00:00This morning, it seems that markets globally in defiance of any kind of U.S. shut down wobble.
00:05Let us bring into the conversation Paul Dobson, our executive editor for Asia Markets.
00:09And the moves have been quite positive through the Asia session, perhaps driven by some of the technology news as well.
00:14Record stock rally extending then, Paul. What's to worry about? Nothing, it appears.
00:21Hi there. Good morning, Anna.
00:22Well, the biggest worry is, are we in a bubble?
00:25And if we are in a bubble, what do you do about it? How do you trade it?
00:28And so far, it's still that kind of bullish momentum seeping through markets and playing out particularly strongly in Asia today.
00:36But lots of enthusiasm for deals involving OpenAI with Korean companies like SK Hynix and Samsung, which show the Cosby take a really big leap forwards.
00:46OpenAI itself has been selling some shares, giving it a valuation of, what is it, $500 billion, something, you know, unspeakably huge.
00:54If you're selling equity, you're in a brilliant place at the moment, and the market is continuing to embrace it.
01:01So I guess it is that concern, okay, so can we carry on going up every day exponentially like we are at the moment,
01:07or is there going to be some point where that momentum starts to fade and we run out of gas?
01:12And if so, how much support is there when we get a dip?
01:14Will there continue to be buying?
01:16So far, that's been the case, whether it's in Europe, record highs, U.S. record highs, Asia, getting there as well today.
01:24But, you know, kind of can it sustain all the way through?
01:27I guess that's the thing that people are continually asking themselves as we continue to press higher.
01:32How are we feeling about JGBs this morning, Paul?
01:35I think we're feeling pretty nervous about government bonds in general, Guy.
01:42The Japanese had an auction today of 10-year debt, didn't go completely swimmingly.
01:47There was a big tail, which means that although, you know, there was plentiful demand for the bonds,
01:52it sort of tailed off, it fell off pretty quickly, meaning that people weren't necessarily prepared to match the bid price in huge volumes.
01:59And that's something that we've been seeing resonating across government bond markets.
02:03Think about, you know, yesterday, I think it was, we had a German sale that went technically uncovered in the U.K.
02:09last week.
02:10It didn't all look very pristine in terms of people showing up for government bonds.
02:13You can understand why when we're in this big bullish market for equities or one of the havens, gold is also surging higher at the moment.
02:20Who wants those lower-yielding government bonds?
02:22So today we've got auctions, I think, coming up for France.
02:25We've got Spain.
02:26We've got, is it, the U.K. on the slate as well.
02:28So keep an eye on those demand metrics to see whether we get some more disturbing information coming through.
02:35Does that all apply to U.S. Treasuries as well?
02:38Ultimately, is a government shutdown, a prolonged U.S. government shutdown, a positive or negative when it comes to Treasuries?
02:46I think that that is really the interesting point, Valerie.
02:49I've been puzzling over it myself.
02:52I think that, you know, what we saw yesterday was a pretty good rally in U.S. Treasuries.
02:55That was because the ADP numbers were surprisingly negative on the labor front.
03:00So it makes people think that the Fed is going to be cutting interest rates again at the end of this month.
03:04That's positive for Treasuries, maybe.
03:07But it depends.
03:08You know, the longer this shutdown goes on, the more it starts to kind of weigh on the economy,
03:12sort of, like, reduce that spending and dim people's sort of perception of the U.S. as well.
03:17That could sour demand for Treasuries over time if it's not a circuit breaker to that shutdown.
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