5 Things You Need to Know to Start Your Day

Russian President Vladimir Putin vows to continue the war, HSBC’s bonus pool shrinks and investors weigh how much they need to retire. — Kri [View in browser]( [Bloomberg]( Russian President Vladimir Putin vows to continue the war, HSBC’s bonus pool shrinks and investors weigh how much they need to retire. — [Kristine Aquino]( To catch up on the trading day in the UK and Europe,[ check out Markets Today.]( One year of war Putin [vowed to continue the faltering invasion of Ukraine]( until Russia has achieved its goals, in a state-of-the-nation address that comes days before the war hits the one-year mark. “We will solve the set tasks step-by-step, carefully and consistently,” Putin told Russia’s parliament and top officials in Moscow on Tuesday, a day after US President Joe Biden made a surprise visit to Kyiv. Biden’s trip was the result of months of secret planning by a close circle of advisers, and yielded a promise of [$460 million in additional military aid]( to Ukraine. HSBC bonuses [HSBC’s bonus pool fell by nearly 4%](to $3.36 billion in 2022, as a difficult year in deal making offset the bank’s better-than-expected profit in the fourth quarter. That said, junior-banker bonuses rose on average due to inflationary and cost-of-living challenges. Meanwhile,[JPMorgan is letting go of about 30 investment bankers]( in Asia-Pacific this week, with a majority of them based in Greater China, people familiar with the matter said. The cuts to its Hong Kong and China-based bankers are the biggest seen in years, though they make up less than 5% of its investment-banking headcount in the region. $3 million to retire To retire comfortably, [you need somewhere between $3 million and $5 million]( — that’s according to 553 professional and retail investors worldwide who shared their views in the latest MLIV Pulse survey. Inflation and rising borrowing costs drove the average US 401(k) retirement account down 20% last year, and respondents were not as sure about whether they’d ultimately have enough saved to maintain their lifestyle in retirement. “While inflation appears to be cooling off, it increases the amount of funds that a person needs to have in retirement,” said Christine Benz, Morningstar’s director of personal finance and retirement planning. Futures falter S&P 500 futures fell 0.7% as of 5:44 a.m. in New York, while Nasdaq 100 contracts slid 0.8%. The Bloomberg Dollar Spot Index retreated from the day’s highs, and the pound led gains among Group-of-10 currencies after UK companies reported surprise growth in output. Treasuries fell, joining global bond markets in losses. Oil and gold declined, and Bitcoin retreated following yesterday’s 0.9% gain. Coming up… At 9:45 a.m., we’ll get data on US purchasing managers’ indexes, followed by existing home sales 15 minutes later. The US will sell $60 billion of 13-week bills and $48 billion of 26-week bills at 11:30 a.m., followed by auctions for $34 billion of 52-week bills and $42 billion of 2-year notes at 1 p.m. Earnings include Walmart, Home Depot, Coinbase and Caesars. What exactly is a soft landing? How likely is it that the US will make no landing and instead continue to zoom? Share your views in the [next MLIV Pulse survey here](. What we’ve been reading Here’s what caught our eye over the past 24 hours: - [S&P 500 could drop 26% in months](, Morgan Stanley’s Wilson says - Top Chinese scientists sketch out plans to [circumvent US chip sanctions]( - How Russia’s war on Ukraine [exposes the US military’s failingsÂ]( - China urges the world to[stop comparing Taiwan with Ukraine]( - [Hackers got data center logins](for some of the world’s biggest companies - The [four-day work week gains traction](in a UK trial - Bridgewater’s Ray Dalio [retired with a billion-dollar exit packageÂ]( And finally, here’s what Ven is interested in this morning Investors now expect the major central banks to raise rates much more than they were thinking just at the start of this month. They are still underpricing the risk of how much more tightening is to come. The Fed may raise interest rates as high as 6%, the ECB to 4% and the BOE to possibly 5% should the global economy continue to be resilient and inflation run rife. Here’s why: the tell-tale three-month/10-year Treasury curve has been in a consistent inversion since November, and typically, recessions have followed between 11 and 14 months. That would suggest that the US economy is unlikely to roll over before October at the earliest — meaning central banks may be raising rates all through the summer as they try to get inflation to converge to their targets. While traders have re-priced central bank trajectories considerably this month, they are still blasé: the markets currently see a terminal rate just shy of 5.50% in the US, about 3.75% in the euro zone and 4.50% in the UK. The scenarios projected above are consistent with analysis that showed the Fed has, on average, been able to stop tightening only when its inflation-adjusted policy rate has reached a full 200 basis points. The Fed’s current real policy rate is 95 bps — meaning it still has a considerable distance to go. Recent data in the US have upended expectations of quick disinflation, with consumer prices actually accelerating from a month earlier in January — spurred by the jobless rate sliding to the lowest since 1969 and retail sales rising the most in almost two years. While the Fed has raised rates by a phenomenal 450 bps in the current cycle, headline inflation is still running at 6.4%, more than three times its target. Recent comments by euro-region policymakers suggest that the ECB may act forcefully. The central bank currently projects inflation to average 6.3% this year, meaning its real policy rate is deeply negative, underscoring why many of its officials reckon the benchmark isn’t restrictive yet. In the UK, recent comments suggest that policymakers are wary of taking interest rates too high, though BOE Governor Andrew Bailey’s remarks suggest that the central bank may make peace with a peak rate of 4.50%. Even so, with both headline and retail-price inflation in the UK still running above 10%, a quick decline to 2% is unlikely. Also, in an environment where the Fed and the ECB keep raising rates, the BOE would find it hard to stop where it would like to in the absence of compelling evidence that inflation is crumbling. At the start of the year, traders were working on the assumption that inflation is a problem of yesteryear. Now we know that it is still alive and kicking, while the economies are also more resilient than thought. That means only one thing: a re-calibration of central banks’ rate trajectories. —[ Ven Ram]( Follow Us You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. 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