5 Things You Need to Know to Start Your Day

Good morning. Biden is off to Israel on Wednesday, a Trump loyalist is close to becoming the next US House speaker and the Treasury market i [View in browser]( [Bloomberg]( Good morning. Biden is off to Israel on Wednesday, a Trump loyalist is close to becoming the next US House speaker and the Treasury market is really wild these days. Here’s what people are talking about. — [Sofia Horta e Costa]( Biden in Israel President Joe Biden [will travel to Israel on Wednesday]( in a high-stakes, high-risk bid to prevent the conflict from [drawing in Iran](as well as other Middle Eastern nations. He will also travel to Jordan, where he is due to meet with Arab leaders including Egyptian President Abdel Fattah El-Sisi and Palestinian Authority President Mahmoud Abbas. Secretary of State Antony Blinken [has already been touring]( regional capitals in visits to Jordan, Qatar, the United Arab Emirates, Bahrain, Saudi Arabia and Egypt. Biden’s trip to Israel would be his second to an active war zone as president following a visit to Kyiv earlier this year to show his support for Ukraine. The president is facing increasing pressure at home to secure the US’s position in the region after the administration appeared surprised by the Oct. 7 attack. Trump loyalist Representative Jim Jordan closed in Monday night on the votes he needs to be the [next US House speaker](. The hardline conservative from Ohio planned to press his candidacy in a vote on the House chamber floor as early as noon Tuesday. GOP Representatives Mike Lawler of New York, Don Bacon of Nebraska, Mike Kelly of Pennsylvania, Ken Buck of Colorado as well as Carlos Gimenez and Mario Diaz-Balart, both of Florida, were among those saying Monday night that they’d vote against him, at least initially. With Republicans holding a small majority in the chamber, [Jordan can’t lose more than four votes]( in party-line balloting with Democrats, who will be backing their own leader, Hakeem Jeffries. Jordan is seen as a Donald Trump loyalist who has supported an isolationist “America First” agenda. Wild bonds It’s [volatile out there in the long-end Treasury market]( — the highest levels of turbulence in the 30-year yield since the height of the pandemic-era panic of March 2020. For traders, the focus keeps rapidly shifting between rising geopolitical risks, a looming supply glut, concern over deficits and expectations that the Federal Reserve’s interest-rate hiking cycle will tip the economy into recession. Marko Kolanovic, JPMorgan’s chief global markets strategist, is nonetheless recommending that investors increase their bond allocations. “While it remains uncertain whether bonds have bottomed, we add back 1% to our government bond allocation given geopolitical risk, cheap valuations, and less pronounced positioning,” he wrote in a note earlier this week. Dollar rises Markets are struggling for direction as investors wait for more data from earnings season and watch developments in the Middle East. US futures are little changed early Tuesday, yields on the US 10-year benchmark earlier rose beyond 4.7% and the dollar is strengthening -- though the moves are small. Israel’s shekel is extending its decline while Brent crude oil trades near $90 a barrel. A weak yen has helped the Nikkei climb and provided a competitive advantage to Japanese exporters. But what will happen to the currency and Japan's stocks when its central bank starts increasing interest rates? Share your views in the latest [MLIV Pulse survey](. Coming up… It’s the day for Goldman Sachs, Bank of America and Johnson & Johnson to update investors on their latest financial results. There’s also data on September retail sales and industrial production due before markets open, as well as reports on business inventories and cross-border investment. New York Fed President John Williams is set to moderate a discussion with Intel CEO Pat Gelsinger at the Economic Club of New York, Richmond Fed President Tom Barkin speaks to the Real Estate Roundtable in Washington, while Fed Governor Michelle Bowman and Minneapolis Fed President Neel Kashkari are also due to speak later today. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Brussels police shoot a man suspected of a [terrorist attack](. - Goldman CEO David Solomon [will stop DJing](, FT says. - Putin [has arrived in Beijing]( for the Belt and Road forum. - UK [wage growth cools](, adding to bets the BOE’s rates have peaked. - Ray Dalio is [growing his footprint](in Abu Dhabi. - John Paulson [sues]( his former Puerto Rico business partner. - China’s Country Garden edges closer to a [dollar bond default](. - Ranking the world’s [best and worst pension systems]( in 2023. And finally, here's what Joe’s interested in this morning If you read the monthly ISM manufacturing report, there's a section in it in which they look at what key "commodities" are deemed as scarce in a given month. The good news is that over the last year, the number of things in short supply have fallen quite a bit. One category has been in a particularly persistent shortage, and that is electrical components. [For 36 straight months now, ISM respondents have said that electrical components have been in short supply](. Transmission products are also consistently identified as being in shortage. As of the last report, they've been identified in shortage for two straight months. Obviously this has all kinds of ramifications for the process of electrification, as part of the energy transition. EVs are a big part of this story. [This morning the IEA is out with a new report on the role of electricity grids as part of the energy transition](, and there's a section in the main document about the persistent stress on electricity grid supply chains (page 21). A big part of the issue here is simply that there's a lot of demand for the key commodities that go into all these parts, as a result of all this investment. Here's a key paragraph: The availability of GOES (Grain Oriented Electrical Steel) has a significant impact on transformer production. In 2020 the global manufacturing capacity of GOES stood at around 3.8 Mt and was concentrated in a few countries: China, Japan, France, Germany, India, Poland, the Czech Republic, Russia, Brazil, Korea and the United States. China is the largest market, with estimated annual domestic consumption of 1.33 Mt in 2020, followed by the European Union at 0.23 Mt and the United States at 0.15 Mt. The transformer industry has been facing shortages of GOES, which led to price increases of 70% in 2022 compared with 2020. The sanctions on material exports from Russia, which accounted for almost 10% of global GOES production capacity in 2020, is an important factor. The ongoing electrification of the transport sector is a further contributor, since GOES is used in EV charging stations. Growing demand for non-oriented electrical steel (NOES) for making EV motors is another contributing factor, as it has led some steel producers to switch part of their production away from GOES. So true supply side factors are part of it (including the curbs on Russian exports) and then also obviously there's booming demand, both on the infrastructure side and the end use side for this key industrial input. Given how much public money is being put towards the energy transition, it's unlikely that the demand side will slow down anytime soon, making supply side expansion all the more urgent. 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](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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