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

Good morning. All eyes are on US bank earnings, Treasuries are back in vogue and Japan makes waves in currencies. Here’s what’s moving marke [View in browser]( [Bloomberg]( Good morning. All eyes are on US bank earnings, Treasuries are back in vogue and Japan makes waves in currencies. Here’s what’s moving markets. — [Kristine Aquino]( Booming banks [JPMorgan, Wells Fargo and Citigroup kick off the second-quarter earnings season](with results due on Friday. The shares of the biggest Wall Street lenders are trouncing the broader market this year, with investors expecting bank earnings outlooks to brighten in the coming quarters. While net interest income — a key source of revenue for lenders — is expected to drop, investors are focusing on what’s likely to be a rosy view on fee-generating businesses like investment banking. “I think near-term that momentum will continue” for bank stocks, said David Konrad, an analyst with Keefe, Bruyette & Woods. Treasuries comeback Like banks, [Treasuries are in vogue among investors and have erased this year’s declines]( as cooling inflation boosts bets on Federal Reserve interest-rate cuts. Traders are now holding out hope for three reductions in borrowing costs this year following data on Thursday that showed US inflation slowed more than expected. A report on producer prices is due on Friday, and more evidence of ebbing price pressures is likely to sustain the outlook for cuts. The key will be whether this will convince policymakers. “Comments from Fed officials will be even more closely monitored in coming weeks, but it does feel like the turn is now coming for Treasury bulls,” said Nick Twidale, chief analyst at ATFX Global Markets in Sydney. Yen jolt [Growing bets for Fed rate cuts probably gave Japan an opening to step into currency markets]( for a third time this year to prop up the yen, according to a Bloomberg analysis of central bank accounts. The scale of intervention was probably around ¥3.5 trillion ($22 billion), based on a comparison of Bank of Japan accounts and money broker forecasts. The figures indicate Japan’s currency authorities tried to take advantage of a buildup of expectations for lower US rates immediately after data showed domestic inflation cooling broadly. Finance Minister Shunichi Suzuki and top currency chief Masato Kanda both declined to comment on Friday on whether they intervened, in line with their responses following similar such actions earlier this year. Biden gaffes Investors continue to confront uncertainty around the US election, with [President Joe Biden vowing he would remain in the 2024 presidential race even as he made two critical mistakes at the NATO summit](. He mistakenly introduced Ukrainian President Volodymyr Zelenskiy as Russian President Vladimir Putin at an event in the late afternoon on Thursday. Then, at the opening of the press conference, he fumbled a question about Vice President Kamala Harris by saying he “wouldn’t have picked Vice President Trump to be vice president” if he did not have confidence in her. The gaffes pierced an otherwise confident showing from Biden, who spoke on a range of complex issues from the tax code and trade policy to Russia and the Israel-Hamas war. Boeing delays [Boeing warned some 737 Max customers in recent weeks that aircraft due for delivery in 2025 and 2026 face additional delays](. The company has cautioned that delivery timelines continue to slip by three to six months on top of already-late handovers, according to people familiar with the matter. In some instances, deliveries scheduled for next year have spilled into 2026. That said,[ Boeing has won an order for 35 of its 737 Max aircraft](, including its largest variant, the Max 10, from the US aircraft leasing unit of Tokyo Century. The order is a boost during one of the company’s lowest moments as it faces production constraints on its cash-cow 737s. What we’ve been reading Here’s what caught our eye over the past 24 hours: - AI investor darling TSMC confronts[test of its $420 billion rally this year]( - [New Yorkers have seen a 58% rise in fees](for food delivery - An Oxford University study links [Ozempic to a lower rate of dementia]( - [Donald Trump asks judge to toss his conviction]( over hush money - Mental health startup Headway [nabs a valuation of $2.3 billion]( - [Why `payment-in-kind’ debt]( is so appealing and risky - The French Riviera enjoys a [property boom fueled by rich Americans]( And finally, here’s what Justina is interested in today I had a grand plan to write about everyone's favorite gripe of the week -- the decades-high concentration in US stocks -- but then everything changed yesterday. After data showed inflation in June slowed more than expected, there were some notable one-day swings: - The S&P 500 beat the Nasdaq 100 by the most in a year (though both were down) - Russell 2000 beat the S&P 500 by the most since March 2020 - Russell 1000 Value beat Russell 1000 Growth by the most since January 2021 - A Dow Jones market-neutral momentum index had its worst day in two months (i.e. a rotation from recent winners into losers) - A Dow Jones market-neutral quality index had its worst day since December - A Goldman Sachs basket of the most-shorted stocks had its best day versus the Russell 3000 since late May The theme through all these moves, which might sound paradoxical given the headline drop in the S&P 500, is pretty clear: risk-on. In fact, nearly 400 of S&P 500 constituents were flat or up yesterday. It's interesting because before last year, it used to be an easy rule of thumb that when rates go up, value does better and growth does worse. And it seemed to make sense because Big Tech (generally associated with growth) trades at lofty valuations and gives you long-term future earnings, so they benefit more from lower discount rates. All this changed last year, when tech (and growth) [kept]( outperforming despite rising rates. One explanation was that the rule of thumb was always just a zero-rate phenomenon. Another explanation was, of course, AI, and the general sense that a lot of these tech firms can profit from secular trends and are just reliable profit generators. So they had become, weirdly, a safety trade in the QT era. And after yesterday, investors were feeling a bit more dangerous and found a reason to move out of these overstretched-looking tech names and into value and small-caps. That also suggests that while the US economy has shown signs of slowing, we're still in a Goldilocks scenario. Enjoy summer, people. Justina Lee is a cross-asset reporter based in London. Follow Bloomberg's Justina Lee on X [@Justinaknope](. [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](