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North America
CNBC Economy

Surging Treasury yields pose a brand new problem for Kevin Warsh and the Fed

The bond market is yelling at the Federal Reserve, but the messages are coming from different directions and pose a dilemma for policymakers as they seek to strike a balance that won't tank the economy. Treasury yields continued their upward march Thursday as investors sought to price in a variety of factors: inflation still hovering well above the Fed's 2% goal, another bump up in energy prices and the impact of a global hyperscaler financial arms race and accompanying debt issuance. In the past, policymakers have been willing to look through inflation spurts from temporary shocks like high energy prices and tariffs. And the narrative not so long ago was that the artificial intelligence investing boom was a story that would last a year or two and ultimately prove disinflationary. But now Fed officials are rethinking the impact of those factors and seeing the danger of more durable inflation. At the same time, markets are grappling with a central bank that suddenly has no interest in telegraphing its next moves, leaving an uncertain calculus on who is calling the shots — policymakers or market players. "The time of looking through the initial supply shock has come to an end," said Joseph Brusuelas, chief economist at RSM. "The bias has to be towards restoring price stability, and they should take what's going on seriously." Over the past day or so, traders raised the odds of a rate hike in October, which would come only a month or so after last week's quarter percentage point increase. They also see a third increase either late this year or early in 2027, with additional hikes possible in subsequent months. That's a big switch from a Fed that in June projected it might hike once this year and then be done before starting to cut in the next couple of years. "My view coming out of the [September] meeting was that we're going to get three rate hikes," Brusuelas said. But modeling performed at his firm about the potential for higher yields, along with a prolonged cycle of AI investment, changed that view. The modeling indicated that sharply higher long-term yields could slow growth and increase unemployment and still not get inflation back to 2%. RSM found that even a 5.5% 10-year yield — it was around 5.15% on Thursday — would lower growth to 1.5% and lift unemployment to 4.7% while core inflation remained stuck at 2.4%. "The Fed is underestimating what's going to be necessary to restore price stability — that we're probably not talking two or three hikes. We're talking five or six," Brusuelas said. Not everyone on Wall Street agrees. Some strategists think the market is getting ahead of itself — that yields now essentially are pricing in stronger economic growth and are overly sensitive to the vagaries of oil prices amid the ongoing tensions in the Middle East.

Surging Treasury yields pose a brand new problem for Kevin Warsh and the Fed
Europe
The Guardian

