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

Good morning. Federal Reserve Chair Jerome Powell speaks to lawmakers again, President Joe Biden delivers his State of the Union address and [View in browser]( [Bloomberg]( Good morning. Federal Reserve Chair Jerome Powell speaks to lawmakers again, President Joe Biden delivers his State of the Union address and the European Central Bank decides on interest rates. Here’s what’s moving markets. — [Kristine Aquino]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Powell repeat Fed Chair Powell will testify before the Senate Banking Committee on Thursday, a day after[signaling officials would scale back plans](to make them hold more capital — a move that appeared to catch even seasoned industry lobbyists off-guard. Powell also reiterated the central bank is in [no rush to cut interest rates](, while adding that it will likely be appropriate to begin lower borrowing costs “at some point this year.” That was enough to spur the biggest two-day rally in Treasuries since early February, keeping benchmark 10-year yields near a one-month low set on Wednesday. Powell’s testimony, due at 10 a.m. New York time, will come after weekly labor data that’s forecast to show initial jobless claims picked up slightly from the previous period. Biden attacks President Joe Biden’s campaign plans to [ramp up attacks on Donald Trump’s economic agenda]( for a second term, in memos that will be circulated on Thursday during the president’s State of the Union address. His speech will focus on increasing the minimum tax rates paid by major US and multinational corporations to 21% and eliminating breaks for companies with high-paid executives. Meanwhile, Biden’s top economic aide, Lael Brainard, successfully pressed to adjust a White House forecast so that it resulted in [a slightly rosier outlook in the president’s budget plan]( that’s scheduled for release on Monday. Japan bets Speculation surged that [the Bank of Japan will move in March to raise interest rates]( for the first time since 2007, following reports that some BOJ policymakers favor an early move and some government officials support a rate hike. That sent the yen surging more than 1% to a one-month high against the dollar Thursday, and Japanese bank shares and government bond yields rose after the wage data and remarks from a BOJ board member who expressed confidence in inflation. “Japan’s economy and inflation are steadily making progress toward meeting the stable 2% inflation target,” BOJ board member Junko Nakagawa said. China’s warning China’s foreign minister blasted the US for [imposing a “bewildering” level of trade curbs]( on the Asian nation. “The US has been devising various tactics to suppress China and keeps lengthening its unilateral sanctions list, reaching bewildering levels of unfathomable absurdity,” Foreign Minister Wang Yi said at an annual press briefing in Beijing on Thursday. The top diplomat’s comments come as the Biden administration is [pressing]( allies including the Netherlands, Germany, South Korea and Japan to further tighten restrictions on China’s access to semiconductor technology.  ECB’s turn [The European Central Bank is set to keep borrowing costs steady]( for a fourth meeting on Thursday, with analysts unanimously predict the deposit rate will be held at a record 4%. Like their US counterparts, President Christine Lagarde and her colleagues are in no hurry to begin loosening monetary policy. Traders are bracing for the likelihood of the first quarter-point rate cut to be delivered either in June or July, while also expecting a total of at least three such reductions this year. What we’ve been reading This is what’s caught our eye over the past 24 hours. - [How Apple sank about $1 billion a year]( into a car it never built - Nvidia directors sell shares to [reap a windfall of $180 million]( - Trump’s ex-Treasury chief lands[2024’s highest-profile US bank deal]( - [Alabama passes law to protect IVF treatments]( after a ruling on embryos - Muni investors are staging a[rare effort to challenge a $1 billion deal]( - [Billionaire Joe Lewis places a 34-year-old]( on top of a besieged empire And finally, here's what Joe’s interested in this morning We're one day away from the Jobs Report, and as I wrote earlier in the week a big question is whether the "heat" we've seen so far this year is real? Is the economy really re-accelerating, with inflation and growth picking up? Or are we seeing quirks and/or seasonality that masks a mellowing. Anyway. Maybe we'll get an answer on Friday. But in the meantime, yesterday we got the JOLTS report, and so it's a good time to update one of my favorite charts showing the Quits rate vs. the Labor Differential index (which asks the public how they view the labor market as part of the Conference Board Survey). The big story is that the quits rate (teal line) continues to fall steadily. And is now solidly below pre-pandemic levels. Labor differential is also below pre-pandemic levels, though still very high in the grand scheme of things. You can tell a story where lower quits means lower wages (companies don't need to pay as much if their employees are sticking around) and lower wages mean lower inflation. It's a story. It may even be true. And it may be a sign that the economy is still mellowing out, rather than reheating. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( 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. [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. 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