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

Good morning. Jerome Powell sees cuts on the horizon, China readies its largest chip fund to date and investors await key US jobs data. Here [View in browser]( [Bloomberg]( Good morning. Jerome Powell sees cuts on the horizon, China readies its largest chip fund to date and investors await key US jobs data. Here’s what’s moving markets. — [Charlotte Hughes-Morgan](. Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter.]( ‘Not far’ for the Fed Federal Reserve Chair Jerome Powell suggested the central bank is [getting close]( to the confidence it needs to start lowering interest rates, bolstering the idea that such a move could come in the next few months. He told lawmakers that rate reductions “can and will begin” this year, adding that policymakers are well aware of the risks of cutting too late. Powell’s comments sent benchmark 10-year Treasury yields to a one-month low. The Fed Chair also told Congress that the threat to the US banking system from mounting [bad commercial real estate loans]( is manageable. He noted the Fed is talking with lenders to make sure they are on top of potential losses after the [recent troubles]( at New York Community Bancorp, but dismissed the possibility of a risk to the overall system. Jobs day Powell’s words boosted investor risk appetite ahead of [key US employment data]( out today, which is expected to cement the case for interest-rate cuts in coming months. The consensus forecast places the number of new jobs added to the US economy at 200,000, much fewer than January’s blowout 353,000. Hourly wage growth is also expected to slow. However, a dispersion in expectations could trigger volatile trading when the final print is released. For instance, RBC Capital Markets expects 260,000 jobs, while Citigroup predicts 145,000. Bloomberg Economics anticipates a strong report, but one that shows hiring in February was concentrated in just a few sectors, masking a [broader cooling]( in the labor market. Biden’s reelection plans In a spirited and sharply political[State of the Union]( speech, President Joe Biden laid out the makings of a reelection platform and took aim at an opponent he didn’t ever name. Some of Biden’s [proposals]( include ratcheting up the burden on the wealthy and corporations, calling on them to “pay your fair share.” The President’s new initiatives include a crackdown on insurance fees designed to lower housing prices and a proposal for a tax credit for new homeowners to offset high interest rates. Biden also used the speech to call on Israel to let more aid into Gaza and has directed the US military to establish a [temporary port]( on the Gaza coast to ease the humanitarian crisis in the territory. Listen to more takeaways from the address on Bloomberg’s [Daybreak Podcast](. China’s chips China is readying [more than $27 billion]( for its largest chip fund to date as it works to accelerate the development of cutting-edge technologies. Known as the Big Fund, the state-backed firm is expanding its remit just as the US prepares to sharply [escalate]( technology curbs designed to curtail Chinese chip and artificial intelligence progress. This comes as Bloomberg reports that Huawei and its partner SMIC relied on [US technology]( to produce an advanced 7-nanometer chip in China last year, suggesting the country still cannot entirely replace certain foreign components required for cutting-edge products like semiconductors. Coming Up... The jobs data is the main focus today, with eyes also on any potential downward revisions from January’s hot print. SEC chair Gary Gensler is set to speak at the Investment Adviser Compliance Conference in Washington. New York Fed President John Williams will also speak in a moderated discussion. It’s a fairly quiet day for earnings, with Algonquin Power among the companies expected to report results today. What We’ve Been Watching This is what’s caught our eye over the past 24 hours. - Klarna’s CEO looks to Google for the [‘perfect’ IPO]( blueprint - How New York made Michael Strahan [who he is todayÂ]( - Wildfires aren’t just a risk for California utilities, as [Texas]( found out - Lara Williams is [watching the shoes]( at this year’s Oscars - Hong Kong proposes [life terms]( for crimes in its New Security Law - Listen to Odd Lots explain the [sudden surge]( in Japanese stocks And finally, here's what Kristine’s interested in this morning After briefly converging on their outlook for interest-rate cuts, traders and the Federal Reserve are once again at odds. The former is leaning toward four quarter-point reductions versus the three laid out in the Fed's dot plot. That's very much a reaction to Chair Jerome Powell's comments to lawmakers on Thursday, saying that [the Fed is "not far" from gaining the confidence]( it needs to start lowering rates. Those expectations could see some whiplash with today's jobs report. Non-farm payrolls for February are expected to moderate from the previous month, which would be consistent with the soft landing narrative that supports rate cuts later this year. The sticking point could be growth in average hourly earnings, which exceeded estimates in three of the past four releases. Yet as my colleague Michael MacKenzie noted: ...the market can live with a resilient jobs sector so long as the pace of inflation declines towards the Fed’s goal of 2%, as that combination will keep the door to rate cuts this year open. [Kristine Aquino]( is managing editor for Bloomberg Markets Today. Follow her on X at [@krisaqnews](. 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. Tell us what you want to see in the Five Things newsletter! Please [take our quick survey here]( [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. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](