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The world’s biggest money manager says the Fed will keep hiking, Charles Schwab’s $7 trillion empire built on low rates is showing cracks an [View in browser]( [Bloomberg]( The world’s biggest money manager says the Fed will keep hiking, Charles Schwab’s $7 trillion empire built on low rates is showing cracks and investment giants are losing out in China’s pension market.  — [David Goodman]( BlackRock warning The Federal Reserve will [keep raising interest rates]( despite traders betting otherwise as fears of a banking crisis convulse markets, according to BlackRock. The world’s biggest money manager favors inflation-linked bonds — securities that offer protection from rising prices — on the view markets are wrong in expecting imminent US rate cuts as the economy lurches toward a recession. This time is different as the Fed and its peers have made clear that troubles buffeting the banking sector won’t halt their battle against inflation, BlackRock Investment Institute strategists including Wei Li wrote in a client note. Schwab shows cracks Charles Schwab seems an [unlikely candidate]( to be swept up in the worst US banking crisis since 2008. The firm, a half-century mainstay in the brokerage industry, isn’t overexposed to crypto like Silvergate, nor to startups and venture capital, which felled Silicon Valley Bank. Yet the questions around Schwab won’t go away. Rather, as the crisis drags on, investors are starting to unearth risks that have been hiding in plain sight. Unrealized losses on the Westlake, Texas-based firm’s balance sheet, loaded with long-dated bonds, ballooned to more than $29 billion last year. At the same time, higher interest rates are encouraging customers to move their cash out of certain accounts that underpin Schwab’s business and bolster its bottom line. China pensions BlackRock and Fidelity are [losing out]( in China’s pension market as Beijing ensures that domestic banks and fund managers win the vast majority of new business in a market that may eventually grow to $1.7 trillion. China launched private pension plans for the first time last year and given their tiny asset bases in the country, most foreign money managers have so far been excluded from pilot trials in 36 cities, allowing banks like Industrial & Commercial Bank of China and China Merchants Bank to grab all the inflows. To cement their lead, the banks are offering everything from cash incentives to free ibuprofen for each new account. Stocks gain European [stocks advanced](and the dollar traded lower as fears of broader contagion from the banking turmoil eased. US futures were flat. Treasuries fell along with German bunds and gilts as traders firmed up expectations that central bank tightening isn’t over. Benchmark stock indexes in Spain posted the biggest gains in the eurozone, while markets climbed in Hong Kong, Japan and South Korea as well. Coming up… The US reports a suite of data this morning, including reports on wholesale and retail inventories, house prices and consumer confidence numbers. Later, Fed Vice Chair for Supervision Michael Barr testifies before the Senate Banking Committee, while the US sells $43 billion of five-year notes. What we’ve been reading Here’s what caught our eye over the past 24 hours: - UK’s record shop-price inflation drives BOE bets: [Markets Today]( - Bailey says bank runs can happen quicker in the [world of social media](. - [Israel Latest](: uproar eases as leaders prepare for talks. - Musk’s stock grants value [Twitter at $20 billion](. - Apple’s best hope for [new headset]( is a smartwatch-like trajectory. - How to keep corporate account safe amid [bank collapse jitters](. - A guide to who’s who in the [Gwyneth Paltrow ski crash trial.]( And finally, here’s what Joe’s interested in this morning The turmoil that we saw in March in the banking sector obviously delivered a big jolt to the rates outlook. Most notably we see it at the short end of the curve, as two-year yields have come in dramatically. And they're notably lower than the Fed Funds rate, indicating imminent rate cuts. Ok, fine, that makes sense. The Fed typically hikes until it breaks things. Judging by the slew of extraordinary events of the last month, it looks like that's where we are. Prior to all this, there was a lot of talk about how the economy was overheating again, and that rates would be higher for longer again. And the thing is, so far in the data, it's not clear that the momentum has stopped. While the overall Bloomberg Economic Surprise Index is slightly negative right now, the housing sub-index (probably the most rate sensitive area) has been surging. Most labor-data points have remained robust as well. The one thing that's really dragging things down are the regional manufacturing surveys, which can be highly volatile. Meanwhile, [the Atlanta Fed's latest GDPNow estimat]( (last updated on Friday) shows growth of 3.2% for Q1. So, intuitively, something has to give here. Either the March jolt starts showing in the real economy, with tighter financial conditions flowing through to lower hiring and investing. Or the rate cut bets are going to have to go away, because right now the two don't seem consistent. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart](. 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. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](