As the US midterms approach, Trump’s boasts on the economy fall flat with voters

Donald Trump at the UN headquarters on 22 September in New York. Photograph: Chip Somodevilla/Getty ImagesView image in fullscreenDonald Trump at the UN headquarters on 22 September in New York. Photograph: Chip Somodevilla/Getty ImagesUS economyAs the US midterms approach, Trump’s boasts on the economy fall flat with votersTrump’s tariffs and his war against Iran caused prices to rise, but the US president continues to claim it’s ‘the greatest economy in history’ Steven GreenhouseMon 28 Sep 2026 07.00 EDTLast modified on Mon 28 Sep 2026 13.03 EDTSharePrefer the Guardian on GoogleDonald Trump has taken to repeating a familiar boast: “We have the greatest economy in history,” Trump said recently at a White House press gaggle. The boast comes even though inflation is higher and economic growth lower than when Joe Biden left office, even though gas prices have jumped about 50% since the war against Iran started, and even though 73% of Americans think the economy is in fair or poor shape (48% say it’s in poor shape). What’s more, the Federal Reserve is so worried about inflation that it just raised interest rates. “It’s bluster, it’s gaslighting for him to say the economy is the greatest ever,” said Darrick Hamilton, chief economist for the AFL-CIO, the nation’s main union federation. “The economy is trending down by many measures. A lot of that has been caused by Trump’s unforced errors.” Hamilton said those errors include Trump’s tariffs and his war against Iran, both of which have pushed up prices – inflation is running at 3.4%, up from 3.0% when Biden left office. One unfortunate result is that prices have been rising faster than wages, worsening Americans’ affordability problems. A New York Times/Siena Poll found that 71% of voters disapprove of how Trump is handling the cost of living. Over the past 12 months, according to the Bureau of Labor Statistics, fuel oil prices have soared 52%, while ground beef is up 7.2%, fish and seafood up 6.5%, coffee 6.1%, sugar and sweets 6.1% and electricity up 3.8%. The administration boasts that egg prices are down 23%, even as gas has soared to an average of $4.47 per gallon nationwide. With the economy growing at a modest 1.5% rate in the second quarter, Trump stretches the truth when he boasts of a great economy, considering that under John F Kennedy, Lyndon Johnson and Ronald Reagan, there were full years when GDP growth – the broadest measure of the nation’s economy – averaged over 6%. (The economy grew at a 2.7% annual rate during Biden’s last six months in office.) Consumer sentiment has slid sharply in light of today’s stubborn inflation, mixed with slower economic growth, high interest rates and huge economic uncertainty about trade wars and AI. According to a University of Michigan poll, consumer sentiment fell in September to its second lowest level ever in the poll’s 74-year history. Only this past May was lower. Kush Desai, a White House spokesman, said: “President Trump has always been clear about temporary disruptions as a result of the Iran conflict, but the Trump administration has remained laser-focused delivering on the president’s long-term economic agenda on the home front.” As good news, Desai cited “continued private-sector job growth” and “booming investments”. The unemployment rate has been fairly low during Trump’s second term – at 4.1%, it’s about the same rate as in Biden’s last year. But the jobless rate has been lower under several previous presidents; it sank to 2.5 % at one point under Dwight Eisenhower and below 4% at times under Bill Clinton, Richard Nixon and Johnson. But in a not-so-great statistic, job growth has been mediocre since Trump returned to office – just 43,000 a month on average, less than one-third the 145,000 average during Biden’s last two years in office. Although Trump said his tariffs were aimed at revving up manufacturing, the US has lost 35,000 factory jobs since he returned to office. Last month, however, there was good news on job growth – the nation added an impressive 162,000 jobs. Desai said the Biden administration “padded employment growth” by “adding hundreds of thousands of government or government-adjacent jobs that relied on runaway federal spending”. He added, “President Trump is slashing regulations and taxes to create sustainable private-sector jobs – not juking the statistics by drumming up government spending.” Michael Strain, director of economic policy studies at the American Enterprise Institute, a center-right thinktank, had an upbeat view, saying: “The economy is strong.” Strain added, “the unemployment rate is very low,” and “the economy is very resilient in the face of high energy prices, and consumers are resilient in the face of the trade war.” He noted that “investment spending is very strong”.

As the US midterms approach, Trump’s boasts on the economy fall flat with voters
Europe
BBC Business

Energy bills are going up - here's what you can do about it

Energy prices have now risen by nearly 4%, with forecasts of a much bigger jump to come in January. Regulator Ofgem's price cap affects about 20 million households in England, Scotland and Wales and sets a maximum price for each unit of gas and electricity. Forecasters have suggested a 16% increase is possible in January, due to high wholesale prices paid by suppliers as a result of the conflict in the Middle East. While that's beyond consumers' control, charities say the government should offer more support - beyond a VAT cut on electricity bills which takes effect on Thursday - and households should reset for winter again. That includes reading the meter now, and taking other steps to keep a check on rising bills. The energy regulator, Ofgem, is advising people to consider fixing - so that the price you are charged per unit of gas or electricity does not change every three months, although the total bill will still vary depending on how much energy you use. The trouble is that it is very difficult to work out whether a fixed deal is a good deal at the moment. Should energy prices rise sharply, then those who have fixed already have the certainty of what they will pay for each unit of energy. That price may well be lower than the forecast price in January. However, if events in the Gulf region settle down, and a peace deal in the Iran war leads to lower international gas prices, then a longer-term fix might not seem such good value compared with the price cap. So consumer group Which? also recommends keeping an eye on any exit fees when picking a fixed deal. If variable prices fall below your fixed rate and you want to get out of it before the end of your agreement period, you may have to pay a hefty sum. Before you fix, consumer website MoneySavingExpert advises you look at all the deals available, not just what your own supplier is offering. Ofgem says about five million people still pay their bill when it arrives every three months. For some that's because they do not want their supplier to estimate their usage in case they are overcharged.

