Shell Beats Estimates, Global Bond Rout Gathers, More
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What is the main topic discussed in this episode?
AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining trade-offs shaping the future of AI. Thank you to our presenting sponsor, Salesforce, and supporting sponsors, IDA Ireland and Schneider Electric. Learn more at BloombergLive.com slash TechLondon. News when you want it with Bloomberg News Now.
I'm Caroline Hepker. And I'm Lizzie Burden. Now to our top stories. A global bond route continues after the Fed held interest rates at their meeting yesterday. 30-year Treasury yields climbed three basis points on Thursday to 5.23%, the highest since 2007, extending an 11 basis point jump following the Fed decision. Investors are now questioning whether the Federal Reserve is serious about tackling inflation, despite Kevin Walsh's hawkish rhetoric.
For some households, businesses, and market professionals, five years of high inflation have left a mistaken impression that's hard to shake, that the Fed's implicit inflation target was somehow above 2%. Let me reiterate, there is no soft inflation target.
However, investors appeared unconvinced by Walsh's words, sending 30-year yields sharply higher as markets wagered the Fed was only delaying an inevitable rate rise. Within hours of his press conference, J.P. Morgan brought forward its forecast for the next hike to December. Markets are now pricing a 65% chance of a rate rise at the next Fed meeting in September.
Meanwhile, the Bank of England is expected to follow the Fed's lead and leave interest rates unchanged today. Traders see just a 1% chance of a rate hike, with the Monetary Policy Committee expected to leave borrowing costs unchanged for a fifth straight meeting. Here is Bloomberg Economics' Chief UK Economist, Dan Hanson.
You've got inflation and the data not throwing up any red flags. Good news. On the other hand, re-escalation in the Middle East. And that is obviously a significant issue for the Bank of England and all central banks because oil prices have risen. Importantly, for European central banks, gas prices have risen. And you sort of add those two things up and you've got this picture where In the near term, there's no rush to do anything, but you've got to keep your options open because we just do not know where this is heading into the second latter half of this year.
Dan Hanson was speaking as markets put the odds of a rate hike in September for the UK at around 60%. We will have live coverage of the Bank of England's decision here on Bloomberg from 12pm London time today, followed by Governor Andrew Bailey's press conference an hour later.
The U.S. military says it has launched a powerful response to Iran's attempted missile attack on American forces in the Middle East. The U.S. says it struck dozens of Iranian targets, including command centers, missile and drone facilities, and coastal defense sites as well. The strikes came less than 24 hours after Tehran fired ballistic missiles at a U.S. base in Jordan, ending a brief pause in hostilities. Meanwhile, U.S.
How did the Fed decision trigger a global bond rout and rising long-term Treasury yields?
Energy Secretary Chris Wright says that oil continues to flow out of the Gulf.
A seven-day trailing average right now out of the Arabian Gulf region is 13 million barrels a day, about half of that flowing through the strait and half of that through bypass pipelines. So we're about two-thirds of the delivery of oil out of the Arabian Gulf region as we were before the conflict started.
And you can hear our full interview with Energy Secretary Chris Wright on the Bloomberg Talks podcast. His comments come as Qatar sent its first shipment of LNG through the Strait of Hormuz in more than three weeks, offering a sign that energy supplies are beginning to recover despite the renewed fighting.
Now to earnings. Shell has reported its strongest quarterly profit in more than three years after the Iran war boosted refining margins and energy trading. Net income more than doubled to $9.8 billion, comfortably beating analysts' estimates.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–3:08
2
How did the Fed decision trigger a global bond rout and rising long-term Treasury yields?
3:08–5:37
3
Why are investors questioning the Fed’s inflation stance after Kevin Walsh’s remarks?
5:37–8:32
4
What are markets pricing for US and UK rate hikes and near-term central bank outlooks?
8:32–9:32
Speakers
8 identifiedMore from Bloomberg News Now
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