implications from what the Japanese policymakers do here in Japan
forlobal markets, especially given how sensitive global bonials have been
to jgb's.
Speaker 4 (03:07):
I don't think so, because I still think that Japanese
investors will want to keep a healthy exposure to US treasuries,
and so I know they own over a trillion of them.
But as I said, if the policy rate in Japan
is only seventy five basis points in June of next year,
then I'm not expecting the Japanese government bond yields to
(03:32):
skyrocket further. And where they are now, I would say
is actually reflective of a healthy economy. I know there's
great consternation around how quickly they've gone up, but I
think Japan is in a much better situation today with
some decent inflation and some decent growth than in the
(03:53):
decades past when they had very little of either.
Speaker 1 (03:59):
Mark we have plenty of central bank decisions to go
around this week, including the RBA. Of course, we had
the RBI cutting rates as well on a week where
we have plenty of ego data China trade data today
as well. Is there anything in particular that you're watching
for a moment or catalyst when it comes to Asian markets, Yes, I.
Speaker 4 (04:19):
Am watching the RBA. It is our favorite bond market
in Asia, and the reason for that is you get
a much higher yield in Australian investment great corporate bonds
than their US peers. If memory serves me right, it's
about five and a half percent, and their inflation is high.
(04:41):
I think it's over three percent. Their unemployment is very low,
and their private sector is doing very well. There's a
lot of confidence in the economy. So I don't think
the RBA will cut and I think that will provide
stability to their currency. So we're looking for the Aussie
(05:03):
to be about five and a half percent higher twelve
months from now versus US dollar, and putting all that together,
I think it's a very good environment to invest in
corporate bonds.
Speaker 3 (05:13):
The thing of the RBA is also that I think
investors are watching to see how hawkish they are and
they've been chatting not so long ago about a prospective hike.
Is that something that you're putting in the calculus? How
might that put risks to your existing view?
Speaker 4 (05:29):
And we're not expecting a hike in Australia, but we
should watch the inflation rate because it has been rising
for the last four to five months and also been
above expectations for the last four to five months. So
I guess if their economy really gets a big head
of steam, that they would need to raise rates, but
right now it's not in our forecast.
Speaker 3 (05:50):
One of the economies very closely tied to China's economy,
of course, is Australia. When it comes to what you're
seeing among tech AI leadership is the I guess risk
to the view given how these things we've seen in
the past two years, they shift very quickly. We've gone
from open AI to alphabet What is that going to
(06:12):
mean for Chinese tech investment.
Speaker 4 (06:15):
Well, it's a different ecosystem, of course, So they do
have artificial intelligence, they do have large language models. But
in China you're also talking about advanced manufacturing, robotics and biotechnology,
and so what I think is interesting is how quickly
They're picking up market share around the world with their technology,
(06:39):
and that has implications for their currency because the more
they sell those things overseas, the more money will be
repatriated to China into the redmen B. And so I
think actually the renmen B will be trending up over
the next few years as they increase their global market
share in these products and services that they're very competitive in.
Speaker 2 (07:00):
Mark Matthews, head of Asia Research at Julius Behar, speaking
to Bloomberg's April Hong and Sherry On Coming up, we
will dive deeper into the latest data coming out of
Japan and what this means for the Bank of Japan's
rate decision. Welcome back to the Daybreak Asia podcast. I'm
(07:25):
Charlie Peck. Doug Chrisner has the day off. We go
to Japan next, where a slew of economic data was
released In Tokyo, the labor cash earnings were released. Stronger
wage gains in October bolstered the case for the Bank
of Japan to deliver a twenty five basis point rate
cut at its December eighteenth and nineteenth meeting. And for more,
(07:48):
we heard from Bloomberg's Brian Fowler. He spoke to Bloomberg's
April Hong and Sherry On.
Speaker 5 (07:54):
First of all, we had the nominal gains which have
been very steady, and that's a positive sign for the BOJA.
On the other hand, we saw real wages fall for
a tenth straight month. But the problem there isn't the
nominal wage gains, those are steady, it's the inflation. So
that's yet another reason why it makes sense for the
boj to hike rates to try to put a cap
(08:14):
on inflation. So I think overall, the wage data definitely
support the case for a hike on December nineteenth, and
possibly for further tightening well into two six.
Speaker 3 (08:28):
Not to say that we should be discounting what we
got out of the third quarter GDP numbers.
Speaker 5 (08:36):
Well, aver I wouldn't discount it. Those numbers definitely were
a little bit bleaker than we expected, and they will
add justification to Prime Minister Chakeichi for the very large
stimulus package that she announced last month. On the other hand,
we've got all kinds of conflicting data. A week from
today you can see this on the Bloomberg terminal. We
have the Tongkon coming out, and we've already got surveys
(08:59):
from aonymous showing that they broadly expect a business sentiment
to stay steady, possibly even getting a little bit better
for large manufacturers. So the BOJ is going to be
looking at all these figures, wages, the household spending we
had last last Friday, today's revised GDP, and of course
Tong Kong next week. And I think broadly speaking, while
(09:21):
there are pockets of weakness, the trend remains fairly solid
and certainly solid enough for the BOJ to hike rates.