Energy bills are going up - here's what you can do about it
Europe
BBC Business

Employers should teach primary-age children about work, says Milburn

Image source, Getty ImagesByHannah KarpelPublished30 September 2026Updated 4 hours agoChildren should be introduced to the world of work at the start of primary school, says the author of a major report into youth activity in the UK. Former minister Alan Milburn says children as young as four should be learning about different careers, with work experience placements made mandatory for 14- to 16-year-olds. However, teaching unions warn of the "significant pressure" already facing primary schools and say practical considerations must ensure all schools have access to the support. The latest data from the Office for National Statistics (ONS) suggests 981,000 people aged 16 to 24 in the UK were not in education, employment or training (known as Neet), between April and June 2026. Milburn told the BBC "in primary school, it's really about opening their eyes and giving them a sense about what is possible". Despite a push towards apprenticeships and work experience in Years 10 and 11, for many the journey towards becoming Neet starts well before their 16th birthday. As a result, Milburn says children should be introduced to the world of work much earlier in their school journey, with dedicated space in the curriculum to "broaden horizons". He told the BBC this could be achieved by employers giving talks in primary schools and offering taster sessions to children. "It'd be good if employers came into schools and said, 'Look, this is what's going on, these are things that are possible.'" Milburn says that for Key Stage 4 pupils - aged between 14 and 16 - experience must be given in a real workplace with employer feedback. "Work experience needs to be mandatory. It makes a big difference," he told the BBC. Milburn also emphasised the difficulty some young people face when trying to find work experience placements.

Employers should teach primary-age children about work, says Milburn
Europe
The Guardian

Anthropic ‘warns of existential AI risks to humanity’ in IPO document

Reuters reported that approximately 80 pages of the 261-page main body of the Anthropic prospectus were devoted to laying out risk factors. Photograph: Carlos Barría/ReutersView image in fullscreenReuters reported that approximately 80 pages of the 261-page main body of the Anthropic prospectus were devoted to laying out risk factors. Photograph: Carlos Barría/ReutersAnthropicAnthropic ‘warns of existential AI risks to humanity’ in IPO documentReported admission to investors of AI’s ‘self-preserving behaviours’ comes as company prepares for a potential $2tn flotation Anthropic is telling investors that advanced AI could pose “catastrophic or existential risks to humanity”, according to reports, as it prepares for a potential $2tn (£1.5tn) flotation. The warning inside the startup’s IPO prospectus, which has yet to be made public, was reported by Reuters and the Financial Times. It follows the company’s call for a slowdown in breakneck development of the technology – a warning echoed by rivals. The prospectus – a document outlining a company’s finances, growth plans and risk profile ahead of a share listing – is said to warn that AI models could exhibit “self-preserving behaviours”, including attempts to “resist shutdown”, to “conceal or manipulate information” and behaviour “resembling blackmail”. “Our development of highly advanced models, platforms, and applications and expansion of use cases could further ⁠increase the risk that our models cause harm,” the developer of the Claude chatbot reportedly said, adding the potential for a model to be aware it was being tested created a “significant limitation” on Anthropic’s ability to assess model safety. Companies preparing to go public routinely report on risks ranging from safety issues to regulatory concerns but warnings about a product causing human extinction reflect heightened concern about such a consequential technology. The reported prospectus admission follows a surge in debate about the existential risk question, triggered this month when an Anthropic researcher, Jacob Coxon, resigned warning that people building AI “earnestly believe that it could kill us all by the end of the decade”. A senior safety researcher at Anthropic then posted their agreement on X, claiming there was a more than 10% chance it “could kill all humans” within the next decade. Days later, Anthropic’s chief executive, Dario Amodei, said the industry “must slow the pace at which we improve the capabilities of AI models”. Some experts have criticised the existential risk warnings, saying they are unverifiable and unscientific. However, there are growing examples of unsanctioned behaviour by the technology, including OpenAI agents – autonomous systems that carry out sequences of tasks without human intervention – hacking dozens of third-party organisations including the AI startup Hugging Face and Australia’s universal healthcare system. OpenAI announced on Monday it had cancelled the release of its newest model because of safety concerns. It said the GPT-6.1 Astra model showed higher levels of deception and performed poorly on tests for alignment, the term for ensuring a model adheres to human values and goals. Reuters reported that approximately 80 pages of the 261-page main body of the Anthropic prospectus were devoted to laying out risk factors, compared with 48 pages to describe its business. Anthropic is reportedly seeking a valuation of more than $2tn, compared with the $1.8tn achieved by Elon Musk’s SpaceX.

