# Waller Comments on Fed

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 4 Sep 2026, 17 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/7eebd7ac-ac8f-42ec-bc38-b4bb002250ac/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Business and finance news from the Asia-Pacific. Asian stocks and currencies rose as investors pared bets on a Federal Reserve interest-rate hike this month, weakening the dollar. The yen strengthened, with traders lifting bets on Bank of Japan rate hikes and remaining vigilant to the risk of official action to further boost the currency. Fed Governor Christopher Waller said he'd be willing to support holding rates steady if price pressures continue to show signs of easing. Waller said his next decision on rates will be "heavily influenced" by August inflation data due next week. Waller's remarks helped weaken the dollar, but the yen rallied, strengthening against the dollar by 1.9%. For more, Bloomberg TV Host Shery Ahn spoke with Yujio Goto, head of Japan FX strategy at Nomura and Bloomberg TV Host Haidi Stroud-Watts spoke with Suresh Tantia, CIO of Asia Equity Strategy UBS Global Wealth Management. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios. Podcasts.
[0:05] Speaker 2: Radio.
[0:06] Speaker 1: News.
[0:10] Speaker 2: Welcome to the Daybreak Asia podcast.
[0:12] Speaker 1: I'm Doug Krisner.
[0:13] Speaker 3: U.S.
[0:14] Speaker 2: Markets responded to some dovish Fed speak on Thursday. We
[0:17] Speaker 2: had Governor Chris Waller saying he'd be willing to support
[0:20] Speaker 2: holding rates steady if price pressures continue to show signs
[0:24] Speaker 2: of easing. And Waller went on to say his next
[0:26] Speaker 2: decision on rates will be heavily influenced by the August
[0:30] Speaker 2: inflation data, which is due in the coming week. Now,
[0:33] Speaker 2: his remarks helped to weaken the dollar. In New York trading,
[0:36] Speaker 2: the Bloomberg Dollar Spot Index was down more than a
[0:39] Speaker 2: half of 1%. On the flip side, the yen rallied,
[0:42] Speaker 2: strengthening against the greenback by 1.9%. And we got reaction
[0:47] Speaker 2: to the price action in the yen from Yujiro Goto.
[0:50] Speaker 2: He is head of Japan FX Strategy at Nomura. Goto
[0:54] Speaker 2: spoke with Bloomberg Sherry on, and Sherry began the conversation
[0:57] Speaker 2: by asking, about the possibility for outsized or even faster
[1:02] Speaker 2: rate hikes from the BOJ, perhaps as soon as this month.
[1:05] Speaker 4: I think for now, into September, a 25 basis hike
[1:09] Speaker 4: looks quite reasonable. That's a great message from Ueda-san earlier
[1:15] Speaker 4: this week. And it's possible that we can have a
[1:19] Speaker 4: back-to-back rate hike in October and December if possible. Momentum
[1:25] Speaker 4: and weakness continues toward a gain to 160 or even
[1:29] Speaker 4: above 160. But I think a 50 basis hike immediately
[1:33] Speaker 4: in September looks a little bit too much for the
[1:36] Speaker 4: BOJ at the moment.
[1:38] Speaker 3: When it comes to what the BOJ does next, How
[1:41] Speaker 3: strong will the signaling effect be, given that we also
[1:44] Speaker 3: saw these incredible moves coming from the U.S. with Secretary
[1:47] Speaker 3: Besant's pressure as well?
[1:49] Speaker 4: Yes, so I think it's really unusual for U.S. authority
[1:55] Speaker 4: to put very strong pressure on the central bank, Bank
[1:58] Speaker 4: of Japan, to consider a rate hike. And also, Scott
[2:02] Speaker 4: Besant suggested that Japan needs to stop reflationary policies which
[2:07] Speaker 4: may include the fiscal side of the policy stance as well.
[2:10] Speaker 4: So I think this pressure looks quite strong. And also,
[2:15] Speaker 4: in July, the US supported Japan's intervention by a coordinated intervention.
