5 Things You Need to Know to Start Your Day

Former President Donald Trump gets indicted, a deposit flight inflicts pain on smaller banks and the financial system shows signs of easing [View in browser]( [Bloomberg]( Former President Donald Trump gets indicted, a deposit flight inflicts pain on smaller banks and the financial system shows signs of easing stress. — [Kristine Aquino]( Note: We want your feedback. Please take a few minutes to[fill out a survey](on how we can make this newsletter better. Thank you. Trump indicted [Trump was indicted on Thursday]( and is expected to be arraigned as early as Tuesday, according to his defense attorney. He became the first former US president to be indicted, after a Manhattan grand jury determined there was enough evidence to proceed with a case against him for directing hush money payments to a porn star during his 2016 campaign. Trump, who is running for president again and faces multiple other legal probes, called the indictment “political persecution and election interference at the highest level in history.” Banking strains [The flight of deposits that resulted from the banking turmoilÂ](in the last few weeks is inflicting pain on small lenders that struggle to compete with higher-yielding money-market funds. Deposits at such lenders slumped $120 billion in the week ended March 15, while those for the 25 largest firms rose almost $67 billion, Federal Reserve data showed. “The bottom line is, deposits were really taken for granted for a very, very long time because of the zero interest rate environment, and now that’s completely changed,” said Joseph Plevelich, senior research analyst at Pekin Hardy Strauss Wealth Management. Easing turmoil [One silver lining for the banking sector](is that the panic appears to have dissipated. US institutions had a combined $152.6 billion in outstanding borrowings from two Fed backstop lending facilities in the week through March 29, compared with $163.9 billion the previous week. That said, banks are still borrowing much more than is typical during periods of low stress. “After the dust has settled a little bit this week with the banks, today’s report offers some assurance that, at a minimum, things haven’t gotten any worse,” Jefferies economists Thomas Simons and Aneta Markowska wrote in a note to clients. Mixed markets S&P 500 and Nasdaq 100 futures rose 0.1% as of 5:32 a.m. in New York. The Bloomberg Dollar Spot Index rallied from its lows of the day, pressuring most Group-of-10 currencies. Treasury yields were little changed, mirroring calm in European bond markets. Oil fell and gold was little changed, while Bitcoin slid for a second day. Coming up… At 8:30 a.m., we’ll get data on personal spending and the Fed’s preferred inflation gauge. We’ll get a reading on a Chicago business measure at 9:45 a.m., followed by the latest figures on University of Michigan’s sentiment index 15 minutes later. New York Fed President John Williams will speak at an event shortly after 3 p.m., while Fed Governor Lisa Cook will deliver a speech at 5:45 p.m. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Dollar’s rally pulls pound back from a two-month high:[Markets Today]( - Investor Michael Burry [congratulates investors who bought the dipÂ]( - Spouses of [H-1B visa holders in tech sector](can work in the US: judge - [Patek Philippe to launch a new model line]( for the first time in 24 years - A once-bankrupt Korean carmaker[seeks revival with a $30k electric SUV]( - [John Wick’s blowout opening]( lifts Lionsgate after recent stumbles - [The 14 best new books]( to read in April And finally, here’s what Garfield’s interested in this morning Bonds have been jumping all over the place this year, bringing investors to the realization that the haven status of Treasuries may be showing some cracks. How risk-free are US government bonds when you consider the plunge in their value [played]( a key role in the downfall of Silicon Valley Bank? Bond markets settled down this week thanks to a lack of fresh turmoil triggers, though there were still plenty of weird and wonderful disconnects to keep investors on their toes. Chief among those was the question of whether the banking crisis spells the end for interest-rate hikes by the Federal Reserve and others. Some of the heaviest of bond heavyweights found themselves on opposite sides of that debate. BlackRock Inc. said traders betting on rate cuts are just [wrong](, so it is investing in inflation-linked notes. DoubleLine Capital LP’s Jeffrey Gundlach expects a US [recession]( will start in a few months, and the Fed will need to respond “[very dramatically](” by lowering its benchmark. That sets up the next round in this year’s battle royale between bond investors and central bankers. After all, money managers are again [favoring]( bets that government debt will climb, after this month’s rally was turbocharged by the burst of short-covering that hedge funds were forced into. Recession concerns have [grown](, with the odds for one increasing. Still, the worry is that investors may be exposed to a February-style reversal. After all, policymakers on both sides of the Atlantic are making it clear further tightening remains [likely]( if banking turmoil continues to ease. Philip Lane, the European Central Bank’s chief economist, said interest rates will need to go up under the base case, because “we expect these tensions will settle down.” Fed officials continue to stress the need to contain cost pressures even as they keep an eye on banking strains. “Inflation remains too high, and recent indicators reinforce my view that there is more work to do, to bring inflation down to the 2% target associated with price stability,” Boston Fed President Susan Collins, a non-voter this year, [told]( a conference on Thursday hosted by the National Association for Business Economics in Washington. One possible straw in the wind for those eager to work out whether the rally is close to a peak was the apparent decision by one bold trader to [cash in]( their January bet on a 1.5% Fed cash rate by year-end for an estimated $10 million. They could be deciding risks for rate bets are on the verge of skewing to the upside again. —[ Garfield Reynolds]( 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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