5 Things You Need to Know to Start Your Day

Good morning. The Federal Reserve is set to hold rates, China disappoints stimulus-hungry investors and Argentina undergoes shock therapy. H [View in browser]( [Bloomberg]( Good morning. The Federal Reserve is set to hold rates, China disappoints stimulus-hungry investors and Argentina undergoes shock therapy. Here’s what’s moving markets. — [Sam Unsted]( Hold on The Federal Reserve is set to [hold rates steady for a third consecutive meeting](, with an expectation that it will push back against the ramped-up bets on cuts to come next year. Yesterday’s inflation report showing a pick up in consumer prices [damped hopes of a more dovish pivot](, with a pause the unanimous view of the big banks watching the decision. Chair Jerome Powell has said it is too early to speculate on when rate cuts may start to materialize and instead policymakers are likely to emphasize a desire to stay on hold and continue assessing how higher borrowing costs are impacting the economy. Bond test The Fed ahead is keeping a [lid on market moves]( for the most part, with US stock futures edging higher, Treasuries and the dollar about flat. The decision will mark the [biggest test yet for the bold bet on interest-rate cuts]( reflected in the bond market. Tuesday’s inflation report did see traders trim expectations for cuts and positioning data shows a more neutral stance on Treasuries than recent levels, but the market remains heavily invested in an eventual Fed pivot. Wells Fargo strategist Chris Harvey, meanwhile, said the stock market [has got ahead of itself]( in betting that tightening is over. China disappoints China’s top leaders pledged to [make industrial policy the top priority]( for next year, disappointing investors who had been awaiting a more forceful bout of stimulus for the country. The ruling Communist Party’s annual economic work conference set goals that were seen as “rather traditional’’, according to BNP Paribas’s Jacqueline Rong, with no new remedies on offer for the struggling property sector. Beyond the event, however, one of China’s top housing officials pledged to [avoid a cascade of defaults]( by property developers, one of the strongest commitments yet on containing the liquidity crisis in the industry. Shock therapy The first batch of measures from new Argentinean President Javier Milei were delivered, including [devaluing its currency by 54%]( and massive spending cuts designed to eliminate its primary fiscal deficit next year. Economy chief Luis Caputo repeatedly said when announcing the measures that there is [“no more money”]( and explained the dire situation for the economy which has sparked the need for this shock treatment. Despite that, it [may not be enough for investors]( who had already sent the country’s assets rallying on Milei’s election. COP deal The COP28 climate talks in Dubai have closed with a [landmark deal that includes a commitment to transition away from all fossil fuels]( for the first time. That involved brokering a deal sufficiently strong to get the US and European Union on side, while also ensuring that Saudi Arabia and other oil-producing countries are on board. That was achieved with the agreement calling for a shift in a just and orderly fashion, which convinced the skeptics. What We’ve Been Watching This is what’s caught our eye over the past 24 hours. - Zelenskiy’s plea and the Fed on [the Daybreak podcast](. - SpaceX’s value jumps [closer to $180 billion](. - The [$3.5 trillion debt pile]( for the world’s poorest countries. - A major [political scandal]( unfolding in Japan. - Netflix spills the beans on [viewing figures](. - TikTok [takes on]( Amazon. - Scanners and masks return amid a [Covid surge in Asia](. And finally, here's what Joe’s interested in this morning Hello and happy Fed Day. By now you know the drill. And you've read all the previews. The action will be in the press conference and in the dots, and how many cuts are penciled in for next year, and what the committee's inflation forecast looks like. Yesterday we got a CPI report, and you could spin it any way you want. The headline number was a tad hotter than expected. The core number was right in line. Core services showed a little bit of heat. Used cars showed some unexpected heat. Rent continues to be a little hot, defying the various private market measures that have been showing sharp deceleration for awhile. All that being said, after whipping around a little bit in the immediate wake of the number, stocks staged another strong rally yesterday. The S&P 500 gained 0.46% and finished right at the highs of the day. The index is now up nearly 21% this year. It was the same on Friday. The fall in the unemployment rate didn't prove to be an impediment to the rally. It's more signs of an environment in which investors don't seem scared at all by good news or heat, in a marked change from where things stood a year ago. Follow Bloomberg's Joe Weisenthal on X [@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. Tell us what you want to see in the Five Things newsletter! 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