[2:20] Speaker 4: So I think the Japanese authority, the BOJ government, needs
[2:24] Speaker 4: to listen to what Scott Besant wants to achieve. So
[2:28] Speaker 4: in that sense, I think at least once every three months,
[2:33] Speaker 4: once every quarter, a rate hike is likely or necessary
[2:37] Speaker 4: for the BOJ from here. But the chance is for, again,
[2:41] Speaker 4: a back-to-back rate hike in October. That cannot be ruled
[2:45] Speaker 4: out now.
[2:46] Speaker 3: What is Nomura's call for the year-end target for the yen?
[2:51] Speaker 3: And what will it hinge on? Is it more BOJ?
[2:53] Speaker 3: Is it more just a lot of speculative moves as well?
[2:56] Speaker 4: I think our target is just 154 at the moment.
[3:00] Speaker 4: And this looks still reasonable. But obviously for Darayan, not
[3:04] Speaker 4: just BOJ, but what FED is going to do and
[3:08] Speaker 4: oil price movements are important drivers. And in that sense, yesterday's,
[3:13] Speaker 4: you know, Governor Orr's comment and also New York Fed
[3:17] Speaker 4: William's comments on Tuesday suggest Fed may not be rushing
[3:22] Speaker 4: for a rate hike in September. And a market share
[3:25] Speaker 4: price is around a 50% chance for the September hike.
[3:29] Speaker 4: If FED is not going to hike in September, another
[3:34] Speaker 4: weakness momentum is likely to happen after the September FOMC.
[3:40] Speaker 4: So we may breach 155 a bit earlier than many
[3:45] Speaker 4: expected if FED does not hike in September while BOJ
[3:49] Speaker 4: communicated hawkishly around the same timing.
[3:54] Speaker 3: Not to mention that the U.S. has its own fiscal concerns, right,
[3:57] Speaker 3: where we see the ongoing debasement call for the U.S.
[4:01] Speaker 1: Dollar.
[4:03] Speaker 3: When it comes to what potentially, say, Japan's pension service
[4:08] Speaker 3: does next, because we saw their sort of unusual August
[4:11] Speaker 3: management meeting, could we see more investors allocating out of
[4:15] Speaker 3: the U.S.? And that would be a big issue for
[4:17] Speaker 3: Japan if they were to reallocate into Japanese assets, right? Yeah.
[4:21] Speaker 4: I have to say pension fund story, that is still
[4:25] Speaker 4: quite uncertain whether GPIF is really going to purchase domestic
[4:31] Speaker 4: bonds aggressively in the near future. But I think market
[4:37] Speaker 4: is now viewing risk of BOJ falling behind the curve
[4:42] Speaker 4: is now much smaller. That's quite important for many domestic
[4:47] Speaker 4: bond investors because You know, past six to 12 months,
[4:53] Speaker 4: domestic bond investors were concerned over behind the curve, and
[4:57] Speaker 4: BOJ's rate hike may sustain not just into 2027, but
[5:02] Speaker 4: 2028 due to very slow pace of rate hike. But now,
[5:06] Speaker 4: BOJ is going to hike much more quickly, and many
[5:10] Speaker 4: investors can expect much earlier timing of the That's really
[5:17] Speaker 4: important condition for lifers, pension funds, other bond investors to
[5:22] Speaker 4: consider aggressive bond purchases. So, I think there is a
[5:27] Speaker 4: bigger chance for some kind of repatriation by Japanese investors
[5:32] Speaker 4: to support long end of the JGBs going forward.
[5:35] Speaker 3: Was that sort of reflected on what we saw in
[5:36] Speaker 3: the JGB auctions this week as well?
[5:38] Speaker 4: I think so. And yesterday's JGB movement was quite interesting
[5:44] Speaker 4: to see a much bigger decline in 30-year or 10-year
[5:49] Speaker 4: JGB yields more than the short-end of the curve. And also,
[5:52] Speaker 4: I think fiscal stimulus, fiscal policy is in focus for sure,
[5:57] Speaker 4: but recent local media reports suggest the Takaichi government may
[6:02] Speaker 4: not have the second supplementary budget for this fiscal year,
[6:06] Speaker 4: even though we had an earthquake in Kumamoto and so on.