Anthropic ‘warns of existential AI risks to humanity’ in IPO document
North America
CNBC Economy

Here's what happens to the economy when Treasury yields soar like they are now

Soaring Treasury yields aren't just bad for the government and its $40 trillion debt. They also threaten to raise borrowing costs, hitting everyone from homeowners to credit card users, while providing limited help to savers and potential benefits to banks. Government debt costs leaped higher Wednesday, the product of multiple factors including a fresh report showing higher inflation pressures, surging expectations for a Federal Reserve rate hike in October, and an auction for 5-year notes showing that Treasury demand was weak. Competition from hyperscaler debt issuance also is seen as an aggravating factor. Yields responded by jumping more than they have in nearly a year and a half, dating back to April 2025 when President Donald Trump first announced so-called reciprocal tariffs against U.S. trading partners. Recent market liquidity efforts pushed by Treasury Secretary Scott Bessent have had no impact so far, with rates surging higher despite intensified buyback efforts on longer-dated debt. The 10-year note, a benchmark for mortgages and other longer-term borrowing, saw its yield hit, 5.125%, a level not seen since prior to the global financial crisis. Similarly, the 2-year note, which typically responds to Fed rate expectations and signals rates for home equity, auto loans and other debt, climbed more than 13 basis points past 4.9% as traders priced in a strong possibility that the central bank would follow its hike last week with another in October. Such moves generally portend higher borrowing rates that hit the U.S. economy where it hurts the most — consumers, who drive nearly 70% of all economic activity and hold nearly $19 trillion in total debt. While savers will benefit with incrementally higher rates on their bank savings accounts, it's unlikely to offset the pain they'll feel elsewhere, said Dan North, senior economist with Allianz Trade North America. "The consumer's the most important part of the economy," North said. "They're going from little tiny yields on savings to ever slightly bigger tiny yields on savings. So I don't think that really yet helps the consumer that much. But it sure does crush housing, and it [impacts] on all those personal consumer loans, the credit cards and so forth." Indeed, the interest rate on plain-vanilla savings accounts is around 0.37% and has been on a modest decline since the Fed enacted three quarter-point cuts late in 2025, according to FDIC data. Mortgage rates, though, have been on an entirely different trajectory and are likely to continue rising. A typical 30-year mortgage is now at 7.26%, up more than a quarter percentage point in just the past couple weeks and nearly a full point over the past year, according to Mortgage News Daily. Credit card interest rates have been fairly steady over the past few years, but also are unlikely to stay that way if current trends hold up. When the Fed hikes, it feeds directly into the prime rate, which is used as a baseline for adjustable-rate credit and most recently was at 7%, after rising a quarter point off last week's Fed move. Taken together, the factors make it more expensive for consumers to borrow and less likely that they'll seek the loans and credit that fuel a lot of the activity in the $32 trillion U.S. economy.