Of course, the BOJA will say that policy even with
the hike, remains accommodative. That's important to show that it's
on the same page as the government. But I think
all things being said, there's no reason not to go
(09:42):
ahead with a twenty five basis point hike.
Speaker 1 (09:44):
To your point on being on the same page, I mean,
for the last couple of weeks we continue to get
these signals coming from the government that they're not going
to get on the way of a hike.
Speaker 5 (09:53):
Yeah, exactly. So they could have anytime they could have,
they could have said things to indicate that they did
they were not in favor of the BOJ. And from
the government side, we haven't seen that, and also from
Governor Ueita side, he's given fairly subtle hands. He said,
I'm working closely with the government, and we know that
he met with Takaichi. The implication is that he explained
to her what needed to be done and she did
(10:15):
not object. And he's basically said that he thinks that
he's got the green light to do whatever he thinks
needs to be done, and we think that.
Speaker 2 (10:22):
Means I Bloomberg's Brian Fowler speaking to Bloomberg's April Hogg
and Sherry On.
Speaker 6 (10:30):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(10:53):
and Australia. I'm Doug Prisoner and this is Bloomberg
Speaker 2 (11:00):
Four
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm Charlie Palett. Doug
Chrisner has the day off. Investors are looking ahead to
the Federal Reserve decision happening later this week. FED Chair
J Powell is expected to push through another quarter point
interest rate cut this week that despite growing on ease
among fellow policymakers, that inflation remains too high, and in Asia,
(00:34):
the Reserve Bank of Australia's rate decision under raft of
Chinese data are the key events in the week ahead.
We heard from Mark Matthews, had of Asia Research at
Julius Bear and he spoke with Bloomberg's Avril Hong and
Sherry on what are.
Speaker 3 (00:50):
You expecting this week? I mean, twenty five is baked in,
but what else are you expecting to hear from the
US Central Bank?
Speaker 4 (00:57):
Well, everybody wants to see how hawkish of a cut
it is, because we know there are a lot of dissenters.
I can count basically six out of the twelve voting
members of the FMC who expressed some concern over inflation,
and so we'll have to look at how many dissenters
(01:17):
there were and how Chairman Powell handles the Q and
A session to see how guarded they want to be
about further rate cuts going forward. But for the record,
we still expect another rate cut in January and then
one more in March.
Speaker 3 (01:34):
What is this going to mean for Asia currencies including
the yin There's some expectation that the BOJ will have
to hike and then keep hiking for us to see
more sizeable appreciation in the currency.
Speaker 4 (01:48):
I think that's probably right because they have a significant
balance sheet they can also offload to help tighten monetary policy.
So we are looking for a rate hike in Japan
this month, then we're looking for one more in June
next year, so that would take them up to policy
rate of zero point seven five percent, which still leaves
(02:11):
real rates deeply negative because their inflation is at three percent.
So I would expect some exp appreciation in the yen,
but I wouldn't expect it to skyrocket. And if you
compare now to that last time there was a surprising
change in the BOJ and a big reversal in the end.
(02:32):
There were a lot of short positions back then that
needed to be covered, and now, in fact, people are
on average slightly long the end.
Speaker 1 (02:44):
Yeah, that's a good point, right, because what we saw
in July of twenty twenty four was that crazy unwind
when it came to yen carry trades, and in fact
that even hit US stock performance. Will there be any
implications from what the Japanese policymakers do here in Japan
forlobal markets, especially given how sensitive global bonials have been
to jgb's.
Speaker 4 (03:07):
I don't think so, because I still think that Japanese
investors will want to keep a healthy exposure to US treasuries,
and so I know they own over a trillion of them.
But as I said, if the policy rate in Japan
is only seventy five basis points in June of next year,
then I'm not expecting the Japanese government bond yields to
(03:32):
skyrocket further. And where they are now, I would say
is actually reflective of a healthy economy. I know there's
great consternation around how quickly they've gone up, but I
think Japan is in a much better situation today with
some decent inflation and some decent growth than in the
(03:53):
decades past when they had very little of either.
Speaker 1 (03:59):
Mark we have plenty of central bank decisions to go
around this week, including the RBA. Of course, we had
the RBI cutting rates as well on a week where
we have plenty of ego data China trade data today
as well. Is there anything in particular that you're watching
for a moment or catalyst when it comes to Asian markets, Yes, I.
Speaker 4 (04:19):
Am watching the RBA. It is our favorite bond market
in Asia, and the reason for that is you get
a much higher yield in Australian investment great corporate bonds
than their US peers. If memory serves me right, it's
about five and a half percent, and their inflation is high.