[6:09] Speaker 4: So that suggests Takaichi's stance not to rely on supplementary
[6:16] Speaker 4: budget is more credible. And if that's the case, in
[6:20] Speaker 4: the new fiscal year, current budget request, which was a
[6:24] Speaker 4: bit bigger than this and the previous fiscal year, but
[6:26] Speaker 4: 143 trillion yen, that may not be too aggressive fiscal
[6:32] Speaker 4: easing if Japan is departing from the supplementary budget stance.
[6:37] Speaker 4: So I think fiscal policy stance may be also somewhat
[6:40] Speaker 4: more supportive for JGB market and also Japanese yen.
[6:44] Speaker 3: What's the next catalyst for the yen? Because it was
[6:46] Speaker 3: kind of difficult to understand why we saw this huge
[6:48] Speaker 3: strengthening all of a sudden towards the 155 level recently, right?
[6:52] Speaker 4: I think the market views that the BOJ is going
[6:55] Speaker 4: to hike in September. That's kind of a done deal now.
[6:57] Speaker 4: But we want to hear any kind of communication from
[7:02] Speaker 4: the government side regarding the monetary policy, especially any comments
[7:07] Speaker 4: from Prime Minister Takahichi on BOJ or monetary policy can
[7:11] Speaker 4: be quite important driver or catalyst for next movement. she
[7:16] Speaker 4: sounded still negative for rate hike, but the BOJ market
[7:20] Speaker 4: will be disappointed and the yen may be sold again.
[7:23] Speaker 4: But if she remains quiet on BOJ policy or suggests
[7:28] Speaker 4: or emphasizes independence on BOJ and so on, I think
[7:32] Speaker 4: the market will be excited about a clear turning point
[7:35] Speaker 4: of the monetary policy of Japan, which will be very
[7:40] Speaker 4: supportive for Japanese yen towards even below 150 against the U.S.
[7:44] Speaker 2: Dollar. That is Yujiro Goto, head of Japan FX Strategy
[7:47] Speaker 2: at Nomura, speaking with Bloomberg's Sherry Ong, bringing you their
[7:51] Speaker 2: conversation here on the Daybreak Asia podcast. Welcome back to
[8:00] Speaker 2: the Daybreak Asia podcast. I'm Doug Krisner. And as I
[8:03] Speaker 2: mentioned earlier, Fed Governor Chris Waller was saying on Thursday
[8:07] Speaker 2: he'd be willing to support holding rates steady if price
[8:10] Speaker 2: pressures continue to show signs of easing. That's where we
[8:14] Speaker 2: start the conversation with Suresh Tensha, CIO of Asia Equity
[8:18] Speaker 2: Strategy at UBS Global Wealth Management. He spoke with Bloomberg's
[8:22] Speaker 2: Heidi Stroud-Watts, and Heidi asked about the risk to equity
[8:26] Speaker 2: investors from the current state of Fed policy.
[8:29] Speaker 1: I think they are very meaningful because they might have
[8:32] Speaker 1: changed or tilted the balance of the next Fed policy decision.
[8:39] Speaker 1: At this point of time, I think we are watching
[8:40] Speaker 1: two key data points. One is the non-farm payroll numbers
[8:44] Speaker 1: coming on Friday and the next inflation data. They are
[8:47] Speaker 1: likely to decide whether Fed moves in the next meeting
[8:50] Speaker 1: or not. At this point of time, I would say
[8:52] Speaker 1: it's more of a coin toss. Latest data points have
[8:55] Speaker 1: been in the right direction, whether it's the labor market
[8:58] Speaker 1: data or the inflation data. But the Fed has a
[9:01] Speaker 1: 2 percent inflation target, which is far away. So let's
[9:05] Speaker 1: see what happens next week. But as if the data supports,
[9:08] Speaker 1: I think most likely we are not going to see
[9:10] Speaker 1: a rate hike coming in the September meeting.
[9:14] Speaker 5: Because at the same time, of course, what we've really
[9:16] Speaker 5: seen swirling are these concerns over the budget, over the
[9:19] Speaker 5: fiscal situation in the US, what we're seeing with the
[9:22] Speaker 5: sort of untethered situation with treasury yields, but global yields
[9:26] Speaker 5: more broadly. Does this continue to be the theme that
[9:29] Speaker 5: plays out for downside risk for markets?
[9:35] Speaker 1: I think for equity market it's not much of a
[9:38] Speaker 1: concern at this point of time. Eventually equity market follow earnings.
