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

Good morning. Markets assess the potential implications of Trump policies and the Fed has more confidence on the path of inflation. Here’s w [View in browser]( [Bloomberg]( Good morning. Markets assess the potential implications of Trump policies and the Fed has more confidence on the path of inflation. 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](. Trump’s return Donald Trump made his [first public appearance]( since the assassination attempt on him at the Republican National Committee convention. He didn’t speak, but the through-line of his policies was in evidence, ranging from tax cuts to slashing regulations and with the [appointment of Senator JD Vance](, a rising star in the party whose populist policies align with Trump’s, as his running mate for the election. China threat In one of his first interviews since being named at Trump’s running mate, Vance said [China is the biggest threat to the US](. Trump has already pledged to hike tariffs on China across the board should he be elected, including a 60% tax on all imports from the country, with both him and President Joe Biden seeking to be seen as tough on China. Research from UBS estimated that those 60% tariffs would [more than halve China’s economic growth rate](. Treasury trade The momentum behind Trump’s presidential bid has put pressure on long-term Treasuries, sending their yields higher on the view that his policies would worsen the country’s finances and fan inflation. That [“Trump trade”]( is rewarding investors who had bet the bond market curve would return to normal. For that trade to really take hold, however, it would take an interest-rate cut from the Fed, which [Goldman Sachs economists think looks justified](. And investors are increasingly pricing that in too, [with Treasuries rallying]( and 10-year yields near the lowest since March. More Fed confidence Fed Chair Jerome Powell said that recent economic data has [provided greater confidence]( that inflation is headed to the 2% target, albeit while still emphasizing risks in the country’s labor market. Mary Daly agreed that [confidence about the inflation path is growing](, but also suggested there remains plenty of data to come to confirm that. John Authers said that ultimately, [the Fed will have more impact]( on investor decisions than a possible second Trump presidency. Coming Up… The volley of results from the financial services sector continues apace, topped by numbers from Morgan Stanley and Bank of America as earnings season continues to get into gear. Brokerage Charles Schwab,  investment group State Street and health insurance giant UnitedHealth are all on the slate too. Retail sales are top of the economic agenda, with an expectation that the data will show consumers remain under pressure. The S&P 500 is trading near all-time highs, Apple hit a fresh peak and Goldman Sachs gained after a surge in profits. How much more can the US stocks climb? Will corporate earnings in second half be better than in the first? Will Tesla shares end the year higher or lower? 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. - Verizon considering selling [thousands of towers](. - A [third activist investor]( takes a stake in Tinder-owner Match. - A [scathing Amazon review]( that sunk a mom-and-pop business. - Will Olympic athletes [swim in the Seine?]( - Traders [increase their bets]( on cuts by the Bank of England. And finally, here's what Joe’s interested in this morning The big macro news yesterday was [Goldman Sachs top economist Jan Hatzius declaring]( that the economic data justifies a rate cut at the Fed's decision at the end of July. Between the upward drift in the unemployment rate, the decline in job openings, and the recent string of mild inflation prints, there's been a lot of chatter about how the risks to the economy are balanced in such a way now that the rate cut cycle can properly begin. Of course, it's one thing to say that the data justifies a rate cut. It's another thing to have the internal agreement at the FOMC to go for it in July. So for now, markets are still indicating very slim odds of a cut. Per the WIRP function on the terminal, the chances of a cut are just 8.5%, up modestly from the 6.5% last month. The conventional wisdom here is probably now that July will be used to set up a September cut. The other thing that's going on, of course, is the emerging conventional wisdom that Donald Trump will win in November. And the expectation there is that between tax cuts, further tariffs, and other "populist" policies that we'll see upward pressure on inflation. And so the combo gets you to re-steepening of the yield curve. The 2-10 spread is at around its shallowest inversion since January. Meanwhile, the 2-30 spread has totally erased its inversion. Meanwhile, today we get a little more color on the inflation picture when we get import prices for June. Expectations are for a 0.2% decrease and a 0.4% decrease in import prices ex-petroleum. 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? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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