ADVERTISEMENT

Five Things You Need to Know to Start Your Day

Five Things You Need to Know to Start Your Day

(Bloomberg) -- Want to receive this post in your inbox every morning? Sign up here

Stocks bounce back, a warning on U.S. government debt, and signs of a policy shift on North Korea. Here are some of the things people in markets are talking about today.

Reprieve

Equities are rising today, giving investors a break from the volatility-driven selloff that rocked global markets last week. Overnight, the MSCI Asia Pacific ex-Japan Index gained 0.7 percent, with most of the region’s gauges advancing with the notable exception of Australia as a government inquiry into banks weighs on financial stocks. Japanese markets were closed for a holiday. In Europe, the Stoxx 600 Index was 1.5 percent higher at 5:50 a.m. Eastern Time, with most sectors posting gains of more than 1 percent. S&P 500 futures rallied 1 percent and gold was higher. 

Bonds

The yield on the 10-year Treasury traded as high as 2.893 percent this morning as investors stay alert on inflation risks ahead of key U.S. CPI data on Wednesday. Budget Director Mick Mulvaney warned that there could be a spike in yields as the U.S. posts a larger deficit this year, while adding that the budget imbalance would fall over the long haul as part of President Donald Trump’s spending plans. With investors amassing record short U.S. Treasury positions, and more Fed hikes this year a done deal, a fully-fledged bond bear market may have legs.

Policy shift

North Korean leader Kim Jong Un has invited South Korean President Moon Jae-in to Pyongyang, a summit which would be the first meeting of the leaders of the two countries in 11 years, with Korean markets reacting positively to the invitation. Vice President Mike Pence, meanwhile, signaled a shift in U.S. policy towards North Korea, saying that that the administration was ready to enter talks with the regime, while citing “meaningful steps towards denuclearization” as a basis for discussions on sanctions relief.

Budget day

Trump’s spending plan is due to be released later today, with a border wall and funds to combat opioid abuse in focus. Congress with its own spending priorities is expected to ignore the document -- as it often does with executive-branch spending requests -- but the proposal will prove a key indicator of the administration’s legislative goals. 

D-Day in SA

The National Executive Committee of South Africa’s ruling African National Congress is due to meet today to finalize the fate of President Jacob Zuma. Rand investors are nervous ahead of the meeting, which is expected to announce a smooth power transition from Zuma to recently-elected ANC leader Cyril Ramaphosa. Zuma has, up to now, defied calls to step down to pave the way for the newly crowned chief of the governing political party. 

What we've been reading

This is what's caught our eye over the weekend.

To contact the author of this story: Lorcan Roche Kelly in Dublin at lrochekelly@bloomberg.net.

To contact the editor responsible for this story: Sid Verma at sverma100@bloomberg.net, Cecile Gutscher

©2018 Bloomberg L.P.