5 Things You Need to Know to Start Your Day

Good morning. Israel orders an evacuation of civilians in Gaza City that the UN calls ``impossible,’’ Steve Scalise pulls out of the race fo [View in browser]( [Bloomberg]( Good morning. Israel orders an evacuation of civilians in Gaza City that the UN calls ``impossible,’’ Steve Scalise pulls out of the race for House speaker and China is on the brink of consumer-price deflation again. Here’s what people are talking about. — [Sofia Horta e Costa]( Evacuation order Israel’s army [has ordered the evacuation of all civilians]( in Gaza City within 24 hours and warned of significant military activity in the area in the coming days — a sign that a ground operation may be imminent.  The United Nations described the demand as “impossible” and [said it would create]( a humanitarian disaster. Meanwhile, Iranian Foreign Minister Hossein Amirabdollahian — who met with Hezbollah during a visit to Lebanon — [did not rule out a new front in the war](, saying every ``possibility and decision’’ by other stakeholders would be considered if actions by Israel against Gaza continue. The US is in talks with nations, including Egypt and Israel, about ensuring safe passage out of Gaza for Americans and other civilians, according to a CNN report. And here’s why the war risks tipping the global economy [into recession](. Scalise out Representative Steve Scalise [has dropped out of the race]( to become US House speaker. The decision Thursday night followed days of contentious meetings among fellow Republicans, who plan to meet again on Friday morning to discuss their next steps. Scalise said he wouldn’t get involved in choosing an alternative nominee. He noted that the election of a speaker “needs to happen quickly” as further delays would prolong the House’s inability to address an approaching fiscal deadline and respond to the war in the Middle East. Conservative firebrand Jim Jordan, who has the endorsement of former President Donald Trump, received 99 votes in the first round and could run again. [Here’s an explainer]( of what the House of Representatives can do with no speaker and how it affects the US. China’s challenges China is struggling to [generate inflation](, with consumer prices unexpectedly flatlining in September. Exports also fell for a fifth straight month as global demand for Chinese goods [continues to weaken](. The data underscore the fragility of the country’s economic recovery and add to other warning signs in recent weeks. Home sales have failed to recover despite a step up in support for the property market, while spending over the key holiday period that just passed was weaker than the government had predicted. Weak confidence in China’s growth prospects is evident among investors, prompting Beijing to [consider forming a state-backed stabilization fund]( to shore up its near $10 trillion stock market. Cuts to stock transaction fees and stamp duties have done little to move the needle. Oil rises Oil futures are up on the escalating situation in the Middle East. A worsening of Israel’s war with Hamas, drawing in Iran, could send crude oil to $150 a barrel and cut about $1 trillion off world economic output, according to Bloomberg Economics. Treasuries are also rallying on Friday, paring some of the sharp rise in yields that followed Thursday’s hotter-than-expected inflation print. US stocks can avoid a dire outlook [as long as bond yields stay below 5%](, says Bank of America strategist Michael Hartnett. Coming up… The third-quarter earnings season is starting with reports from JPMorgan, Citigroup and Wells Fargo. The University of Michigan consumer sentiment index is due at 10 a.m. New York time, while Philadelphia Fed President Patrick Harker speaks on the economic outlook during a virtual event with the Delaware State Chamber of Commerce. What we’ve been reading This is what’s caught our eye over the past 24 hours. - UK regulators clear Microsoft’s [$69 billion Activision deal](. - Didi is planning a Hong Kong comeback after its [ill-fated New York IPO](. - Jeff Bezos buys the [mansion next door]( in Florida for $79 million. - Ford says [it can’t go any higher]( than its last offer to the UAW. - BOE Governor Andrew Bailey says [there’s more to do]( on inflation. - Deutsche Bank’s CEO sees hard times for [commercial real estate](. - Taylor Swift’s movie is set for a [big first weekend]( at the box office. And finally, here's what Katie’s interested in this morning Thursday’s brutal bond selloff was a good reminder that Treasuries are a volatile place right now. All year, Wall Street pros have been sinking record sums of cash into the world’s largest Treasury ETF on a high-conviction bet that interest rates have peaked — and all year, they’ve been wrong. The big reason: Even a modest rebound in long-dated government debt would spark bumper returns. The bullish appetite makes sense when you think of basic investing math. With yields on 20-year Treasuries hovering near 5%, a drop of 50 basis points would deliver a total return of more than 11% over the next 12 months, according to data from F/m Investments. On the flip side, a 50 basis point rise would only result in a loss of about 1.1%. “The risk-reward for duration is extraordinarily favorable right now and it’s just the bond math,” Karissa McDonough, fixed income strategist at Nottingham Trust, said on Bloomberg Television’s The Close. “If you have just a slight decrease in yields from here for the 10-year, we can talk about a double-digit total return in long bonds and we haven’t seen that in literally years.” That logic has helped investors keep the faith through a brutal year for bond bulls amid elevated price pressures and increased Treasury supply. The $39 billion iShares 20+ Year Treasury Bond ETF (ticker TLT) has attracted a record $17.6 billion so far this year through Wednesday, the third-largest haul among more than 3,300 US-listed ETFs. And demand has only intensified amid the fund’s 50% drawdown from its 2020 peak. The potential payoff isn’t nearly as extreme in shorter-dated debt. With two-year yields trading near 5.07%, a 50 basis point jump would still produce a return of about 4.6% given how elevated yields are right now. That gain grows to 5.5% should rates drop by 50 basis points. Follow Bloomberg's Katie Greifeld on Twitter [@kgreifeld]( 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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