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SVB’s woes prompt questions over the health of the banking system, contagion fears grip the market and the US reports jobs data. — David Goo [View in browser]( [Bloomberg]( SVB’s woes prompt questions over the health of the banking system, contagion fears grip the market and the US reports jobs data. — [David Goodman]( SVB warning [Panic spread across the startup — and wider — world]( after a warning from Silicon Valley Bank, a major lender to fledgling companies, prompted Peter Thiel’s Founders Fund and other prominent venture capitalists to advise portfolio businesses to withdraw their money. The turmoil followed a surprise announcement from SVB that it was holding a $2.25 billion share sale after a significant loss on its portfolio, which included US Treasuries and mortgage-backed securities. The stock plunged 24% in premarket trading before exchanges opened in New York on Friday, set to extend its 60% decline on Thursday. However, the big impact of SVB’s woes is that it has investors asking whether this be the start of a [much bigger problem]( as attention turns to risks that may lurk in other financial institutions after the Fed’s steep rate hikes. Market rout Those concerns drove a rout in global equity markets today, with [banks taking the lion’s share of the turmoil](. Europe’s Stoxx 600 equity gauge dropped more than 1%, with an index of bank stocks sliding the most since June. US futures also pointed to more losses at the open. [Bond markets were also roiled by the news,]( sending yields plunging as traders headed for havens. Treasuries extended gains for a second day, driving 10-year yields down by as much as 11 basis points to a three-week low, while German 10-year government borrowing costs were at one point poised for their biggest slump since early February. Traders pared wagers on the scope for further central bank tightening, pricing about 93 basis points of Fed hikes by July, compared with 112 basis points on Wednesday. To catch up on the trading day in the UK and Europe, [check out Markets Today](. Payrolls data The volatility won’t be helped by the monthly [US jobs report]( this morning, which would normally be the day’s biggest risk event. Economists project a 225,000 increase in February payrolls, about half January’s blockbuster pace, and a softer number could further tilt expectations back to a quarter-point hike. However, the Fed will need to position to “potentially raise by a half a percentage point very quickly” if the payrolls data come in hotter than expected, Danielle DiMartino Booth, chief executive officer and chief strategist at Quill Intelligence, said on Bloomberg Television. US-China tensions China and the US have [locked themselves into]( a new cycle of recriminations, provoking fresh worries that the world’s two biggest economies are heading down a path that could one day lead to the once unthinkable: the possibility of open conflict. A week of back-and-forth from officials on both sides have brought into sharp focus how the US and China increasingly have one thing in common: a growing distrust of the other side. Even worse, the escalating rhetoric is entrenching divisions that could make it harder for both sides to find a way to co-exist peacefully over the long term. Coming up… The jobs data drop at 8:30 a.m. in Washington, although investors will have to wait a while for any comments from Fed officials on the report, with nothing on the schedule until next week. In the meantime, the focus will stay on the fallout from the SVB story, and any signs of contagion. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Digging deeper into the real [fears gripping markets today](. - Ackman says US should [mull SVB bailout]( as a possible option. - El-Erian says US banking system can [weather contagion risk](. - China’s faith in all-powerful Xi shaken [by chaos of Covid pivot](. - UK economy [grows more than expected]( in January. - Ex-Goldman banker’s prison term previews [what former boss faces](. - King Charles gives Prince Edward [‘Duke of Edinburgh’ title.]( And finally, here’s what Katie’s interested in this morning After January’s blowout number and Jerome Powell’s performance this week, the stakes are unusually high for Friday’s jobs report. Economists forecast a reading of 225,000, but recent history would suggest being wary of an upside surprise — nonfarm payrolls have beat estimates for 10 straight months, the longest streak in decades, according to Bloomberg data. While every payrolls print is a top-tier release, the Federal Reserve chair’s testimony to Congress this week only upped the ante. After declaring on Feb. 1 that the “disinflationary process” had begun, Powell acknowledged that recent reports have been surprisingly robust, suggesting that “the ultimate level of interest rates is likely to be higher than previously anticipated.” Notably, the Fed chair also said policy makers would be “prepared to increase the pace of rate hikes.” While Powell stressed that the central bank would evaluate “the totality of the data” and that no decision has been made as to the size of this month’s increase, economists reckon one more solid report will be all it takes to push the Fed back to a 50-basis point hike. “If the unemployment data this week is very strong then you’ve got 50 basis points back on the table,” said Bob Michele, chief investment officer of JPMorgan Asset Management. “But that is a pretty high hurdle to get to once you’ve down-shifted to 25 basis points.” A high hurdle for sure, but economists have been underestimating the labor market for the better part of a year. Beginning in April last year, the median forecast in each survey of economists fell short of the government’s initial estimate of payrolls by an average of 100,000 a month — the most in data compiled by Bloomberg back to 1998. The Fed isn’t expected to see a win when it comes to wages, either. Average hourly earnings likely rose by 0.3% on a monthly basis, while that measure is expected to have jumped by 4.7% on an annual basis in February, versus 4.4% the prior month. “The stronger the number is, the risk is you are reaccelerating,” said Michael Gapen, head of US economics at Bank of America Corp. He judged that payrolls is the most important component for the Fed because it shows “where the momentum is today,” while the jobless rate and wages are a little more backward-looking. 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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