(04:41):
I think it's over three percent. Their unemployment is very low,
and their private sector is doing very well. There's a
lot of confidence in the economy. So I don't think
the RBA will cut and I think that will provide
stability to their currency. So we're looking for the Aussie
(05:03):
to be about five and a half percent higher twelve
months from now versus US dollar, and putting all that together,
I think it's a very good environment to invest in
corporate bonds.
Speaker 3 (05:13):
The thing of the RBA is also that I think
investors are watching to see how hawkish they are and
they've been chatting not so long ago about a prospective hike.
Is that something that you're putting in the calculus? How
might that put risks to your existing view?
Speaker 4 (05:29):
And we're not expecting a hike in Australia, but we
should watch the inflation rate because it has been rising
for the last four to five months and also been
above expectations for the last four to five months. So
I guess if their economy really gets a big head
of steam, that they would need to raise rates, but
right now it's not in our forecast.
Speaker 3 (05:50):
One of the economies very closely tied to China's economy,
of course, is Australia. When it comes to what you're
seeing among tech AI leadership is the I guess risk
to the view given how these things we've seen in
the past two years, they shift very quickly. We've gone
from open AI to alphabet What is that going to
(06:12):
mean for Chinese tech investment.
Speaker 4 (06:15):
Well, it's a different ecosystem, of course, So they do
have artificial intelligence, they do have large language models. But
in China you're also talking about advanced manufacturing, robotics and biotechnology,
and so what I think is interesting is how quickly
They're picking up market share around the world with their technology,
(06:39):
and that has implications for their currency because the more
they sell those things overseas, the more money will be
repatriated to China into the redmen B. And so I
think actually the renmen B will be trending up over
the next few years as they increase their global market
share in these products and services that they're very competitive in.
Speaker 2 (07:00):
Mark Matthews, head of Asia Research at Julius Behar, speaking
to Bloomberg's April Hong and Sherry On Coming up, we
will dive deeper into the latest data coming out of
Japan and what this means for the Bank of Japan's
rate decision. Welcome back to the Daybreak Asia podcast. I'm
(07:25):
Charlie Peck. Doug Chrisner has the day off. We go
to Japan next, where a slew of economic data was
released In Tokyo, the labor cash earnings were released. Stronger
wage gains in October bolstered the case for the Bank
of Japan to deliver a twenty five basis point rate
cut at its December eighteenth and nineteenth meeting. And for more,
(07:48):
we heard from Bloomberg's Brian Fowler. He spoke to Bloomberg's
April Hong and Sherry On.
Speaker 5 (07:54):
First of all, we had the nominal gains which have
been very steady, and that's a positive sign for the BOJA.
On the other hand, we saw real wages fall for
a tenth straight month. But the problem there isn't the
nominal wage gains, those are steady, it's the inflation. So
that's yet another reason why it makes sense for the
boj to hike rates to try to put a cap
(08:14):
on inflation. So I think overall, the wage data definitely
support the case for a hike on December nineteenth, and
possibly for further tightening well into two six.
Speaker 3 (08:28):
Not to say that we should be discounting what we
got out of the third quarter GDP numbers.
Speaker 5 (08:36):
Well, aver I wouldn't discount it. Those numbers definitely were
a little bit bleaker than we expected, and they will
add justification to Prime Minister Chakeichi for the very large
stimulus package that she announced last month. On the other hand,
we've got all kinds of conflicting data. A week from
today you can see this on the Bloomberg terminal. We
have the Tongkon coming out, and we've already got surveys
(08:59):
from aonymous showing that they broadly expect a business sentiment
to stay steady, possibly even getting a little bit better
for large manufacturers. So the BOJ is going to be
looking at all these figures, wages, the household spending we
had last last Friday, today's revised GDP, and of course
Tong Kong next week. And I think broadly speaking, while
(09:21):
there are pockets of weakness, the trend remains fairly solid
and certainly solid enough for the BOJ to hike rates.
Of course, the BOJA will say that policy even with
the hike, remains accommodative. That's important to show that it's
on the same page as the government. But I think
all things being said, there's no reason not to go
(09:42):
ahead with a twenty five basis point hike.
Speaker 1 (09:44):
To your point on being on the same page, I mean,
for the last couple of weeks we continue to get
these signals coming from the government that they're not going
to get on the way of a hike.
Speaker 5 (09:53):
Yeah, exactly. So they could have anytime they could have,
they could have said things to indicate that they did
they were not in favor of the BOJ. And from
the government side, we haven't seen that, and also from
Governor Ueita side, he's given fairly subtle hands. He said,
I'm working closely with the government, and we know that
he met with Takaichi. The implication is that he explained
to her what needed to be done and she did
(10:15):
not object. And he's basically said that he thinks that
he's got the green light to do whatever he thinks
needs to be done, and we think that.
Speaker 2 (10:22):
Means I Bloomberg's Brian Fowler speaking to Bloomberg's April Hogg
and Sherry On.
Speaker 6 (10:30):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(10:53):
and Australia. I'm Doug Prisoner and this is Bloomberg
Speaker 2 (11:00):
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