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

Good morning. Record-setting US stocks stand out against struggling European indexes, Apple overtakes Microsoft again and the BOJ sparks new [View in browser]( [Bloomberg]( Good morning. Record-setting US stocks stand out against struggling European indexes, Apple overtakes Microsoft again and the BOJ sparks new yen weakness. Here’s what traders are talking about. — [David Goodman]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. US outperforms S&P 500 futures pointed lower on Friday after the index notched its fourth record close of the week yesterday. The strong performance, which has delivered a 1.6% advance since last Friday, [stands in contrast]( to a sharp decline in European stocks, which are headed for their worst week since January on growing concerns about political turmoil in France. Apple on top A big factor in the record-setting run for US stocks this year has been a rally in tech firms, and Thursday saw the latest evidence of that strong performance. The day saw [Apple overtake Microsoft]( to regain its title as the world’s most valuable company -- the latest sign of improving investor sentiment over its growth and position with artificial intelligence. The milestone follows a blistering rally, including Apple’s biggest three-day advance since August 2020, which took the firm from third place earlier this week. Fed divergence The US’s outperformance comes even as the Federal Reserve is appearing to [diverge from its international peers](, signaling fewer interest-rate cuts this year even as others have already begun to ease. The Fed staying on hold raises questions around harmful foreign-exchange volatility and risks undermining progress on getting inflation down, according to analysis by Bloomberg Economics. Fed official Loretta Mester is due to give a trio of interviews, including on Bloomberg TV, later today, while Austan Goolsbee is also scheduled to make remarks. Yen slump The Bank of Japan, meanwhile, is also making investors wait, although in its case for more for details on a reduction in bond buying. Traders were surprised by the BOJ’s decision on Friday to flag a cut in debt purchases without laying out any figures or timeline, an apparent delay in policy normalization which [sparked renewed weakness in the yen on Friday](. France in focus Even with the Fed and BOJ meetings, and the latest US CPI reading, the big market story for the week has come from France, where traders have been rocked by President Emmanuel Macron’s shock decision to call early parliamentary elections. Alice Gledhill and Sagarika Jaisinghani run through the wild week [here](, with the fallout continuing. G7 leaders are[lamenting Macron’s risky bet,]( while French Finance Minister Bruno Le Maire today warned that victory by a new left-wing alliance in the upcoming election would [lead to the country’s exit from the European Union.]( What we’ve been reading This is what’s caught our eye over the past 24 hours. - ‘[Roaring Kitty’]( appears to have exited GameStop call options. - Luxury labels slash prices 50% to [lure wary Chinese shoppers.]( - [Xi has few options]( to punish EU without starting a trade war. - Ex-Goldman banker says obviously fake [Ozy call left mind `blown’](. - Tesla investors back Musk’s [$56 billion pay deal,]( Texas move. And finally, here's what Garfield is interested in this morning This week’s Federal Reserve decision ended up playing second fiddle to inflation data. The closely watched core consumer price index, which excludes food and energy costs, stepped down for a second month in May, data released Wednesday showed. The surprise miss boosted investor hopes that cost pressures will stop being so sticky. The bond rally picked up pace Thursday as separate figures showed US producer prices unexpectedly declined in May. That helped drive strong demand at an auction of 30-year Treasuries, and sent yields across the curve to the lowest since April. It also put Bloomberg’s gauge of US government debt very close to erasing this year’s declines — which peaked at a 3.4% loss through April 25. Bloomberg The moderation took most of the sting out of the Fed’s new dot plots, which projected just one rate reduction this year, rather than the three that had been penciled in at the March gathering. It helped too that Chair Jerome Powell signaled the door is open for two reductions. Bond investors are back to fighting the Fed by anticipating more easing than the central bank said it expects. Swaps traders are positioning for almost 90% odds that the Fed delivers two rate reductions — after briefly pricing that in as a certainty after the CPI data. Source: CME, Federal Reserve The relief was palpable across most of the fixed income world, after signs earlier in the week that strong May jobs data prompted some bond bulls to exit positions. Higher-for-longer is meantime boosting the performance of money-market funds — now managing a record $6.12 trillion. The confidence investors are showing that the Fed will deliver more cuts than it expects, may partly also be explained by concerns that a broad economic slowdown is coming. Large swaths of the economy are putting off plans for major purchases. Garfield Reynolds is team leader for Bloomberg’s Markets Live Asia, based in Sydney. 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 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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