Here's what happens to the economy when Treasury yields soar like they are now
Europe
BBC Business

Regulating AI 'not the right place to start' says Bailey

Image source, Carl Court/Getty ImagesPublished1 hour agoThe Governor of the Bank of England has said regulating artificial intelligence (AI) "is not the right place to start" but instead called first for "rigorous" testing to find vulnerabilities and safeguards to contain risk. Writing his first-ever article for Substack, Andrew Bailey said the risks around AI were "real and increasingly significant". Bailey said the development of AI should not be halted or prohibited - "on the contrary, the benefits are immense" - but added there must be a system for intervention and to establish boundaries in which AI operates. In recent weeks, the debate about the potential risks surrounding the rapid development of AI and what it means for humanity has intensified. The bosses of leading AI firms such as Anthropic and OpenAI have called for development of the technology to slow down and for an internationally co-ordinated approach assessing risks and putting safeguards in place. OpenAI recently announced that it would not release its latest AI model due to safety concerns. The idea of a slowdown, however, has been rejected by the likes of President Donald Trump who has said the US is leading the AI race ahead of China, adding: "And, frankly, I want to keep it that way because whoever wins AI, wins." But on Tuesday, after hosting a summit with the leading firms in AI such as OpenAI and Anthropic, Trump said executives had signed a "morally binding" document that would serve as a "form of protection" from AI's potential risks. Under the agreement, the companies are responsible for ensuring the safety of their own technology. In the UK, Bailey said "important work" was underway in testing AI - the UK has set up the AI Security Institute - which, he said, should help form part of a set of standards. "But the pace of progress must accelerate," the bank governor said, though he added: "We should proceed with a degree of humility." He said, with testing, there will be failures and "models will behave unexpectedly".

Regulating AI 'not the right place to start' says Bailey
Europe
The Guardian

A ‘freaked out’ US food industry is hitting back at Maha – with social media influencers

‘RFK Jr believes chronic illness is primarily caused by processed foods and dyes, exposure to certain chemicals, and poor farming practices.’ Composite: The Guardian/Getty ImagesView image in fullscreen‘RFK Jr believes chronic illness is primarily caused by processed foods and dyes, exposure to certain chemicals, and poor farming practices.’ Composite: The Guardian/Getty ImagesFood & drink industryA ‘freaked out’ US food industry is hitting back at Maha – with social media influencersCross-partisan support in Washington on issues like pesticides and food additives pose a threat to the industry’s bottom line Some of the biggest food and agriculture corporations in the US are funding a campaign that pays social media influencers to combat elements of Robert F Kennedy Jr’s Make America Healthy Again platform, according to an investigation by the Guardian and Documented, an investigative watchdog and journalism project. The ascension of RFK Jr to secretary of health and human services has boosted his putative campaign to end chronic illness in the US, which he believes is primarily caused by processed foods and dyes, exposure to certain chemicals, and poor farming practices, along with an overuse of what he falsely claims are dangerous vaccines. The “Maha” movement blends long-running mainstream concerns about food and farm safety with conspiracy theories about everything from medicine to milk. A Maha “summit” in Washington this week will feature JD Vance and several members of Trump’s cabinet. A KFF poll from May 2026 reveals that some Maha themes resonate with a broad segment of US adults. About four in 10 say they support the Maha movement, while a majority of the public say there is not enough regulation of pesticides used in agriculture (64%) or of chemical food additives (75%). View image in fullscreenAn Eat Real Food rally at Brazos Hall in Austin, Texas, on 26 February. Photograph: Bloomberg/Getty ImagesCross-partisan support in Washington on some of these issues poses a threat to the food industry’s bottom line – though the Trump administration has largely stopped short of enacting new regulations. But several large corporations are fighting back. An effort by the Center for Food Integrity, an industry-funded non-profit, tracks public sentiment around key issues central to Maha and suggests ways that agricultural interests can counter those narratives by appealing to emotion or scientific reasoning. They call it Gaha: Growing a Healthier America. Documents show the coordinated effort is tracking Maha closely and researching ways to respond to the movement’s claims without alienating its supporters. They are focused on several key areas: seed oils, pesticides, high-fructose corn syrup, regenerative agriculture, organic farming, raw milk/dairy and “big ag”, internal documents obtained by the Guardian and Documented show. The campaign involves deploying social media influencers with significant reach online in an effort to rebuild trust in the industries that the Maha movement has made their target. The Gaha influencer campaign officially launched late last year. In February, CFI compiled a report listing dozens of sponsored posts on platforms such as online blogs, Facebook, TikTok and Instagram about key Gaha subjects. So far, at least six influencers have signed on to the Gaha campaign, reaching a total audience of more than 2.6 million viewers. Influencers who participated in the paid campaign said they saw it as a way to counter misinformation that comes from Maha proponents, many of whom are paid to promote products in the wellness space. Some of the paid posts involved talking to farmers about pesticides or regenerative agriculture, which is the practice of restoring soil health, or explaining what seed oils are to counter claims that they cause a host of health problems. In one July 2025 training video uncovered by the Guardian and Documented, the center explained the goal was to create an “echo chamber” among the food and agriculture industry groups, aligning them behind “the same ultimate message”. “Without this coordinated response, that misinformation [from Maha] risks undermining consumer trust, fueling new regulations and eroding confidence in agriculture as a whole,” said Kelly Leighton, the center’s executive director, in the video. The Center for Food Integrity, formed in 2007, conducts research and public relations campaigns on behalf of the food and agricultural sectors. The board consists of corporate executives from top brands: Bryan Malenius, CFI’s board president, also serves as the director of reputation strategy for public affairs at Chick-fil-A, while other members hold senior positions at companies such as Cargill, Dairy Farmers of America and the National Pork Board. Its members, whose dues pay to keep CFI operating, include groups such as the American Farm Bureau Federation and several state farm bureaus, CropLife America and the National Restaurant Association.

