5 Things You Need to Know to Start Your Day

Good morning. At least two missiles were fired at Israel from Lebanon, the Federal Reserve releases the minutes of its September meeting and [View in browser]( [Bloomberg]( Good morning. At least two missiles were fired at Israel from Lebanon, the Federal Reserve releases the minutes of its September meeting and House Republicans will try to pick a speaker today. Here’s what’s people are talking about. — [Sofia Horta e Costa]( Lebanon missiles Israel [said an anti-tank missile]( fired from Lebanon hit one of its military posts near the border, news that saw investors seek haven assets like US Treasuries. Tensions in the region have soared since Hamas attacked Israel on Saturday and Israel responded by striking Gaza — with the combined death toll now over 2,000. Hezbollah, the Iran-funded group that operates from Lebanon, has expressed solidarity with Hamas and fired several rockets at Israel. Some say [a ground invasion of Gaza]( by Israel is all but inevitable after Prime Minister Benjamin Netanyahu promised that “what we will do to our enemies in the coming days will reverberate with them for generations.” But a ground invasion would be complicated by Gaza’s dense population, its complex underground network of tunnels and the danger it would pose to hostages. Fed minutes Federal Reserve Governor Michelle Bowman [toned down her hawkish language](, somewhat, at an event on the sidelines of the World Bank/IMF annual meetings in Morocco. In prepared remarks, she said interest rates may need to rise further and stay higher for longer than previously expected to get inflation down to target — a tweak from comments made earlier this month when Bowman said multiple rate hikes could be needed. Several Fed officials have said in recent days that a surge in long-term Treasury yields is doing the central bank’s job in tightening financial conditions, reducing the need for further rate increases. Minutes of the Fed’s September policy meeting, due at 2 pm. New York time, will be scrutinized for hints the central bank may not follow through with the last hike indicated in its economic projections. Fed Bank of San Francisco President Mary Daly said the so-called neutral rate, which Fed officials have estimated at 2.5% since before the pandemic, [may have risen]( to 3%. Speaker election House Republicans head [into a speaker election Wednesday]( without clarity on how long it will take to agree on a new leader. The two declared candidates to replace McCarthy, No. 2 House Republican Steve Scalise of Louisiana and the hardline Judiciary Chairman Jim Jordan of Ohio, addressed Republican lawmakers at a closed-door meeting on Tuesday evening. The House has been unable to handle normal business since eight dissident Republicans joined with Democrats last week to topple Speaker Kevin McCarthy. The ouster has sowed uncertainty about funding the US government, with a temporary bill due to expire after Nov. 17, as well as aid to Ukraine and Israel. New candidates could emerge if no one is able to gain enough support. Bonds gain US Treasuries jumped, leading European bonds higher, as the conflict in Israel intensified. US stock-index futures fluctuated while the Bloomberg dollar index was little changed after five straight days of declines. LVMH dragged European luxury stocks lower. Coming up… Aside from the minutes of Fed’s September policy meeting and the planned House speaker election, Atlanta Fed President Raphael Bostic is due to speak about economic conditions at Metro Atlanta Chambers event. Fed Governor Christopher Waller holds a fireside chat at the E2 Summit in Park City, Utah, while Boston Fed President Susan Collins will deliver the 2023 Goldman Lecture in Economics at Wellesley College. Data on producer prices for September is due at 8:30 a.m. New York time. What we’ve been reading This is what’s caught our eye over the past 24 hours. - SBF’s ex-girlfriend [says he knew of risks](to Alameda Research. - LVMH tumbles after reporting softer third-quarter [sales growth](. - Birkenstock prices its IPO [around the middle](of a marketed range. - Deutsche Bank is [seeking cash]( from the UK arm of Lehman Brothers. - JPMorgan goes live with its [first blockchain]( collateral settlement. - Exxon is close to [sealing its $58 billion deal](to buy Pioneer. - Walgreens [has a new CEO](in former Cigna executive Tim Wentworth. - [Signs of stress]( are bubbling up in the UK’s jobs and housing markets. - Don’t worry, Skittles [won’t be banned]( in California after all. And finally, here's what Joe’s interested in this morning This week we're already seeing a pretty sharp pullback in yields from the peak that they made last week. In the immediate wake of the Non-Farm Payrolls report on Friday, the 10-year came close to hitting 4.9%. As of this moment that I'm typing this, that yield is down below 4.6%. It's hard to pinpoint exactly what's driving the move lower, but that's in part because it's hard to know for sure what drove the move higher. [On the podcast today](, we have a conversation with Jay Barry, a rates strategist at JPMorgan, discussing exactly this. One of the themes is that there was simply a crescendo of negative developments all building on each other over the last 4-6 weeks. Deficit talk absolutely exploded. The "higher for longer" theme really started setting in after the September FOMC. The Bank of Japan's tolerance for letting its own 10-year yield wiggle around a little bit, meant that the marginal yield pickup for Japanese investors was dissipating. Longer-term inflation expectations in the form of forward breakevens had been moving higher. Investors got way offside this summer, betting the wrong way on growth and so on. Anyway again, there's no simple bright line story between any of these things and the broader move. But together there's a theme of building up and blowing out. And now we seem to be coming off the boil a little bit, with seemingly supportive economic data and a more dovish raft of Fed speak. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( 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](. Want to sponsor this newsletter? [Get in touch here](. 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