5 Things You Need to Know to Start Your Day

Good morning. The US reports inflation data, Israel targets Hamas leaders and China’s sovereign wealth fund buys more shares of the nation’s [View in browser]( [Bloomberg]( Good morning. The US reports inflation data, Israel targets Hamas leaders and China’s sovereign wealth fund buys more shares of the nation’s biggest banks. Here’s what people are talking about. — [David Goodman]( CPI day The US is due to report its latest consumer price data Thursday, which economists are forecasting will show a further easing in inflation. Analysts expect the headline reading to fall to 3.6% on an annual basis, while the monthly reading is expected to come in at 0.3% — half the August outcome. The release comes after minutes of the [Federal Reserve’s latest meeting](, released Wednesday, show policymakers agreed that rates should remain restrictive for some time, while noting that the risks of overtightening had to be balanced against keeping inflation controlled. Israel latest Israel is [targeting Hamas’ political leaders]( in Gaza as well as military ones as it seeks to crush the Palestinian group that launched a brutal attack on its civilians last weekend. Israel’s emergency [unity government]( hasn’t yet decided on a widely anticipated ground invasion, though the military is preparing for it. The conflict has killed at least 2,400 people in total on both sides, and the Israeli defense minister warned of a “long and difficult” war. Meanwhile, US Secretary of State Antony Blinken landed in Tel Aviv Thursday on a hastily arranged diplomatic trip. China fund China’s sovereign wealth fund [increased its stake]( in the nation’s biggest banks for the first time since 2015, stoking speculation authorities will intensify efforts to prop up the sinking stock market. State-owned Central Huijin Investment bought about $65 million of shares in a number of banks, according to filings Wednesday. Huijin, a unit of the $1.4 trillion China Investment Corp., plans to further increase holdings over the next six months, the filings show. The move comes as a growing number of Chinese economists and hedge funds are calling on the government to directly intervene with a stabilization fund to buy stocks. Stocks gain [Stocks gainedÂ](and Treasuries were little changed before the US CPI report. Europe’s Stoxx 600 Index advanced 0.4% to a three-week high, with miners leading the advance. Energy shares outperformed as oil erased a drop after OPEC+ leaders Saudi Arabia and Russia reaffirmed their close cooperation to support the crude market. Coming up… The all-important CPI report drops at 8:30 a.m. in New York, the same time as the weekly jobless claims data. Later, a trio of Fed speakers -- Lorie Logan, Raphael Bostic and Susan Collins — deliver remarks. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Bond traders are [starting to bail](on winning yield-curve bets. - US[raises travel advisory level]( on Israel. - The pound is eying its [longest run of gains]( since 2020. - Stubbornly high rates risk [squeezing the life out of UK firms](. - How [fake parts](infiltrated airline fleets. - Ex-trader gains 780% reselling ticket for [world’s biggest cricket match.]( - False claims around the Israel attacks [include a video game clip](. And finally, here's what Joe’s interested in this morning Hello and Happy CPI Day. Perhaps unexpectedly, this has so far been a week of calm in the market. 10-year yields are way off their recent highs from last Friday already. Stocks have been green. The Fed speak has been soothing. There is still growing optimism that the soft landing scenario is in reach. There seems to be an increasing view that the Fed is done raising rates for the year. Maybe the hiking cycle is over for good, but at least for the time being the calls for more hikes immediately have largely subsided. In other words, it would probably take something really unexpected from today's report to get hikes back on the immediate agenda. With all that out of the way, here are a few things to think about. - The official expectation is for a 0.3% month-over-month increase in both core and headline CPI. That being said, of the 67 economists in the Bloomberg poll, 26 of them see a 0.2% increase in the core rate. So the views are fairly varied. - We're back to paying a lot of attention to used cars. As [Omair Sharif of Inflation Insights noted on Twitter](, there is a HUGE potential range of used car outcomes, potentially representing a 21 basis point swing in core alone. Somehow, it's October 2023, and we're still talking about used cars. (Also, incidentally, Tracy Alloway and I are interviewing Omair live at the Bloomberg Screentime conference in Los Angeles today and if you happen to be in town, [you can get a discount on tickets here](). - So this gets to a point that Julia Coronado [made in a recent episode of Odd Lots]( that the real thing to be watching is basically the number of categories moving up or down. There's always going to be noise. And people can find excuses to exclude this or that category for idiosyncratic reasons. But generally the number of categories showing uncomfortable heat lately has been on the decline, and so that's encouraging. - In a note to clients yesterday, Ian Shepherdson of Pantheon Macroeconomics said that one category that could put upward pressure on the index is airline fares. But as he noted the driver of that pressure is the rebounding case of jet fuel. This gets to a point that [Matt Boesler recently made](, that there are a lot of categories that are "core" and yet in some way are largely influenced by commodities pricing. It's all nice and well to say you want to exclude the impact of volatile food and energy prices. But if volatile food and energy prices are making their way into categories that aren't specifically labeled as such, excluding them is harder said than done. BTW. At the same time as the inflation print drops at 8:30 AM ET, we also get Initial Jobless Claims, which have remained remarkably low. Just something to keep an eye on. 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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