5 Things You Need to Know to Start Your Day

Good morning. It’s jobs day today, plus Exxon closes in on a $60 billion deal with shale-focused Pioneer, and strategists are split on wheth [View in browser]( [Bloomberg]( Good morning. It’s jobs day today, plus Exxon closes in on a $60 billion deal with shale-focused Pioneer, and strategists are split on whether we’ll get a big rally in bonds or a recovery in stocks next year. Here’s what people are talking about. — [Sofia Horta e Costa]( Jobs day It feels like the whole financial-markets world is preparing for the nonfarm payrolls report that’s forecast to show employers added fewer workers last month. The September numbers are set to add another data point to the array of sources providing a mixed narrative on the state of the US labor market. Reports earlier this week showed job-openings overshot estimates, but a measure of private employment from ADP was weaker than forecast. Bloomberg Economics predicts today’s report, due at 8:30 a.m. New York time, may be the last to [show solid hiring]( before a sharp slowdown. ``Since the September survey week, financial conditions have tightened sharply and auto strikes have escalated,’’ wrote Bloomberg economists Anna Wong, Stuart Paul and Eliza Winger. Exxon’s deal Exxon Mobil [is in advanced talks]( to buy Pioneer Natural Resources — a shale-focused producer whose Chief Executive Officer Scott Sheffield is set to retire at the end of the year. A deal between the two companies could be worth as much as $60 billion, putting it on track to be Exxon’s biggest since it merged with Mobil in 1999. Exxon, which has been on the lookout for acquisitions in the Permian Basin of Texas and New Mexico for years, would be by far the oil field’s biggest producer with an output of about 1.2 million barrels a day — more than many OPEC nations. Both Exxon and Pioneer said they don’t comment on “market rumors” when contacted by Bloomberg. Strategists split Bonds will ``rally big’’ next year, says Michael Hartnett at Bank of America. He predicts bonds will be the [best performing asset class](in the first half of 2024, when his team forecasts economic data will validate the recession being priced in by markets. Either that or a credit event will then trigger policy easing, he says. Hartnett has been pessimistic on risk assets throughout this year and remains bearish for now due to what he sees is the likelihood of an economic hard landing. Meanwhile, the team at Citigroup [recommends buying the dip in equities](, eyeing an advance of 15% in a global stock index by mid-2024. They predict macroeconomic risks will be more ``balanced’’ then and favor cyclical stocks that are exposed to the economic cycle. Markets waiting US equity futures were up slightly as of 6:07 a.m. New York time. Treasury yields extended their advance, with the 10-year hovering around 4.74% after reaching 4.88% earlier this week. A gauge of dollar strength was little changed. Shares climbed in Asia and Europe, while mainland Chinese markets remain shut for a weeklong holiday. Oil was also little changed, halting its decline this week. Coming up… Aside from the jobs report due this morning, August data on consumer borrowing and credit-card balances will be released later today. Fed Governor Christopher Waller participates in a moderated discussion about the payments system at a Brookings Institution event. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Nobel Peace Prize goes to Iranian human rights [activist Narges Mohammadi](. - A Biden-Xi meeting at a [summit next month]( is becoming more likely. - Russia lifts a [diesel-export ban]( that roiled global markets. - Tesla [cut prices]( on its most popular cars in the US again. - US warns the EU’s landmark AI policy will only [benefit Big Tech](. - Corporate America is [bingeing on debt](. - Here’s why a 5% bond-yield market [would be so painful](. - Trump endorses Ohio’s Jim Jordan as the [next House speaker](. - Powerball’s jackpot rises to [$1.4 billion]( for the next draw on Saturday. And finally, here's what Garfield’s interested in this morning Anyone looking for Treasuries to bounce back after September’s savage selloff has been severely disappointed. The combination of hawkish comments from Federal Reserve officials and a patina of strong, but second-tier data points, saw October begin with investors rushing for the exits. Yields spiked yet again, with the 30-year touching 5% for the first time since 2007 and traders bracing for the 10-year to reach that level within weeks.   Long bonds are the ultimate pain trade now, with losses rivaling some of the most storied equities crashes in recent history — such as the collapse after the dot-com bubble burst. Wall Street was left struggling to explain the rout: Fed hawks obviously had plenty to do with it, but a growing chorus flagged the return of the “bond vigilantes”. With the US budget deficit swelling — and little sign it will be brought under control — speculation is growing that investors are seeking greater compensation to hold government debt as the inflation rate remains elevated. Former bond king Bill Gross said retail investors who dumped bonds recently may have been making similar judgments. BlackRock said the fiscal outlook means investors are demanding higher yields to compensate for the risks of holding longer-term debt, pointing to the surge in the term premium. Part of the concern for the Fed is that the steepest rate hikes in a generation are failing to notably slow the economy. One sign that this dynamic will continue for some time, is the way US companies have been piling on debt — borrowing cash in bond markets to upgrade their operations, expand their businesses and fund share buybacks. Few are willing to bet that the peak is in for yields. PGIM Fixed Income’s Robert Tipp was gaming out 6% for the 10-year note. So was JPMorgan’s William Eigen, whose decision to pile into cash has made his fund something of a rarity in the fixed-income universe with positive returns this year. Ian Lyngen, the BMO rates strategist, who called bonds a “screaming buy” at the end of August now says it’s time to stay on the sidelines. — [Garfield Reynolds]( is Bloomberg’s chief rates correspondent. Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. 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](. 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