5 Things You Need to Know to Start Your Day

Hedge funds bet big against US Treasuries, Janet Yellen urges Congress to raise the debt ceiling and Binance halts Bitcoin withdrawals twice [View in browser]( [Bloomberg]( Hedge funds bet big against US Treasuries, Janet Yellen urges Congress to raise the debt ceiling and Binance halts Bitcoin withdrawals twice in less than a day. — [Sofia Horta e Costa]( Treasuries short [Leveraged funds supercharged their bearish Treasury bets]( to record levels in the week ending May 2, according to the latest available data from the Commodity Futures Trading Commission. That was just days before the US banking turmoil took a turn for the worse, spurring a rally in Treasuries amid bets the Federal Reserve would soon pause its tightening cycle. Sentiment flipped again after Friday’s better-than-expected jobs data, however. Some of the positions may not be due to the rising popularity of the so-called basis trade, a strategy where investors buy cash Treasuries and short the underlying futures — pocketing any difference in pricing. Yellen’s warning [Treasury Secretary Janet Yellen said there are “simply no good options” for solving the debt limit stalemate](in Washington other than Congress lifting the cap. In an interview Sunday on ABC’s “This Week,” she cautioned that resorting to the 14th Amendment would provoke a constitutional crisis. Yellen insisted that Congress lift the debt ceiling and said she didn’t want to consider emergency options. President Joe Biden is scheduled to meet House Speaker Kevin McCarthy and other congressional leaders Tuesday to discuss the $31.4 trillion borrowing limit — a debate that’s adding to [stagflation risks](. Bitcoin outflows [Binance has resumed withdrawals of Bitcoin after two halts in less than 12 hours](, which the company said were due to congestion on the token’s blockchain. Withdrawals had been down for over two hours on Monday in the Asian session and for about 90 minutes on Sunday. Data from CryptoQuant showed the platform saw its highest ever net daily outflow of Bitcoin — a net 175,646 tokens — on May 7. Binance is by far the largest exchange in the digital-asset sector after the collapse of rival FTX last year. Futures fluctuate Futures on US equities fluctuated after Friday’s stock rebound, which halted the S&P 500’s longest losing streak since February. UK markets are shut for a holiday to mark the coronation of King Charles III. Oil edged higher to start the week, while Chinese bank stocks soared. Japanese stocks fell as traders came back online after a holiday. Coming up… The Fed’s latest Senior Loan Officer Opinion Survey, an indicator of credit conditions in the economy, will be [released]( around 2 p.m. in New York. Minneapolis Fed President Neel Kashkari speaks at an event at 4:45 p.m. Earnings from private-equity giant KKR & Co., Tyson Foods and drugmaker Viatris are due after the close of trading. What we’ve been reading Here’s what caught our eye over the weekend: - US bank stocks are nearing a [crisis-era threshold](. - Investors are bailing on [preferred shares](. - Warren Buffett [reaffirms]( Greg Abel as his successor. - Biden’s approval falls to a[career low]( in an ABC News opinion poll. - Beijing is worried about US think tanks accessing data [in China](. - Lines at food banks are [getting longer](. - Newton Minow, who called TV a “vast wasteland” in 1961, [has died](. And finally, here’s what Joe’s interested in this morning The main thing people talk about with this economy is inflation. Why is it so high? When will it come down to target? What kind of policy errors lead to it getting so high? Was it that the Fed was slow to hike rates? Was it the extra checks from Biden? Is it that "transitory" is a really long time? Are expectations embedded? Is it the result of high wages? Is it the result of corporate greed? Why hasn't it slowed down more, even as supply chains have eased? Would the Fed accept a period of 3% inflation, instead of 2%? How does US inflation compare to inflation elsewhere in the world? What's the best measure of inflation? These are all legitimate questions. But there's more going on than just high inflation. On Friday we got the latest Non-Farm Payrolls report, [and it's at its lowest level in 70 years](. Low unemployment is a good thing. And mostly people agree, but also mostly people talk about the labor market in the context of the Fed's efforts to get inflation down. The labor market is described in terms that are neutral at best. "Tight" is a common way to describe it, even though that's an inherently employer-side perspective to take. Labor might be tight or scarce, but the flipside is that jobs are abundant. But even beyond the framing, this labor market is more than just tight. It's good. It's high quality. [Skanda Amarnath at Employ America]( put together a great thread after the report, highlighting some numbers and trends that aren't getting as much attention. Among the notable facts. The Full-Time Prime Age (25-54) employment-to-population ratio just hit its highest level in over 2-decades. This is important. People try to throw cold water on the news by saying things like it's all part-time jobs, or something to do with demographics, or whatever. But this is not the case. Full-time employment is rocketing past the pre-crisis highs. The fruits of the strong labor market are spreading out across demographics. [Black unemployment is at its lowest level in history](, while prime-age employment-to-population for the group hits its highest level since the late 90s. Meanwhile, as [Lydia Depillis of the NYT flagged](, the Labor Force Participation Rate for prime-aged women has also hit its highest level ever. To the extent that we regard employment as a good thing for society, it's worth taking stock of what's been achieved in this recovery. It's not just that the labor market is tight or that the unemployment rate is low. Under the hood, there are numerous measures that have sailed past pre-crisis levels. And to the extent that certain policy decisions may have contributed to higher inflation, it's worth spending time on what's been achieved on the labor side. And what we stand to lose, potentially, in a recession. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart](. Follow Us Like getting this newsletter? 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