A ‘freaked out’ US food industry is hitting back at Maha – with social media influencers
Europe
BBC Business

The AI telling farmers when to harvest

When the first day of the apple harvest rolled around in Washington State last year, the fruit was ripe and the pickers were ready – but the weather had other ideas. "It was like 38C… it's not safe for people to work in that heat," recalls Joel Carter at Okanagan Specialty Fruits. "We had to stop at 10 o'clock in the morning." He says that artificial intelligence (AI) models that forecast ideal harvest dates, taking into account the weather, would be useful. "You need to know more than just when your fruit is going to be ripe. How long do you have to pick it?" he says. "That's where these models are really helpful." Carter's company has more than 1,250 acres of apple orchards in Washington, and the fruit is grown for sliced apple portions – often sold to hotels and schools, for example. The firm is investing in technology with the hope of maximising productivity. Even the apples are genetically engineered so that they don't brown easily once cut. But planning a harvest is tricky. New tools that count and analyse fruit on the tree or vine, and predict when crops will ripen, are emerging. It matters because prices for fruit, especially high-value berries such as strawberries or blueberries can fluctuate wildly. Getting the harvest date wrong means you book seasonal workers when you don't actually need them, and risk missing out on the biggest profits. Okanagan Specialty Fruits is already experimenting with cameras from a Canadian firm called Vivid Machines. The cameras are mounted atop tractors and they scoop up imagery of the apple trees as the tractor trundles by. AI identifies buds, flowers or fruit in that footage. "Right now, Vivid is telling us crop estimates and harvest dates," says Carter. He notes that the system is good at picking out very tiny flower buds, which are hard to see at a glance with the naked eye. But the accuracy of forecasts is noticeably dependent on the quality of historical information fed in to the system, adds Carter. "This isn't something where an AI can scrape the internet and figure out what's the average [yield] for Granny Smith," he explains. "It's going to be bespoke to your farm." Apples are at least somewhat forgiving – the harvest window for those Granny Smiths is three weeks long, says Carter. For other fruit, such as berries, you might only have a few days. "If a strawberry crop is on, you have to harvest it – otherwise your entire crop gets diseased very, very quickly," says Raymond Martin, co-founder and chief operating officer of FruitCast, a UK company that offers harvest forecasts to fruit growers here. His firm offers growers crop predictions for strawberries and also raspberries, blackberries, blueberries and tomatoes. "We're moving on to grapes next year," adds Martin. Don't experienced farmers know when their fruit will be ripe, I ask? Martin says they generally do – but not necessarily across their entire farm, which might be many acres in size, or have both outdoor and indoor growing areas. "We do exactly what the farmers could do but we just do it on a scale that they can't."

The AI telling farmers when to harvest