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

Good morning. Stocks slide before a landmark Wednesday, bond traders turn their eyes to 2025 and Apple’s AI plans fail to ignite markets. He [View in browser]( [Bloomberg]( Good morning. Stocks slide before a landmark Wednesday, bond traders turn their eyes to 2025 and Apple’s AI plans fail to ignite markets. Here’s what investors are talking about. — [David Goodman]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Stocks steady US stock futures edged lower, while Treasuries and the dollar rose, as traders [prepared for a landmark day tomorrow]( that sees the release of both CPI data and the Federal Reserve’s latest decision. The crowded schedule sets up a crucial 36 hours for risk assets, including Bitcoin, which is currently moving in the [opposite direction to Treasury yields]( to an unusual degree. Dot plots While the market is focused on tomorrow’s double whammy, some bond traders are [already turning their attention to next year](. With sticky inflation raising the prospect of higher-for-longer interest rates through 2024, the big question in the fixed-income space is how to game out 2025 and beyond, heaping more attention on the Fed’s interest rate projections — known as the dot plot. European jitters Initially, it looked like some calm had returned to European markets on Tuesday after [rising political risks](rocked assets at the beginning of the week. But things took a [turn throughout the day](, with stocks sliding and French bonds remaining under pressure, pushing the 10-year spread over German bunds to the highest since October. Read more on this from Joe below. Apple slips Apple shares slipped in pre-market trading, set for a second day of losses, after its [much-anticipated AI announcement last nigh](t saw no major surprises. The firm is making a high-stakes bid to catch up with rivals in the booming AI market, and yesterday announced a new platform called Apple Intelligence. A partnership with OpenAI — in the works for months — [was only briefly mentioned at the event]((although Elon Musk still said he would [ban Apple devices from his companies]( if OpenAI’s software is integrated at the operating system level.) Oil holds surge Oil [held its biggest jump since March]( before an OPEC report that will provide a snapshot on the market outlook. Crude surged on Monday as traders [piled back into the commodity]( after the biggest weekly loss since early May. The OPEC report will be followed by a Short-Term Energy Outlook from the US later on Tuesday, and a monthly release from the International Energy Agency on Wednesday. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Nvidia shares are volatile after its 10-for-1 [stock split took effect](. - [Hong Kong’s identity crisis](fuels $270 billion property wipeout. - UK jobs data prompts traders to [boost bets on BOE rate cuts](. - [Mexico’s Peso sinks](as Sheinbaum embraces judicial reform. - Segantii insider case[hinges on a market-moving block trade](. And finally, here's what Joe’s interested in this morning I have to admit, it's been a long-time since I thought about intra-Eurozone sovereign bond spreads. Eleven or 12 years ago, if I were up writing a newsletter at 5 AM, then this would have been THE thing I was pulling up in the morning. So it's kinda retro to see a headline like this pop up. *FRANCE-GERMANY 10-YEAR YIELD SPREAD JUMPS TO HIGHEST SINCE OCT. Of course this is coming in the wake of the big day for Le Pen's party in Sunday's European Parliamentary election, and then Macron's decision to hold snap parliamentary elections this summer. So a little bit of fragmentation risk, or country risk, creeping back into the market. Here's a long-term chart. There are two things this chart makes me think about. The first is that the move higher is, in the grand scheme, still pretty modest. The spread between how much France pays to borrow vs. how much Germany pays to borrow is basically where it's been hovering for a while now. Still nowhere near the highest spreads during the European financial crisis (and fwiw, the equivalent charts for, say, Spain or Italy would show much wider spreads during the 2011/2012 period). Mostly France was always considered to be "core" Europe during that whole episode. That being said, it's interesting that even with that crisis having faded (thanks mostly to the ECB), spreads really never got back to pre-GFC levels. In 2006, the spread wasn't much more than a basis point. Post-crisis, it never got back to sub-20. It didn't come up much obviously, but there's been a modest, but noticeable, lingering scar from the whole crisis for basically the past decade. Once the idea emerged that Eurozone sovereign risk was a thing, it never quite went away. And now we're here, talking about political risk and all that again, and so the concern marches a little bit closer to the fore. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](