[9:43] Speaker 1: As long as economy is holding up, as long as
[9:45] Speaker 1: earnings are coming through, equity market can tolerate higher yields.
[9:49] Speaker 1: And if you look at the earnings for this year,
[9:51] Speaker 1: we are projecting 25% growth for S & P 500.
[9:52] Speaker 1: Next year 14% growth. So despite higher yield, higher earnings
[9:55] Speaker 1: are going to offset that. And that's why we think
[10:02] Speaker 1: equity market can go higher, even if we see a
[10:05] Speaker 1: Fed rate hike in the next meeting or subsequent meeting.
[10:12] Speaker 5: Suresh, so you still favor the U.S. What do you
[10:15] Speaker 5: like most in Asia at the moment?
[10:20] Speaker 1: So we are bullish on Taiwan. We are bullish on India.
[10:24] Speaker 1: I think these two are our favorite markets. Taiwan simply
[10:27] Speaker 1: because it's a quality market, very strong earnings growth. We
[10:30] Speaker 1: are looking at 35% plus growth, not just this year,
[10:34] Speaker 1: even for next year. And even if there is a
[10:36] Speaker 1: bit of slowdown in the AI spending coming from hyperscalers,
[10:40] Speaker 1: The earnings for Taiwan companies are not going to get
[10:42] Speaker 1: hit because they sort of have a monopoly in their
[10:44] Speaker 1: business and especially in the foundry and semi-equipment. And the
[10:49] Speaker 1: other one we like is India because I think the
[10:51] Speaker 1: market has bottomed. Yes, short term it could consolidate because
[10:55] Speaker 1: of higher oil prices. But given the expectations of double
[10:58] Speaker 1: digit growth in this year and next year and cheaper valuation,
[11:03] Speaker 1: I think eventually the equity market in India is going
[11:05] Speaker 1: to go higher.
[11:09] Speaker 5: It's interesting you say Taiwan. You favor emerging markets, and
[11:14] Speaker 5: I'm guessing that you're not counting kind of the technicality
[11:17] Speaker 5: of Korea being an emerging market within that. Can you
[11:20] Speaker 5: tell us about why you prefer Taiwan over Korea at
[11:22] Speaker 5: this point?
[11:25] Speaker 1: The reason would be that Korea is very volatile and
[11:29] Speaker 1: Korea market is more focused on the DRAM place. DRAM
[11:35] Speaker 1: prices have already gone up five to six times in
[11:37] Speaker 1: the last nine months. At this point of time, I
[11:41] Speaker 1: think it's difficult to see a massive rise in DRAM prices,
[11:45] Speaker 1: even though there is a shortage. And what we tend
[11:47] Speaker 1: to see is that historically, investors tend to trade the
[11:52] Speaker 1: stocks one year before the peak in the cycle. So
[11:55] Speaker 1: we think the cycle peak is quite close. And that
[11:58] Speaker 1: means there might not be much upside in terms of
[12:02] Speaker 1: the earnings revisions or in terms of the market. That's
[12:05] Speaker 1: why at this point of the cycle, we prefer a
[12:07] Speaker 1: quality market like Taiwan over South Korea.
[12:11] Speaker 5: Do you like China as a counterweight when it comes
[12:14] Speaker 5: to U.S., Taiwan, Korea, AI ecosystem? Or do you like
[12:20] Speaker 5: China for some of the other thematics that might be
[12:22] Speaker 5: at play there?
[12:26] Speaker 1: So we are positive on China, but the key differentiation
[12:28] Speaker 1: is that A shares, I think, are going to do
[12:30] Speaker 1: much better because they provide you exposure to the domestic
[12:35] Speaker 1: hardware stocks. It's quite clear that China is building its
[12:38] Speaker 1: own AI ecosystem now, similar to US. And that would
[12:42] Speaker 1: mean there'd be a lot more demand for hardware stocks
[12:45] Speaker 1: and hardware equipments in China. So A shares, I think,
[12:48] Speaker 1: offer much better value. The earnings revisions have been strong.
[12:52] Speaker 1: despite the fact that the economy is not doing great.
[12:55] Speaker 1: So in China, I think investors really need to differentiate
[12:58] Speaker 1: in which part of the market they need to be.
