Good morning. Andrew here. Twenty-five years ago this morning, at this hour, I was finishing up a prototype of this very newsletter. We were conducting a dress rehearsal and planning to launch DealBook that week. I’ll never forget the images of the planes striking the World Trade Center, or the hours and days in the newsroom, on the phone with anxious New Yorkers and Wall Street executives trying to account for their colleagues. I knew people who died that day. Sept. 11 shattered our sense of safety and our assumptions about the world and wrapped Americans in overwhelming grief. Yet in the weeks that followed, the country came together. In a far less polarized era, leaders sought to bridge divisions rather than exploit them. We rallied together. While the attacks’ aftermath ultimately led to war and complex global consequences, I cannot help but return to this question: How would we navigate such a crisis in today’s climate? (Was this newsletter forwarded to you? Sign up here.)
Fretting about 5%The global bond sell-off has slowed this morning. But the causes of the turmoil — soaring oil, inflation and debt worries — remain front and center. The monthslong rout has also laid bare an inconvenient truth: Quick-fix interventions look to be no match against the so-called bond vigilantes. That could heap further pressure on Treasury Secretary Scott Bessent and Kevin Warsh, the Fed chairman, as investors brace for a pivotal inflation report this morning. The latest:
Can Bessent calm the market? He has said he has “a big tool kit” to help bring down yields. Exhibit A: an enhanced bond buyback program, which investors glimpsed for the first time yesterday. But the Treasury bought only $5.19 billion in long-dated bonds — below the $6 billion expected — and yields continued to climb. Bessent played down those ructions, telling Steve Bannon, the longtime ally of President Trump, that the Treasury market is “in very good shape.” But he also seemed to dare traders, adding “Look, if some of the Bloomberg Terminal bros are unhappy with what I’m doing, well, that’s too bad.”
Is this a go-big moment for Bessent? “The Bond Vigilantes are daring Bessent to use the bazooka in his tool kit. That would mean much larger bond buybacks,” analysts at Yardeni Research wrote in a note to investors yesterday. Watch the Fed: Raising interest rates next week would send a message to markets that the central bank was serious about fighting inflation, a move that could also “ease some of the upward pressure on long-term yields,” the Yardeni Research analysts wrote. The market is pricing in two Fed hikes this year, the first coming next week. This morning’s Consumer Price Index report — especially if it comes in as hot as yesterday’s Producer Price Index report — could increase those odds.
“Jimmy Kimmel Live” takes its interview with James Talarico off the air. The ABC late-night show posted Jimmy Kimmel’s interview with Talarico, the Democratic candidate for the U.S. Senate in Texas, on YouTube instead, amid an ongoing battle between the network and the Federal Communications Commission. Brendan Carr, the F.C.C. chair, has warned that networks may be breaking equal-time rules if they interview candidates from only one party. He has also initiated a review of ABC’s station licenses because of its diversity policies. The White House reportedly reconsiders potential copper tariffs. The Trump administration has not decided whether to put levies on the metal amid concerns that the move could raise manufacturing costs, Reuters reports, citing unidentified sources. Copper prices hit a record this week in London on expectations that the White House would expand duties on the metal, key to the artificial intelligence building spree. Trump dividends catch Republicans off guard. Top lawmakers in the party were still looking for details of President Trump’s plan to pay adult Americans $5,000 each if Republicans kept control of Congress in the November midterms. (The announcement has received pushback from fiscal hawks.) Elsewhere, the Trump administration announced $500 rebates for Obamacare customers amid voter concerns about health care costs and a wider affordability crunch. Strait scareOil prices surged to $109 a barrel yesterday, as traders contemplated a new bottleneck affecting the global energy market. A new choke point in the Red Sea is compounding investor worries that the Strait of Hormuz will not reopen anytime soon, threatening to push up inflation in the U.S. and elsewhere. The latest:
An Iran-backed militia captured a strategic Red Sea port. Houthi rebels in Yemen pushed out forces allied with the Yemeni government, which is backed by Saudi Arabia, to seize the city of Mokha and its port. It’s a major setback for Saudi Arabia. The city is near the Bab el-Mandeb Strait, which controls the entry to the southern end of the Red Sea. Houthi attacks in the strait could further restrict the country’s oil exports. Riyadh told OPEC that its oil output last month had already fallen to its lowest level since 1990, as America’s war with Iran limited the kingdom’s export routes.
Will A.I. giants hit the pause button?Fear about the rapid advance of artificial intelligence surged globally this week, amid dire warnings by researchers that the technology could lead to human extinction. (A new disclosure by Anthropic most likely hasn’t helped. More below.) Amid those fears, OpenAI has reportedly told employees that it could slow development of cutting-edge models. But whether it would do so, and whether others would — or could — follow suit, remains unclear. OpenAI is weighing a slowdown on its own, its C.E.O., Sam Altman, said at a companywide meeting this week, according to Bloomberg. That follows a post by Jakub Pachocki, the start-up’s top scientist, warning that A.I. companies should be “coordinating to slow down future development as needed.” Altman told employees that while he hoped other labs would agree to that plan, some may choose not to, Bloomberg added. (Some A.I. executives told DealBook recently they don’t see companies unilaterally disarming, for fear of rapidly falling behind rivals.) Could that kind of industrywide slowdown actually happen? OpenAI in recent weeks has asked lawmakers for guidance about whether any industrywide slowdown risked violating antitrust laws, Wired reports. Some in Congress are addressing the issue, including via a bipartisan House bill introduced in July that would explicitly allow A.I. labs to coordinate on reducing security risks tied to their technology.
Anthropic gave another reason to be concerned about rapidly advancing A.I. The company disclosed yesterday that it had disrupted efforts to use its models for research that could have led to new biological weapons. That said, Anthropic’s head of threat intelligence told The Times that “it’s an incredibly nuanced situation.” And some experts praised Anthropic for its transparency. The view from Silicon Valley: Clearly, many tech workers worry about the apocalyptic potential of their products. (Remember that a current Anthropic researcher said he thought there was a greater than 10 percent chance that “A.I. could kill all humans.”) But several attendees at the Goldman Sachs Communacopia + Technology Conference in San Francisco this week, among others in the Valley, told DealBook’s Sri Muppidi that such fears were overblown. For some, the bigger concern was that the public doomerism could chill markets ahead of Anthropic’s mega-I.P.O., which may seek to raise more than $100 billion. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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