5 things to start your day

[Bloomberg Markets]( [FOLLOW US [Facebook Share]]([Twitter Share]( [SUBSCRIBE [Subscribe]](  Forward Guidance  Stocks are rising, warning on U.S. deficit, and a North Korea policy shift. Reprieve Equities are rising today, giving [investors a break]( from the volatility-driven selloff that rocked global markets last week. Overnight, the MSCI Asia Pacific ex-Japan Index gained 0.7 percent, with most of the region’s gauges advancing with the notable [exception]( of Australia as a government inquiry into banks weighs on financial stocks. Japanese markets were closed for a holiday. In Europe, the Stoxx 600 Index was 1.5 percent higher at 5:50 a.m. Eastern Time, with most sectors posting gains of more than 1 percent. S&P 500 futures rallied [1 percent]( and gold was higher. Bonds The yield on the 10-year Treasury traded [as high as 2.893 percent]( this morning as investors stay alert on inflation risks ahead of key U.S. CPI data on Wednesday. Budget Director Mick Mulvaney warned that there could be a [spike in yields]( as the U.S. posts a larger deficit this year, while adding that the budget imbalance would fall over the long haul as part of President Donald Trump’s spending plans. With investors amassing [record short U.S. Treasury positions](, and more Fed hikes this year a done deal, a fully-fledged bond bear market may have legs. Policy shift North Korean leader Kim Jong Un has invited South Korean President Moon Jae-in to [Pyongyang](, a summit which would be the first meeting of the leaders of the two countries in 11 years, with Korean markets reacting positively to the invitation. Vice President Mike Pence, meanwhile, signaled a shift in U.S. policy towards North Korea, saying that that the administration was [ready to enter talks]( with the regime, while citing “meaningful steps towards denuclearization” as a basis for discussions on sanctions relief. Budget day Trump’s spending plan is due to be released later today, with a [border wall]( and funds to combat opioid abuse in focus. Congress with its own spending priorities is expected to ignore the document -- as it often does with executive-branch spending requests -- but the proposal will prove a key[ indicator]( of the administration’s legislative goals. D-Day in SA The National Executive Committee of South Africa’s ruling African National Congress is due to meet today to [finalize the fate]( of President Jacob Zuma. Rand [investors are nervous]( ahead of the meeting, which is expected to announce a smooth power transition from Zuma to recently-elected ANC leader Cyril Ramaphosa. Zuma has, up to now, [defied calls]( to step down to pave the way for the newly crowned chief of the governing political party. Here's what you should read today - Odd Lots: Annie Duke explains how to [apply poker skills]( to markets and other business decisions. - “Shut up and let me trade.” The week that [rocked stock markets](. - Volatility’s awakening spurs [record long position]( in VIX futures. - Deutsche Bank to [recruit rookies]( in bid to revive equities unit. - ECB’s record as a bank supervisor? [Barely as pass](, experts say. - Nearly [everyone loses]( if immigration deal fails. - How an amateur astronomer found a long-lost [NASA spacecraft](.  And finally, here’s what Joe’s interested in this morning Last week's wild market action has sparked a debate about whether something fundamental has changed or not. For years, the market has been steadily rising, punctuated by the occasional volatility spasm that ultimately turns out to be irrelevant. So is it, you know, different this time? The most popular argument that something has changed is that the macro backdrop is now different. Central banks don't have the same urgency to fight deflation, as price risks tilt to the upside. As such, investors will now be watching every single datapoint like a hawk. The January CPI report is coming out this Wednesday, and it will probably be hyped up and scrutinized with an intensity that's typically reserved for a Non-Farm Payrolls release. Retail sales, the same day, will also be closely watched, as will the Producer Price Index data on Thursday, and the University of Michigan Sentiment report on Friday, particularly if the latter gives clues on whether consumer inflation expectations have changed. Oh, and if you want to get a jump on all this, Steven Englander of Rafiki Capital says you should check out the NFIB poll on optimism among small businesses on Tuesday. "The advantage of surveys is that those surveyed are up to date in terms of expectations on prices and output and can look past unseasonably bad weather to a better underlying trend," he writes. It's going to be a fun week!   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.](   You received this message because you are subscribed to the Bloomberg Markets newsletter.   [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022