[13:04] Speaker 5: We talked a little bit about our treasuries, but do
[13:06] Speaker 5: you lock in yields at this point for that opportunity?
[13:11] Speaker 1: Absolutely. So we are looking at a bucket of two
[13:14] Speaker 1: to five year yield because market is already pressing in
[13:18] Speaker 1: more than 50 basis point of hike over the next
[13:21] Speaker 1: 12 months. And if our base case of no rate
[13:24] Speaker 1: hike comes true, it's quite likely that the yields on
[13:28] Speaker 1: the shorter rated bonds will come down. And that's why
[13:32] Speaker 1: we prefer and advise investors to lock in yield between
[13:36] Speaker 1: two to five years. Longer-dated treasuries are a very different ballgame.
[13:40] Speaker 1: They are more driven by the concern about debt situation
[13:43] Speaker 1: in the U.S., and that is a bit unclear at
[13:46] Speaker 1: this point of time. So, managed year duration within fixed income,
[13:49] Speaker 1: lock-in yield between two to five years duration. What about
[13:55] Speaker 1: gold as a hedge? Is that still appealing?
[13:57] Speaker 3: No.
[13:59] Speaker 1: I think that's still a very good investment, at least
[14:02] Speaker 1: to hedge your portfolio. Because over the next few years,
[14:06] Speaker 1: the big concern for investors and market would be inflation.
[14:10] Speaker 1: And there's only one asset class which gives you hedge
[14:13] Speaker 1: against inflation, and that's gold. Short term, yes, we are
[14:16] Speaker 1: seeing a bit of pullback because of the higher rates expectations.
[14:19] Speaker 1: But I think closer to 4000 is a good buying level. Eventually,
[14:23] Speaker 1: we do expect gold to rise above 5000 given the
[14:28] Speaker 1: debase spent concern of all the currencies and debt situation.
[14:33] Speaker 5: How do you feel about energy stocks at the moment,
[14:36] Speaker 5: given that we have continued to see these gains in
[14:40] Speaker 5: the crude market? It doesn't seem like any sort of
[14:42] Speaker 5: quick resolution is on hand for the Strait of Hormuz
[14:45] Speaker 5: or resumption of normality in these transiting vessels. Would you
[14:49] Speaker 5: be looking at some of the energy adjacent names in
[14:54] Speaker 5: markets like Australia, for example, or really across Asia?
[14:59] Speaker 1: I think it's more of a tactical play or to
[15:01] Speaker 1: hedge your portfolio against the US-Iran situation. Because in the
[15:06] Speaker 1: medium term, you are not probably going to see massive
[15:09] Speaker 1: returns in the sector given the low volume growth and
[15:13] Speaker 1: the fact that prices are not going to be sustained.
[15:16] Speaker 1: Once we get a resolution of the crisis, prices are
[15:18] Speaker 1: going to come down and that's going to weigh on
[15:21] Speaker 1: the energy stocks. A better way to participate in the
[15:24] Speaker 1: equity market is to look at the cyclical sectors like
[15:29] Speaker 1: industrials or materials. Even financials, I think they should do
[15:34] Speaker 1: well given the strong economy. So energy is more of
[15:37] Speaker 1: a tactical play just to hedge your portfolio. I would
[15:40] Speaker 1: be looking at more at other cyclical sectors like industrials,
[15:44] Speaker 1: financials to play the economic recovery.
[15:47] Speaker 2: That is Suresh Tensha, CIO of Asia Equity Strategy at
[15:51] Speaker 2: UBS Global Wealth Management, speaking with Bloomberg's Heidi Stroud-Watts, bringing
[15:56] Speaker 2: you their conversation here on the Daybreak Asia podcast. Thanks
[15:59] Speaker 2: for listening to today's episode of the Bloomberg Daybreak Asia
[16:03] Speaker 2: Edition podcast. Each weekday, we look at the stories shaping markets, finance,
[16:08] Speaker 2: and geopolitics in the Asia-Pacific. You can find us on Apple, Spotify,
[16:12] Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.
[16:16] Speaker 2: Join us again tomorrow for insight on the market moves
[16:19] Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Krisner,
[16:24] Speaker 2: and this is Bloomberg.

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