00:00top story today the global bond sell-off it's rippling across asia pushing yields higher as
00:04investors weigh the impact of rising oil prices and inflation risks stocks are also not spared
00:10with japan and south korea leading declines bloomberg's avril hong joins us now for more
00:15in singapore avril plenty going on today yeah no lack of drivers negative catalysts anywhere you
00:23look for asia stock market investors there are very few places to hide given the bond market
00:28carnage as our mlife strategists have been highlighting there is little incentive for them
00:33to jump in aggressively to markets ahead of the weekend and then there's that added complication
00:38as well when you think about the v41 flash released by deep seek that touts more efficient usage of
00:45memory that raises the question how much memory do we really need you're seeing the memory names
00:52dragging the indices today now flip the board when it comes to the bond market sell-off that
00:57accelerated this is coming along with the spike in brent to near the 110 handle you really get the
01:05sense that traders have been neglecting the geopolitical risk premium all that is stoking
01:10inflation concerns anew and as far as the 10-year treasury is it is on the cusp these yields of
01:18five
01:18percent something we haven't seen in a very very long time in the past two days we have been seeing
01:24those comments from treasury secretary scott besant as well as operations by the department itself
01:29really not helping the situation first he disappointed the markets with his amped up buyback
01:34plan and then of course the operations came through on the 10 to 20 year at 5.2 billion dollars
01:40of buying
01:41which was less than the six billion dollars maximum that he had touted so all that is in the mix
01:47and
01:47really not helping things let's flip the board and take a look at how the yields on treasuries are also
01:53rippling through other g10 debt markets notably in australia dragging up aussie yields as well
01:59the three and the 10-year yield highest level we've seen it since 2011 at one point we saw the
02:05policy
02:06sensitive part the three-year climbing 20 basis points the bond market now really needs a circuit
02:13breaker and some analysts have highlighted it could come in two forms one of it a benign u.s inflation
02:19print tonight another a fed rate hike next week to show they're really getting serious on tackling
02:25inflation and here traders are also pricing in about a 70 percent chance of a rate hike by the fed
02:31next
02:32week paul all right bloomberg's avril hong there in singapore well let's get some more perspective now
02:38we're joined by me bui economist with amp right here in sydney me thanks so much for joining us
02:43thanks for having me i want to pick up on uh what ava was saying there we have a chart
02:47to illustrate it
02:47too tells us what we all know though we've got that uh 10-year yield now getting really close to
02:51five
02:52percent we're approaching levels we haven't really seen since the gfc now so is crossing that threshold
02:57inevitable and if so then what i think totally we definitely can cross that five percent threshold but
03:04the question is when is it going to be i think we have been in this world where we basically
03:08have
03:09higher inflation and higher bond yields that is going to be the theme for this decade it has been
03:13going on since 2020 it's going to go on for much longer until at least the end of this decade
03:18i would
03:18say because we have all these long-term drivers aging demographics more populist policies more
03:24geopolitical risks more government debt and government spending so that would push you to about five
03:29percent in the short term though i don't really see that going there in the next month first of all
03:34exactly for the reasons that everyone was saying i do think that the fed would probably have to hike
03:38this month i do think the fed is still rather quite independent they have shown size that they do want
03:44to hike given that while the labor market is stabilizing in the u.s and inflation doesn't really
03:50seem to go down i know everyone's worrying about the cpi but i guess you know what we were really
03:55worried about that is through the core pc and the core pc is really hasn't made that much progress
04:00yeah i want to get back to the cpi and the fed in a moment but let's talk about the
04:04fiscal side as
04:05well because of you know treasury secretary scott besson you know he really threw down this week i
04:09am the house you know don't try to test me well the market's trying to test him yeah what's the
04:14next
04:14move i mean messin would probably try to do a few more rounds of this we have already seen a
04:18few times
04:19when he basically said that he would double and now actually triple the size of the bond buybacks
04:23like i don't think he can do that forever because while evidence from this shows that market doesn't
04:28really believe him because i think everyone should remember that the investor market is a lot bigger
04:33than the u.s government they do have a lot of alternatives now rather than just buying u.s bonds
04:38so they don't really have to take you know besson's words as as the golden side and also remember that
04:45when besson tries to increase the bond buybacks on the long term he has to issue short-term bonds
04:51bonds to to actually fund that purchases and the short-term bonds would expire at some point so
04:56they have to keep rolling that over they basically have to go back into the market to keep issuing
05:00bonds so i would say that the long-term fundamentals still drive markets more than those short-term
05:07noises of course i do think that you know yields have gone up so much we probably are due for
05:12a
05:12little bit of a correction here markets have been pricing so many
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