5 Things You Need to Know to Start Your Day

Treasuries speculators timed their bets before strong US jobs data, the bond market overplays the risk of a deep recession and tech is set f [View in browser]( [Bloomberg]( Treasuries speculators timed their bets before strong US jobs data, the bond market overplays the risk of a deep recession and tech is set for a tough earnings season. —[Heather Burke]( Strong jobs data Speculators timed it just about perfectly before Friday’s strong [US payrolls data](, adding the most to their [bets against benchmark Treasuries](in just over a year. Net-short leveraged fund positions in 10-year futures climbed by almost 150,000 contracts in the week to last Tuesday, according to the latest report from the Commodity Futures Trading Commission. Treasuries slumped on Friday after the March labor data boosted expectations that the Federal Reserve will hike rates by a quarter point in early May. Overall, the March payrolls data — following strong readings in the prior two months — paint a picture of resilient labor demand that is particularly remarkable as [other parts]( of the economy slow. Bond divide When banks started going belly-up, the reaction in bonds was emphatic. Rates showed stress in the financial system made a recession inevitable. Or did they? Three weeks later, questions won’t stop swirling about what to make of[fixed-income volatility]( that for all its ferociousness remains mostly absent in equities and credit. Explaining the divide has become a Wall Street obsession. One concern is whether things having nothing to do with the economy — bearish positioning among speculators, specifically — made the big drop in yields a recessionary false alarm. Meanwhile, most [global central banks]( may be either close to a peak or already done with interest-rate hiking. Tech’s tough times This year’s 20% rally in US technology stocks is decoupling from reality ahead of what’s predicted to be a gloomy reporting season, the latest [MLIV Pulse survey]( shows. While investors have flocked to tech recently, the rotation is at odds with analyst calls for the steepest drop in quarterly profits for the sector since at least 2006. Nearly 60% of the 367 respondents surveyed by Bloomberg said the bounce in the shares had nothing to do with earnings expectations. Profits at big banks, on the other hand, are likely to have taken a hit from the tumult in the industry, according to 41% of the participants. Futures steady US equity futures [were steady]( and Asian stocks rose in holiday-thinned trading as investors assessed the Fed’s policy path following Friday’s US jobs data. S&P 500 futures were little changed as of 6:30 a.m. New York time. Markets across Europe, Hong Kong and Australia closed for Easter holidays and trading volumes were expected to be light. Treasury yields dropped across the curve in Asia after jumping Friday. [Oil steadiedÂ](as traders assess challenges to supply in the wake of planned output cuts by OPEC+. Coming up… New York Fed President John Williams takes part in a moderated discussion hosted by The Economics Review at New York University. US economic data include wholesale inventories. China reports PPI and CPI on Tuesday. All eyes will be looking ahead to Wednesday’s US CPI. The data is expected to show that inflation was largely unwavering in March. Economists are projecting a monthly increase in consumer prices on par with the previous half year. What we’ve been reading Here’s what caught our eye over the weekend: - [FTX failure]( rooted in ‘greed,’ debtors report says - A popular [emerging market FX trade]( is back - A [$1.5 trillion wall of debt]( is looming for US commercial properties - Apple’s[40% plunge](leads PC shipments down - Twitter reverses[NPR label,]( tweaks to ‘government funded media’ - Tesla[new battery plant](cements China’s place in energy storage - Jon Rahm rallies to win [golf’s Masters]( And finally, here’s what Joe’s interested in this morning A thing that keeps popping up over and over again is how the big macro themes of the 2020s so far are almost like the perfect reverse mirror image of the 2010s. On the latest episode of the [Odd Lots podcast out today](, we had a discussion with [Jim Costello](, the chief economist for real assets at MSCI, about the intersection of commercial bank stress and regional bank balance sheets. It occurred to me during the chat that this is one story that flips the last decade on its head in at least three different ways. - Obviously, to the extent that real estate is a big source of concern right now, it seems entirely focused on commercial real estate, rather than residential real estate. Whereas the last bust was all about people's houses, this time around, home values have held up shockingly well, perhaps, given the surge in interest rates. This time, the stress is showing up not where people live, but where they work. - Meanwhile, the crisis of 2008/2009 was largely about the “Too Big to Fail” banks. This time around, problems in the banking system are perceived to be at smaller banks, who face higher costs of capital, and there’s concern about the potential loss of deposits. - Perhaps the most interesting point that Jim made in our conversation about commercial real estate distress is that the people who are licking their chops and sensing an opportunity are the people who know how to get their hands dirty and reposition a piece of real estate. If you know what you're doing to get a mall rezoned or can navigate turning an office building into apartments, you might be able to make a lot of money right now. But this takes local knowledge. It takes specialized knowledge. After the Great Financial Crisis, some of the players who made a fortune were big, institutional asset managers that bought up a bunch of single family homes that had been foreclosed upon. And the main knowledge you needed to do that trade was familiarity with a spreadsheet and an understanding of finance. This time around, spreadsheet knowledge isn't gonna cut it. And so to some extent, the story in commercial real estate is a specific instance of a more general story that the 2020s are all about the physical world. Whether it's energy, infrastructure, semiconductors, or distressed commercial real estate, the winners are likely to be the people that know how to operate something well, rather than those who just have access to cash and the ability to buy up financial assets. Find the episode on [Apple](, [Spotify]( or elsewhere. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart](. 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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