Treasuries Stabilize, ECB's Lagarde On Growth, More
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What is the main topic discussed in this episode?
Hi, I'm David Weston. Join me every week for the Wall Street Week Podcast to hear stories of capitalism from around the world. From geopolitical tensions and central bank decisions to artificial intelligence, energy, and infrastructure, we sit down with the CEOs, economists, policymakers, and thought leaders whose decisions are shaping markets everywhere we find them. Subscribe to the Wall Street Week Podcast on Apple, Spotify. Five or anywhere you listen.
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And I'm Stephen Carroll.
Why are rising oil prices and Fed rate bets driving a global bond sell-off?
Surging oil prices and mounting bets on further US rate hikes are driving a global bond sell-off. The moves follow President Donald Trump's rejection of Iran's latest proposal to reopen the Strait of Hormuz, threatening to prolong the war's energy shock. While Treasuries are now showing signs of stabilization, that comes after a sharp sell-off in New York pushed the 10 year benchmark yield to 5.25%. CEO manager at Vanguard, Rebecca Venter, shares her thoughts on the move in treasuries.
We've seen rates rise, obviously, over 100 basis points. If you look at the 10-year so far this year, much of that move was a slow build, really based on the market recognizing the stronger growth that has happened so far this year. But recently, obviously, the move has been a lot bigger. Uh, in our view, this is really the market trying to figure out the Fed is serious about inflation. We've seen that. What exactly does a hiking cycle need to look like to cool inflation at the pace? pace that they would like to see. And that's a little bit of an open question in markets. And every time we get a a strong data growth point, a growth data point, something that's worrisome about inflation, we're gonna see this market reaction, we think, in the very near term.
Mm.
Rebecca Venter there. Bloomberg Opinions John Authors dubs the turmoil a bond pocalypse. Authors argues a negative surprise in U upcoming US data may be the only thing capable of halting the sell off. Subscribers can read what's going to break in the bond pocalypse now.
How is the UK government responding to rising borrowing costs and pressure on its fiscal rules?
The UK's Chancellor John Healy is seeking to reassure bond investors that Labour will keep the public finances under control. Surging borrowing costs have right wiped out roughly half of the almost twenty four billion pound fiscal buffer ch that Healy inherited from Rachel Reeves. He says that he and Prime Minister Andy Burnham are committed to meeting the government's fiscal rules.
On day one. As Chancellor. I said my first duty is fiscal discipline, and I'll tell you why. It underwrites every promise this government makes. On growth. on jobs, on national security and on public services. We can't succeed without it. And that's why the Prime Minister and I are united. in meeting the fiscal rules. Balancing the books. With a buffer against uncertainty. controlling borrowing to bring down inflation. And re reducing long term pressures on our finances.
That was the UK's Chancellor John Healy. Prime Minister Burnham will address Labour's conference later, setting out plans on social care alongside policies on energy, water and housing.
How could higher bond yields affect euro-area growth and ECB inflation policy?
Across the channel, there may be a silver lining to the borrowing cost pane. European Central Bank President Christine Lagarde says rising bond yields will slow economic growth, but also help contain inflation. Speaking to lawmakers in Brussels, she said higher borrowing costs should limit how much elevated energy prices feed through to inflation.
Growth has been resilient, no question about it. As you know, we have updated our projections as well, both for twenty six and twenty seven. Since our last meeting, uh we have seen new developments, particularly at the longer end of the curve, and long term interest rates have risen notably. That will have an impact on growth. It will probably slow growth and reduce pass through by more than projected in our September exercise.
Lagarde added that the ECB should adopt a measured response as appropriate to keep inflation in check. Euro area inflation is expected to have jumped to 3.7% in September, well above the ECB's 2% target, and traders are pricing almost four more quarter point ECB hikes over the next 12 months.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:35
2
Why are rising oil prices and Fed rate bets driving a global bond sell-off?
0:35–2:00
3
How is the UK government responding to rising borrowing costs and pressure on its fiscal rules?
2:00–3:08
4
How could higher bond yields affect euro-area growth and ECB inflation policy?
3:08–4:28
5
What safety and legal concerns are shaping the development of advanced AI models?
4:28–5:40
6
How much revenue must AI data centers generate to justify their investment?
5:40–6:35
7
What do the UK terror investigation and NATO changes mean for European security?
6:35–7:57
8
How are Treasury yields, European stocks, the dollar, and oil prices moving?
7:57–9:27
Speakers
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