5 Things You Need to Know to Start Your Day: Americas

Good morning. The S&P 500 is closing in on a symbolic milestone after rising to yet another record, while an auction of 30-year Treasuries w [View in browser]( [Bloomberg]( Good morning. The S&P 500 is closing in on a symbolic milestone after rising to yet another record, while an auction of 30-year Treasuries wraps up a third test for the market. Plus, Arm and Disney are upbeat on their outlooks. Here’s what people are talking about. — [Sofia Horta e Costa]( S&P five thousand The S&P 500 is set to open little changed after the index hit a fresh all-time high on Wednesday. It’s now within [striking distance of the 5,000 level]( and a small gain of just 5 points would take it there today. The MSCI World Index of developed-market stocks [also rose to a record](, helped by an ever-increasing dominance of US tech stocks in the benchmark, as Bloomberg’s Joe Weisenthal [pointed out in a post on X](. We’re still in the midst of earnings season: the lineup in the US today includes Expedia, Philip Morris, ConocoPhillips, S&P Global and cereal maker Kellanova. Another bond test The US Treasury will complete its quarterly debt refunding today with the [sale of $25 billion of 30-year bonds](. The sales of the longer-maturity notes is this week’s third key test of investor confidence — and the market’s ability to absorb supply — following the successful sales of three- and 10-year bonds in the past few days. The strong demand shows the primary market is resilient to fears around the commercial real estate sector following New York Community Bancorp’s [downward spiral](in the equity market. Investors are also absorbing a run of warnings from Federal Reserve policy makers that a rate cut isn’t likely until May at the earliest. The Treasury market is steady, with yields flat to down across the curve. Separately, US regulators will [begin making available key details]( on completed Treasuries trades, the latest push by Washington to increase transparency in the world’s biggest government bond market. Upbeat forecasts Chip designer Arm is [surging 25% in early trading]( after giving a much better forecast for revenue and earnings than expected. Executives explained that Arm’s customers are shifting to a new version of its technology called V9, which carries twice the royalty rate of its predecessors. They’re also using more Arm computing cores per device -- more than 100 in Microsoft’s new server chips -- which translates into higher royalties. Arm, which priced its IPO at $51 back in September, isn’t too far from $100 now. [Disney]( is also rising after it reported better-than-expected earnings and [issued an upbeat profit outlook]( for the year. Shares of Danish[shipping giant Maersk](plunged as much as 15% after it warned gloom will return to the industry later this year when the boost to freight rates from the Red Sea conflict evaporates. China deflation Consumer prices in one of the world’s largest consumer markets fell 0.8% in January, worse than expected and the steepest [decline since September 2009](. The producer price index fell 2.5%, marking 16 straight months of deflation for factory-gate costs. The data underscores one of the biggest problems facing policymakers in Beijing: how to[ revive domestic demandÂ](and boost consumer confidence. Meanwhile China’s mainland markets reacted positively to the appointment of a new securities regulator whose [nickname the “Broker Butcher”]( suggests a more forceful approach to stemming a stock-market rout. Markets in Shanghai, Beijing and Shenzhen will be shut from tomorrow through the end of next week, while Hong Kong still has half a trading day tomorrow. Coming up… US Treasury Secretary Janet Yellen will testify at a Senate banking committee hearing on the Financial Stability Oversight Council annual report. Pharma CEOs including Johnson & Johnson’s Joaquin Duato and Merck’s Robert Davis are due to speak at a Senate panel on prescription drug prices. On the economic data front, inflation numbers are due from Brazil and Mexico, after Chile released figures earlier this morning. Mexico’s central bank also decides on its benchmark rate today, with economists predicting no change for a seventh consecutive meeting. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Novo CEO says [‘scared’ food executives]( call him for advice on Ozempic. - Biden keeps [confusing the names]( of European leaders. - Germany’s [residential property market]( fell the most in 60 years in 2023. - Why Jack Dorsey’s plan for Elon Musk to save Twitter [went south](. - Pakistan has [suspended mobile phone service]( on election day. - Bloomberg Opinion’s John Authers looks at how to [invest in Trump 2.0](. - Last month was the [hottest January]( on record. And finally, here's what Joe’s interested in this morning Stocks rallied again yesterday. And the S&P 500 is now close to a 5% gain on the year. Again, it's interesting how we see this strength despite rising rates, and the Fed downplaying the prospect of an imminent cut. That being said, while officials keep [waving off the prospect of March](, it's worth noting that even the more hawkish members are still talking about cuts. Just not right away. And maybe not as deep as the more dovish members. [Here's a great roundup of Fedspeak]( since last week's FOMC decision. You can see even names like Mester and Kashkari are more or less echoing Powell that we're on a path towards cutting at some point, once the data is in hand. Of course, in the meantime, people have been talking about how the economic data is looking surprisingly robust. Last week's strong non-farm payrolls report was the most prominent example. But of course we also know about the rise in consumer sentiment, some decent ISM data, the general commentary from corporate America and so on. So at least for this moment, we seem to be in a period of robust data and an expectation of cuts at some point, though not right away. Of course there are two ways that could wave. One is if some Fed officials start to question the wisdom of cutting at all. If we get more economic heat, or obviously an inflation pickup, then maybe the appetite to lower rates diminishes. Or the recent economic strength could prove to be a bit of a mirage. This is something that [Conor Sen warns about here](. Even in that strong NFP number last week, there were some sources of concern, such as the shortened workweek, and the softness in the household survey. If the data were to surprise to the downside, then perhaps the "cuts, but not too soon" message could be overly hawkish and risky. But anyway, at least for the moment it seems like a nice spot for investors when the data generally keeps beating expectations and mostly Fed officials are talking about when they're going to cut rates. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. 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