5 Things You Need to Know to Start Your Day: Americas

Good morning. Stock futures are mixed after a rally, Middle East tension is rattling crude and Treasuries have reverted to their former role [View in browser]( [Bloomberg]( Good morning. Stock futures are mixed after a rally, Middle East tension is rattling crude and Treasuries have reverted to their former role. Here’s what’s moving markets. — [Sam Unsted]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Futures mixed [US stock futures are mixed]( after the S&P 500 and Nasdaq 100 closed about 1% higher apiece on Monday, helped by more optimism among investors about the timing and depth of potential rate cuts by the Federal Reserve. European stocks are higher, while indexes in Japan and the UK are catching up after being closed for holidays yesterday. Shares in Swiss bank UBS jumped after it [returned to profit]( and showed more progress in its integration of Credit Suisse. Oil volatility Oil prices are [edging higher for a second day](, following the worst weekly drop for crude since February, helped by a broader risk-on mood in markets and amid ongoing tensions in the Middle East. Israel [rejected a cease-fire proposal]( that Palestinian militant group Hamas said it agreed to. Results from [UK oil major BP](, which missed estimates but kept its buyback pace up, and from [Saudi giant Aramco](, which is maintaining a $31 billion payout to investors, are also being digested by the market. Hike impact The Fed’s Thomas Barkin said that the full impact of rate hikes by the central bank [is yet to come through](, and he anticipates that restrictive policy will slow the economy and cool inflation toward the 2% target. Ken Griffin, founder of Citadel, said the [Fed is likely to cut in December if it doesn’t in September](, saying that the decision by the bank to keep rates higher for longer was the right one. Neel Kashkari is set to speak today, in a lighter slate for Fed officials. Bond market’s return As the debate on when or whether the Fed will cut rates this year goes on, the US bond market is reverting back to its [traditional role in the economy]( — providing a source of reliable income that investors can lock in for years to come following nearly two decades of zero rate monetary policy. Last year, investors pocketed nearly $900 billion in annual interest from Treasuries, double the average of the previous decade. And thanks to this, investors are better shielded against any jump in yields. Contrarian calls Fund managers are increasingly saying that the US stock exceptionalism which has driven indexes to records [may have run its course](. Among US stocks today, [AI software firm Palantir]( is falling in premarket trading as its sales forecast failed to impress, Amazon is [spending $9 billion]( on its cloud business in Singapore and Apple is said to be developing [its own AI chip](. Entertainment behemoth Walt Disney is set to report after the close. Is gold rallying because of its safe haven qualities? Is Bitcoin at $63,000 a better hedge against losses in other securities than it was when it traded at $5,000? Is buying large cap US tech stocks a good strategy in the environment of elevated inflation? Share your views in the latest MLIV Pulse [survey](. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [High-tech trading firms]( are muscling into the bond industry. - Police shield [the Met Gala]( from pro-Palestine protests. - China’s newfound [love of coffee]( is reshaping the industry. - A campaign to overhaul [crypto’s reputation](. - Asia’s [“block-trade king”]( is hit by insider trading allegations. And finally, here's what Joe’s interested in this morning After yesterday's rally, stocks are nearing all-time highs again. The catalyst for the latest bounce seems to have been that weak jobs report from Friday morning that got people thinking: wait, maybe the economy isn't overheating again actually. In fact right after the report, we got the latest update to Citi's US Economic Surprise Index, which turned negative, falling to its lowest level in over a year. The market has shown this uncanny ability to rally on two different narratives. Late last year, the story was: soft landing coming, rates will come down, stocks higher. Then this year the story has been: no soft landing, rate hikes getting pushed out, but earnings and growth are strong, so stocks higher. So the question is whether the environment can keep toggling and go back to: Landing + rate cuts. Granted we're just talking about a couple of days of action here. But if we are talking about a landing again, then of course it raises the question of whether it will be soft(ish) and whether Fed policy can pivot in time. At least for the moment, investors seem to like the evidence of deceleration, and the idea that maybe the heat will come off in a way that lets the Fed ease in a gradual manner. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? 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