Good morning. Weâre watching annual CPI revisions today to give quiet markets some direction. Plus business is booming at Hermes and Chinaâs [View in browser](
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Good morning. Weâre watching annual CPI revisions today to give quiet markets some direction. Plus business is booming at Hermes and Chinaâs real estate crisis is having a ripple effect elsewhere. Hereâs what people are talking about. â [Sofia Horta e Costa]( Quiet markets There is very little movement in both US stock futures and the Treasury market this morning. One potential catalyst could come in the shape of [annual revisions to monthly US inflation data]( â after last yearâs adjustments cast doubt on the Federal Reserveâs progress in taming inflation. The regular US CPI print is due next Tuesday. The S&P 500 briefly crossed the 5,000 milestone on Thursday but closed about two points below that level, so weâll be watching out for that at the open. Bank of Americaâs Michael Hartnett says his teamâs bull-and-bear indicator is close to triggering a sell signal on US stocks, after last week he said the rush into technology stocks was beginning to [resemble the bubble of 1999](. And [Expedia shares]( are down 15% in early trading after announcing a sudden CEO change. Luxury winners Business is booming at Hermes, with the shares rising to a record in Paris. Despite a cooling in demand for luxury products in places like the US, Hermesâ brand [still lures wealthy customers]( willing to splurge on its hard-to-get handbags and pricey silk scarves. All the main divisions of the Paris-based company grew by at least 10%. [Hereâs a good read](on how Hermes thrived by doing things its own way. While LVMH is also proving [resilient](, Gucci hasnât [fared so well](. French cosmetics group LâOreal, whose rival Estee Lauder [said earlier this week](it will cut 5% of its workforce, did better than expected in North America [but sales in China]( let it down. Property crisis spreads US [commercial real estate contagion](has already moved to Europe. And now, a batch of overseas property assets acquired by Chinese developers are [starting to hit the market]( in Europe and Australia. The countryâs landlords and developers are deciding they want cash now to shore up domestic operations and pay off debts. The transactions could help put numbers on just how much trouble the wider industry is in globally, write my colleagues [Neil Callanan]( and [Ainslie Chandler](, as so few assets have been sold so far. Completed commercial property deals worldwide sank to the lowest level in a decade last year, with owners unwilling to sell buildings at steep discounts. Regulators and the market are nervous that this logjam could be concealing large unrealized losses in [commercial real estate especially](. Meanwhile, mom-and-pop investors are pulling more than â¬1 billion a month from [real estate funds]( in Europe. Unhappy hedge funds US regulators will begin requiring hedge funds to confidentially share more information about their investment strategies â [and the money managers arenât pleased](. Managed Funds Association, which represents hedge funds, called the rules âmisguidedâ and said it will actually harm regulatorsâ ability to monitor risks. The new rules, approved Thursday, will require firms to provide more details on investments, borrowing and counter-party exposure. It comes after news earlier this week that hedge funds and proprietary trading firms which regularly trade US Treasuries [will be labeled as dealers]( by the SEC â a tag that brings greater compliance costs and scrutiny. Read Matt Levineâs [take on what that means](. Coming up⦠Todayâs economic data calendar includes unemployment in Canada and December industrial production figures from Mexico. Dallas Fed President Lorie Logan speaks at a event in Texas, while US President Joe Biden will host German Chancellor Olaf Scholz at the White House. Football fans will be looking forward to the NFL Super Bowl this Sunday between the Kansas City Chiefs and San Francisco 49ers. Itâs also the start of Lunar New Year celebrations â happy Year of the Dragon to those who mark it. What weâve been reading This is whatâs caught our eye over the past 24 hours. - Dozens of bankers at Barclays are [getting no bonuses](.
- Trump [dominates the Nevada caucuses]( â South Carolina is next.
- Biden confuses [foreign leaders](yet again.
- Why commercial real estate troubles could spread to[European banks](.
- [Loan growth]( in China falls to a new low.Â
- Odd Lots looks at how [surging US oil output]( is being moved and stored.
- [NFL owners face](Â huge estate taxes to keep teams in the family.
- New York City is considering cracking down on [laundry detergent pods](. And finally, here's what Kristineâs interested in this morning [This year]( was meant to be the year when some semblance of normality returns to bond markets, at least by the measure of a steeper -- even positive, eventually -- yield curve. Now, it looks like we'll have to wait for a little bit longer before we get there. Just to back up a bit -- why is a steeper or positive yield curve held up as the standard for [what's normal in bond markets](? If it comes as a result of lower short-term yields and higher long-dated yields, then it would align with the risks associated with holding bonds of a particular maturity. The longer investors lock their money away in these securities, the higher the yield that they would demand as compensation. With the Federal Reserve set to lower borrowing costs this year, investors were betting that the yield curve was poised to steepen as lower borrowing costs pressure short-term yields. Yet recent pushback from Chair Jerome Powell and other officials on the timing of rate reductions has instead lifted yields in the short end of the bond market, bringing them closer to long-end yields and flattening the curve as a result. Adding to that flattening impulse is yesterday's [strong auction]( of 30-year Treasuries, which halted an ascent in yields that began earlier this month. There are near-term data points that could reignite that steepening move, beginning with CPI revisions due later today. Then thereâs the January inflation print due next Tuesday, which is expected to show a moderation in annual headline and core measures. Yet given the recent surprises in jobs and services activity figures, thereâs a risk that a stronger labor market and more upbeat services sector will feed into inflation too. That scenario would give yields on longer-maturity debt renewed momentum to ascend, which would revive yield-curve steepening. [Kristine Aquino]( is managing editor for Bloomberg Markets Today. Follow her on X at [@krisaqnews](. 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. [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before itâs here, itâs on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals canât 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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